[Congressional Record Volume 144, Number 41 (Thursday, April 2, 1998)]
[Senate]
[Pages S3120-S3155]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. DASCHLE:
  S. 1905. A bill to provide for equitable compensation for the 
Cheyenne River Sioux Tribe, and for other purposes; to the Committee on 
Indian Affairs.


       the cheyenne river sioux tribe equitable compensation act

  Mr. DASCHLE. Mr. President, today I am introducing legislation to 
compensate the Cheyenne River Sioux Tribe for losses the tribe suffered 
when the Oahe dam was constructed in central South Dakota and over 
100,000 acres of tribal land was flooded. Its passage will help the 
tribe rebuild their infrastructure and their economy, which was 
seriously crippled by the Oahe project during the 1950s. It is 
extraordinary that it has taken four decades to reach this point. The 
importance of passing this long-overdue legislation as soon as possible 
cannot be stated too strongly.
  This legislation was developed with the assistance of Chairman Gregg 
Bourland and Council Member Louis Dubray of the Cheyenne River Sioux 
Tribe. Both men have worked tirelessly to bring us to this point and I 
am grateful for their assistance. This legislation represents one 
element of their progressive vision for providing the members of the 
Cheyenne River Sioux Tribe with greater opportunities for economic 
development and to fulfill the debts owed to the tribe by the federal 
government.
  The Cheyenne River Sioux Infrastructure Development Trust Fund Act is 
the companion bill to the Lower Brule Sioux Tribe Infrastructure 
Development Trust Fund Act, which passed by unanimous consent in 
November of 1997, and the Crow Creek Sioux Tribe Infrastructure 
Development Trust Fund Act of 1996, which passed the Congress 
unanimously in 1996.
  The bill is based on an extensive analysis of the impact of the Pick-
Sloan Dam Projects on the Cheyenne River Sioux Tribe, which was 
performed by the Robert McLaughlin Company. The McLaughlin report was 
reviewed by the General Accounting Office, which found that the losses 
suffered by the tribe justify the establishment of a $290 million trust 
fund,

[[Page S3121]]

which is the amount called for in this legislation.
  It represents an important step in our continuing effort to fairly 
compensate the tribes of South Dakota for the sacrifices they made 
decades ago for the construction of the dams along the Missouri River 
and will further the goal of improving the lives of Native Americans 
living on those reservations.
  To fully appreciate the need for this legislation, it is important 
for the committee to understand the historic events that are prologue 
to its development. The Oahe dam was constructed in South Dakota 
pursuant to the Flood Control Act (58 Stat. 887) of 1944. That 
legislation authorized implementation of the Missouri River Basin Pick-
Sloan Plan for water development and flood control for downstream 
states.
  The Oahe dam flooded 104,000 acres of tribal land, forcing the 
relocation of roughly 30 percent of the tribe's population, including 
four entire communities. Equally as important, the tribe lost 80 
percent of its fertile river bottom lands--lands that represented the 
basis for the tribal economy. Prior to the flooding, the tribe relied 
on these lands for firewood and building material, game, wild fruits 
and berries, as well as cover from the severe storms that characterize 
winters in South Dakota and shelter from the heat of the prairie 
summer. Indian ranchers no longer had places to shelter their cattle in 
the wintertime, causing a significant loss in the value of their 
operations.
  The loss of these important river bottom lands can be felt today. 
Last year, during the extreme winter of 1996-1997, the tribe lost 
roughly 30,000 head of livestock, including 25,000 head of cattle. 
Without adequate natural shelter, the remaining Indian ranchers along 
this stretch of river can expect to continue to have difficulty 
scratching out a living in future years when the winter turns 
particularly hard.
  Mr. President, the damage caused by the Pick-Sloan projects touched 
every aspect of life on the Cheyenne River reservation. Ninety percent 
of the timber on the reservation was wiped out, causing shortages of 
building material and firewood. Wildlife, once abundant in the river 
bottom, became more scarce. The entire lifestyle of the tribe changed 
as it was forced to relocate much of its people from the lush river 
bottom lands to the windswept prairie.
  Most Americans, if not all, are familiar with the many broken 
promises of the United States Government to Native Americans during the 
1800's. For Indian tribes located along the Missouri River in the State 
of South Dakota, the United States Government still has not met its 
responsibilities for compensation for losses suffered as a result of 
the construction of the Pick-Sloan dams. This proposed legislation is 
intended to correct that situation as it applies to the Cheyenne River 
Sioux Tribe.
  We cannot, of course, remake the lost lands and return the tribe to 
its former existence. We can, however, help provide the resources 
necessary to the tribe to improve the infrastructure on the Cheyenne 
River reservation. This, in turn, will enhance opportunities for 
economic development which will benefit all members of the tribe. 
Perhaps most importantly, it will fulfill part of our commitment to 
improve the lives of Native Americans--in this case the Cheyenne River 
Sioux.
  I strongly urge my colleagues to approve this legislation this year. 
Providing compensation to the Cheyenne River Sioux Tribe for past harm 
inflicted by the federal government is long-overdue and any further 
delay only compounds that harm. I ask unanimous consent that the entire 
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. 1905

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

     SECTION 1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Cheyenne 
     River Sioux Tribe Equitable Compensation Act''.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds that--
       (1) Congress approved the Pick-Sloan Missouri River Basin 
     program by passing the Act of December 22, 1944, commonly 
     known as the ``Flood Control Act of 1944'' (58 Stat. 887, 
     chapter 665; 33 U.S.C. 701-1 et seq.)--
       (A) to promote the general economic development of the 
     United States;
       (B) to provide for irrigation above Sioux City, Iowa;
       (C) to protect urban and rural areas from devastating 
     floods of the Missouri River; and
       (D) for other purposes;
       (2) the Oahe Dam and Reservoir project is a major component 
     of the Pick-Sloan program, and contributes to the economy of 
     the United States by generating a substantial amount of 
     hydropower and impounding a substantial quantity of water;
       (3) notwithstanding the contributions referred to in 
     paragraph (1), the Oahe Dam and Reservoir project has 
     contributed little to the economy of the Tribe;
       (4) the Oahe Dam and Reservoir project overlies the eastern 
     boundary of the Crow Creek Indian Reservation;
       (5) the Oahe Dam and Reservoir project has--
       (A) inundated the fertile, wooded bottom lands of the Tribe 
     along the Missouri River that constituted the most productive 
     agricultural and pastoral lands of the Tribe and the homeland 
     of the members of the Tribe; and
       (B) as a result of that inundation, severely damaged the 
     economy of the Tribe and the members of the Tribe;
       (6) the Secretary appointed a Joint Tribal Advisory 
     Committee that examined the Oahe Dam and Reservoir project 
     and that advisory committee correctly concluded that--
       (A) the Federal Government did not justify, or fairly 
     compensate the Tribe for, the Oahe Dam and Reservoir project 
     when the Federal Government acquired 104,492 acres of land of 
     the Tribe for that project; and
       (B) the Tribe should be adequately compensated for the 
     taking described in subparagraph (A); and
       (7) after applying the same method of analysis used for the 
     compensation of similarly situated Indian tribes, the 
     Comptroller General of the United States determined the 
     amount of compensation for the taking described in paragraph 
     (6) and determined that the appropriate amount of 
     compensation to pay the Tribe for the taking would be 
     $290,722,958;
       (8) the Tribe is entitled to receiving additional financial 
     compensation for the taking described in paragraph (6)(A) in 
     a manner consistent with the determination of the Comptroller 
     General under paragraph (7); and
       (9) the establishment of a dual cash account with the 
     amounts made available to the Tribe under this Act is 
     consistent with the principles of self-governance and self-
     determination.
       (b) Purposes.--The purposes of this Act are as follows:
       (1) To provide for additional financial compensation to the 
     Tribe for the taking of 104,402 acres of land of the Tribe 
     for the Oahe Dam and Reservoir project in a manner consistent 
     with the determination of the Comptroller General of the 
     United States described in subsection (a)(7).
       (2) To provide for the establishment of the Cheyenne River 
     Sioux Recovery Account, a dual cash account to be managed by 
     the Office in order to make payments to the Tribe to carry 
     out projects under a plan prepared by the Tribe.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Account.--The term ``account'' means the Cheyenne River 
     Sioux Recovery Account established under section 4.
       (2) Cheyenne river sioux tribe; tribe.--The term ``Cheyenne 
     River Sioux Tribe'' or ``Tribe'' means the Itazipco, Siha 
     Sapa, Minnicoujou, and Oohenumpa bands of the Great Sioux 
     Nation that reside on the Cheyenne Reservation, located in 
     central South Dakota.
       (3) Fund account.--The term ``Fund Account'' means a 
     consolidated account for tribal trust funds in the Treasury 
     of the United States that--
       (A) is managed by the Secretary, through the Office, in 
     accordance with applicable law; and
       (B) as of the date of enactment of this Act, is numbered 
     14X8365.
       (4) Office.--The term ``Office'' means the Office of Trust 
     Fund Management within the Department of the Interior.
       (5) Program.--The term ``Program'' means the power program 
     of the Pick-Sloan Missouri River Basin program, administered 
     by the Western Area Power Administration.
       (6) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.

     SEC. 4. CHEYENNE RIVER SIOUX TRIBAL RECOVERY ACCOUNT.

       (a) Cheyenne River Sioux Tribal Recovery Account.--The 
     Secretary of the Treasury shall establish in the Fund Account 
     a dual cash account to be known as the ``Cheyenne River Sioux 
     Tribal Recovery Account''. The dual cash account shall have a 
     principal component and an interest component. The interest 
     component of the account shall be used to make payments to 
     the Tribe in accordance with this Act. The principal 
     component of the account may not be expended. The corpus and 
     the income of the account may be invested in accordance with 
     applicable law.
       (b) Funding.--
       (1) In general.--Subject to paragraphs (2) and (3), 
     beginning with fiscal year 1999, and for each fiscal year 
     thereafter, until such time as the aggregate of the amounts 
     deposited is $290,722,958, the Secretary of the Treasury 
     shall deposit into the fund an amount equal to 10 percent of 
     the receipts

[[Page S3122]]

     from the deposits to the Treasury of the United States for 
     the preceding fiscal year from the Program.
       (2) Percentage amount.--Beginning with fiscal year 2004, if 
     no other law provides for the compensation to parties in 
     conjunction with an applicable plan for the Program, the 
     Secretary of the Treasury shall deposit into the fund an 
     amount equal to 25 percent of the receipts from the deposits 
     to the Treasury of the United States for the preceding fiscal 
     year from the Program, until such time as the aggregate of 
     the amounts deposited into the fund from such receipts and 
     receipts deposited under paragraph (1) equals the amount 
     specified in paragraph (1).
       (3) Additional interest.--If, by the date that is 60 days 
     after the end of a fiscal year, the Secretary of the Treasury 
     fails to deposit into the fund an amount determined under 
     paragraph (1) or (2), the Secretary of the Treasury shall 
     deposit, in addition the applicable amount required to be 
     deposited under paragraph (1) or (2), interest on the amount 
     required to be deposited, determined for the period beginning 
     on the day after the termination of that 60-day period and 
     ending on the date on which the amount determined under 
     paragraph (1) or (2) is deposited, and based on a rate of 
     interest that is commonly referred to as the Treasury 
     overnight rate.
       (c) Withdrawal.--
       (1) In general.--Subject to paragraph (2), in accordance 
     with section 202 of the American Indian Trust Fund Management 
     Reform Act of 1994 (25 U.S.C. 4022), the Tribe may, in 
     accordance with that Act, voluntarily withdraw some or all of 
     the funds held in trust for the Tribe by the United States 
     and managed by the Secretary through the Office.
       (2) Limitation.--No amount of principal withdrawn under 
     this subsection may be expended by the Tribe. The Tribe may 
     withdraw funds under this subsection on the condition that 
     the Tribe may expend only the interest earned on the 
     principal.
       (e) Payment of Interest to Tribe.--In accordance with this 
     Act, the Secretary, acting through the Office, and in a 
     manner consistent with the first section of the Act of June 
     24, 1938 (52 Stat. 1037 et seq., chapter 648; 25 U.S.C. 162a) 
     shall make payments to the Tribe from the interest credited 
     to the interest component of the account, beginning at the 
     end of the first fiscal year during which interest is 
     credited to the account. The Tribe shall use the payments 
     made under this subsection only for carrying out projects and 
     programs pursuant to the plan prepared under subsection (f).
       (f) Plan.--
       (1) In general.--The governing body of the Tribe shall, not 
     later than 18 months after the date of enactment of this Act, 
     prepare a plan for the use of the payments made to the Tribe 
     under subsection (e).
       (2) Contents of plan.--The plan developed under this 
     subsection shall provide for the manner in which the Tribe 
     will expend the payments referred to in paragraph (1) to 
     promote--
       (A) economic development;
       (B) infrastructure development;
       (C) the educational, health, recreational, and social 
     welfare objectives of the Tribe and its members; or
       (D) any combination of the activities referred to in 
     subparagraphs (A) through (C).
       (3) Plan review and revision.--The Tribal Council of the 
     Tribe shall make available for review and comment by the 
     members of the Tribe a copy of the plan before the plan 
     becomes final, in accordance with procedures established by 
     the Tribal Council. The Tribal Council may, on an annual 
     basis, update the plan by revising the plan in a manner that 
     provides the members of the Tribe to review and comment on 
     any proposed revision.
       (4) Audit.--The activities of the Tribe in carrying out the 
     plan under this subsection shall be audited as part of an 
     annual audit conducted for the Tribe. The auditors that 
     conduct the audit shall include in the written findings of 
     that audit a determination whether the funds received by the 
     Tribe under this section were expended in a manner consistent 
     with this section to carry out the plan under this 
     subsection.
       (g) Transfers; Limitations.--
       (1) Withdrawal and transfer of funds.--In a manner 
     consistent with the requirements of this Act, upon request of 
     the Secretary of the Interior, the Secretary of the Treasury 
     shall withdraw amounts in the interest component of the 
     account and transfer such amounts to the Secretary of the 
     Interior for use in accordance with paragraph (2). The 
     Secretary of the Treasury may only withdraw funds from the 
     account for the purpose specificed in paragraph (2).
       (2) Payments to tribe.--The Secretary of the Interior shall 
     use the amounts transferred under paragraph (1) only for the 
     purpose of making annual payments to the Tribe.
       (4) Prohibition on per capita payments.--No portion of any 
     payment made under this subsection may be distributed to any 
     member of the Tribe on a per capita basis.

     SEC. 5. ELIGIBILITY OF TRIBE FOR CERTAIN PROGRAMS AND 
                   SERVICES.

       (a) In General.--No payment made to the Tribe pursuant to 
     this Act shall result in the reduction or denial of any 
     service or program to which, pursuant to Federal law--
       (1) the Tribe is otherwise entitled because of the status 
     of the Tribe as a federally recognized Indian tribe; or
       (2) any individual who is a member of the Tribe is entitled 
     because of the status of the individual as a member of the 
     Tribe.
       (b) Exemptions from Taxation.--No payment made pursuant to 
     this Act shall be subject to any Federal or State income tax.
       (c) Power Rates.--No payment made pursuant to this Act 
     shall affect Pick-Sloan Missouri River Basin power rates.

     SEC. 6. SALE OF WESTERN AREA POWER AUTHORITY.

       (a) In General.--If, before the amount specified in section 
     4(b)(1) is deposited into the Fund, the United States sells 
     or otherwise transfers title to the assets and income of the 
     Western Area Power Authority to an entity other than the 
     United States--
       (1) an amount of the proceeds from that sale equal to the 
     difference between the amount specified in section 4(b)(1) 
     and the aggregate amount that, as of the sale of power 
     authority, had been paid into the Fund, shall be deposited in 
     the Fund; or
       (2) the purchaser may assume responsibility for making 
     payments to the Treasury of the United States for deposit in 
     the Fund in amounts determined under section 4(b)(1).
       (b) Security.--If a purchaser assumes the responsibility 
     for making the payments and shall provide the Tribe with 
     appropriate security to secure those payments.
                                 ______
                                 
      By Mr. LEAHY:
  S. 1906. A bill to require the Senate to remain in session to act on 
judicial nominations in certain circumstances; to the Committee on 
Rules and Administration.


           the judicial emergency responsibility act of 1998

  Mr. LEAHY. Mr. President, last week, faced with five continuing 
vacancies on a 13-member Court, Chief Judge Winter of the United States 
Court of Appeals for the Second Circuit certified the judicial 
emergency caused by these continuing vacancies, began canceling 
hearings and took the unprecedented step in the Second Circuit of 
authorizing 3-judge panels to be composed of two visiting judges and 
only one Second Circuit Judge.

  The Judiciary Committee has reported to the Senate the nomination of 
Judge Sotomayor to the Second Circuit, but her nomination continues to 
sit on the Senate calendar. Her nomination was received back in June 
1997. She was favorably reported by a Committee vote of 16 to 2, once 
the Committee finally considered her nomination. She is strongly 
supported by both New York Senators, yet the nomination continues to 
languish without consideration.
  Three additional outstanding Second Circuit nominees are pending 
before the Judiciary Committee and await their confirmation hearings. 
Judge Rosemary Pooler was nominated back on November 6, 1997, as was 
Robert Sack, a partner in the law firm of Gibson Dunn & Crutcher. The 
final pending nomination to the Second Circuit was received two months 
ago, back on February 11, when the President nominated Chester J. 
Straub, a partner in the law firm of Wilkie Farr & Gallagher.
  I have been urging action on the nominees to the Second Circuit for 
many months. The Senate is failing in its obligations to the people of 
the Second Circuit, to the people of New York, Connecticut and Vermont. 
We should call an end to this stall and take action.
  Last Friday I urged consideration of the nomination of Judge 
Sotomayor without further delay and requested that the Judiciary 
Committee proceed to hold the necessary hearings on the three other 
Second Circuit nominees this week so that they, too, might be confirmed 
before the upcoming recess.
  I do not believe that the Senate should be leaving for two weeks' 
recess and leaving the Second Circuit with vacancies for which it has 
qualified nominations pending. This is too reminiscent of the 
government shutdown only a couple of years ago and the numerous times 
of late when the Republican congressional leadership has recessed 
without completing work on emergency supplemental and disaster relief 
legislation.
  In his most recent Report on the Judiciary the Chief Justice of the 
United States Supreme Court warned that persisting vacancies would harm 
the administration of justice. The Chief Justice of the United States 
Supreme Court pointedly declared: ``Vacancies cannot remain at such 
high levels indefinitely without eroding the quality of justice that 
traditionally has been associated with the federal judiciary.''
  The people and businesses in the Second Circuit need additional 
federal judges confirmed by the Senate. Indeed, the Judicial Conference 
of the United States recommends that in addition to the 5 vacancies, 
the Second

[[Page S3123]]

Circuit be allocated an additional 2 judgeships to handle its workload. 
The Second Circuit is suffering harm from Senate inaction. That is why 
the Chief Judge of the Second Circuit had to declare the Circuit in a 
state of emergency.
  Must we wait for the administration of justice to disintegrate 
further before the Senate will take this crisis seriously and act on 
the nominees pending before it? I hope not.
  As part of my efforts to encourage the Senate to do its job, I am 
today introducing the Judicial Emergency Responsibility Act. The 
purpose of this bill is to supplement the law by which Chief Justice 
Winter certified the emergency and to require the Senate to do its duty 
and to act on judicial nominations before it recesses for significant 
stretches of time when a Circuit Court is suffering from a vacancy 
emergency.
  I urge prompt action on the bill and immediate action on the 
nomination of Judge Sonia Sotomayor to the Second Circuit.
                                 ______
                                 
      By Mr. DASCHLE:
  S. 1907. A bill to amend the Internal Revenue Code of 1986 to allow a 
refundable tax credit for wetland restoration and conservation 
expenses; to the Committee on Finance.


           wetlands restoration and conservation legislation

  Mr. DASCHLE. Mr. President, today I am introducing legislation to 
provide a refundable tax credit to farmers for the restoration and 
conservation of wetlands.
  We have learned over the years the extraordinary value that wetlands 
can provide as habitat for plants and waterfowl, as a filter for water 
and as a buffer against flooding. At the same time, anyone who has ever 
owned a farm in South Dakota with what we call prairie potholes can 
appreciate the frustration wetlands can generate, making it 
logistically difficult to till the field efficiently and, of course, 
impossible to grow crops on lands that are flooded.
  To add insult to injury, farmers often need to pay property taxes on 
these wetlands, even though they provide no financial return.
  As a nation, we have recognized the dilemma this presents and have 
taken steps in the past to provide farmers with a means of obtaining 
some value for their efforts to protect wetlands. For years the 
Department of Agriculture has allowed farmers to enroll wetlands into 
the Wetland Reserve Program, while the U.S. Fish and Wildlife Service 
has worked with conservation groups to provide farmers with long-term 
easement options. Recently, Congress enacted legislation I sponsored to 
allow farmers to enroll wetlands in the Conservation Reserve Program.
  Unfortunately, due to the funding caps, many farmers cannot enroll 
their wetlands into the CRP while others are reluctant to use the WRP 
or U.S. Fish and Wildlife easements. Consequently, despite these 
efforts, many wetlands throughout this country continue to present 
farmers with a challenge: ensuring their protection without any 
compensation.
  In addition, over the last century, many wetlands have been drained, 
filled or otherwise degraded. These areas represent a vast reservoir of 
potentially important wetlands that could provide useful environmental 
functions if fully restored. The time has come for Congress to 
establish a more comprehensive set of incentives to both restore 
degraded wetlands and ensure their long-term protection.
  Under the legislation I am introducing today, owners of wetlands, 
farmed wetlands and prior-converted croplands that are surrounded by or 
immediately adjacent to actively farmed cropland in the same ownership 
are eligible for a tax credit. To take advantage of this credit, 
farmers must restore to fully functioning condition their farmed 
wetlands or prior converted croplands condition according to a 
restoration plan approved by the Natural Resources Conservation 
Service. A tax credit equal to the restoration costs will be available 
under this bill. To protect the water quality of wildlife values, a 
maximum of three associated acres of non-wetland may be eligible for 
the credit for every acre of wetland. To ensure that the federal 
government does not pay twice to protect the same wetlands, those 
enrolled in CRP or WRP are not eligible for this credit.
  The bill provides a tax credit equal to 50% to 70% of the soil-
specific Conservation Reserve Program (CRP) rental rate for eligible 
wetland and associated non-wetland acres, plus any certification fee. 
This may be taken in each year of the conservation agreement in which 
the eligible land is not used for agricultural production or drained, 
dredged, filled, leveled, or otherwise manipulated for that purpose.
  A farmer who enters into an agreement to conserve the eligible 
wetland and associated non-wetland acres for a period of not less than 
10 years will receive 50% of the annual CRP rental rate; a farmer who 
agrees to conserve the wetland for not less than 20 years will receive 
60% of the annual CRP rental rate; and a farmer who agrees to conserve 
the wetland for 30 years will receive 70% of the annual CRP rental 
rate. Certification of compliance with the agreement must be made at 
least every 5 years.
  As a long-term alternative to the conservation credit, farmers may 
opt for an easement credit, which would be equal to the fair market 
value of the land in agricultural use, as determined by a certified 
appraisal. This would be based on the charitable donation by the 
landowner of a deed restriction, granted in perpetuity on the use which 
may be made of the eligible land to a qualified conservation 
organization, exclusively for conservation purposes. The full credit 
may be taken in the year in which the deed restriction is recorded.
  Mr. President, Americans increasingly are becoming aware of the 
tremendous environmental benefits that wetlands provide. From critical 
waterfowl habitat to reducing the severity of flooding, wetlands are a 
critical component of our landscape. What may not be as widely 
appreciated is the nature of the farmer's role in protecting this 
resource.
  The time has come for us to both acknowledge the contributions made 
by farmers to the conservation of wetlands and provide them with 
appropriate incentive to preserve them. Farmers should not be penalized 
for doing the right thing. This legislation will take a giant step 
toward making available fair and reasonable compensation for their 
efforts in this regard.
  I urge my colleagues to join me in supporting this legislation. It 
represents an idea that is popular with conservation organizations as 
well as producers, and I am hopeful that Congress will enact it in the 
very near future. I ask unanimous consent that the full 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. 1907

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

     SECTION 1. REFUNDABLE CREDIT FOR WETLAND RESTORATION AND 
                   CONSERVATION EXPENSES.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     refundable credits) is amended by redesignating section 35 as 
     section 36 and by inserting after section 34 the following 
     new section:

     ``SEC. 35. WETLAND RESTORATION AND CONSERVATION EXPENSES.

       ``(a) Allowance of Credit.--In the case of an eligible 
     taxpayer, there shall be allowed as a credit against the tax 
     imposed by this subtitle for the taxable year in an amount 
     equal to the sum of--
       ``(1) the wetland restoration credit, plus
       ``(2) the wetland conservation credit, plus
       ``(3) the wetland easement credit.
       ``(b) Wetland Restoration Credit.--
       ``(1) In general.--The wetland restoration credit for any 
     taxable year is an amount equal to the wetland restoration 
     expenditures paid or incurred by the eligible taxpayer for 
     such taxable year.
       ``(2) Wetland restoration expenditures.--For purposes of 
     this subsection, the term `wetland restoration expenditure' 
     means an expenditure for the restoration of farmed wetland or 
     prior converted wetland to fully functioning wetland 
     condition--
       ``(A) pursuant to a restoration plan approved by the 
     Natural Resources Conservation Service of the Department of 
     Agriculture, and
       ``(B) paid or incurred during the first 5 years of the 
     qualified conservation agreement or qualified conservation 
     easement relating to such farmed wetland or prior converted 
     wetland.

     Such term shall not include any expenditure which is required 
     to be made pursuant to any Federal or State law.

[[Page S3124]]

       ``(c) Wetland Conservation Credit.--
       ``(1) In general.--The wetland conservation credit for any 
     taxable year is an amount equal to the sum of--
       ``(A) the applicable percentage of the soil-specific 
     Conservation Reserve Program rental rate applicable to the 
     eligible taxpayer's qualified wetland for such taxable year 
     under title XII of the Food Security Act of 1985, plus
       ``(B) any fee for certification of compliance paid or 
     incurred by the eligible taxpayer in such taxable year with 
     respect to the qualified conservation agreement relating to 
     such qualified wetland.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1)(A), the applicable percentage is equal to, in the case of 
     an eligible taxpayer who has entered into a qualified 
     conservation agreement with a term of--
       ``(A) at least 10 years, but less than 20 years, 50 
     percent,
       ``(B) at least 20 years, but less than 30 years, 60 
     percent, and
       ``(C) 30 years, 70 percent.
       ``(3) Denial of credit if wetland easement credit is 
     elected.--With respect to any qualified wetland with respect 
     to which the taxpayer makes an election under subsection (d) 
     for any taxable year, the wetland conservation credit with 
     respect to such qualified wetland for such taxable year is 
     zero.
       ``(d) Wetland Easement Credit.--
       ``(1) In general.--At the election of the eligible 
     taxpayer, the wetland easement credit for any taxable year is 
     an amount equal to the fair market value of any qualified 
     wetland of the taxpayer subject to a qualified conservation 
     easement.
       ``(2) Determination of value.--For purposes of paragraph 
     (1), the value of such qualified wetland is the fair market 
     value of such qualified wetland in agricultural use (as 
     determined by a certified appraisal) during the taxable year 
     (determined as of the date of the grant of the easement).
       ``(3) Election.--An election under this subsection shall 
     apply to the taxable year for which made.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Eligible taxpayer.--The term `eligible taxpayer' 
     means a taxpayer who--
       ``(A) owns property which consists of--
       ``(i) wetlands, farmed wetlands, or prior converted 
     wetlands, and
       ``(ii) the surrounding or immediately adjacent actively 
     farmed cropland, and
       ``(B) with respect to such property, has entered into a 
     qualified conservation agreement or a qualified conservation 
     easement.
       ``(2) Qualified wetland.--
       ``(A) In general.--The term `qualified wetland' means--
       ``(i) wetland, including farmed wetland or prior converted 
     wetland, which through the use of wetland restoration 
     expenditures is being converted to fully functioning wetland 
     condition, plus
       ``(ii) as determined under a qualified conservation 
     agreement or a qualified conservation easement, such 
     surrounding or immediately adjacent nonwetland as is 
     appropriate to buffer the water quality or wildlife habitat 
     values associated with the wetland, but only to the extent 
     the nonwetland acreage is not more than 3 times greater than 
     the wetland acreage.
       ``(B) Certain property excluded.--Such term shall not 
     include any acre of land with respect to which contract or 
     easement payments are received in the taxable year from the 
     Conservation Reserve Program or the Wetlands Reserve Program 
     under title XII of the Food Security Act of 1985.
       ``(3) Wetland, farmed wetland, and prior converted 
     wetland.--The terms `wetland', `farmed wetland', and `prior 
     converted wetland' shall have the meanings given such terms 
     by title XII of the Food Security Act of 1985.
       ``(4) Qualified conservation agreement.--
       ``(A) In general.--The term `qualified conservation 
     agreement' means an agreement by the eligible taxpayer--
       ``(i) with a governmental unit referred to in section 
     170(c)(1),
       ``(ii) for a term of not less than 10 years and not more 
     than 30 years,
       ``(iii) under which the taxpayer agrees to comply with the 
     conservation requirements of subparagraph (B) with respect to 
     the qualified wetland, and
       ``(iv) under which the taxpayer agrees to obtain a 
     certification of compliance not less than every 5 years 
     during the period of the agreement.
       ``(B) Conservation requirements.--An eligible taxpayer 
     complies with the conservation requirements of this 
     subparagraph if--
       ``(i) the taxpayer does not use the qualified wetland for 
     agricultural production, and
       ``(ii) the taxpayer does not drain, dredge, fill, level, or 
     otherwise manipulate the qualified wetland (including the 
     removal of woody vegetation, or any activity which results in 
     impairing or reducing the flow, circulation, or reach of 
     water) for the purpose, or that has the effect, of making 
     production of an agricultural commodity or development of 
     built structures on such wetland possible.
       ``(5) Qualified conservation easement.--The term `qualified 
     conservation easement' means an easement granted in 
     perpetuity by the eligible taxpayer restricting the use which 
     may be made of the qualified wetland to a qualified 
     organization exclusively for conservation purposes (as 
     defined in section 170(h)).
       ``(f) Special Rules.--
       ``(1) Denial of double benefit.--
       ``(A) In general.--No credit shall be allowed under 
     subsection (a) for any expense for which a deduction or 
     credit is allowed under any other provision of this chapter.
       ``(B) Grants.--No credit shall be allowed under subsection 
     (a) for any expense to the extent that funds for such expense 
     are received under any Federal, State, or local program.
       ``(2) Married Couples Must File Joint Returns.--If the 
     taxpayer is a married individual (within the meaning of 
     section 7703), this section shall apply only if the taxpayer 
     and the taxpayer's spouse file a joint return for the taxable 
     year.''
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 35 of such Code''.
       (2) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of the Internal Revenue Code of 
     1986 is amended by striking the last item and inserting the 
     following:

``Sec. 35. Wetland restoration and conservation expenses.
``Sec. 36. Overpayments of tax.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.
                                 ______
                                 
      By Mr. MOYNIHAN (for himself and Mr. D'Amato):
  S. 1908. A bill to amend title XVIII of the Social Security Act to 
carve out form payments to Medicare+Choice organizations amounts 
attributable to disproportionate share hospital payments and pay such 
amounts directly to those disproportionate share hospitals in which 
their enrollees receive care; to the Committee on Finance.


               THE MANAGED CARE FAIR PAYMENT ACT OF 1998

  Mr. MOYNIHAN, Mr. President, I rise today to introduce with my 
colleague Senator D'Amato, the ``Managed Care Fair Payment Act of 
1998,'' a companion to H.R. 2701 which was introduced in the House of 
Representatives last year by my colleague and friend, Representative 
Rangel.
  In the Balanced Budget Act of 1997 (BBA), Congress and the President 
agreed to ``carve out'' the payment made to Medicare HMOs attributed to 
the cost for graduate medical education (GME), and instead make the 
payment for GME directly to teaching hospitals. The BBA did not 
contain, however, a provision passed by the Senate to ``carve out'' 
payments to disproportionate share hospitals--often called DSH 
payments.
  Medicare DSH payments are paid to almost 2000 hospitals that serve a 
``disproportionate share'' of low-income--often uninsured--patients. 
The DSH adjustment for each hospital is determined by a complex set of 
formulas relating to a hospital's location, size and percentage of low-
income patients.
  Until 1998, Medicare's payments to private health plans were based on 
the average payments made on behalf of Medicare beneficiaries in the 
fee-for-service program. Under the BBA, Medicare+Choice payment rates 
are no longer directly linked to local fee-for-service spending. 
Instead, they blend average spending locally and nationally. Because 
the DSH payment was not carved out in the BBA, the DSH payment will 
continue to be made with the expectation that HMOs will, when 
negotiating rates with hospitals, ``pass on'' the DSH payment to 
hospitals that serve a large number of low-income, uninsured 
individuals. Unfortunately, as was the case before the BBA was enacted, 
DSH payments to managed care plans will likely not be passed on to 
hospitals. This bill seeks to correct this problem by ``carving out'' 
the DSH payment from the Medicare+Choice payments to managed care plans 
and giving the payments directly to hospitals.
  This issue is particularly important to New York state. Hospitals in 
New York currently receive approximately $700 million per year in DSH 
payments. The number of New York Medicare beneficiaries enrolled in 
HMOs and other managed care plans has grown by nearly 86 percent to 
more than 300,000 since 1995. At this level of penetration, a DSH carve 
out would redirect $150 million each year to New York's 127 DSH 
hospitals.
  To preserve the viability of hospitals that provide the bulk of the 
care to low-income--often uninsured--patients, it is imperative, as 
managed care enrollment grows, that Medicare DSH payments be carved out 
from HMO payments. The bill I am introducing today does just that--it 
would carve out 100 percent of the DSH funds

[[Page S3125]]

from the managed care payment rate, beginning in January 1999 and pay 
these funds directly to hospitals. These payments must go directly to 
hospitals that serve the poor. I urge my colleagues to join me in 
supporting the Managed Care Fair Payment Act of 1998.
  I ask unanimous consent that the full 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. 1908

       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 ``Managed Care Fair Payment 
     Act of 1998''.

     SEC. 2. CARVING OUT DSH PAYMENTS FROM PAYMENTS TO 
                   MEDICARE+CHOICE ORGANIZATIONS AND PAYING THE 
                   AMOUNTS DIRECTLY TO DSH HOSPITALS ENROLLING 
                   MEDICARE+CHOICE ENROLLEES.

       (a) In General.--Section 1853(c)(3) of the Social Security 
     Act (42 U.S.C. 1395w-23(c)(3)), as inserted by section 4001 
     of the Balanced Budget Act of 1997, is amended--
       (1) in subparagraph (A), by striking ``subparagraph (B)'' 
     and inserting ``subparagraphs (B) and (D)'',
       (2) by redesignating subparagraph (D) as subparagraph (E), 
     and
       (3) by inserting after subparagraph (C) the following:
       ``(D) Removal of payments attributable to disproportionate 
     share payments from calculation of adjusted average per 
     capita cost.--
       ``(i) In general.--In determining the area-specific 
     Medicare+Choice capitation rate under subparagraph (A) for a 
     year (beginning with 1999), the annual per capita rate of 
     payment for 1997 determined under section 1876(a)(1)(C) shall 
     be adjusted, subject to clause (ii), to exclude from the rate 
     the additional payments that the Secretary estimates were 
     payment during 1997 for additional payments described in 
     section 1886(d)(5)(F).
       ``(ii) Treatment of payments covered under state hospital 
     reimbursement system.--To the extent that the Secretary 
     estimates that an annual per capita rate of payment for 1997 
     described in clause (i) reflects payments to hospitals 
     reimbursed under section 1814(b)(3), the Secretary shall 
     estimate a payment adjustment that is comparable to the 
     payment adjustment that would have been made under clause (i) 
     if the hospitals had not been reimbursed under such 
     section.''.
       (b) Additional Payments for Managed Care Enrollees.--
     Section 1886(d)(5)(F) of the Social Security Act ((42 U.S.C. 
     1395ww(d)(5)(F)) is amended--
       (1) in clause (ii), by striking ``clause (ix)'' and 
     inserting ``clauses (ix) and (x)'', and
       (2) by adding at the end the following:
       ``(ix)(I) For portions of cost reporting periods occurring 
     on or after January 1, 1999, the Secretary shall provide for 
     an additional payment amount for each applicable discharge of 
     any subsection (d) hospital that is a disproportionate share 
     hospital (as described in clause (i)).
       ``(II) For purposes of this clause, the term `applicable 
     discharge' means the discharge of any individual who is 
     enrolled under a risk-sharing contract with an eligible 
     organization under section 1876 and who is entitled to 
     benefits under part A or any individual who is enrolled with 
     a Medicare+Choice organization under part C.
       ``(III) The amount of the payment under this clause with 
     respect to any applicable discharge shall be equal to the 
     estimated average per discharge amount that would otherwise 
     have been paid under this subparagraph if the individuals had 
     not been enrolled as described in subclause (II).
       ``(IV) The Secretary shall establish rules for an 
     additional payment amount, for any hospital reimbursed under 
     a reimbursement system authorized under section 1814(b)(3) if 
     such hospital would qualify as a disproportionate share 
     hospital under clause (i) were it not so reimbursed. Such 
     payment shall be determined in the same manner as the amount 
     of payment is determined under this clause for 
     disproportionate share hospitals.''.
                                 ______
                                 
      By Mr. McCAIN:
  S. 1909. A bill to repeal the telephone excise tax; to the Committee 
on Finance.


              the telephone excise tax repeal act of 1998

  Mr. McCAIN. Mr. President, I rise to offer a bill to repeal the three 
percent federal excise tax that all Americans pay every time they use a 
telephone.
  Under current law, the federal government taxes you three percent of 
your monthly phone bill for the so-called ``privilege'' of using your 
phone lines. This tax was first imposed one hundred years ago. To help 
finance the Spanish-American War, the federal government taxed 
telephone service, which in 1898 was a luxury service enjoyed by 
relatively few. The tax reappeared as a means of raising revenue for 
World War I, and continued as a revenue-raiser during the Great 
Depression, World War II, the Korean and Vietnam Wars, and the chronic 
federal budget deficits of the last twenty years.
  Earlier this month, however, we received some long-overdue good news: 
thanks to the Balanced Budget Act enacted by the Congress in 1997, the 
Congressional Budget Office projected an $8 billion federal budget 
surplus for 1998. Mr. President, that announcement should mean the end 
of the federal phone excise tax.
  Here's why. First of all, the telephone is a modern-day necessity, 
not like alcohol, or furs, or jewelry, or other items of the sort that 
the government taxes this way. The Congress specifically recognized the 
need for all Americans to have affordable telephone service when it 
enacted the 1996 Telecommunications Act. The universal service 
provisions of the Act are intended to assure that all Americans, 
regardless of where they live or how much money they make, have access 
to affordable telephone service. The telephone excise tax, which bears 
no relationship to any government service received by the consumer, is 
flatly inconsistent with the goal of universal telephone service.
  It's also a highly regressive and unfair tax that hurts low-income 
and rural Americans even more than other Americans. Low-income families 
spend a higher percentage of their income than medium- or high-income 
families on telephone service, and that means the telephone tax hits 
low-income families much harder. For that reason the Congressional 
Budget Office has concluded that increases in the telephone tax would 
have a greater impact on low-income families than tax increases on 
alcohol or tobacco products. And a study by the American Agriculture 
Movement concluded that excise taxes like the telephone tax impose a 
disproportionately large tax burden on rural customers, too, who rely 
on telephone service in isolated areas.
  But, in addition to being unfair and unnecessary, there is another 
reason why we should eliminate the telephone excise tax. Implementation 
of the Telecom Act of 1996 requires all telecommunications carriers--
local, long-distance, and wireless--to incur new costs in order to 
produce a new, more competitive market for telecommunications services 
of all kinds.
  Unfortunately, the cost increases are arriving far more quickly than 
the new, more competitive market. The Telecom Act created a new subsidy 
program for wiring schools and libraries to the Internet, and the cost 
of funding that subsidy has already increased bills for business users 
of long-distance telephone service and for consumers of wireless 
services. Because of more universal service subsidy requirements and 
other new Telecom Act mandates, more rate increases for all users will 
occur later this year and next year.
  Mr. President, the fact that the Telecom Act is imposing new charges 
on consumers' bills makes it absolutely incumbent upon us to strip away 
any unnecessary old charges. And that means the telephone excise tax.
  Mr. President, the telephone excise tax isn't a harmless artifact 
from bygone days. It collects money for wars that are already over, and 
for budget deficits that no longer exist, from people who can least 
afford to spend it now and from people who will have new bills to foot 
as the 1996 Telecom Act gets implemented. That's unfair, that's wrong, 
and that must be stopped.
  San Juan Hill and Pork Chop Hill have now gone down in history, and 
so should this tax.
  Mr. President, I ask unanimous consent that the text of the bill 
appear in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1909

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

     SECTION 1. REPEAL OF TELEPHONE EXCISE TAX.

       (a) In General.--Effective with respect to amounts paid 
     pursuant to bills first rendered on or after January 1, 1999, 
     subchapter B of chapter 33 of the Internal Revenue Code of 
     1986 (26 U.S.C. 4251 et seq.) is repealed. For purposes of 
     the preceding sentence, in the case of communications 
     services rendered before December 1, 1998, for which a bill 
     has not been rendered before January 1, 1999, a bill shall be 
     treated as having been first rendered on December 31, 1998.
       (b) Conforming Amendment.--Effective January 1, 1999, the 
     table of subchapters for

[[Page S3126]]

     such chapter is amended by striking out the item relating to 
     subchapter B.
                                 ______
                                 
      By Mr. D'AMATO:
  S. 1911. A bill to amend the Internal Revenue Code of 1986 to provide 
a $500 nonrefundable credit to individuals for the payment of real 
estate taxes; to the Committee on Finance.


            THE WORKING MIDDLE-CLASS TAX RELIEF ACT OF 1998

  Mr. D'AMATO. Mr. President, last year, the Congress delivered some 
long-overdue and much-deserved tax relief to the American people. The 
Taxpayer Relief Act of 1997 provided the first middle-class tax cut in 
16 years.

  The tax cuts we passed last year are making a difference in the 
monthly budgets of working middle-class families. But we can and we 
must do more. These families still send too much of their hard-earned 
money to Washington. And between federal, state, and local taxes, the 
average American's tax bill is nearly 35 percent of their total income. 
In fact, most Americans spend more time working to pay their tax bills 
than they spend working to provide food, clothing, and shelter 
combined. We absolutely must continue our efforts to reduce the tax 
burden.
  One area that escaped our tax-cutting efforts last year was the 
enormous property tax bills paid by homeowners. Last year, hardworking 
Americans paid about $209 billion in real-estate property taxes. This 
was more than one-and-one-half times what individuals paid in state 
income taxes.
  In addition, property tax rates have increased almost twice as fast 
as inflation. Property taxes are spiraling out of control, and the time 
has come to give homeowners some real relief.
  Homeownership is the American dream, but that dream now comes with a 
tax bill that puts a heavy burden on working families. This property 
tax bill also provides a disincentive to any young couple considering 
purchasing a home. We in Washington should change that equation--we 
should be doing everything we can to encourage and assist 
homeownership.
  Today, I am introducing the ``Working Middle-Class Tax Relief Act of 
1998.'' This bill will allow homeowners to take a federal tax credit 
for the first $500 of property taxes paid on their personal residence. 
The Working Middle Class Tax Relief Act will provide real help to 
working families who are struggling to make ends meet, and it will send 
a strong message that homeownership can become a reality for all 
Americans.
  Here are a few examples of how my bill works. Under current law, 
there are nearly 36 million taxpayers who do not get any savings on 
property taxes because they don't file an itemized federal tax return. 
Under my bill, every dollar of property tax that they pay, up to $500, 
will come back to them in the form of federal tax savings.
  Of course, millions of other Americans do itemize. Take, for example, 
a typical family of four with a taxable income of $42,000, and a 
property tax bill of $3,000. Under current law they receive a $450 
federal tax benefit. By turning the first $500 of property taxes into a 
tax credit, my legislation would give this typical family an additional 
$425 savings, for a total tax benefit of $875.
  This savings to homeowners could cut their property tax bill by one-
third or more, and in some cases wipe it out all together. This 
legislation will let working families keep more of their money. That's 
the way it should be. After all, the American people know how to manage 
their own money much better than Washington does.
  The Working Middle-Class Tax Relief Act is real savings for the 66 
million Americans who have realized the dream of owning a home, and it 
will help millions more achieve that dream.
  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. 1911

       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 ``Working Middle Class Tax 
     Relief Act of 1998''.

     SEC. 2. NONREFUNDABLE TAX CREDIT FOR REAL ESTATE TAXES ON 
                   PRINCIPAL RESIDENCE.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     nonrefundable personal credits) is amended by inserting after 
     section 25A the following:

     ``SEC. 25B. REAL ESTATE TAXES ON PRINCIPAL RESIDENCE.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a credit against the tax imposed by this 
     chapter for the taxable year an amount equal to the lesser 
     of--
       ``(1) the applicable dollar amount, or
       ``(2) the amount allowable as a deduction under section 164 
     (determined without regard to subsection (c)(3) thereof) for 
     State, local, and foreign real property taxes paid or accrued 
     by the taxpayer on property for periods the property was 
     owned and used by the taxpayer as the taxpayer's principal 
     residence.
       ``(b) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Applicable dollar amount.--The applicable dollar 
     amount shall be determined in accordance with the following 
     table:


``For taxable years                                          The dollar
  beginning in:                                              amount is:
  1999........................................................$100 ....

  2000........................................................ 200 ....

  2001........................................................ 300 ....

  2002........................................................ 400 ....

  2003 and thereafter......................................... 500.....

       ``(2) Principal residence.--The term `principal residence' 
     has the meaning given such term by section 121, except that 
     the period for which a dwelling unit is treated as a 
     principal residence of the taxpayer shall include the 30-day 
     period ending on the first day on which it would (but for 
     this paragraph) be treated as the taxpayer's principal 
     residence.
       ``(3) Joint return required.--Rules similar to the rules of 
     paragraphs (2), (3), and (4) of section 21(e) shall apply.
       ``(4) Ownership and use.--Rules similar to the rules of 
     paragraphs (1), (2), (3), (4), and (7) of section 121(d) 
     shall apply.''
       (b) Denial of Double Benefit.--Section 164(c) of the 
     Internal Revenue Code of 1986 (relating to deduction denied 
     in case of certain taxes) is amended by adding at the end the 
     following:
       ``(3) Taxes on real property to the extent of the amount of 
     the credit allowed under section 25B.''
       (c) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter A of chapter 1 of the 
     Internal Revenue Code of 1986 is amended by inserting after 
     the item relating to section 25A the following:

``Sec. 25B. Real estate taxes on principal residence.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.
                                 ______
                                 
      By Mr. FORD (for himself and Mr. Bond):
  S. 1912. A bill to amend title 10, United States Code, to exclude 
additional reserve component general and flag officers from the 
limitation on the number of general or flag officers who may serve on 
active duty; to the Committee on Armed Services.


                       NATIONAL GUARD LEGISLATION

  Mr. FORD. Mr. President, today I join Senator Bond, my fellow co-
chairman of the National Guard Caucus, in introducing legislation to 
allow the Secretary of Defense to increase the number of National Guard 
and reserve generals on active duty.
  Deputy Secretary of Defense John Hamre brought it to our attention 
that under current law, guard and reserve general officers brought on 
active duty for more than 180 days count against the service's active 
duty ceilings specified in 10 U.S.C. 526. Our proposed legislation 
would exempt full-time active duty guard and reserve general officers 
from the limit in title 10. But we only allow the exemption so it does 
not exceed 3 percent of the current limit of 877 general officers.
  This legislation will encourage the military services to assign 
guard/reserve general officers to a wider variety of non-traditional 
assignments allowing these general officers to gain a greater depth of 
experience. The legislation will greatly enhance the total force idea, 
by providing a more seamless integration of the reserve and active 
component senior leadership. Senator Bond and I also believe this 
legislation will foster a greater appreciation by the active duty 
service leadership of the expertise available from the guard and 
reserve community.
  This legislation would eliminate the disincentive to expand guard and 
reserve general officers assignments by easing the one-for-one reserve 
component versus active component offset. There are currently 22 Guard 
and Reserve general officers on full time active duty. All but three of 
those officers are serving in assignment directly related to Guard and 
Reserve matters. This legislation would exempt up to 25 Guard and 
Reserve general officers

[[Page S3127]]

from counting against active duty general officer end strength.
  Senator Bond and I would encourage the Senate Armed Services 
Committee to include this legislation in the fiscal year 1999 defense 
authorization bill.
  I ask unanimous consent that the bill and section-by-section be 
printed in the Record.
  There being no objection, the items were ordered to be printed in the 
Record, as follow:

                                S. 1912

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

     SECTION 1. EXCLUSION OF ADDITIONAL RESERVE COMPONENT GENERAL 
                   AND FLAG OFFICERS FROM LIMITATION ON NUMBER OF 
                   GENERAL AND FLAG OFFICERS WHO MAY SERVE ON 
                   ACTIVE DUTY.

       Section 526(d) of title 10, United States Code, is amended 
     to read as follows:
       ``(d) Exclusion of Certain Reserve Officers.--(1) Subject 
     to paragraph (2), the limitations of this section do not 
     apply to the following reserve component general or flag 
     officers:
       ``(A) A general or flag officer who is on active duty for 
     training.
       ``(B) A general or flag officer who is on active duty under 
     a call or order specifying a period of less than 180 days.
       ``(C) A general or flag officer who is on active duty under 
     a call or order specifying a period of more than 179 days.
       ``(2) The number of general or flag officers of an armed 
     force covered by paragraph (1)(C) at any one time may not 
     exceed the number equal to three percent of the number 
     specified for that armed force under subsection (a).''.
                                  ____


     Authorized Strength: General and Flag Officers on Active Duty


                      section by section analysis

       Section 526(a) limits the number of general and flag 
     officers on active duty in the Army (302), Navy (216), Air 
     Force (279) and Marine Corps (80). Section 526(d), title 10, 
     United States Code provides that these limits do not apply to 
     reserve general or flag officers who are on active duty for 
     training or who are on active duty under a call or order 
     specifying a period of less than 180 days.
       The intent of the proposed language is to exempt Reserve 
     and National Guard general/flag officers from the limits in 
     Section 526(a), up to a maximum of 3% of the total number of 
     general and flag officers currently authorized for each 
     Service.


       reserve/guard general/flag officer exemption justification

       Currently, any Reserve or Guard general officer ordered to 
     active duty for a period of more than 179 days counts against 
     the Service's active duty general and flag officer limit.
       Greater participation by Reserve and Guard senior 
     leadership in the day-to-day planning, decision-making and 
     execution will lead to a more seamless Total Force and will 
     immeasurably benefit both the Reserve and Active Components. 
     Reserve and Guard officers will gain greater depth of 
     experience from their full-time assignment and Active 
     Component will gain greater understanding of the assets the 
     Reserve and Guard community bring to the table.
       This legislation will also encourage the Services to assign 
     Reserve and Guard general and flag officers to a wider 
     variety of non-traditional billets, to include joint 
     assignments.
       This section amends Section 526 by adding a provision to 
     exempt a number of Reserve and Guard general and flag 
     officers serving on full-time active duty from the limits of 
     subsection (a).
                                 ______
                                 
      By Mr. BAUCUS (for himself and Mr. Burns):
  S. 1913. A bill to require the Secretary of the Interior to sell 
leaseholds at the Canyon Ferry Reservoir in the State of Montana and to 
establish a trust and fund for the conservation of fish and wildlife 
and enhancement of public hunting and fishing opportunities in the 
State; to the Committee on Environment and Public Works.


         the montana fish and wildlife conservation act of 1998

  Mr. BAUCUS. Mr. President, I rise today to announce the introduction 
of ``The Montana Fish and Wildlife Conservation Act of 1998.'' I am 
pleased to be joined on this bill by my Colleague from Montana, Senator 
Burns. This bill will help protect important lands in Montana for the 
use and enjoyment of all Americans. It will protect our hunting and 
fishing heritage and ensure that our children and our grandchildren can 
enjoy our great wild lands, just as we do today.

  Canyon Ferry Reservoir sits just east of Helena, Montana. Along the 
north shore of the reservoir, there are 265 cabin sites that have been 
leased by the Bureau of Reclamation for over two decades. On these 
sites, families have built cabins and houses, car ports and garages, 
and planted lawns and gardens. Many families now live in these cabins 
year-round.
  These cabin sites have been a constant management problem for the 
Bureau of Reclamation. In addition to managing the reservoir, the 
Bureau of Reclamation has been forced to play landlord. Like all 
landlords, the Bureau of Reclamation has often been at odds with the 
cabin owners over rental payments and maintenance of the property. This 
conflict has damaged public good will and created administrative 
expenses for the government as appeals are filed to respond to the 
conflict of the day.
  The Montana Fish and Wildlife Conservation Act establishes an 
equitable means of resolving these conflicts and, at the same time, 
provide substantial benefit to the public. This Act proposes to sell 
all 265 cabin sites through a sealed bid process with the minimum bid 
set at fair market value determined in accordance with federal 
appraisal standards. All existing lease arrangements would have to be 
honored by the purchaser of the 265 cabin sites, and each cabin owner 
would have to be given an option to purchase their cabin site from the 
successful bidder. In this way, the Act ensures that the public will 
receive a maximum return on the investment, while at the same time, 
fully protecting the interests of the current leaseholders.
  The Montana Fish and Wildlife Conservation Act of 1998 would use the 
proceeds from this sale to establish two funds for the conservation of 
fish and wildlife and would return 10% of the proceeds to the U.S. 
Treasury.
  The first fund established by this Act, the Canyon Ferry-Missouri 
Trust, would be a perpetual endowment fund with 45% of the proceeds 
from the sale of the cabin sites. It would be used for the public 
acquisition of property at Canyon Ferry Reservoir and along the 
Missouri River and its tributaries upstream to the confluence of the 
Madison, Jefferson, and Gallatin Rivers.
  This trust would be managed by a board consisting of representatives 
of local and statewide sportsmens organizations and local landowners. 
The Canyon Ferry-Missouri River Endowment would be used to purchase 
public access to hunting and fishing sites and to acquire property and 
conservation easements to enhance public hunting and fishing 
opportunities at the reservoir and along the Missouri. All property 
acquired by this trust would be purchased from willing sellers.
  The second fund, Montana Hunter and Fisherman Access Fund would be a 
state-wide fund established with another 45% of the proceeds from the 
sale of the cabin sites. It would be used to acquire public access to 
federal lands in Montana and to acquire property and conservation 
easements to enhance public hunting and fishing opportunities across 
the state. This fund would be managed by the Bureau of Land Management, 
the Forest Service, and Fish and Wildlife Service. This fund could be 
used to acquire property only from willing sellers.
  The remaining 10% of the proceeds from the sale of the cabin sites 
would be returned to the U.S. Treasury.
  The Montana Fish and Wildlife Conservation Act of 1998 presents an 
exciting opportunity for us to ensure that our children can enjoy 
hunting and fishing just as we do. This bill will improve access to 
public lands and will protect important fish and wildlife habitat for 
the benefit of all Americans. It does so by selling cabin sites which 
currently are providing very few benefits to the general public while 
causing significant management conflicts and expenses for the Bureau of 
Reclamation.
  This is a fair bill that is widely supported by cabin owners, local 
land owners, and sportsmen throughout Montana. There are a number of 
issues that still need to be ironed out with this bill. In particular, 
the Canyon Ferry Recreation Association (the association of cabin 
owners) has expressed concern that they may not financially be able to 
step into the role of landlord for those leasees who are unable to 
purchase the cabin sites should be Association be the highest bidder. 
We'll have to work through these and other issues as this bill moves 
forward.
  Nonetheless, Mr. President, I believe that this bill is a good start. 
I look forward to working with my Colleague from Montana and with all 
the members of the Senate to finalize and pass

[[Page S3128]]

this legislation for the benefit of America's fish and wildlife 
heritage.
  Mr. President, I urge my colleagues to join me in supporting this 
important bill.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1913

       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 ``Montana Fish and Wildlife 
     Conservation Act of 1998''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) it is in the interest of the United States for the 
     Secretary of the Interior to sell leaseholds at Canyon Ferry 
     Reservoir in the State of Montana for fair market value if 
     the proceeds from the sale are used--
       (A) to establish a trust to provide a permanent source of 
     funding to acquire access or other property interests from 
     willing sellers to conserve fish and wildlife and to enhance 
     public hunting and fishing opportunities at the Reservoir and 
     along the Missouri River;
       (B) to establish a fund to be used to acquire access or 
     other property interests from willing sellers to increase 
     public access to Federal land in the State of Montana and to 
     enhance hunting and fishing opportunities; and
       (C) to reduce the Pick-Sloan project debt for the Canyon 
     Ferry Unit;
       (2) existing trusts in the State of Montana, including the 
     Rock Creek Trust and the Montana Power Company Missouri-
     Madison Trust, have provided substantial public benefits by 
     conserving fish and wildlife and by enhancing public hunting 
     and fishing opportunities in the State of Montana;
       (3) many Federal lands in the State of Montana do not have 
     suitable public access, and establishing a fund to acquire 
     easements to those lands from willing sellers would enhance 
     public hunting and fishing opportunities in the State of 
     Montana;
       (4) the sale of the leaseholds at the Reservoir will reduce 
     Federal payments in lieu of taxes and associated management 
     expenditures in connection with the ownership by the Federal 
     Government of the leaseholds while increasing local tax 
     revenues from the new owners of the leased lots; and
       (5) the sale of the leaseholds at the Reservoir will reduce 
     expensive and contentious disputes between the Federal 
     Government and leaseholders, while ensuring that the Federal 
     Government receives full and fair value for the acquisition 
     of the property.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) CFRA.--The term ``CFRA'' means the Canyon Ferry 
     Recreation Association, Incorporated, a Montana corporation.
       (2) Fund.--The term ``Fund'' means the Montana Hunter and 
     Fisherman Access Fund established under section 6(a).
       (3) Lessee.--The term ``lessee'' means the holder of a 
     leasehold described in section 4(b) as of the date of 
     enactment of this Act, and the holder's heirs, executors, and 
     assigns of the holder's leasehold interest.
       (4) Purchaser.--The term ``Purchaser'' means the person or 
     entity that purchases the 265 leaseholds under section 4.
       (5) Reservoir.--The term ``Reservoir'' means the Canyon 
     Ferry Reservoir in the State of Montana.
       (6) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.
       (7) Trust.--The term ``Trust'' means the Canyon Ferry-
     Missouri River Trust established under section 5(a).

     SEC. 4. SALE OF LEASEHOLDS.

       (a) In General.--Subject to subsection (c) and 
     notwithstanding any other provision of law, the Secretary 
     shall sell at fair market value--
       (1) all right, title, and interest of the United States in 
     and to all (but not fewer than all) of the leaseholds 
     described in subsection (b), subject to valid existing 
     rights; and
       (2) easements for--
       (A) vehicular access to each leasehold;
       (B) access to and the use of 1 dock per leasehold; and
       (C) access to and the use of all boathouses, ramps, 
     retaining walls, and other improvements for which access is 
     provided in the leases as of the date of this Act.
       (b) Description of Leaseholds.--
       (1) In general.--The leaseholds to be conveyed are--
       (A) the 265 cabin sites of the Bureau of Reclamation 
     located along the northern portion of the Reservoir in 
     portions of sections 2, 11, 12, 13, 15, 22, 23, and 26, 
     Township 10 North, Range 1 West; plus
       (B) any small parcels contiguous to the leaseholds (not 
     including shoreline property or property needed to provide 
     public access to the shoreline of the Reservoir) that the 
     Secretary determines should be conveyed in order to eliminate 
     inholdings and facilitate administration of surrounding land 
     remaining in Federal ownership.
       (2) Acreage; legal description.--The acreage and legal 
     description of each property shall be agreed on by the 
     Secretary and the Purchaser.
       (c) Purchase Process.--
       (1) In general.--The Secretary shall--
       (A) solicit sealed bids for all of the leaseholds; and
       (B) subject to paragraph (2), sell the leaseholds to the 
     bidder that submits the highest bid above the minimum bid 
     determined under paragraph (2).
       (2) Minimum bid.--Before accepting bids, the Secretary, in 
     consultation with interested bidders, shall establish a 
     minimum bid based on an appraisal of the fair market value of 
     the leaseholds, exclusive of the value of private 
     improvements made by the leaseholders before the date of the 
     conveyance, by means of an appraisal conducted in accordance 
     with the appraisal procedures used under Federal law, 
     including, to the extent practicable, the procedures 
     specified in sections 2201.3 through 2201.3-5 of title 43, 
     Code of Federal Regulations.
       (3) Right of first refusal.--If the highest bidder is other 
     CFRA, CFRA shall have the right to match the highest bid and 
     purchase the leaseholds at a price equal to the amount of 
     that bid.
       (d) Conditions.--
       (1) Consideration.--As consideration for the conveyance 
     under subsection (a), the Purchaser shall--
       (A) contribute to the Trust the amount that is equal to 45 
     percent of the purchase price of the leaseholds;
       (B) contribute to the Fund the amount that is equal to 45 
     percent of the purchase price of the leaseholds; and
       (C) pay the Secretary for deposit in the Treasury of the 
     United States an amount that is equal to 10 percent of the 
     purchase price of the leaseholds.
       (2) No charitable deduction.--The Purchaser, any owner, 
     member, or other interest holder in the Purchaser, and any 
     leaseholder shall not be entitled to a charitable deduction 
     under the Internal Revenue Code of 1986 by reason of the 
     making of the contribution under subparagraph (A) or (B) of 
     paragraph (1).
       (3) Option to purchase.--
       (A) In general.--The Purchaser shall give each leaseholder 
     of record of a leasehold conveyed under this section an 
     option to purchase the leasehold at fair market value.
       (B) Nonpurchasing lessees.--
       (i) Right to continue lease.--A lessee that is unable or 
     unwilling to purchase a property shall be permitted to 
     continue to lease the property for fair market value rent 
     under the same terms and conditions as the existing leases, 
     including the right to renew the term of the existing lease 
     for 2 consecutive 5-year terms.
       (ii) Compensation for improvements.--If a lessee declines 
     to purchase a leasehold, the Purchaser shall compensate the 
     lessee for the full market value of the improvements made to 
     the leasehold.
       (4) Historical use.--The Purchaser shall honor the existing 
     property descriptions and historical use restrictions for the 
     leaseholds, as determined by the Bureau of Reclamation.
       (e) Administrative Costs.--Any administrative cost incurred 
     by the Secretary incident to the conveyance under subsection 
     (a) shall be reimbursed by the Purchaser.

     SEC. 5. CANYON FERRY-MISSOURI RIVER TRUST.

       (a) Establishment.--The Secretary shall encourage 
     establishment of a nonprofit charitable permanent perpetual 
     trust, similar in structure and purpose to the existing 
     trusts referred to in section 1(2), to be known as the 
     ``Canyon Ferry-Missouri River Trust'', to provide a permanent 
     source of funding to acquire land and interests in land from 
     willing sellers at fair market value to conserve fish and 
     wildlife, enhance public hunting and fishing opportunities, 
     and improve public access at the Reservoir and along the 
     Missouri River and its tributaries from the confluence of the 
     Madison River, Gallatin River, and Jefferson River downstream 
     to the Reservoir.
       (b) Board of Trustees.--
       (1) Membership.--The trust referred to in subsection shall 
     have a Board of Trustees consisting of 1 representative of 
     each of--
       (A) local agricultural landowners;
       (B) a local hunting organization;
       (C) a statewide hunting organization;
       (D) a fisheries conservation organization; and
       (E) a nonprofit land trust or environmental organization.
       (2) Consultation.--In managing the Trust, the Board of 
     Directors shall consult with representatives of--
       (A) the Bureau of Reclamation;
       (B) the Forest Service;
       (C) the Bureau of Land Management;
       (D) the United States Fish and Wildlife Service;
       (E) the Montana Department of Fish, Wildlife, and Parks;
       (F) the Montana Science Institute at Canyon Ferry, Montana; 
     and
       (G) local governmental bodies (including the Lewis and 
     Clark and Broadwater County Commissioners).
       (c) Use.--
       (1) Principal.--The principal amount of the Trust shall be 
     inviolate.
       (2) Earnings.--Earnings on amounts in the Trust shall be 
     used to carry out subsection (a) and to administer the Trust.
       (d) Management.--Land and interests in land acquired under 
     this section shall be managed for the purposes described in 
     subsection (a).

     SEC. 6. MONTANA HUNTER AND FISHERMAN ACCESS FUND.

       (a) Establishment.--There is established in the Treasury of 
     the United States an interest-bearing account, to be known as 
     the

[[Page S3129]]

     ``Montana Hunter and Fisherman Access Fund'', for the purpose 
     of acquiring land and interests in land in the State of 
     Montana from willing sellers at fair market value to--
       (1) improve public access to Federal land in the State of 
     Montana for hunting or fishing; and
       (2) enhance public hunting and fishing opportunities in the 
     State of Montana through the conservation of fish and 
     wildlife.
       (b) Use.--
       (1) Principal.--The principal amount of the Fund shall be 
     inviolate.
       (2) Earnings.--
       (A) In general.--Earnings on amounts in the Fund shall be 
     used to carry out subsection (a).
       (B) Administration.--The earnings shall be used at the 
     joint direction of--
       (i) the Chief of the Forest Service;
       (ii) the Director of the Bureau of Land Management; and
       (iii) the Director of the United States Fish and Wildlife 
     Service.
       (c) Management.--Land and interests in land acquired under 
     this section shall be managed for the purposes described in 
     subsection (a).
                                 ______
                                 
      By Mr. GRASSLEY:
  S. 1914. A bill to amend title 11, United States Code, provide for 
business bankruptcy reform, and for other purposes; to the Committee on 
the Judiciary.


               the business bankruptcy reform act of 1998

  Mr. GRASSLEY. Mr. President, today I am introducing ``The Business 
Bankruptcy Reform Act of 1998.'' As Members of this body may remember, 
the National Bankruptcy Review Commission submitted a list of 
recommendations to Congress in October of last year. So far, the public 
has tended to focus on the consumer bankruptcy recommendations, which 
unfortunately would have made it easier to get into bankruptcy and 
would have given consumers even more of an upper hand. I think that 
these recommendations were fatally flawed, and that's why I introduced 
the Consumer Bankruptcy Reform Act with Senator Durbin last year to 
tighten up the bankruptcy system and provide new consumer protections 
when creditors use abusive tactics.
  The legislation I am introducing today will make many badly-needed 
reforms to the business provisions of the bankruptcy code. This 
legislation will provide--for the first time ever--new protections for 
patients of hospitals and HMOs and nursing homes that declare 
bankruptcy. Under current law, the bankruptcy process is oriented 
toward protecting the interests of creditors and helping the debtor 
corporation reorganize. And that is all we need most of the time.
  But hospitals and HMOs and nursing homes are different. Patients are 
uniquely vulnerable and Congress needs to take special care to ensure 
that patients are protected during the bankruptcy process. For that 
reason, this bill allows a bankruptcy judge to appoint a patient 
ombudsman to make sure that the bankruptcy process is fair to patients. 
If the ombudsman determines that the quality of patient care is 
declining, he must notify the bankruptcy court so that corrective 
action can be taken.
  This legislation also requires that the bankruptcy trustee ensure 
patients are transferred to other hospitals when a health care provider 
is winding down. Under current bankruptcy law, there's no such 
requirement. Under current law, patients could just be thrown out and 
have nowhere to go. Congress can't let that happen.
  Importantly, to the extent that there are some State laws which 
already require a State agency to place patients when health care 
providers go under, this legislation will allow those agencies to 
recoup their expenses from the estate of the bankrupt health care 
provider. Otherwise, the bankruptcy code forces State taxpayers to pay 
for something which should be paid for by the defunct health care 
provider.
  Following a recommendation of the National Bankruptcy Review 
Commission, this legislation provides an important new protection for 
employee health care and pensions. Under current law, if money is 
withheld from wages to pay for health care insurance or pension 
contributions, but a company declares bankruptcy before the withheld 
money is actually transferred, then the bankruptcy code prohibits the 
company from transferring this money. In practical terms, this means 
that workers lose their health insurance and forfeit pension 
contributions. I think this is wrong. So, my legislation will create a 
special carve out so that withheld money can go for its intended 
purpose.
  The Business Bankruptcy Reform Act also makes several changes to the 
way securities transactions are treated under the bankruptcy code. Many 
of these changes are supported by the administration. I would call my 
colleagues' attention to one provision in particular. As we all know, 
home mortgage rates are at an all time low, allowing many Americans to 
purchase homes for the first time or to move into a larger home to 
accommodate a growing family. One factor in keeping mortgage interest 
rates very low is the existence of a robust secondary market where 
mortgage lenders can spread the risk by issuing securities backed up by 
home mortgages. With the risk spread by a securities market, mortgage 
bankers can make loans at lower interest rates.
  Unfortunately, a provision of the bankruptcy code threatens to 
undermine the viability of this important secondary market. And if the 
secondary market dries up, then lenders will have to raise interest 
rates. Under current law, it isn't clear that the income stream going 
to the purchaser of the mortgage-backed securities will continue if the 
lender declares bankruptcy. In my bill, we expressly say that the 
income stream belongs to the securities purchaser and not the bankrupt 
lender. This change will help ensure that the secondary market stays 
strong by providing much-needed certainty to purchasers of mortgage-
backed and other asset-backed securities.
  On another topic, this legislation enacts the model law on 
international bankruptcies. When I held a hearing on international 
bankruptcies before my subcommittee last year, I learned that many 
times bankruptcy proceedings in this county are hampered because 
foreign countries won't cooperate with our bankruptcy courts. This 
model law would provide for standard procedures for recognizing and 
cooperating with foreign bankruptcy proceedings. If other countries--
especially our trading partners--follow our lead in enacting this model 
law, then our bankruptcy proceedings will be treated fairly and 
American creditors will be able to get a fair shake for the first time 
when trying to collect from a foreign corporation which has declared 
bankruptcy.
  The development of bankruptcy systems is a critically important 
factor in ensuring that international trade will continue to expand and 
benefit the United States economy. Many international insolvency 
specialists tell me that the lack of a good bankruptcy system in the 
Asian countries is making the Asian financial crisis even worse. When 
we finally get to consider the IMF funding bill, I intend to offer an 
amendment which would require the IMF to push for meaningful bankruptcy 
reforms when they provide loans to countries in economic trouble. I 
hope that my colleagues will support me in this effort.
  Finally, the legislation I'm introducing today will provide for 
special fast-track procedures for businesses that declare bankruptcy 
which have less than $5 million in debt. Right now, these cases often 
languish for years in bankruptcy without a real hope of reorganizing. I 
believe that the bankruptcy code should identify cases which have no 
realistic chance of reorganizing and get them into chapter 7 as quickly 
as possible. In this way, creditors will get more of what they are 
owed. Most of these special fast-track proceedings were recommended by 
the Bankruptcy Review Commission, although I've added some changes to 
reduce the chances that clever bankruptcy lawyers will find a way to 
keep a company in chapter 11 which should be liquidated. The Business 
Bankruptcy Reform Act also contains special tax provisions so that 
taxing authorities will receive effective notice of a bankruptcy.
  Mr. President, I believe that this bill will do much good for 
patients, for creditors and for all Americans whose lives are 
increasingly affected by business bankruptcies. I hope that we can pass 
this bill in this Congress.
                                 ______
                                 
      By Mr. LEAHY:
  S. 1915. A bill to amend the Clean Air Act to establish requirements 
concerning the operation of fossil fuel-fired

[[Page S3130]]

electric utility steam generating units, commercial and industrial 
boiler units, solid waste incineration units, medical waste 
incinerators, hazardous waste combustors, chlor-alkali plants, and 
Portland cement plants to reduce emissions of mercury to the 
environment, and for other purposes; to the Committee on Environment 
and Public Works.


            Omnibus Mercury Emissions Reduction Act of 1998

  Mr. LEAHY. Mr. President, today I am introducing the ``Omnibus 
Mercury Emissions Reduction Act of 1998.'' As United States Senators, 
we all have a responsibility to build a nation for our children. As a 
recent grandfather, this commitment has never been more real for me. I 
am introducing this comprehensive piece of legislation to eliminate 
mercury--one of the last remaining poisons without a specific control 
strategy--from our air, our waters and our forests. By eliminating 
mercury from our natural resources, we will protect our nation's most 
important resource--our children and grandchildren.
  As we learned from the campaign to eliminate lead, our children are 
at the greatest risk from these poisons. I often ask myself how many 
Albert Einsteins have we lost in the last generation because of the 
toxics they have been exposed to? Just as with lead, we know that 
mercury has much graver effects on children at very low levels then it 
does on adults. The level of lead pollution we and our children breathe 
today is one-tenth what it was a decade ago. That figure by itself is a 
tribute to the success of the original Clean Air Act. I want to achieve 
the same results with mercury.
  Mercury is toxic in every known form and of utterly no nutritional 
value. At high enough levels it poisons its victims in terribly tragic 
ways. In Japan, victims of mercury poisoning came to be known as 
suffering from Minimata Disease, which took its name from the small 
Minimata Bay in which they caught fish for their food.
  For years, the Chisso Company discharged mercury contaminated 
pollution in the Bay, which was taken into the flesh of fish and then 
the people who ate them. Their disease was frightfully painful, causing 
tremors and paralysis, and sometimes leading to death. Thankfully, 
discharges of mercury like those in Minimata Bay have been eliminated. 
But a torrent of air pollution still needlessly pours this heavy metal 
into the air of North America, poisoning lakes and streams, forests and 
fields and--most importantly--our children. Mercury control needs to be 
a priority now because we know, without a doubt, of the neurological 
damage it causes.
  This is not to say that men, women and children are doubled over in 
agony as they were three decades ago in Japan. But wildlife are being 
killed--we know that endangered Florida panthers have been fatally 
poisoned by mercury and that loons are endangered as well. In Lake 
Champlain we now have fish advisories for walleye, trout and bass even 
though we have relatively no mercury emissions within our own state 
borders.
  Instead, we Vermonters are exposed to mercury and other pollutants 
that blow across Lake Champlain and the Green Mountains every day from 
other regions of the country. The waste incinerators and coal-fired 
power plants are not accountable to the people of Vermont and therefore 
a federal role is needed to control the pollution.
  That is part of the reason voters send us here. They expect Members 
of the Congress to determine what is necessary to protect the public 
health and the environment nationally, then require it. And in many 
cases, perhaps most, we have done that. But not with respect to 
mercury.
  Mr. President, what I propose is that we put a stop to this poisoning 
of America. It is unnecessary, and it is wrong. Mercury can be removed 
from products, and it has been done. Mercury can be removed from coal-
fired powerplants, and it should be done. With states deregulating 
their utility industries, this is the best opportunity to make sure 
powerplants begin to internalize the cost of their pollution. We cannot 
afford to give them a free ride into the next century at the expense of 
our children's health.
  So, too, should mercury be purged from chlor alkali plants, medical 
waste incinerators, municipal combustion facilities, large industrial 
boilers, landfills, lighting fixtures and other known sources.
  My bill directs EPA to set mercury emission standards for the largest 
sources of mercury emissions. The bill requires reducing emissions by 
95 percent, but it also lets companies choose the best approach to meet 
the standard at their facility whether through the use of better 
technology, cleaner fuels, process changes, or product switching.
  We will hear a lot of rhetoric about how much implementing this bill 
will cost. In advance of those complaints I want to make two points. 
First, when we were debating controls for acid rain we heard a lot 
about the enormous cost of eliminating sulphur dioxide. But what we 
learned from the acid rain program, is that when you give industry a 
financial incentive to clean up their act they will find the cheapest 
way. More often than not, assertions about the cost of controlling 
pollution grossly overestimate and distort reality. If you look at 
electricity prices of major utilities since the acid rain program was 
implemented, their rates have remained below the national average and 
some have actually decreased--even without adjusting for inflation.
  Secondly, and most importantly, the bottom line here should not be 
the cost of controlling mercury emissions, but the cost of NOT 
controlling mercury. While we may not be able to calculate how many 
Einstein's we have lost, if we lose one the price has been too high.
                                 ______
                                 
      By Mr. DURBIN:
  S. 1916. A bill for the relief of Marin Turcinovic, and his fiancee, 
Corina DeChalup; to the Committee on the Judiciary.


                       private relief legislation

  Mr. DURBIN. Mr. President, I rise today to introduce a private bill 
for the relief of Marin Turcinovic of Croatia and his wife Corina 
DeChalup of France. My bill would grant permanent resident status to 
Marin and Corina, affording them the legal security they need to 
rebuild their lives in this country.
  Marin Turcinovic first arrived in the United States from Croatia in 
January 1990. He was admitted on an H-1 visa as a member of the band 
Libertas. On February 8, 1990, during the period of his authorized 
stay, Marin was hit by a car in Fairview, New Jersey. Both his legs 
were shattered. His spinal cord was severed, leaving him paralyzed 
below the neck. He will probably never walk again. His then-fiancee, 
Corina DeChalup of France, immediately came to the United States. Both 
Marin and Corina have been in the United States since their initial 
entries, and neither now has legal status.
  Marin requires 24-hour medical care for his survival. An insurance 
settlement from the car accident litigation provides Marin with 
lifetime medical and rehabilitative care, in a specially modified house 
located in the Beverly community of Chicago. According to Marin's 
lawyers, the insurance settlement that provides for Marin's lifetime 
shelter and medical care would not cover him at another location. A 
medical malpractice suit against the doctors who initially provided 
care to Marin is pending.
  Corina and Marin married in February 1996, 6 years after his 
accident. Corina is an essential part of Marin's life. She has been 
with Marin throughout his ordeal and has been instrumental in 
coordinating his medical care. She has directly provided care for 
Marin, and he could never have reached the degree of recovery he now 
enjoys without her support.
  Before arriving in the U.S., Corina, a university graduate, worked as 
a tour guide for a Yugoslavian tourist agency. Although her days are 
primarily devoted to Marin, she has the skills and desire to find part-
time employment and would like to obtain authorization to work.
  According to Marin and Corina's lawyer, Corina has no way to legally 
gain permanent resident status in the U.S. Because she entered the U.S. 
under the visa waiver pilot program, she was subject to an order of 
deportation, without the right to an administrative hearing, once she 
overstayed her 90-day authorized admission in February 1990. Since 
1994, she has received a stay of deportation in 1-year increments. She 
cannot currently travel to see her family in

[[Page S3131]]

France, and she has no assurance that her stay will be renewed from 1 
year to the next.
  Marin was placed in deportation proceedings in 1997 at his request. 
This allowed him to seek a suspension of deportation, a legal remedy 
that in the past has resulted in permanent resident status. Although 
Marin's application was granted, the grant is conditional. If Marin's 
grant does not fall within the annual quota set by the Illegal 
Immigration Reform and Immigration Responsibility Act of 1996, it is 
unclear to what status he will revert. There is a possibility that 
Marin would be issued an order of voluntary departure.
  Corina's status depends on Marin. If granted permanent resident 
status, Marin will be able to petition for Corina, but she will face a 
4- to 5-year wait before qualifying for resident status, herself.
  Mr. President, 8 years ago, fate tragically changed forever the lives 
Marin Turcinovic of Croatia and Corina DeChalup of France. A terrible 
accident in the United States left Marin permanently injured, making 
his return home impossible. Fortunately for Marin, he had the love and 
support of Corina, without whom he may not have made it this far. Given 
the tremendous adversity that Marin and Corina already face on a day-
to-day basis, I believe it appropriate for Congress to grant them 
permanent resident status. Such status would clear up much of the 
uncertainly that currently clouds their future, and would allow Marin 
and Corina to rebuild their lives in our country with confidence.
  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. 1916

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

     SECTION 1. PERMANENT RESIDENCE.

       Notwithstanding any other provision of law, for purposes of 
     the Immigration and Nationality Act (8 U.S.C. 1101 et seq.), 
     Marin Turcinovic and his fiancee, Corina Dechalup, shall be 
     held and considered to have been lawfully admitted to the 
     United States for permanent residence as of the date of the 
     enactment of this Act upon payment of the required visa fees.

     SEC. 2. REDUCTION OF NUMBER OF AVAILABLE VISAS.

       Upon the granting of permanent residence to Marin 
     Turcinovic and his fiancee, Corina Dechalup, as provided in 
     this Act, the Secretary of State shall instruct the proper 
     officer to reduce by the appropriate number during the 
     current fiscal year the total number of immigrant visas 
     available to natives of the country of the aliens' birth 
     under section 203(a) of the Immigration and Nationality Act 
     (8 U.S.C. 1153(a)).
                                 ______
                                 
      By Mr. DURBIN (for himself, Mr. Chafee, Mr. Reed, and Mrs. 
        Boxer):
  S. 1917. A bill to prevent children from injuring themselves and 
others with firearms; to the Committee on the Judiciary.


                the child firearm access prevention act

  Mr. DURBIN. Mr. President, I rise today with Senators Chaffee, Reed 
and Boxer, to introduce the Child Firearm Access Prevention Act.
  The tragedy which occurred in Jonesboro, AR, last week raises many 
questions. Two come to mind immediately. Why do children kill? I do not 
know the answer to that. I have heard a variety of opinions from people 
who suggest that violent television and violent movies are somehow 
contributing to this. There are others who say, if the children would 
just pray in school, it would make all the difference in the world. 
Some look to the families more than the schools; others think the 
schools have a greater role to play.
  We will debate this at length, and I am sure many of us will come up 
with a lot of different explanations as to why children reach the point 
in their young lives where they would take the life of another.
  But the tragedy in Jonesboro raised another question which I think we 
can address because it is a simpler question. How do children at that 
young age come to possess lethal weapons? Think about it. An 11-year-
old and a 13-year-old with 10 firearms--rifles, shotguns, and handguns, 
and 3,000 rounds of ammunition--went into the woods behind that middle 
school, tricked the students out with a fake fire alarm, opened fire 
and shot off somewhere in the range of 30 to 40 rounds before they were 
finally stopped.
  Four little girls were killed. A teacher, who deserves all of our 
recognition and praise for her courage, stood in the line of fire to 
protect one of those little girls and lost her own life. This teacher, 
the mother of a 2-year-old, lost her life defending her students.
  How do kids come into possession of firearms? They do not buy them. 
In most States it is unthinkable that they would even approach a 
counter and try. And yet, day after day in America there is further 
evidence of children, younger and younger, being found with firearms.
  The day after the Jonesboro, AR, tragedy, in Cleveland, OH, a 4-year-
old showed up at a day-care center with a loaded handgun.
  In my home State of Illinois, in Marion, IL, a high school student 
showed up at school the next day with a handgun.
  In Daly City, CA, the day after Jonesboro, a 13-year-old was arrested 
for attempting to murder his principal with a semiautomatic pistol.
  There is something we can do about this. I am not sure that it will 
solve the problem completely, but it can help. Fifteen States have 
already recognized this problem and done something about it. These 
States have passed a child access prevention law which is known as a 
CAP law, saying to those who purchase and own handguns, it is not 
enough for you to follow the law in purchasing them and to use those 
guns safely; you have another responsibility. If you are going to own a 
firearm in your home, you have to keep it safely and securely so that 
children do not have access to it.
  And these laws are effective. Florida was the first state to pass a 
CAP law in 1989. The following year, unintentional shooting deaths of 
children dropped by 50 percent. Moreover, a study published in the 
Journal of the American Medical Association in October 1997 found that 
there was a 23% decrease in unintentional firearm related deaths among 
children younger than 15 in those states that had implemented CAP laws. 
According to the Journal of the American Medical Association, if all 50 
states had CAP laws during the period of 1990-1994, 216 children might 
have lived.
  Should we consider these state laws as a national model? I think the 
obvious answer is yes, because the tragedy in Jonesboro, which we will 
not forget for a long, long time, unfortunately, is not unique. Every 
day in America 14 young people, ages 19 and under, are killed in gun 
homicides, suicides and unintentional shootings, with many more 
wounded.
  The scourge of gun violence frequently attacks the most helpless 
members of our society--our children.
  Mr. President, what I propose today is Federal legislation that will 
apply to every State, not just 15, but every State. And this is what it 
says. If you want to own a handgun, a rifle or shotgun, and it is legal 
to do so, you can; but if you own it, you have a responsibility to make 
certain that it is kept securely and safely.
  You may buy a trigger lock. Senator Herb Kohl of Wisconsin has a 
proposal that all handguns be sold with trigger locks. I support it. I 
am a cosponsor of it. It makes sense.
  How many times do you read in the paper, how many times do you listen 
on TV, to kids with their playmates and the gun goes off and someone is 
killed? A trigger lock, as Senator Kohl has proposed, is sensible. It 
should be required. It shouldn't even be debated. I think that 
legislation will go a long way toward reducing gun violence.
  But beyond that proposal, the legislation I propose today, says to 
every gunowner, if it is not a trigger lock, put that gun in a place 
where that child cannot get to it.
  As to these two kids, 11 and 13 years old, God only knows what was 
going through their minds when they were setting out to get the guns to 
go out and start shooting. They first stopped at the parents of one of 
the kids and wanted to pick up that parents' guns. That parent had the 
guns under lock and key in a vault and they couldn't get to them. So 
they thought about it and said, wait a minute, my grandfather has some, 
too; let's go over to his place. And that is where they came up with 
the weapons and the ammunition.

[[Page S3132]]

  In one instance, one parent had taken the necessary steps to take the 
guns and keep them away from kids. Sadly, it appears--and I just say 
``appears'' because I do not know all the details--in another case that 
did not happen.
  Now a lot of people will say to me, ``There they go again, those 
liberals on Capitol Hill. Another bill, another law to infringe on 
second amendment rights.'' Oh, I know I will hear from the folks from 
the National Rifle Association, all the other gun lobbies, screaming 
bloody murder about the second amendment.
  But look at the 15 States that have already passed these child access 
prevention laws, to protect kids, to say to gun owners ``you have a 
special responsibility.'' You will not find a list of the most liberal 
States in America. The first State to pass this legislation in 1989 was 
Florida. The list goes on: Connecticut, Iowa, California, Nevada, New 
Jersey, Virginia, Wisconsin, Hawaii, Maryland, Minnesota, North 
Carolina, Delaware, Rhode Island, and in 1995, the last State to pass a 
child access prevention law, certainly no bleeding heart State by any 
political definition, was Texas. The Texas law says it is ``unlawful to 
store, transport or abandon an unsecured firearm in a place where 
children are likely to be and can obtain access to it,'' and it is a 
criminal misdemeanor if you do it.
  I am going to ask my colleagues in the Senate to not only return home 
during this recess and to not only witness those sad events on 
television--the funerals in Jonesboro, the tributes--but to also 
resolve to do something about it. That is what we are here for. That is 
why we were elected to the Senate and the House, not just to be sad as 
we should be, but to do something about it. Not to infringe on people's 
right to own firearms, but to say ``Own them responsibly, put them 
securely in your homes, keep them safely, keep them away from 
children.''
  Mark my words, my friends, and you know this from human experience, 
no matter where you hide a gun or a Christmas gift, a kid is going to 
find it. You can stick it in a drawer and say, ``Oh, they will never 
look behind my socks, that is the last place in the world,'' or up on 
some shelf in the closet and believe your child can't reach that, but 
you know better. You know when you are gone and the house is empty 
those kids are scurrying around and looking in those hiding places. So 
I hope we can address this issue.
  First, Senator Kohl's legislation for these child safety devices, 
these trigger locks, will help. But then take the extra step, follow 
these 15 States and enact a federal law.

  But please, let this Senate and this House, before we leave this 
year, do something to make certain that those troubled children cannot 
get their hands on a firearm. I think every parent in America, 
particularly those of children of school age, paused at least for a 
moment after they heard about Jonesboro and thought, could it happen to 
my son, my daughter, my grandson, my granddaughter? The sad reality of 
life in modern America, is, yes, it could. There are so many weapons 
being kept so carelessly that it could happen to any of us or any of 
our children in virtually any school in America.
  Mr. President, I know that the Senate has a very busy schedule and 
limited opportunity this year, but I hope as part of our work we will 
let the lesson of the tragedy of Jonesboro result in legislation that 
will be designed to protect children and schoolteachers and innocent 
people in the future.
  Mr. President, I ask unanimous consent that a copy of the legislation 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1917

         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 ``Child Firearm Access 
     Prevention Act''.

     SEC. 2. CHILDREN AND FIREARMS SAFETY.

       (a) Secure Gun Storage or Safety Device.--Section 921(a) of 
     title 18, United States Code, is amended by adding at the end 
     the following:
       ``(34) The term `secure gun storage or safety device' 
     means--
       ``(A) a device that, when installed on a firearm, prevents 
     the firearm from being operated without first deactivating or 
     removing the device;
       ``(B) a device incorporated into the design of the firearm 
     that prevents the operation of the firearm by anyone not 
     having access to the device; or
       ``(C) a safe, gun safe, gun case, lock box, or other device 
     that is designed to be or can be used to store a firearm and 
     that can be unlocked only by means of a key, a combination, 
     or other similar means.''.
       (b) Prohibition and Penalties.--Section 922 of title 18, 
     United States Code, is amended by adding at the end the 
     following:
       ``(y) Prohibition Against Giving Juveniles Access to 
     Certain Firearms.--
       ``(1) Definition of juvenile.--In this subsection, the term 
     `juvenile' means an individual who has not attained the age 
     of 18 years.
       ``(2) Prohibition.--Except as provided in paragraph (3), 
     any person that--
       ``(A) keeps a loaded firearm, or an unloaded firearm and 
     ammunition for the firearm, any of which has been shipped or 
     transported in interstate or foreign commerce or otherwise 
     substantially affects interstate or foreign commerce, within 
     any premise that is under the custody or control of that 
     person; and
       ``(B) knows, or reasonably should know, that a juvenile is 
     capable of gaining access to the firearm without the 
     permission of the parent or legal guardian of the juvenile;
     shall, if a juvenile obtains access to the firearm and 
     thereby causes death or bodily injury to the juvenile or to 
     any other person, or exhibits the firearm either in a public 
     place, or in violation of subsection (q), be imprisoned not 
     more than 1 year, fined not more than $10,000, or both.
       ``(3) Exceptions.--Paragraph (2) does not apply if--
       ``(A) the person uses a secure gun storage or safety device 
     for the firearm;
       ``(B) the person is a peace officer, a member of the Armed 
     Forces, or a member of the National Guard, and the juvenile 
     obtains the firearm during, or incidental to, the performance 
     of the official duties of the person in that capacity;
       ``(C) the juvenile obtains, or obtains and discharges, the 
     firearm in a lawful act of self-defense or defense of 1 or 
     more other persons; or
       ``(D) the person has no reasonable expectation, based on 
     objective facts and circumstances, that a juvenile is likely 
     to be present on the premises on which the firearm is 
     kept.''.
       (c) Role of Licensed Firearms Dealers.--Section 926 of 
     title 18, United States Code, is amended by adding at the end 
     the following:
       ``(d) The Secretary shall ensure that a copy of section 
     922(y) appears on the form required to be obtained by a 
     licensed dealer from a prospective transferee of a 
     firearm.''.
       (d) No Effect on State Law.--Nothing in this section or the 
     amendments made by this section shall be construed to preempt 
     any provision of the law of any State, the purpose of which 
     is to prevent children from injuring themselves or others 
     with firearms.
                                 ______
                                 
      By Mr. DORGAN (for himself, Mr. Daschle, Mr. Wellstone, Mr. 
        Johnson, Mr. Conrad, Mr. Harkin, and Mr. Baucus):
  S. 1918. A bill to require the Secretary of Agriculture to make 
available to producers of the 1998 and subsequent crops of wheat and 
feed grains nonrecourse loans that provide a fair return to the 
producers in relation to the cost of production; to the Committee on 
Agriculture, Nutrition, and Forestry.


             the cost of production safety net act of 1998

  Mr. DORGAN. Mr. President, we now have had two crop years under the 
1996 farm law and soon farmers across this country will be planting 
their spring crops for the third year of this seven-year farm law. It 
is time to take a serious look at how this new farm law, often called 
the Freedom to Farm law, is working. Is it achieving the goals and 
promises that were made? What is happening to our nation's system of 
family farm agriculture under this law? Is it creating new hope and new 
opportunities for a new generation of family farms on the land? Or is 
it pushing more and more family farm operators off the land and further 
depopulating rural America?

  Launched during a period of high grain prices with a flurry of 
optimism and hope, the Freedom to Farm law is taking family farmers 
down a very rocky path and even more uncertain future. The initially 
generous farm payments that fueled its passage are now giving way to 
the harsher realities of not having a working safety net.
  When poor crops, low prices, escalating production costs, and 
abnormal weather all arrive at the same time, the current farm law, 
with its capped commodity loan rates and declining transition payments, 
is poorly suited to respond to the disastrous conditions facing many of 
our farm families. During the debate of the 1996 farm bill, I said that 
the time would come when

[[Page S3133]]

farm commodity prices would fall well below the costs of production and 
we would need a working safety net for our nation's family farmers. In 
fact, the failure to have a working safety net was the primary reason 
that many of us could not support the 1996 farm bill.
  The proponents of the Freedom to Farm law promised that a second look 
would be taken if rural America ran into trouble under their farm bill. 
As we begin the third crop year under this farm law, there is no 
question that large portions of rural America are in serious trouble. 
The economic crisis in the countryside is being demonstrated every week 
by the hundreds of farm auction notices that appear in rural America's 
newspapers, particularly our agricultural weeklies. The sheer volume of 
these farm auctions demands that the farm bill debate be reopened, so 
that we can make the needed mid-course corrections to this farm law.
  Behind the escalating exodus of farmers this spring is the underlying 
issue of farm commodity prices. The value of North Dakota's spring 
wheat and barley crops this past year have each dropped by 41 percent 
from the previous year. This is a combined total of $659 million less 
than the year before. That's a tremendous drain of money out of farmers 
pockets and North Dakota's farm economy. It is why our farms are not 
cash flowing and our bankers are having more and more difficulty in 
financing their borrowers for another year.
  After talking with North Dakota farmers and the agricultural 
community, I'm convinced the problem is not just the blizzards and 
floods that we have experienced in the past few years, nor is it just 
confined to North Dakota.
  There are a number of underlying problems that must be addressed 
within our nation's farm policies. We need increased agricultural 
research to combat specific crop disease problems such as fusarium head 
blight, which is also known as scab. This disease has had a devastating 
effect on producers in many parts of North Dakota. We need to recognize 
that the current Federal Crop Insurance program is not adequately 
addressing disaster conditions, particularly in regions which have 
suffered a succession of weather-related disasters. We need to address 
a multitude of trade issues that are adversely affecting our foreign 
agricultural markets, and unfairly interfering in our domestic markets.


                       Bottom line is farm prices

  We can talk for hours about the variety of problems that are facing 
farmers, but the bottom line is and always has been the commodity 
prices that our farmers receive when they seek to sell their harvests 
in the marketplace. The simple fact is that ever since the passage of 
the 1996 farm law wheat prices have been on a downward slide, and there 
is nothing in place to stop these prices from falling further.
  Today, I am introducing legislation which would strengthen the farm 
commodity loan safety net, by establishing a new targeted commodity 
loan program geared to the actual costs of production. This is an 
addition to the current commodity loan program. My bill would not take 
anything away from producers, nor would it change any of the existing 
programs in current law. The legislation I am introducing would 
establish a new tier of marketing loans to provide a working safety net 
targeted to our nation's family farms for wheat and feed grains.
  We need to provide farmers, particularly our wheat producers, an 
effective marketing tool so that they can hold off selling their 
harvests until prices improve sufficiently to meet their production 
costs. They need a functional loan program that allows orderly 
marketing so that the supply they offer to the market demands a better 
price.
  When Congress told family farmers it was going to phase out price 
supports and farmers would have to get their price from the 
marketplace, Congress should have established a commodity loan program 
to allow such orderly marketing. Without a decent commodity loan, too 
many farmers are forced to sell grain when the market offers dirt cheap 
prices.
  To provide a working safety net, we need to increase the loan rate to 
bring it more in line with the costs of production and give wheat 
producers greater equity with other commodities. We also need a loan 
that lasts at least 12 months and can be extended for another 6 months, 
if needed.
  The U.S. Department of Agriculture has determined that the most 
recent five year average of the economic costs of production for wheat 
is $5.00 per bushel. Under my plan, the loan rate would be pegged at a 
minimum of 75% of those costs. That would mean a minimum wheat loan of 
$3.75 per bushel, compared to the $2.58 maximum under the current farm 
law.
  I am greatly concerned that the current wheat loan lags significantly 
behind other commodities in relationship to production costs. For 
example, the current maximum loan rate under the 1996 farm law for corn 
is 72% of its economic costs of production. The maximum loan rate under 
current law for soybeans is set at 89% of its costs of production. Yet, 
the maximum loan available for wheat under the current farm law is just 
52% of the costs of production.
  Equity among major farm commodities requires that Congress take a 
close look at why there is such a great discrepancy among loan rates 
for our major commodities in relationship to the costs of production of 
these commodities. Based on the fact that current wheat loans are at 
the lowest level in relationship to production costs, it is not 
surprising that wheat country is in greater economic trouble than the 
other sections of our nation's agriculture.
  This legislation is a companion bill to S. 26, the Agricultural 
Safety Net Act, introduced by Senator Daschle and cosponsored by myself 
and others. Both bills seek to improve the underlying commodity loan 
program and provide higher, more meaningful commodity loan rates for 
our producers. S. 26 would remove the commodity loan caps in the 
current farm law. As a result, commodity loan rates could actually be 
set at 85 percent of the simple five-year Olympic average of prices 
received by farmers. S. 26 provides an important cushioning effect for 
farm prices and would help stabilize farm prices and thereby help 
farmers meet the challenges of price volatility in the marketplace.
  The bill I am introducing today would add a critically important 
bottom line to ensure that farmers receive cost of production returns 
on a basic level of production. It establishes that commodity loan 
rates for wheat and corn must be at a minimum level of 75 percent of 
the economic costs of production. Other feed grain loan rates would be 
based on the historic relationship of using their feed equivalency 
value to corn.


               Targeting farm programs to family farmers

  There is one more essential reform. My plan targets the benefits to 
family farmers. My new loan program would be available on the first 
20,000 bushels of wheat, and 30,000 bushels of corn, and similar 
amounts for other feed grains for each farm. By setting a limit on the 
amount of loans available to any farm, it not only ensures that the 
primary benefits go to our family farmers, but it also means that 
overproduction will be subject to the disciplines of market forces.
  We cannot afford to cover every bushel produced in this country, so 
we need to target them to the family farm. If somebody wants to farm 
the entire township or even the entire county they can do so, but we do 
not need to give them a safety net for everything they produce. If they 
wish to take the risks of such endeavor, they should be free to do so. 
But, they shouldn't have the government as their silent partner.
  One of the major problems of past farm programs has been that they 
were not targeted to an initial basic production level to family 
farmers. The farm programs were basically open-ended programs. The more 
you produced, the greater benefits you received. Thus the benefits of 
the farm program tended to accumulate at the top, rather than spreading 
out across the base of family farmers in rural America. Rather than 
carrying out our nation's historic goal of maintaining a widely-
dispersed system of family farm agriculture, unfortunately the Freedom 
to Farm law, continued the old farm program's top-loaded pattern in its 
transition payment scheme.
  My plan would target the benefits of a working safety net directly 
related to the costs of production to the initial production of family 
farmers in this

[[Page S3134]]

country. It is a true safety net designed to fit the typical family 
farmer. The simple fact is that our family farmers are the ones that 
have the greatest need for a safety net based on production costs. It 
makes good sense and good public policy to target our farm program to 
our family farmers. Such a safety net is particularly important to the 
beginning farmer and other low-equity farmers because it provides an 
assurance that they can more fully recover their costs during periods 
of low prices. It provides the stability they need to build their farm 
operation and it gives rural America the opportunity to reinvigorate 
the family farm system.
  My plan continues to let farmers plant whatever they want, based on 
market signals. But it would also let them market their grain more 
effectively in response to those same market signals. It provides a new 
working safety net, and gives family farmers a tool they need as they 
do business in a market filled with far more powerful interests and 
forces, most of whom want lower, not higher, prices.
  There are those who are fearful that if Congress reopens the farm 
bill debate that somehow the nation would return to the production 
controls and government involvement in planting decisions of past farm 
programs. This is simply not the case. I don't know of anybody who 
seriously wants to go back to such government involvement in 
agricultural production decisions.
  In fact, those who believe that is the framework of agricultural 
policy choices, are not only misreading the current situation, but also 
did not listen very closely to the debate in the 1996 farm law. The 
debate was not about government production controls. The debate was 
whether or not there should be a safety net for family farmers, and how 
should that safety net be constructed. There were no bills offered in 
the farm bill debate to return to production controls. The debate was 
about whether to phase out farm programs in their entirety or to reform 
our nation's farm laws so that family farmers have a working safety 
net.
  How do we construct a safety net that provides greater marketing 
capabilities into the hands of our family farmers? That is the debate 
we must have in this session of Congress. We cannot afford to wait 
while thousands of family farmers are in the process of leaving their 
homesteads and their chosen profession, and their dreams, and thousands 
of others are at increased risk of being forced out of agriculture.
  Mr. President. During this past Christmas season, I received a copy 
of a family holiday letter from a fourth generation family farm couple 
that announced their decision to leave their chosen profession of 
farming and ranching. George and Karen Saxowsky of Hebron are scheduled 
to have their farm auction this spring. It is a powerful letter that 
captures the challenges, frustrations, and dreams of those families who 
have been struggling to make a livelihood in agriculture. They consider 
themselves lucky, because they were not forced by the bank to make the 
decision to leave farming. Yet, they have a host of loans and bills to 
pay and are not sure of how they will get all of that done. I ask 
unanimous consent that this letter be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

     Holiday Greetings to our Friends and Families:
       It is early Sunday morning and while the house is still 
     quiet with everyone sleeping and the trees are so beautifully 
     frost covered, I thought I would dash off a quick line in 
     spite of my resolution not to send a letter this year--when I 
     bought the Christmas cards I really loved the message but 
     thought, that is enough reading for most people!
       In April we had the worst blizzard ever--the city of Hebron 
     was without electricity for 48 hours, but we did have it most 
     of the time. A ``city'' friend and classmate of George's 
     called during the blizzard to say he just loves a good 
     blizzard--my perspective was different so as a gift to him I 
     started a chronicle of the storm, the events that went with 
     it, and the aftermath in a blow-by-blow account that took 15 
     typed pages; it was my way of coping and I handled everything 
     fine at the time but now I can't read it without crying. 
     Jason was off the farm during the whole thing but Glendon was 
     here and such wonderful help and such a trooper.
       March had gone out like a lamb with 60 degree days. The 
     predictions were the storm would miss us; then changed to 3-5 
     inches of snow with wind and it would end Friday night. We 
     had just bought another large portable (can be moved with two 
     tractors) calf shelter, so now had two, and have lots of 
     corrals, wind breaks, protection, feed and hay on hand--so 
     felt pretty confident we were ready.
       The storm actually raged all day Friday, Saturday, and on 
     into Sunday afternoon with gusts through the evening. We got 
     some outrageous amounts of snow--after twenty-four inches it 
     didn't matter anymore.
       The cattle started running with the storm, the guys were 
     able to get them turned around and back to corrals but that 
     was just the beginning of the nightmare! We chased different 
     herds into protected areas (of course they don't want to go), 
     then we worked on getting 70 calves into the calf-shelter and 
     decided to haul those that were freezing from the corrals 
     into the barn (the pick-ups, tractors nor bobcat could get 
     through the snow) fighting 50 mph winds, George bought one 
     calf while I tried to help Glendon bring another--going up 
     hill and fighting the wind in thigh deep snow--I just 
     couldn't do it. We got those two to the barn, decided they 
     were in such bad shape if we were going to save them they 
     would have to go to the house so took them there, then 
     reassessed the situation. Glendon said, ``If we do another 
     trip I'll have to pull Mom and the calf, in the calf sled, up 
     hill, in the blizzard!'' And that was the truth of it.
       The tractor bucket broke, but they couldn't get the tractor 
     to the shop to weld it so in the raging blizzard they brought 
     the welder, on a calf sled, from the shop to the house, 
     pulled my stove ahead to plug it in, drove the tractor up on 
     the porch and welded it in the kitchen doorway--twice. The 
     stories just go on and on (guess you had to be there)! Those 
     poor guys worked all day in the blizzard, came in exhausted, 
     took a quick nap and went back out. At 7:30 Saturday night 
     they were coming in for supper when they heard loud cracks in 
     the barn--the roof beams were cracking from the weight of the 
     snow! They stayed out and shoved off the roof until 
     11:30 (figured they moved about 3 tons of snow and ice), 
     then got up at five the next morning and worked all day 
     again.
       As the storm abated Sunday evening I could hear Glendon 
     yelling and ran to see what was going on now, but couldn't 
     find him. Here, they had found a cow lying on its side 
     drowning in muck. Glendon was lying flat on his belly holding 
     the cows head out of the muck while George was trying 
     frantically to get the tractor down to him. I plowed through 
     four foot deep snow to help--the first tractor got wet and 
     quit. (All during the storm we had distributor caps in the 
     oven drying out!) He got the Bobcat--it quit; he got the next 
     tractor and we made it down there, tore a fence down, put 
     chains on the cow and pulled her out. She died; as did a calf 
     that had been buried in the snow someplace in the ten feet 
     where we had pulled the cow and we didn't even see, until the 
     snow melted enough, that it was under her; as did those two 
     calves in the basement; as did a calf that had followed its 
     mother to the water fountain, got stuck in the snow and froze 
     to death standing up--we must have walked by that calf fifty 
     times but with the blizzard didn't see it--they get snow 
     covered really fast; as did the cow in the corral with a roof 
     over her head with water and hay right beside her; as did . . 
     . well, you get the picture. It continued for fourteen days 
     after the storm, every day we lost at least one cow and/or 
     calf. We took them to the vets for autopsies and what-not but 
     it just seemed there was nothing we could do to save them. 
     One day we made it to 5:00 without any dying and thought the 
     curse was broken but by midnight we had lost a cow and a 
     calf. It was terrible, terrible time, but we lived through 
     it--but not alone. Friends were there for us. On the Friday 
     after the storm, one called to tell us to get out of the 
     house and come to town for a Fireman's Dance--we were just 
     too exhausted and depressed--but he was pushy (he did the 
     same thing for us after last year's cow incident on I-94. We 
     went, and visited with other farmer-ranchers who were in the 
     same boat--it really was so helpful and encouraging.
       We were really dreading the first snow of this winter. Long 
     about October, George started talking about quitting 
     farming--I took it as a mid-life crisis; a one time slide. 
     But, he kept talking . . . and then started making plans. We 
     would put in a crop in '98 and quit in '99. I still thought 
     `this-too-shall-pass'' but he just got more serious. In 
     November I started getting calls asking if I would like a job 
     off the farm? I have to tell you, I was so flattered that 
     they even considered me capable of doing what they needed; I 
     had been self-employed for almost 25 years. I turned them 
     down, but it did start the wheels turning. Then, there was an 
     ad in the paper for a job in Hebron with benefits. We talked 
     about it and I applied; they offered me the job and I took 
     it. This was not easy, now we couldn't put a crop in this 
     spring as the job is 40 hours a week including every other 
     Saturday and George can't farm without me.
       The bottom line is; a 47 year old, 4th generation farmer in 
     his 27th year of farming is quitting farming.
       I started working at the Credit Union on December 1st. I 
     thought my world would fall apart--the week before I started 
     work everything just `went-to-hell-in-a-basket' and I almost 
     decided I couldn't do it! We sold a semi load of cattle, 
     checked the night before and the market was strong so loaded 
     them up early in the morning. At 10:00 the auctioneer called 
     and said the bottom had fallen out of

[[Page S3135]]

     the market, a bunch of Canadian cattle had just hit the meat 
     packing plants and their buyers weren't buying. George was 
     gone so I had decided what to do; with paying to have them 
     hauled out, and back, then to sale again I said to let 
     them go, when George got home he agreed with me but at the 
     next sale the price was strong again--George and I said, 
     ``That's why we're getting out of farming--there is no 
     predictability!!''
       It was like the farm really needed both of us--as much for 
     moral support as the labor itself. The clincher almost came 
     on Sunday night (before my new job on Monday morning) when I 
     had planned a special ``last-supper'' of T-bones and had them 
     thawing on the counter while I was working on the computer--
     the cats jumped up on the counter and ate them!! Monday 
     morning came and--I went to work. I was so surprised, but I 
     just love my job!! I don't know if it is the people I work 
     with, the people that come in, the feeling of accomplishment, 
     the challenge of balancing the books or what (there is life 
     after farming???) but, I am really happy that I followed 
     through!! In training the hardest part was the balancing out 
     and having everything in the main office by 3:00--one night 
     it was 5:15. Until we actually balance I am always so 
     grateful if I am ``long'' on the money side so at least then 
     they know I didn't take it!! I seem to have the hang of it 
     now, so it is less stressful, easier and even balancing is 
     fun! Everyone is so nice, and I really am trying hard--but 
     keep me in your prayers!
       It sounds like we are having an auction sale in March on 
     the Saturday before Palm Sunday. We are planning on renting 
     out the land and selling the cattle but still living on the 
     farm. George will continue making hay to sell, doing custom 
     combining and has been working with the local electrician and 
     for elevator doing some carpentry stuff. I thought the deal 
     was if I took a job he would stay home until the cows were 
     gone but . . . I guess not!!
       I have friend who just lost her 38 year old son-in-law to a 
     24 hour illness. Then, trying to come back home from her 
     daughter and grandchildren she was delayed three days as the 
     planes couldn't land due to fog. She was home three days when 
     her house caught on fire. The good news is we're small town. 
     We care about and support each other. We may have our little 
     squabbles and irritations but we get over it and move on! 
     Pastors sermon today was about helping each other cut the 
     tops off some of the ills we have to climb and walking with 
     them through the valley of grief for their upbuilding, 
     encouragement, and consolation. We thought of you, our 
     friends and family! With that thought in mind, we wish you 
     little knolls rather than mountains to climb, friends to 
     share the valleys with a sincere * * *.
           Merry Christmas and a very Happy New Year!!
                   George and Karen Saxowsky, Hebron, North Dakota

  Mr. DORGAN. Mr. President, in reading this letter, I am reminded of 
the reasons why it is so important that our nation provide a national 
agricultural policy framework that not only fosters a family farm 
system of agriculture, but purposefully sets out to undergird that 
system and provide the tools that are necessary for our family farmers 
and ranchers to have the opportunity to be successful.
  It is for this reason that I am introducing the Cost of Production 
Safety Net Act. I am pleased to include Senators Daschle, Wellstone, 
Johnson, Conrad, Harkin and Baucus as cosponsors to my bill. I 
encourage others to join in this effort and look forward to having a 
meaningful debate on our nation's agricultural future in the remaining 
months of this session.
                                 ______
                                 
      By Mr. MURKOWSKI (for himself, Mr. Nickles, Mrs. Hutchison, and 
        Mr. Domenici):
  S. 1919. A bill to provide for the energy security of the Nation 
through encouraging the production of domestic oil and gas resources 
from stripper wells on federal lands, and for other purposes; to the 
Committee on Energy and Natural Resources.
                                 ______
                                 
      By Mr. MURKOWSKI (for himself, Mr. Nickles, and Mrs. Hutchison):
  S. 1920. A bill to improve the administration of oil and gas leases 
on Federal lands, and for other purposes; to the Committee on Energy 
and Natural Resources.


        the federal stripper well royalty reductions legislation

  Mr. MURKOWSKI. Mr. President, I rise today to introduce two important 
pieces of legislation relating to oil and gas production on federal 
lands. The first is a bill to authorize and direct the Secretary of the 
Interior to provide permanent regulatory authority to reduce the 
royalty rate for stripper oil and gas wells on federal lands.

  This legislation is necessary, Mr. President, because of the 
depressed world oil price situation. With oil prices falling below $15 
per barrel, it is more and more difficult for domestic energy companies 
to produce oil at a reasonable price. While this is good news to U.S. 
consumers because gasoline is at its lowest price ever when adjusted 
for inflation, it is not welcome news to small and independent oil and 
gas producers who will be especially hard hit.
  Under ``normal'' circumstances, stripper wells are on the edge of 
profitability. Low world oil prices threaten stripper wells and the 
jobs associated with those wells. That, in turn, has ripple effects 
elsewhere in the economy through loss of jobs in the industries that 
supply goods and services to producers, and in the communities where 
they operate.
  Mr. President, according to the Interstate Oil and Gas Compact 
Commission, there are approximately 430,000 stripper oil wells and 
170,000 stripper gas wells in the U.S. A sizeable number of these, 
perhaps as many as 30,000, are on federal lands.
  What is absolutely astounding, Mr. President, is the fact that 
stripper wells individually average a little more than 2 barrels of oil 
and 16 thousand cubic feet of gas production per day, yet in 1996 
collectively contributed 352 million barrels of oil (more than 11 
percent of U.S. production, and 5 percent of U.S. consumption), and 
almost 1 billion cubic feet of natural gas.
  There are 38,000 jobs associated with stripper wells, and another 
46,000 outside of the industry related to stripper wells. We cannot 
afford to lose stripper well production and the vital role they play in 
national energy security. Nor can we afford to lose the jobs associated 
with them. That is why I am introducing today the Federal Oil and Gas 
Stripper Well Preservation Act of 1998. I am pleased to be joined by 
Senator Nickles and Senator Hutchison in sponsoring this important 
legislation.
  Mr. President, our bill is very simple: it authorizes and directs the 
Secretary of the Interior to provide permanent regulatory authority to 
reduce the royalty rate for stripper oil and gas wells on federal 
lands. The Secretary already has limited authority to grant stripper 
oil well royalty reductions. We want to ensure that there is permanent 
authority to do so.
  We also want to make sure that the Secretary has permanent authority 
to grant royalty rate reductions for stripper gas wells, something that 
the Secretary recently has declined to do.
  Second, our bill requires the Secretary to suspend any minimum 
royalty (if applicable) and per acre lease rental on stripper oil and 
gas wells on federal lands during the time of any royalty rate 
reduction. This will ensure that stripper well operators are afforded 
the greatest leeway during hard times.
  And finally, our bill requires the applicable lease rental and 
minimum royalty to be reinstated once the Secretary terminates a 
stripper well royalty rate reduction.
  Mr. President, I believe this legislation will make a significant 
contribution in stemming the tide of lost production from our Nation's 
stripper oil and gas wells. Once plugged and abandoned, these wells--
and their vital contribution to national energy security--are more 
likely than not permanently lost. We should not lose this valuable 
national asset.
  I invite my colleagues to join Senator Nickles, Senator Hutchison and 
me in sponsoring the Federal Oil and Gas Stripper Well Preservation Act 
of 1998.


   Transfer of Certain Federal Oil and Gas Lease Management Functions

  Mr. President, the second piece of legislation I introduce today 
relating to federal oil and gas production addresses the performance of 
oil and gas lease management activities on federal lands. We have been 
hearing for some time now that States are very much interested in 
assuming certain oil and gas lease management functions that are now 
performed by the U.S. on federal oil and gas leases. We saw strong 
interest from States in assuming certain royalty management functions 
when we considered and ultimately enacted the Federal Oil and Gas 
Royalty Simplification and Fairness Act in 1996. Devolution of federal 
oil and gas regulatory functions to States is a concept whose time has 
come.

[[Page S3136]]

  The legislation I introduce today along with Senator Nickles and 
Senator Hutchison would do the following: transfer the Bureau of Land 
Management's (BLM) authority to perform certain oil and gas regulatory 
duties to States; institute distinct and reasonable time frames for 
leasing decisions and appeals; require responsible actions to increase 
leasing; and reduce federal appeals delays by rejecting stay requests 
from parties that have no standing.
  We believe this legislation will generate savings to the Treasury by 
increasing administrative efficiencies, eliminating duplication of 
effort, decreasing time frames on leasing and appeals decisions, and 
increasing certainty in leasing. We also believe the bill will increase 
federal acreage available for exploration and development, improve the 
domestic oil and gas resource base, and promote oil and gas production 
on federal lands.
  The key feature of the bill is the transfer from BLM to States 
authority over such activities as: well drilling and production 
operations; well testing and completion; conversion of a producing well 
to a water well; well abandonment procedures; inspections; enforcement 
activities; and site security. Many States already perform these 
functions on federal leases, and are willing to do so on a permanent 
basis. By transferring federal responsibility for these activities, 
federal resources could be used for other purposes.
  Our bill also requires BLM and the Forest Service to offer 
competitive oil and gas leases 90 days after lands are ``nominated'' by 
prospective lessees. The bill requires BLM and the Forest Service to 
render final decisions on administrative appeals within two years. 
These provisions will eliminate costly delays and litigation, allow 
realization of lease revenues (bonuses, rents, royalties) sooner, and 
provide stability and clarity to planning.
  Mr. President, we believe the transfer of lease management functions 
can be achieved with significant savings to States and the Treasury and 
will not disrupt lease management functions or impair important 
resource production. We urge our colleagues in the Senate to join in 
supporting this important legislation.
                                 ______
                                 
      By Mr. JEFFORDS (for himself and Mr. Dodd):
  S. 1921. A bill to ensure confidentiality with respect to medical 
records and health care-related information, and for other purposes; to 
the Committee on Labor and Human Resources.


                        the health care pin act

  Mr. JEFFORDS. Mr. President, today, I join with my good friend 
Senator Christopher Dodd, in announcing the introduction of the Health 
Care Personal Information Nondisclosure Act of 1998--The Health Care 
PIN Act. This legislation will establish necessary national standards 
to protect the confidentiality of each American's medical records.

  Information technology presents our nation with the difficult 
challenge of ensuring that we reap its benefits without sacrificing one 
of our most important values: the right to individual privacy. In order 
to maintain control over our personal medical information, Congress 
must pass health care confidentiality legislation--as quickly as 
possible.
  The time is ripe for action. There have been major technological 
advances in health care's administrative, delivery, and payment 
systems. These advances have the potential to improve the quality of 
patient care. For example, electronic pharmaceutical records make it 
possible for pharmacists to identify potential drug interactions before 
filling a prescription. However, we must also have guarantees that our 
personal health care information is not being used inappropriately.
  Congress has made repeated attempts to enact a comprehensive federal 
privacy law but has, to date, been unsuccessful. The loose web of 
protections at the federal and state levels that has evolved in the 
absence of a comprehensive law leaves many aspects of health 
information unprotected.
  The Health Care PIN Act represents a synthesis of recommendations 
from many sources. It draws heavily from the discussion draft that I 
worked on with Senator Bennett and the ``Medical Information Privacy 
and Security Act,'' introduced by Senator Leahy and Senator Kennedy. 
The Labor and Human Resources Committee has held three hearings on the 
confidentiality of health care information, and the testimony and 
comments provided at each of those hearings has been invaluable--
especially, the administration's recommendations presented by Secretary 
Shalala in September.
  Under the terms of the Kassebaum/Kennedy legislation, if Congress 
fails to enact federal privacy legislation by August 1999, the 
Secretary of Health and Human Services is required to promulgate 
regulations establishing electronic privacy standards in the year 2000. 
This is too important a matter of public policy to be done outside of 
the legislative process and it is another reason why I intend to make 
this task one of the highest priorities of the Labor and Human 
Resources Committee.
  Other nations have taken steps to protect patient privacy. In 1995, 
the European Union enacted the Data Privacy Directive. The EU Directive 
requires that individuals have rights of consent, access, correction, 
and remedies for failure to protect confidential personal information. 
This Directive requires that by October 1998, if countries trading with 
any of the 15 European Union member states do not introduce similar 
rules, data cannot be transmitted between these countries. If we do not 
act promptly, this initiative raises the concern that the European 
Union could limit the flow of health care data between our countries 
for research and restrict the ability of American companies to compete 
overseas.
  The Health Care PIN Act would preempt state laws relating to medical 
records confidentiality--with the important exception of public health 
issues and those areas having a history of discrimination, such as 
mental health and HIV-AIDS. Since most health plans exchange health 
care information over the borders of many states, we need one privacy 
standard in this county--rather than 50 different ones--in order to 
achieve the greatest benefits from information technology and also 
ensure that all Americans have a uniform standard of privacy 
protection.
  The Act requires that individually identifiable health care 
information not be released unless authorized by patient consent. With 
very few exceptions, individually identifiable health care information 
should be disclosed for health purposes only, which includes the 
provision and payment of care and plan operations. Under the 
legislation, patients would have the right to copy and correct their 
medical records. In order to achieve accountability, the Health Care 
PIN Act provides that civil and criminal penalties would be imposed on 
individuals who use information improperly through unauthorized 
disclosure.
  Our individual right to privacy at times must be balanced against the 
need to protect the health of others. The Health Care PIN Act allows 
for the disclosure of health information without patient consent for 
the release of information to public health authorities for disease 
reporting. In addition, patient consent would not be required to 
disclose information needed for legitimate law enforcement purposes, 
including purposes required by state law such as the reporting of 
gunshot victims. Quality care requires more than the free flow of 
information between providers, payers, and other users of health 
information. It requires trust between a patient and a care giver. For 
our health care system to be effective, as well as efficient, patients 
must feel comfortable sharing sensitive information with health 
professionals. Technology has provided the tools to allow the ease of 
access to health care information. Now, the Health Care PIN Act is 
needed to ensure the confidentiality of this personal health 
information.
  It is my intent to work closely with the other members of the Labor 
and Human Resources Committee, and Senators Bennett and Leahy, to enact 
legislation this year that will establish national standards to protect 
medical information and enhance quality of health care for all 
Americans.
  Mr. DODD. Mr. President, I am pleased to join the Chairman of the 
Labor and Human Resources Committee, Senator Jeffords, in introducing 
the Health Care Personal Information Nondisclosure (PIN) Act of 1998. 
This legislation is designed to offer Americans the peace of mind that 
comes with

[[Page S3137]]

knowing that their most personal and private medical information is 
protected from misuse and exploitation.
  Medicine has changed dramatically since the time Norman Rockwell 
painted the scene of a doctor examining his young patient's doll. The 
flow of medical information is no longer confined to doctor-patient 
conversations and hospital charts. Recent technological advances have 
introduced more efficient methods of organizing data that allow 
information to be shared instantaneously--helping to contain costs--and 
even save lives. The national database of medical information provides 
a prime example of the benefits of these advances. Through the use of a 
simple computer, emergency room doctors are now equipped with a quick 
and inexpensive means of accessing the medical records needed to 
properly treat unconscious patients.
  Unfortunately, as we saw all too clearly just a few months ago, our 
laws have not kept pace with technology. In February the Washington 
Post exposed the activities of two pharmacies that were sharing 
personal medical information about prescription drug use with 
unauthorized third parties. And, most disturbingly, these actions were 
perfectly legal. Clearly, the existing patchwork of state laws 
protecting medical records are proving to be inadequate to address the 
public's concerns.
  These concerns are so strong that in some cases they threaten to 
actually negate the benefits of advances in medicine and technology. 
The fear of discrimination and exploitation has led some ethnic 
communities with susceptibility to certain conditions to urge their 
members to avoid genetic testing. The fear that sensitive medical 
information might be released without authorization has led patients to 
avoid full disclosure of mental health concerns to their physicians and 
to unnecessarily forego opportunities for treatment.
  I believe that the Health Care PIN Act offers the privacy protections 
that the public demands. This legislation sets clear guidelines for the 
use and disclosure of medical information by health care providers, 
researchers, insurers, employers and others. The Health Care PIN Act 
provides individuals with control over their most personal information, 
yet promotes the efficient exchange of health data for the purposes of 
treatment, payment, research and oversight. To ensure the 
accountability of entities and individuals with access to personal 
medical information, the legislation imposes stiff penalties for 
unauthorized disclosures.
  The Health Care PIN Act provides consumers with a strong, nationally 
uniform set of privacy protections. However, in areas of privacy law in 
which states have been the most active--namely in the confidentiality 
of sensitive mental health and public health records--states could 
continue to establish additional protections.
  I would also like to indicate my intent to work with Senator Jeffords 
to incorporate into this legislation protections against genetic 
discrimination in both employment and health insurance. Although we 
were unable to resolve this issue before introduction of this 
legislation, I am confident that we can reach consensus on this 
critical and timely issue.
  This legislation represents common-sense middle ground in the range 
of proposals that have been offered both this and the previous 
Congress. I look forward to working with Senator Jeffords, as well as 
with Senators Bennett, Leahy, and Kennedy, who have contributed so much 
to this debate, to move forward quickly to enact comprehensive, 
bipartisan legislation.
                                 ______
                                 
      By Mr. CAMPBELL:
  S. 1922. A bill to amend chapter 61 of title 5, United States Code, 
to make election day a legal public holiday, with such holiday to be 
known as ``Freedom and Democracy Day''; to the Committee on the 
Judiciary.


                 freedom and democracy day legislation

  Mr. CAMPBELL. Mr. President, as our nation approaches the Millennium, 
it is an appropriate time to renew the appreciation and understanding 
of the American people in the democratic heritage and principles which 
make our country the greatest in the world. That is why I am 
introducing legislation today to rename Election Day as Freedom and 
Democracy Day and to renew civic responsibility.
  The two main objectives of this legislation are first, to broaden and 
increase voter turnout, and second, to restore appreciation for our 
country's most fundamental expression of freedom and its democratic 
underpinnings--the right to vote. As a nation, we must all be concerned 
that voter apathy is so high, while voter participation is so low. 
Voting, it seems, has become a neglected, if not cumbersome, privilege 
of Americans. In the past 20 years, voter participation in presidential 
election years has remained barely above 50 percent, and during midterm 
congressional election years it has not been more than 50 percent.
  I am alarmed at the unfortunate fact that voter participation has 
declined to the point that it is now among the lowest of any democratic 
nation. The rate of voter participation among younger Americans--the 
future leaders, teachers, and business executives--has declined 
significantly. It is our responsibility as elected officials, and, more 
importantly, as American citizens, to support additional efforts to 
strengthen the electoral process, to encourage civic awareness, and to 
promote active participation in the exercise of liberty.
  Therefore, the first goal of the bill is to renew civic spirit and 
highlight the importance of Americans to fulfill their civic 
responsibilities by making Election Day a legal public holiday, known 
as Freedom and Democracy Day. This designation gives new meaning to the 
importance of voting on the first Tuesday in November. We need to 
stress the importance of self-government, encourage Americans to 
exercise their freedom and liberty as citizens by voting, and encourage 
Americans to reinvigorate their support for their civic duties.
  Although my bill designates this day as a legal public holiday, I 
want to emphasize that Freedom and Democracy Day will remain a regular 
workday. The bill specifically does not reference statutes relating to 
pay and leave of federal employees, and it does not affect the regular 
operations of the federal government.
  We as legislators and as citizens should do more to promote voter 
turnout and increase understanding of the value and importance of the 
right to vote. That is why the second objective of this bill is to 
encourage communities, schools, civic organizations, charitable 
organizations, companies, radio and television broadcasters, and public 
officials at all levels of government to support and celebrate Freedom 
and Democracy Day. The legislation encourages these key segments of 
society to sponsor and publicize appropriate celebrations and events 
which stress the importance of participation in self government. Their 
programs and support will send a strong message that the legitimacy of 
the democratic process is created from the consent of the governed, and 
voiced in the full participation of an informed, aware and active 
citizenry.
  I believe my bill provides a starting point for a renewed spirit and 
appreciation of freedom and democracy. It is my sincere hope that given 
more incentive to vote, more Americans will seize and exercise this 
expression of freedom. It is a small step in the overall effort to 
encourage all American citizens to take pride and participate in their 
representative system of government.
  Much of the voter apathy reflects many citizens' lack of faith in all 
levels of government. In America, power is supposed to be delegated 
from the citizen and loaned to the government. The Founding Fathers, 
who pledged their lives, their fortunes and their sacred honor for a 
new country, knew that as a nation we must leave room for change and 
growth and development. They knew the nation they left for us would 
modernize, rethink, and restructure.
  Let us be vigilant in remembering that the American idea of democracy 
is a government ``of the people, by the people, for the people.'' This 
is the idea of freedom and liberty; uniquely American. And, it is the 
goal of this bill to strengthen the American people's right to freedom 
and celebrate the spirit of democracy in the country which first 
empowered citizens with ``certain unalienable rights.''
  Mr. President, I ask unanimous consent that the bill be entered into 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

[[Page S3138]]

                                S. 1922

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

     SECTION 1. FINDINGS.

       The Congress finds that--
       (1) democratic government derives its legitimacy from the 
     consent of the governed, as manifested in the full 
     participation of an informed and aware electorate;
       (2) since 1960 the rate of voter participation in the 
     United States has declined and is now among the lowest of any 
     nation with a democratic form of government;
       (3) since 1972 the rate of voter participation among young 
     people in the United States has declined significantly;
       (4) the Federal Government should encourage personal 
     responsibility and the broader understanding of the value and 
     importance of the right to vote; and
       (5) the establishment of a legal public holiday on election 
     day, the first Tuesday after the first Monday in November of 
     each even numbered year, could provide a substantial 
     incentive to increase voter participation by the American 
     public.

     SEC. 2. SENSE OF THE CONGRESS.

       It is the sense of the Congress that educators, civic and 
     charitable organizations, radio and television broadcasters, 
     and public officials at all levels of government should help 
     the people of the United States celebrate Freedom and 
     Democracy Day through appropriate celebrations and events 
     which stress the importance of self-government.

     SEC. 3. DESIGNATION OF ELECTION DAY AS LEGAL PUBLIC HOLIDAY.

       Section 6103 of title 5, United States Code, is amended--
       (1) by redesignating subsection (d) as subsection (e); and
       (2) by inserting after subsection (c) the following:
       ``(d)(1) Subject to paragraph (2), the first Tuesday after 
     the first Monday in November in each even numbered year, 
     Election Day, shall be a legal public holiday, with such 
     holiday to be known as Freedom and Democracy Day.
       ``(2) Freedom and Democracy Day--
       ``(A) shall be a regular workday;
       ``(B) shall not be treated as a legal public holiday for 
     purposes of statutes relating to pay and leave of employees 
     as defined by section 2105 of this title; and
       ``(C) shall not affect the regular operations of the 
     Federal Government.''.
                                 ______
                                 
      By Mr. COVERDELL (for himself, Mr. Breaux, and Mr. DeWine):
  S. 1923. A bill to amend the Federal Water Pollution Control Act to 
ensure compliance by Federal facilities with pollution control 
requirements; to the Committee on Environment and Public Works.


       The Federal Facilities Clean Water Compliance Act of 1999

  Mr. COVERDELL. Mr. President, I rise today to introduce legislation 
with the Senior Senator from Louisiana and the Junior Senator from 
Ohio. This legislation--The Federal Facilities Clean Water Compliance 
Act of 1998--will guarantee that the federal government is held to the 
same full range of enforcement mechanisms available under the Clean 
Water Act as private entities, states, and localities. Each federal 
department, agency, and instrumentality will to be subject to and 
comply with all Federal, State, and local requirements with respect to 
the control and abatement of water pollution and management in the same 
manner and extent as any person is subject to such requirements, 
including the payment of reasonable service charges.
  Last year marked the twenty-fifth anniversary of the Clean Water Act. 
This Act has been an effective tool in improving the quality of our 
nation's rivers, lakes, and streams. Over that period of time, however, 
states have not had the ability to impose certain fines and penalties 
against federal agencies for violations of the Clean Water Act. This is 
a double standard that should not be continued.
  In 1972, Congress included provisions on federal facility compliance 
with our nation's water pollution laws in section 313 of the Clean 
Water Act. Section 313 called for federal facilities to comply with all 
federal, state, and local water pollution requirements. However, in 
1992, the United States Supreme Court ruled in U.S. Dept. Of Energy v. 
Ohio, that States could not impose certain fines and penalties against 
federal agencies for violations of the Clean Water Act and the Resource 
Conservation Recovery Act (RCRA). Because of this decision, the Federal 
Facilities Compliance Act (H.R. 2194) was enacted to clarify that 
Congress intended to waive sovereign immunity for agencies in violation 
of RCRA. Federal agencies in violation of the RCRA are now subject to 
State levied fines and penalties. However, this legislation did not 
address the Supreme Court's decision with regard to the Clean Water 
Act.
  The Federal Facilities Clean Water Compliance Act of 1998 makes it 
unequivocally clear that the federal government waives its claim to 
sovereign immunity in the Clean Water Act. The federal government owns 
hundreds of thousands of buildings, located on millions of acres of 
land, none of which have to abide by the same standards as a private 
entity does under the Clean Water Act. This legislation simply ensures 
that the federal government lives by the same rules it imposes on 
everyone else.
  Mr. BREAUX. Mr. President, I am pleased to join Senator Coverdell 
today in introducing the ``Federal Facilities Clean Water Compliance 
Act of 1998''.
  My primary reason for sponsoring the bill with the Senator from 
Georgia is to make the federal Clean Water Act equitable by requiring 
that it apply to and be enforced against the federal government.
  Currently, states, local governments and the private sector do not 
have immunity from the act's enforcement. By the same principle, the 
federal government should not be granted such immunity from the clean 
water statute and this bill provides that parity.
  The bill also provides that the federal government would be subject 
to all the same enforcement mechanisms that apply to states, local 
governments and the private sector under the Clean Water Act.
  Fairness, safety, public health and environmental protection all 
dictate that Federal agencies should be held to the same standards for 
water pollution prevention and control as apply to states, local 
governments and the private sector.
  Equity is ensured by the Coverdell-Breaux bill because all levels of 
government and the private sector would be treated the same under the 
Clean Water Act's enforcement programs. No one would be allowed 
immunity.
  To paraphrase a well-known adage, what's good for states, local 
governments and the private sector in terms of clean water should be 
good for the federal government.
  In addition to the provisions stated previously, the Coverdell-Breaux 
bill reflects the adage's fairness principle in another fashion.
  The bill would hold the federal government accountable to comply not 
only with its own clean water statute, but also with state and local 
clean water laws. Again, equity would be upheld. And, safety, public 
health and environmental protection would be strengthened.
  Other provisions are contained as well in the legislation which 
Senator Coverdell and I are introducing today. For example the EPA 
administrator, the Secretary of the Army and the Secretary of 
Transportation would be authorized to pursue administrative enforcement 
actions under the Clean Water Act against any non-complying federal 
agencies. It also includes provisions for federal employees' personal 
liability under the act's civil and criminal penalty provisions and a 
requirement that the federal government pay reasonable service charges 
when complying with clean water laws.
  Over the past 25 years, the United States has made dramatic advances 
in protecting the environment as a result of the Clean Water Act. We 
have all benefitted as a result.
  Today, I encourage other Senators to join Senator Coverdell and I as 
cosponsors of the bill to bring equity to the clean water program and 
to make possible the expansion of its public and private benefits.
                                 ______
                                 
      By Mr. MACK (for himself, Mr. Kerry, Mr. D'Amato, Mrs. Feinstein, 
        Mr. Bond, Ms. Moseley-Braun, Mr. Coverdell, Mrs. Boxer, Mr. 
        Gregg, Mr. Kennedy, Mr. Thurmond, Mr. Robb, Mr. Grams, Mr. 
        Bumpers, Mr. Coats, Mr. Dodd, Mr. Inhofe, Mr. Inouye, Mr. 
        Santorum, Mr. Durbin, Ms. Snowe, Mr. Wyden, and Mr. Hollings):
  S. 1924. A bill to restore the standards used for determining whether 
technical workers are not employees as in effect before the Tax Reform 
Act of 1986; to the Committee on Finance.

[[Page S3139]]

               the technical workers fairness act of 1998

  Mr. MACK. Mr. President, today Senator Kerry and I introduce the 
Technical Workers Fairness Act of 1998. This bill would repeal Section 
1706 of the 1986 Tax Reform Act, something that is long overdue and is 
now supported by a strong bipartisan consensus.
  Section 1706 added a new subsection (d) to Section 530 of the Revenue 
Act of 1978. For the class of businesses known as ``technical services 
firms'' who provide technical services to their customers, Section 1706 
removed the Section 530 employment tax safe harbors that otherwise 
apply to all other types of businesses that use the services of 
independent contractors. These Section 530 safe harbors were enacted by 
Congress in 1978 to protect business taxpayers, especially small 
businesses, from arbitrary IRS decisions interpreting the common law 
employment test in employment tax audits.
  Yet Section 1706 leaves one group of taxpayers back in the pre-
Section 530 days. As a result of Section 1706, if a technical services 
firm hires, as an independent contractor, a computer programmer, 
systems analyst, software engineer, or similarly-skilled worker who 
will perform services for that firm's customers, then the technical 
services firm--which is operating in a so-called ``three-party'' 
arrangement--must prove to the IRS that this worker is an independent 
contractor under the centuries-old common law employment test that 
Congress found so troublesome in 1978. Even if the firm can show that 
it has a reasonable basis for treating the worker as an independent 
contractor--for instance, if its past treatment of this worker as an 
independent contractor was approved by the IRS in prior IRS audits, or 
its treatment is consistent with industry practice or a relevant court 
ruling, all of which constitute a ``safe harbor'' under Section 530--
none of these factors is relevant because of the enactment of Section 
1706.
  The harm caused to the technical services industry and its workers by 
Section 1706 is more than theoretical. Technical services firms which 
use independent contractors--even if they act in good faith--can be 
severely penalized by the IRS and forced to pay ``unpaid'' employment 
taxes even though the contractors have already paid these same taxes in 
full. In fact, some IRS auditors have used Section 1706 to claim that 
even incorporated independent contractors are not legitimate. Left with 
only the common law employment test to demonstrate a worker's status to 
the IRS, many technical services firms will not hire any independent 
contractors in order to avoid tempting an IRS audit.
  In 1991, the Treasury Department issued a 100-page study of Section 
1706, as required by Congress. The Treasury Study found that tax 
compliance is actually better-than-average among technical services 
workers compared to other contractors in other industries. It also 
found the scope of Section 1706 was ``difficult to justify on equity or 
other policy considerations.'' Further, Section 1706 is the only 
occasion since the enactment of Section 530 that Congress has ever cut 
back on the safe harbor protections in Section 530. In fact, in 
response to concerns that IRS decisions in independent contractor 
audits were too often arbitrary and unpredictable, in the Small 
Business Job Protection Act of 1996 Congress expanded the Section 530 
protections and even shifted the burden of proof from the taxpayer to 
the IRS. More recently, the Department of Labor's Bureau of Labor 
Statistics found that many high-tech professionals are actually being 
forced to work as employees when their preference is to be independent 
contractors.
  It is time to repeal Section 1706 and end the discrimination against 
this one industry.
  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. 1924

         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 ``Technical Workers Fairness 
     Act of 1998''.

     SEC. 2. RESTORATION OF STANDARDS FOR DETERMINING WHETHER 
                   TECHNICAL WORKERS ARE NOT EMPLOYEES.

       (a) Repeal of Section 530(d) of the Revenue Act of 1978.--
     Section 530(d) of the Revenue Act of 1978 (as added by 
     section 1706 of the Tax Reform Act of 1986) is repealed.
       (b) Effective Date.--The amendment made by subsection (c) 
     shall apply to periods ending after the date of enactment of 
     this Act.

  Mr. KERRY. Mr. President, I join Senator Mack in supporting his 
legislation to repeal Section 1706 of the 1986 Tax Reform Act. We must 
take this opportunity to repeal an unfair section of employment tax law 
which singles out only the computer and high-technology industry and 
makes it difficult for firms in that industry to retain the services of 
self-employed contractors.
  For many years, the common law test used to classify a worker as an 
employee or an independent contractor for employment tax purposes 
lacked precision and predictability. In 1978, in Section 530 of the 
1978 Revenue Act, Congress acted to allow taxpayers, as an alternative 
to the common law test, to use a ``reasonable basis'' safe haven test 
to classify a worker. However, in 1986, Congress enacted Section 1706 
which eliminated all Section 530 protections from only the technical 
services industry, and only in so-called ``three party situations'' in 
that industry in which a worker is paid by a technical service firm to 
perform services for a customer.
  I have heard from a number of computer consultants in Massachusetts 
who believe this unfairly discriminates against the computer consulting 
industry and seriously impairs the ability of legitimate self-employed 
computer consultants to work effectively in the marketplace. Many firms 
in Massachusetts will not use the services of valid self-employed 
contractors because they believe doing so could attract an Internal 
Revenue Service audit and potentially subject the companies to 
penalties or back tax liabilities.
  For many years, along with many of my colleagues in the Senate, I 
have worked unsuccessfully to develop and enact a new definition of 
``leased employee.'' The legislation introduced by Senator Mack today 
is another effort to resolve this problem; it will repeal Section 1706 
and thereby renew the ``reasonable basis'' safe haven test to classify 
workers in the computer consultant industry. A 1991 Treasury Department 
report stated that the tax compliance rates of computer consultants 
were somewhat better than those of other workers who are classified as 
independent contractors. That study also found that the treatment of 
technical service workers as independent contractors actually 
``increases tax revenue'' which ``tends to offset'' any revenue loss 
that might result from any noncompliance by such individuals ``because 
direct compensation to independent contractors is substituted for tax 
favored employee fringe benefits.''
  Repealing Section 1706 will allow companies to hire computer 
consultants without fearing a negative ruling from the IRS. We should 
take this step this year, and I look forward to working with Senator 
Mack to gain Congressional passage of this legislation.
                                 ______
                                 
      By Mr. CAMPBELL (for himself and Mr. Inouye):
  S. 1925. A bill to make certain technical corrections in laws 
relating to Native Americans, and for other purposes; to the Committee 
on Indian Affairs.


                   technical corrections legislation

  Mr. CAMPBELL. Mr. President, today I introduce legislation to make 
certain technical corrections to a number of unrelated laws affecting 
Indian tribes.
  I am pleased to be joined in this effort by my friend and colleague 
from Hawaii, Senator Inouye.
  The bill will allow us to address a series of minor amendments to 
Indian laws in one piece of legislation, without having to introduce 
and legislate on a number of separate bills.
  I conferred with the delegation of each state involved on each of 
these amendments and the delegations generally support the respective 
amendment affecting tribes in their states.
  The bill contains a total of 14 amendments addressing a variety of 
issues including: increasing the allowable lease terms of reservation 
lands; reservation boundary adjustments; amendments to facilitate water 
rights settlements; clarification of federal service areas for tribes; 
and a number of others.

[[Page S3140]]

  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. 1925

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

     SECTION 1. AUTHORIZATION FOR 99-YEAR LEASES.

       The second sentence of subsection (a) of the first section 
     of the Act of August 9, 1955 (69 Stat. 539, chapter 615; 25 
     U.S.C. 415), is amended--
       (1) by inserting ``lands held in trust for the Confederated 
     Tribes of the Grand Ronde Community of Oregon,'' after 
     ``lands held in trust for the Cahuilla Band of Indians of 
     California,''; and
       (2) by inserting ``the Cabazon Indian Reservation,'' after 
     ``the Navajo Reservation,''.

     SEC. 2. GRAND RONDE RESERVATION ACT.

       Section 1(c) of the Act entitled ``An Act to establish a 
     reservation for the Confederated Tribes of the Grand Ronde 
     Community of Oregon, and for other purposes,'' approved 
     September 9, 1988 (102 Stat. 1594), is amended--
       (1) by striking ``10,120.68 acres of land'' and inserting 
     ``10,311.60 acres of land''; and
       (2) in the table contained in that subsection, by striking 
     all after


 
 
 
 
   ``4       7      30  Lots 3, 4, SW\1/4\NE\1/4\, SE\1/           240''
                         4\NW\1/4\, E\1/2\SW\1/4\;......
 

     through the end of the table, and inserting the following:


 
 
 
 
   ``6       8       1  N\1/2\SW\1/4\...................           29.59
     6       8      12  W\1/2\SW\1/4\NE\1/4\, SE\1/                21.70
                         4\SW\1/4\NE\1/4\NW\1/4\, N\1/
                         2\SE\1/4\NW\1/4\, N\1/2\SW\1/
                         4\SW\1/4\SE\1/4\...............
     6       8      13  W\1/2\E\1/2\NW\1/4\NW\1/4\......            5.31
     6       7       7  E\1/2\E\1/2\....................           57.60
     6       7       8  SW\1/4\SW\1/4\NW\1/4\, W\1/                22.46
                         2\SW\1/4\......................
     6       7      17  NW\1/4\NW\1/4\, N\1/2\SW\1/                10.84
                         4\NW\1/4\......................
     6       7      18  E\1/2\NE\1/4\...................           43.42
                                                         ---------------
     6  ......  ......        Total.....................    10,311.60''.
 

     SEC. 3. SAN CARLOS APACHE WATER RIGHTS SETTLEMENT.

       Section 3711(b) of the San Carlos Apache Tribe Water Rights 
     Settlement Act of 1992 (106 Stat. 4752) is amended by 
     striking ``subsections (c) and (d) of section 3704'' 
     inserting ``section 3704(d)''.

     SEC. 4. YUROK SETTLEMENT RECOGNITION.

       Section 4 of Public Law 98-458 (25 U.S.C. 1407) is 
     amended--
       (1) in paragraph (2), by striking ``or'' at the end;
       (2) in paragraph (3), by inserting ``or'' at the end; and
       (3) by inserting after paragraph (3) the following:
       ``(4) are distributed pursuant to--
       ``(A) the judgment of the United States Claims Court (which 
     was subsequently reorganized as the United States Court of 
     Federal Claims) in Jesse Short et al. v. United States, 486 
     F2d. 561 (Ct. Cl. 1973); or
       ``(B) any other judgment of the United States Court of 
     Federal Claims in favor of 1 or more individual Indians,''.

     SEC. 5. SELF-DETERMINATION CONTRACT CARRY-OVER EXPENDITURE 
                   AUTHORIZATION.

       Notwithstanding any other provision of law, any funds that 
     were provided to the Ponca Tribe of Nebraska for any of the 
     fiscal years 1992 through 1998 pursuant to a self-
     determination contract with the Secretary of Health and Human 
     Services that the Ponca Tribe of Nebraska entered into under 
     section 102 of the Indian Self-Determination and Education 
     Assistance Act (25 U.S.C. 450f) that were retained by the 
     Ponca Tribe of Nebraska to carry out programs and functions 
     of the Indian Health Service may be used by the Ponca Tribe 
     of Nebraska to purchase or build facilities for the health 
     services programs of the Ponca Tribe of Nebraska.

     SEC. 6. NAVAJO-HOPI LAND DISPUTE SETTLEMENT ACT.

       Section 12 of the Navajo-Hopi Land Dispute Settlement Act 
     (Public Law 104-301; 110 Stat. 3653) is amended--
       (1) in subsection (a)(1)(C), in the first sentence, by 
     inserting ``of surface water'' after ``on such lands''; and
       (2) in subsection (b), striking ``subsection (a)(3)'' both 
     places it appears and inserting ``subsection (a)(1)(C)''.

     SEC. 7. TREATMENT OF CERTAIN DEMONSTRATION PROJECTS.

       (a) In General.--The Secretary of the Interior shall take 
     such action as may be necessary to extend the terms of the 
     projects referred to in section 512 of the Indian Health Care 
     Improvement Act (25 U.S.C. 1660b) so that the term of each 
     such project expires on October 1, 2002.
       (b) Amendment to Indian Health Care Improvement Act.--
     Section 512 of the Indian Health Care Improvement Act (25 
     U.S.C. 1660b) is amended by adding at the end the following:
       ``(c) In addition to the amounts made available under 
     section 514 to carry out this section through fiscal year 
     2000, there are authorized to be appropriated such sums as 
     may be necessary to carry out this section for each of fiscal 
     years 2001 and 2002.''.

     SEC. 8. CONFEDERATED TRIBES OF COOS, LOWER UMPQUA, AND 
                   SIUSLAW INDIANS RESERVATION ACT.

       Section 7(b) of the Coos, Lower Umpqua, and Siuslaw 
     Restoration Act (Public Law 98-481, 98 Stat. 2253) is amended 
     by adding at the end the following:
       ``(4) In Lane County, Oregon, a parcel described as 
     beginning at the common corner to sections 23, 24, 25, and 26 
     township 18 south, range 12 west, Willamette Meridian; then 
     west 25 links; then north 2 chains and 50 links; then east 25 
     links to a point on the section line between sections 23 and 
     24; then south 2 chains and 50 links to the place of origin, 
     and containing .062 of an acre, more or less, situated and 
     lying in section 23, township 18 south, range 12 west, of 
     Willamette Meridian.''.

     SEC. 9. HOOPA VALLEY RESERVATION BOUNDARY ADJUSTMENT.

       Section 2(b) of the Hoopa Valley Reservation South Boundary 
     Adjustment Act (25 U.S.C. 1300i-1 note) is amended--
       (1) by striking ``north 72 degrees 30 minutes east'' and 
     inserting ``north 73 degrees 50 minutes east''; and
       (2) by striking ``south 15 degrees 59 minutes east'' and 
     inserting ``south 14 degrees 36 minutes east''.

     SEC. 10. CLARIFICATION OF SERVICE AREA FOR CONFEDERATED 
                   TRIBES OF SILETZ INDIANS OF OREGON.

       Section 2 of the Act entitled ``An Act to establish a 
     reservation for the Confederated Tribes of Siletz Indians of 
     Oregon'', approved September 4, 1980 (94 Stat. 1073 and 
     1074), is amended--
       (1) in the first sentence, by striking ``The Secretary'' 
     and inserting ``(a) The Secretary''; and
       (2) by adding at the end the following:
       ``(b) Subject to the express limitations under sections 4 
     and 5, for purposes of determining eligibility for Federal 
     assistance programs, the service area of the Confederated 
     Tribes of the Siletz Indians of Oregon shall include Benton, 
     Clackamas, Lane, Lincoln, Linn, Marion, Multnomah, Polk, 
     Tillamook, Washington, and Yamhill Counties in Oregon.''.

     SEC. 11. MICHIGAN INDIAN LAND CLAIMS SETTLEMENT.

       Section 111 of the Michigan Indian Land Claims Settlement 
     Act (111 Stat. 2665) is amended--
       (1) by striking ``The eligibility'' and inserting the 
     following:
       ``(b) Treatment of Funds for Purposes of Certain Federal 
     Programs and Benefits.--The eligibility''; and
       (2) by inserting before subsection (b), as designated by 
     paragraph (1) of this section, the following:
       ``(a) Treatment of Funds for Purposes of Income Taxes.--
     None of the funds distributed pursuant to this Act, or 
     pursuant to

[[Page S3141]]

     any plan approved in accordance with this Act, shall be 
     subject to Federal or State income taxes.''.

     SEC. 12. MISCELLANEOUS TECHNICAL CORRECTIONS.

       (a) Authorization.--Section 711(h) of the Indian Health 
     Care Improvement Act (25 U.S.C. 1665j(h)) is amended by 
     striking ``for each'' and all that follows through ``2000,'' 
     and inserting ``for each of fiscal years 1996 through 
     2000,''.
       (b) Reference.--Section 4(12)(B) of the Native American 
     Housing Assistance and Self-Determination Act of 1996 (25 
     U.S.C. 4103(12)(B)) is amended by striking ``Indian Self-
     Determination and Education Assistance Act of 1975'' and 
     inserting ``Indian Self-Determination and Education 
     Assistance Act (25 U.S.C. 450 et seq.)''.

     SEC. 13. TRANSFER OF WATER RIGHTS.

       The Jicarilla Apache Tribe Water Rights Settlement Act (106 
     Stat. 2237 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 12. TRANSFER OF WATER RIGHTS.

       ``(a) In General.--In accordance with the requirements of 
     section 2116 of the Revised Statutes (25 U.S.C. 177), the 
     transfer of water rights set forth in paragraph (5) of the 
     stipulation and settlement agreement between the Jicarilla 
     Apache Tribe and other parties to the case referred to in 
     section 8(e)(1)(B)(ii), that was executed on October 7, 1997, 
     is approved.
       ``(b) Effective Date.--The approval under subsection (a) 
     shall become effective on the date of entry of a partial 
     final decree by the court for the case referred to in that 
     subsection that quantifies the reserved water rights claims 
     of the Jicarilla Apache Tribe.''.

     SEC. 14. NATIVE HAWAIIAN HEALTH SCHOLARSHIP PROGRAM.

       (a) Eligibility.--Section 10(a)(1) of the Native Hawaiian 
     Health Care Act of 1988 (42 U.S.C. 11709(a)(1)) is amended by 
     striking ``meet the requirements of section 338A of the 
     Public Health Service Act (42 U.S.C. 2541)'' and inserting 
     ``meet the requirements of paragraphs (1), (3), and (4) of 
     section 338A(b) of the Public Health Service Act (42 U.S.C. 
     254l(b))''.
       (b) Terms and Conditions.--Section 10(b)(1) of the Native 
     Hawaiian Health Care Act of 1988 (42 U.S.C. 11709(b)(1)) is 
     amended--
       (1) in subparagraph (A), by inserting ``identified in the 
     Native Hawaiian comprehensive health care master plan 
     implemented under section 4'' after ``health care 
     professional'';
       (2) by redesignating subparagraphs (B) through (D) as 
     subparagraphs (C) through (E), respectively;
       (3) by inserting after subparagraph (A) the following:
       ``(B) the primary health services covered under the 
     scholarship assistance program under this section shall be 
     the services included under the definition of that term under 
     section 12(8),'';
       (4) by striking subparagraph (D), as redesignated, and 
     inserting the following:
       ``(D) the obligated service requirement for each 
     scholarship recipient shall be fulfilled through the full-
     time clinical or nonclinical practice of the health 
     profession of scholarship recipient, in an order of priority 
     that would provide for practice--
       ``(i) first, in any 1 of the 5 Native Hawaiian health care 
     systems, and
       ``(ii) second, in--

       ``(I) a health professional shortage area or medically 
     underserved area located in the State of Hawaii, or
       ``(II) geographic area or facility that is--

       ``(aa) located in the State of Hawaii, and
       ``(bb) has a designation that is similar to a designation 
     described in subclause (I) made by the Secretary, acting 
     through the Public Health Service,'';
       (5) in subparagraph (E), as redesignated, by striking the 
     period and inserting a comma; and
       (6) by adding at the end the following:
       ``(F) the obligated service of a scholarship recipient 
     shall not be performed by the recipient through membership in 
     the National Health Service Corps, and
       ``(G) the requirements of sections 331 through 338 of the 
     Public Health Service Act (42 U.S.C. 254d through 254k), 
     section 338C of that Act (42 U.S.C. 254m), other than 
     subsection (b)(5) of that section, and section 338D of that 
     Act (42 U.S.C. 254n) applicable to scholarship assistance 
     provided under section 338A of that Act (42 U.S.C. 254l) 
     shall not apply to the scholarship assistance provided under 
     subsection (a) of this section.''.
                                 ______
                                 
      By Mr. GRASSLEY:
  S. 1926. A bill for the relief of Regine Beatie Edwards; to the 
Committee on the Judiciary.


                       private relief legislation

  Mr. GRASSLEY. Mr. President, today I am proposing a private relief 
bill, under the Immigration and Nationality Act, that would classify 
Regine Beatie Edwards as a child, and therefore, allow her to become a 
citizen of the United States.

  This bill originates from a request of Mr. Stan Edwards, a United 
States citizen and Regine's adopted father, concerning his daughter's 
naturalization application. Regine Beatie Edwards was born on August 3, 
1980 in Germany and arrived in the United States with her mother on 
October 16, 1994. In 1997, Mr. Edwards, on several occasions, contacted 
the Immigration and Naturalization Service to obtain the proper form to 
apply for his daughter's naturalization. In response, the INS sent Mr. 
Edwards the form N-643, Application for Certificate in Behalf of an 
Adopted Child, and notified him that the adoption must be completed and 
that the application must be submitted by his daughter's 18th birthday. 
On January 13, 1997, Regine was legally adopted by Mr. Edwards. At this 
time, Regine was 16\1/2\ years old. After the completion of the 
adoption, Mr. Edwards delivered his daughter's application, in person, 
to the INS office in Omaha, Nebraska on March 27, 1997.
  Over the following months, Mr. Edwards became concerned about the 
amount of time that had passed since the submission of the application 
to the INS. In January of 1998, the INS reported that Regine Edwards' 
application was to be denied because the adoption had not been 
completed by the child's 16th birthday and that the form N-643 was the 
incorrect form for application. This new information contradicted what 
the INS had previously told Mr. Edwards that Regine had to be adopted 
by her 18th birthday. The INS indicated that Mr. Edwards' daughter had 
met three of the four qualifications to qualify for citizenship. As a 
result of this misinformation, Regine did not meet the qualification of 
an adoption by a citizen parent before the child had reached the age of 
sixteen. In response to the incorrect information given in this case, 
the INS refunded the money for the N-643 application to Mr. Edwards.
  I feel that Regine Edwards should not be denied citizenship due to 
the wrong information provided by the Immigration and Naturalization 
Service. The Edwards family fulfilled the qualifications that they were 
originally told by the INS were necessary. Unfortunately, Mr. Edwards 
was misinformed which has cost his daughter the opportunity for 
citizenship at this time. Mr. President, I ask you and my fellow 
colleagues to support this young woman by allowing her to fulfill her 
wish to become a United States citizen and not deprive her of this 
opportunity.
                                 ______
                                 
      By Ms. MOSELEY-BRAUN:
  S. 1927. A bill to amend section 2007 of the Social Security Act to 
provide grant funding for 20 additional Empowerment Zones, and for 
other purposes; to the Committee on Finance.


              the empowerment zone enhancement act of 1998

  Ms. MOSELEY-BRAUN. Mr. President, it gives me great pleasure to 
introduce the Empowerment Zone Enhancement Act of 1998. This 
legislation, I believe, will build on the economic success we have 
built over the last several years.
  We have worked to make this the strongest economy in a generation--by 
balancing the budget, investing in education and training, and opening 
up new markets for American products around the world. But we have also 
worked to make this the most inclusive economy in history, so everyone 
has a chance to participate, and no one is left behind. Further, we 
have stressed Community Empowerment. A strategy that gives people the 
tools--and acts as a catalyst for community collaboration--then 
communities can tap the ingenuity and enthusiasm of every citizen, and 
restore our downtowns and distressed areas to a level even our 
grandparents would be proud of.
  I believe that we are beginning to see results in this Community 
Empowerment Philosophy. The Empowerment Zone Initiative is the 
cornerstone program to ensure that all Americans benefit from the 
strong economy. The purpose of the EZ/EC Initiative is to assist 
distressed urban and rural communities to develop and implement 
holistic revitalization programs. In the first round of the Initiative, 
105 urban and rural EZ's and EC's were designated.
  This Initiative has not only produced the intended benefits of 
creating economic opportunity, broad-based community partnerships and 
sustainable community development, but has also had far-reaching spin-
off benefits in bringing together all segments of the EZ/ECs around the 
goal of community revitalization.
  Over $4 Billion in private investment has been leveraged in the EZ 
and EC's. Nearly 20,000 jobs have been created that have been filled by 
people who have previously not had access to economic opportunity. 
Entrepreneurship

[[Page S3142]]

opportunities have been created for people with a dream and the 
economic opportunity to see that dream realized. Job training and 
education opportunities have been created for nearly 45,000 residents. 
More than 12,000 Housing units have been constructed or rehabilitated. 
Communities have addressed public safety, infrastructure and 
environmental clean-up needs through more than 350 programs. More than 
52,000 children, youth and adults have been provided with services to 
help overcome challenges and contribute to their communities growth. In 
short, the EZ/EC Initiative has proven to be a successful holistic 
approach to community revitalization and economic development.
  The Taxpayer Relief Act of 1997 authorized designation of 20 
additional Empowerment Zones (15 urban and 5 rural), and provided for 
tax incentives for these new zones. However, that Act did not provide 
the flexible grant funding critical to the core concept and mission of 
the EZ/EC Initiative. This bill provides for $1.7 billion in grant 
funds over a 10-year period, $1.5 billion for the urban zones and $0.2 
billion for the rural zones. The application process for the second 
round of Empowerment Zones will begin in a few weeks. Communities will 
have several months to put together a comprehensive strategic plan that 
leverages private investment and provides for economic opportunity.
  We can rebuild even our poorest areas--if all the people in the 
community get together and decide to do it, and then find the tools 
they need to get it done. That's why we are so committed to our 
approach. We believe in government as a catalyst--helping to bring 
communities together to plan their future, and giving them the tools 
they need to reach that future. And it's working. For the first time in 
30 years, we're seeing success.
  From the South Bronx to areas of the Mississippi Delta to South 
Central LA to North Kenwood in Chicago--there is a growing American 
renaissance that is turning abandoned buildings, empty lots, and crime-
ridden street corners into new homes, new hope and new opportunity for 
the millions of Americans. This success makes us more and more 
convinced we're on the right track to reverse decades of decay, and to 
remake America's distressed areas into sources of pride and prosperity.
  The hardest part is getting started, and we've got it started now all 
across the country. Now it's just a matter of moving up the momentum by 
expanding the number of zones. With communities working from the 
inside, the federal government helping draw investment from the 
outside--I know this is a battle we're going to win.
  I urge all of my colleagues to join me in supporting quick passage of 
this legislation. I ask unanimous consent that the full 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. 1927

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled, That this 
     Act may be cited as the ``Empowerment Zone Enhancement Act of 
     1998''.

     SEC. 2. FUNDING ENTITLEMENT FOR ADDITIONAL ENTERPRISE ZONES.

       (a) Entitlement.--Section 2007(a)(1) of the Social Security 
     Act (42 U.S.C. 1397f(a)) is amended--
       (1) in subparagraph (A), by striking ``in the State; and'' 
     and inserting ``in the State designated pursuant to section 
     1391(b) of the Internal Revenue Code of 1986;'';
       (2) in subparagraph (B), by striking the period at the end 
     and inserting ``; and''; and
       (3) by adding after subparagraph (B) the following new 
     subparagraph:
       ``(C) 10 grants under this section for each qualified 
     empowerment zone in the State designated pursuant to section 
     1391(g) of such Code.''.
       (b) Amount of Grants.--Section 2007(a)(2) of that Act (42 
     U.S.C. 1397f(a)(2)) is amended--
       (1) in the heading of subparagraph (A), by inserting 
     ``original'' before ``empowerment'';
       (2) in subparagraph (A), in the matter preceding clause 
     (i), by inserting ``described in paragraph (1)(A)'' after 
     ``empowerment zone'';
       (3) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (4) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) Additional empowerment grants.--The amount of each 
     grant to a State under this section for a qualified 
     empowerment zone described in paragraph (1)(C) shall be--
       ``(i) if the zone is designated in an urban areas, 
     $10,000,000, or
       ``(ii) if the zone is designated in a rural area, 
     $4,000,000,

     multiplied by the proportion of the population of the zone 
     that resides in the State.''.
       (c) Timing of Grants.--Section 2007(a)(3) of that Act (42 
     U.S.C. 1397f(a)(3)) is amended--
       (1) in the heading of subparagraph (A), by inserting 
     ``original'' before ``qualified'';
       (2) in subparagraph (A), in the matter preceding clause 
     (i), by inserting ``described in paragraph (1)(A)'' after 
     ``empowerment zone''; and
       (3) by adding after subparagraph (B) the following new 
     subparagraph:
       ``(C) Additional qualified empowerment zones.--With respect 
     to each qualified empowerment zone described in paragraph 
     (1)(C), the Secretary shall make--
       ``(i) 1 grant under this subsection to the State in which 
     the zone lies, on the date of the designation of the zone 
     under such part I; and
       ``(ii) 1 grant under this subsection to such State, on the 
     first day of each of the nine fiscal years that begin after 
     the date of the designation.''.
       (d) Funding.--Section 2007(a)(4) of that Act (42 U.S.C. 
     1397f(a)(4)) is amended--
       (1) by relocating and redesignating the matter following 
     the caption as subparagraph (A);
       (2) by inserting ``Original grants.--'' after the 
     subparagraph designation ``(A)'';
       (3) in subparagraph (A), as so redesignated, by inserting 
     before the period ``for empowerment zones and enterprise 
     communities described in subparagraphs (A) and (B) of 
     paragraph (1)''; and
       (4) by adding after subparagraph (A), as so redesignated, 
     the following new subparagraph:
       ``(B) Additional grants.--$1,700,000,000 shall be made 
     available to the Secretary for grants under this section for 
     empowerment zones described in paragraph (1)(C).''.

     SEC. 3. USE OF GRANTS FOR LOAN FUNDS AND SIMILAR 
                   ARRANGEMENTS.

       Section 2007(b) of the Social Security Act (42 U.S.C. 
     1397f(b)) is amended by adding at the end the following new 
     paragraph:
       ``(5)(A) In order to assist disadvantaged adults and youth 
     in achieving and maintaining economic self-support, a State 
     may use amounts paid under this section to fund revolving 
     loan funds or similar arrangements for the purpose of making 
     loans, loan guarantees, financial services, or related 
     activities more accessible to residents, institutions, 
     organizations, or businesses.
       ``(B) Interest earned by, and repayments of principal and 
     interest on loans made from, revolving funds or similar 
     arrangements described in subparagraph (A) shall be credited 
     to such funds.
       ``(C) The funding of, or holding of funds in, a revolving 
     loan fund or similar arrangement in accordance with 
     subparagraph (A), in amounts reasonably necessary to carry 
     out the purposes of such subparagraph (A), shall be deemed to 
     comply with any requirement to minimize the time elapsing 
     between transfer of funds from the United States Treasury and 
     the issuance of payments for program purposes.''.

     SEC. 4. RESPONSIBILITY FOR ENVIRONMENTAL REVIEW.

       Section 2007 of the Social Security Act (42 U.S.C. 1397f) 
     is amended--
       (1) by redesignating subsection (f) as subsection (h); and
       (2) by inserting after subsection (e) the following new 
     subsection:
       ``(f) Environmental Review.--
       ``(1) Execution of responsibility by the secretary of 
     housing and urban development and the secretary of 
     agriculture.--
       ``(A) Applicability.--This subsection shall apply to grants 
     under this section in connection with empowerment zones and 
     enterprise communities designated under section 1391(a) of 
     the Internal Revenue Code of 1986 and empowerment zones 
     designated under section 1391(g) of such Code--
       ``(i) by the Secretary of Housing and Urban Development in 
     the case of those located in urban areas; and
       ``(ii) by the Secretary of Agriculture in the case of those 
     located in rural areas.
       ``(B) Execution of responsibility.--With respect to grants 
     described in subparagraph (A), the Secretary of Housing and 
     Urban Development and the Secretary of Agriculture, as 
     appropriate, shall execute the responsibilities under the 
     National Environmental Policy Act of 1969 and other 
     provisions of law which further the purposes of such Act (as 
     specified in under this section if the State, unit of general 
     local government, or Indian tribe, as designated by the 
     Secretary in accordance with regulations issued by the 
     Secretary under paragraph (2)(B), assumes all of the 
     responsibilities for environmental review, decisionmaking, 
     and action pursuant to such Act, and such other provisions of 
     law as the regulations of the Secretary specify, that would 
     otherwise apply to the Secretary were the Secretary to 
     undertake such projects as Federal projects.
       ``(B) Implementation.--The Secretary of Housing and Urban 
     Development and the Secretary of Agriculture shall each issue 
     regulations to carry out this subsection only after 
     consultation with the Council on Environmental Quality. Such 
     regulations shall--
       ``(i) specify any other provisions of law which further the 
     purposes of the National Environmental Policy Act of 1969 and 
     to which the assumption of responsibility as provided in this 
     subsection applies;

[[Page S3143]]

       ``(ii) provide eligibility criteria and procedures for the 
     designation of a State, unit of general local government, or 
     Indian tribe to assume all of the responsibilities in this 
     section;
       ``(iii) specify the purposes for which funds may be 
     committed without regard to the procedure established under 
     paragraph (3);
       ``(iv) provide for monitoring of the performance of 
     environmental reviews under this subsection;
       ``(v) in the discretion of the Secretary, provide for the 
     provision or facilitation of training for such performance; 
     and
       ``(vi) subject to the discretion of the Secretary, provide 
     for suspension or termination by the Secretary of the 
     assumption under subparagraph (A).
       ``(C) Responsibilities of state, unit of general local 
     government, or indian tribe.--The Secretary's duty under 
     subparagraph (B) shall not be construed to limit any 
     responsibility assumed by a State, unit of general local 
     government, or Indian tribe with respect to any particular 
     release of funds under subparagraph (A).
       ``(3) Procedure.--The Secretary shall approve the release 
     of funds for projects subject to the procedures authorized by 
     this subsection only if, not less than 15 days prior to such 
     approval and prior to any commitment of funds to such 
     projects (except for such purposes specified in the 
     regulations issued under paragraph (2)(B)), the recipient 
     submits to the Secretary a request for such release 
     accompanied by a certification of the State, unit of general 
     local government, or Indian tribe which meets the 
     requirements of paragraph (4). The approval by the Secretary 
     of any such certification shall be deemed to satisfy the 
     Secretary's responsibilities pursuant to paragraph (1) under 
     the National Environmental Policy Act of 1969 and such other 
     provisions of law as the regulations of the Secretary specify 
     insofar as those responsibilities relate to the releases of 
     funds for projects to be carried out pursuant thereto which 
     are covered by such certification.
       ``(4) Certification.--A certification under the procedures 
     authorized by this subsection shall--
       ``(A) be in a form acceptable to the Secretary;
       ``(B) be executed by the chief executive officer or other 
     officer of the State, unit of general local government, or 
     Indian tribe who qualifies under regulations of the 
     Secretary:
       ``(C) specify that the State, unit of general local 
     government, or Indian tribe under this subsection has fully 
     carried out its responsibilities as described under paragraph 
     (2); and
       ``(D) specify that the certifying officer--
       ``(i) consents to assume the status of a responsible 
     Federal official under the National Environmental Policy Act 
     of 1969 and each provision of law specified in regulations 
     issued by the Secretary insofar as the provisions of such Act 
     or other such provision of law apply pursuant to paragraph 
     (2); and
       ``(ii) is authorized and consents on behalf of the State, 
     unit of general local government, or Indian tribe and himself 
     or herself to accept the jurisdiction of the Federal courts 
     for the purpose of enforcement of the responsibilities as 
     such an official.
       ``(5) Approval by states.--In cases in which a unit of 
     general local government carries out the responsibilities 
     described in paragraph (2), the Secretary may permit the 
     State to perform those actions of the Secretary described in 
     paragraph (3). The performance of such actions by the State, 
     where permitted, shall be deemed to satisfy the 
     responsibilities referred to in the second sentence of 
     paragraph (3).''.

     SEC. 5. PERFORMANCE MEASUREMENT AND EVALUATION; GRANT 
                   ADJUSTMENTS.

       Section 2007 of the Social Security Act (42 U.S.C. 1397f), 
     as amended by section 4, in further amended by adding after 
     subsection (f) the following subsection:
       ``(g) Performance Measurement System, Reports, and 
     Evaluations, Grant Adjustments, and Related Matters.--
       ``(1) Applicability.--The requirements of this subsection--
       ``(A) apply to all grants made by a State, from grants to 
     the State under subsection (a)(2)(C), to lead implementing 
     entities (as defined in paragraph (7)) for empowerment zones 
     designated pursuant to section 1391(g) of the Internal 
     Revenue Code of 1986 (26 U.S.C. 1391(g)); and
       ``(B) are in addition to the annual report and biennial 
     audit requirements applicable to States under section 2006.
       ``(2) Performance measurement system.--The lead 
     implementing entity for an empowerment zone shall establish a 
     performance measurement system acceptable to the Secretary to 
     assist in assessing the extent to which its strategic plan is 
     being implemented and funds made available under subsection 
     (a)(2)(C) are being used effectively.
       ``(3) Performance report.--Each lead implementing entity 
     shall submit to the Secretary (and make available to the 
     public upon request), at such time and in such manner as the 
     Secretary shall prescribe, a report including an assessment 
     of the progress the empowerment zone has made toward 
     implementing its strategic plan, and such other information 
     as the Secretary shall prescribe. To the extent practicable, 
     the report shall also include information available to the 
     lead implementing entity with respect to the use of tax 
     incentives available to empowerment zones designated pursuant 
     to section 1391(g) of the Internal Revenue Code of 1986.
       ``(4) Performance evaluations, adjustments, and 
     recordkeeping.--
       ``(A) Performance evaluations.--The Secretary shall 
     regularly evaluate the progress of the lead implementing 
     entity for the empowerment zone in implementing the strategic 
     plan for the zone, on the basis of performance reviews and 
     any other information that the Secretary may require.
       ``(B) Adjustments.--On the basis of the Secretary's 
     evaluation under subparagraph (A), the Secretary may direct 
     the Secretary of Health and Human Services to adjust, reduce, 
     or cancel the grant to a State under subsection (a)(2)(C) for 
     the current or any future fiscal year or years, except that 
     amounts already properly expended by a lead implementing 
     entity on eligible activities under this Act shall not be 
     recaptured or deducted from future grants to the State.
       ``(5) Retention of records.--Each lead implementing entity 
     shall keep such records relating to funds received from 
     grants to the State under subsection (a)(2)(C), including the 
     amounts and disposition of such funds and the types of 
     activities funded, as the Secretary determines to be 
     necessary to enable the Secretary to evaluate the performance 
     of the lead implementing agency and to determine compliance 
     with the requirements of this subsection.
       ``(6) Secretary's access to documents.--The Secretary shall 
     have access, for the purpose of evaluations and examinations 
     pursuant to paragraph (4)(A), to any books, documents, 
     papers, and records of any grantee or other entity or person 
     that are pertinent to grant amounts received in connection 
     with this section.
       ``(7) Definitions.--For purposes of this subsection--
       ``(A) The term `lead implementing entity' means the local 
     government or governments, the governance body of an 
     empowerment zone as specified in the strategic plan, or any 
     non-profit entity that is principal administrator of an 
     empowerment zone.
       ``(B) The term `Secretary' means the Secretary of Housing 
     and Urban Development for purposes of grants under this 
     section with respect to urban areas and means the Secretary 
     of Agriculture for purposes of grants under this section with 
     respect to rural areas, except as the context otherwise 
     indicates.

     SEC. 6. TECHNICAL AMENDMENTS.

       Section 2007(b) of the Social Security Act is amended--
       (1) in paragraph (2), in the matter preceding subparagraph 
     (A), by striking ``to prevent''; and
       (2) in paragraph (4), in the matter preceding subparagraph 
     (A), by striking ``maintain'' and inserting ``maintaining''.
                                 ______
                                 
      By Mr. LEAHY:
  S. 1928. A bill to protect consumers from overcollections for the use 
of pay telephones, to provide consumers with information to make 
informed decisions about the use of pay telephones, and for other 
purposes; to the Committee on Commerce, Science, and Transportation.


               the consumer pay telephone protection act

  Mr. LEAHY. Mr. President, I have voiced my great disappointment many 
times with how the Telecommunications Act of 1966 is costing consumers 
millions of dollars.

  I complained about this at the time that Act passed, and continue to 
be concerned that Vermonters are being taken to the cleaners.
  I was one of five Senators to vote against that bill. I thought it 
was clear then, and it should be clear by now to everyone, that the 
Telecommunications bill means higher costs for consumers.
  As other hi-tech industries, such as computer technology, offer lower 
and lower prices over time--the telephone and cable TV industries are 
presenting consumers with higher and higher charges.
  For example, I am mad as heck that pay phone charges in Vermont went 
up to 35 cents--from 10 cents.
  But what annoys me more is that if I do not have exact change--if I 
use two quarters--the change the phone company keeps is more than the 
ten cents the call used to cost.
  I have been know to say ``keep the change'' in restaurants, or when I 
buy a newspaper.
  But I do not like phone companies taking my change. I am fed up with 
pay phone service providers nickel and diming consumers.
  This bill will make phone companies provide change to consumers at 
the pay phone--or provide a credit in the amount of the lost change to 
the consumer or to states to be used to help consumers.
  My bill will also give the FCC broad powers to give states authority 
to control pay phone rates, if necessary.
  The bill permits pay phone providers in Vermont to issue a credit 
when

[[Page S3144]]

change is not provided to the consumer which would go to Vermont. This 
means that Vermont could provide better pay phone service for public 
safety or health reasons.
  For example, this fund could be used by states to provide better pay 
phone service to those with disabilities, or those living in nursing 
homes. It would provide funding for pay phones to be placed in remote 
areas in case of emergencies.
  I would rather this change go directly to the consumer, and believe 
when this bill is fully implemented that most consumers will not be 
overcharged for calls.
  In the meantime, however, I would rather have the change used to 
benefit Vermonters than go to the phone companies.
  There are over 2 million pay phones in the United States. The 
Washington Post explained on Monday that if 75 percent of those pay 
phones charge 35 cents for a local call and if just one person a day 
overpays 15 cents at each of those phones, companies would get more 
than $230,000 extra a day, or about $7 million a month.

  My guess is that this hugely underestimates the size of this 
windfall.
  Keep in mind this windfall, in Vermont, is on top of the raise from 
10 cents to 35 cents. I have also noticed fewer and fewer phone booths 
except at places such as airports or train stations where consumers are 
in a hurry and may not have time to track down change.
  My bill goes beyond just keeping phone companies from getting 
windfall profits. It calls for a national investigation of monopoly 
pricing and price gouging in the pay telephone markets.
  It goes further than that--it then gives the Federal Communications 
Commission the tough new authority to deal with this problem. It allows 
them to give states the right to establish rates for local calls if 
necessary to stop this overcharging. Remember, when Vermont was in 
charge before the Telecommunications Act passed the pay phone rates 
were a dime.
  My bill will also encourage the development of new technologies so 
that consumers are not overcharged for local phone calls to begin with.
  My bill also provides funding--and the money comes from telephone 
companies not consumers--for public interest pay phones. These are 
phones which the FCC has determined each state should provide to its 
citizens in areas where there otherwise might not be a phone. They did 
this in a decision issued on October 7, 1996.
  This was a good idea--but there is no federal funding to implement 
the decision.
  In addition, it is uneconomic for a phone company to provide a pay 
phone in remote areas of Vermont. But in a roadside emergency these 
phones could be vital. My bill would provide for this program using 
money that now just goes out of your pockets to the phone companies.
  Also, public interest pay phones could be placed in nursing homes, 
emergency homeless shelters, emergency rooms in hospitals, and other 
similar places.
  Emergency 911 calls would be free from these phones, and other calls 
would cost but at least there would be a phone in a location where 
there otherwise might not be one.
  What is best about this approach is that Vermont would decide how to 
use this funding that now goes directly into the coffers of phone 
companies.
  I have also designed the bill in a way that prevents phone companies 
from trying to take advantage of this situation.
  The bill gives the FCC board powers to ensure that the pay phone 
providers ``do not pass any costs relating to such compliance to 
consumers.''
  It also mandates that the FCC monitor this situation and ensure that 
implementation does not result in any reduction in pay phone service.
  The bill requires that pay phone companies which charge more than 10 
cents for local phone calls provide either cash change or other 
alternatives to consumers, or credits to states equal to the value of 
the unpaid change.
  These credits to states would be used by states for 
telecommunications activities that promote the public interest, such as 
safety, health, emergency services, or education and promote public 
interest pay phones in hospitals, schools, emergency homeless shelters, 
facilities for the disabled, and at similar types of locations.
  The bill directs the FCC, within one year of the bill's enactment, to 
issue proposed rules that apply to pay phone providers that charge more 
than 10 cents for local pay phone calls. Companies would have to 
provide for cash change or automatically credit the appropriate public 
service agency in the respective states to account for instances in 
which change is not provided at the pay phone.
  The bill requires that the FCC ensure that pay phone providers do not 
pass any costs of compliance with this bill on to consumers and that 
pay phone providers in no way reduce or limit service based on this 
anti-windfall requirement.
  The FCC is given major new powers to take action to prevent any price 
gouging including giving states back the authority to regulate the 
price of local calls.
  The bill requires that small stickers or other notice be posted on 
pay phones for the purpose of advising consumers when cash change will 
not be provided.
  The bill directs the FCC to reconsider its rules under which the FCC 
removed authority from states to regulate the charge for local calls 
made over pay phones. The FCC would reexamine the need for states to 
have greater decision making roles where local competition between pay 
phone providers is not present.
  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. 1928

       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 ``Consumer Pay Telephone 
     Protection Act of 1998''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress makes the following findings:
       (1) Some payphone service providers have increased the 
     charge for the use of a coin-operated pay telephone for a 
     local call to 35 cents but have not put into place a system 
     for providing change to users of such telephones for amounts 
     deposited in such telephones in excess of such charge.
       (2) Payphone service providers should charge pay telephone 
     users only for the actual time of use of pay telephones.
       (3) Most consumers, if given a choice, would prefer that 
     any amount of such excess deposits that are not refunded to 
     consumers be used for pay telephones for public health, 
     safety, and welfare purposes rather than have such excess 
     deposits accrue to the financial benefit of payphone service 
     providers.
       (4) There are approximately 2,000,000 pay telephones in the 
     United States, and payphone service providers accrue 
     substantial revenue at the expense of Americans who do not 
     have the exact amount of the charge for their use.
       (5) A decision of the Federal Communications Commission to 
     deregulate the provision of payphone service was premature 
     and did not address adequately the need for local competition 
     that would benefit users of pay telephones.
       (6) The decision of the Commission does not promote the 
     widespread deployment of affordable payphone service that 
     would benefit the general public, nor does the decision 
     promote the widespread deployment of public interest 
     telephones.
       (7) The use of coin-operated pay telephones represents an 
     increasing commercial activity that substantially affects 
     interstate commerce.
       (8) Public interest telephones should be maintained in each 
     State and should be provided to promote the public safety, 
     health, and welfare.
       (b) Purpose.--The purpose of this Act is--
       (1) to require payphone service providers--
       (A) to provide cash change to pay telephone users who 
     deposit amounts for local telephone calls in excess of the 
     amounts charged for such calls; or
       (B) in the event that such providers do not provide such 
     change, to transfer amounts equal to such change to 
     appropriate State entities for public interest purposes 
     related to telephone service;
       (2) to encourage such changes in pay telephone technology 
     as are needed to assure that payphone service providers--
       (A) do not overcharge pay telephone users who do not have 
     the exact amount of the charge for local pay telephone calls; 
     and
       (B) do not charge pay telephone users for any time in which 
     pay telephones are not actually in use; and
       (3) to require the Federal Trade Commission to determine--
       (A) whether dysfunctions exist in the market for payphone 
     service including locational monopolies in which the size of 
     the market concerned results in the availability of payphone 
     service from a single provider; and

[[Page S3145]]

       (B) whether rates for coin-operated pay telephones for 
     local telephone calls are market based.

     SEC. 3. PUBLIC INTEREST PAY TELEPHONES.

       Section 276(b)(2) of the Communications Act of 1934 (47 
     U.S.C. 276(b)(2)) is amended to read as follows:
       ``(2) Public interest pay telephones.--
       ``(A) Sense of congress.--It is the sense of Congress 
     that--
       ``(i) in the interest of the public health, safety, and 
     welfare, public interest pay telephones should be available 
     and maintained in locations where there would not otherwise 
     likely be a pay telephone; and
       ``(ii) such public interest pay telephones should be fairly 
     and equitably supported.
       ``(B) Use of funds.--In accordance with such regulations as 
     the Commission shall prescribe, each State agency that 
     receives amounts under subsection (c)(2)(A) shall use such 
     amounts to promote or otherwise support the installation, 
     maintenance, and use of public interest pay telephones, 
     including specially designed payphones for the disabled and 
     the provision of payphone service in remote locations, 
     nursing homes, emergency homeless shelters, hospitals, 
     facilities that assist the disabled, schools, and other 
     appropriate locations determined by the State agency 
     concerned.''.

     SEC. 4. REQUIREMENT FOR CHANGE AT PAY TELEPHONES.

       (a) Requirement.--Section 276 of the Communications Act of 
     1934 (47 U.S.C. 276), as amended by section 3 of this Act, is 
     further amended--
       (1) by redesignating subsections (c) and (d) as subsections 
     (d) and (e), respectively; and
       (2) by inserting after subsection (b) the following new 
     subsection (c):
       ``(c) Change at Pay Telephones.--
       ``(1) Requirement.--
       ``(A) In general.--Except as provided in paragraph (2), a 
     payphone service provider shall provide any individual using 
     a pay telephone of such provider to make a telephone call 
     described in subparagraph (B) an amount of cash change equal 
     to the amount (if any) by which the amount deposited by the 
     individual for the call exceeds the charge for the call.
       ``(B) Covered telephone calls.--Subparagraph (A) applies to 
     any local telephone call the charge for which exceeds 10 
     cents.
       ``(2) Alternative use of excess collections.--
       ``(A) Transfer.--In accordance with such regulations as the 
     Commission shall prescribe, a payphone service provider may, 
     in lieu of providing cash change under paragraph (1)--
       ``(i) transfer any excess amounts collected by the provider 
     at pay telephones to the State agency in the State in which 
     the telephones are located that is responsible for the 
     support of public interest pay telephones under subsection 
     (b)(2); or
       ``(ii) if the State has no such agency by reason of a 
     determination under subparagraph (B), transfer such excess 
     amounts to the Commission for use under subparagraph (D).
       ``(B) State option.--
       ``(i) State option.--The chief executive officer of each 
     State may determine whether or not to permit the transfer of 
     funds to an agency of such State under subparagraph (A).
       ``(ii) Revocation.--The chief executive officer of a State 
     may revoke any previous decision with respect to the State 
     under this subparagraph.
       ``(iii) Notice.--The chief executive officer of a State 
     shall notify the Commission, in writing, of any determination 
     or revocation of a determination under this subparagraph.
       ``(C) Use by states.--
       ``(i) In general.--A State agency receiving amounts under 
     subparagraph (A) shall utilize such amounts for purposes of 
     promoting and supporting public interest pay telephones in 
     the State under subsection (b)(2).
       ``(ii) Additional use.--In the event that amounts received 
     by a State agency under subparagraph (A) exceed the amounts 
     determined by the agency to be required to properly promote 
     and support public interest pay telephones in the State, the 
     agency shall utilize the excess amounts for purposes relating 
     to providing universal service or improving telephone service 
     in the State under section 254.
       ``(D) Use by commission.--
       ``(i) Deposit.--The Commission shall deposit any amounts 
     received by the Commission under subparagraph (A) in an 
     account in the Treasury established for that purpose.
       ``(ii) Availability.--Under such regulations as the 
     Commission shall prescribe, the Commission shall utilize 
     amounts in the account under clause (i) to assist States that 
     receive amounts under subparagraph (A) with additional 
     assistance to promote and support public interest pay 
     telephones under subsection (b)(2).
       ``(E) Notice to consumers.--
       ``(i) In general.--In the event a payphone service provider 
     decides to transfer excess amounts deposited at any given pay 
     telephone under subparagraph (A) for purposes of supporting 
     public interest pay telephones under subsection (b)(2), the 
     provider shall post at such pay telephone a notice informing 
     potential users of such pay telephone that any such excess 
     amount shall not be returned as cash change or credit but 
     shall be utilized for such purposes.
       ``(ii) Additional notice.--Nothing in clause (i) shall be 
     interpreted to limit a State from requiring additional 
     notices with respect to the matters set forth in that clause.
       ``(3) Regulations.--
       ``(A) Requirement.--Not later than one year after the date 
     of enactment of the Consumer Pay Telephone Protection Act of 
     1998, the Commission shall prescribe the regulations required 
     under this subsection.
       ``(B) Additional elements.--The regulations shall--
       ``(i) provide for the monitoring of the compliance of 
     payphone service providers with the provisions of this 
     subsection;
       ``(ii) ensure that such providers do not pass any costs 
     relating to such compliance to consumers; and
       ``(iii) ensure that the implementation of such provisions 
     do not result in any reduction in payphone service, including 
     the imposition of time limits on local telephone calls or 
     other reductions or limitations in such service.
       ``(C) Effective date.--The regulations shall provide that 
     the provisions of the regulations take effect not earlier 
     than 6 months after the date of the final issuance of the 
     regulations and not later than 12 months after that date.''.
       (b) Study of Alternative Technologies.--
       (1) In general.--Not later than 18 months after the date of 
     enactment of this Act, the Federal Communications Commission 
     shall submit to Congress a report on the availability of 
     technologies or systems that permit persons who do not have 
     exact change to utilize pay telephones for local telephone 
     calls without being overcharged for such calls.
       (2) Elements.--The report shall address the use of tokens, 
     cash debit cards, systems for crediting the monthly telephone 
     bills of individuals who use pay telephones, and such other 
     technologies and systems as the Commission considers 
     appropriate.

     SEC. 5. STUDY OF COMPETITIVENESS OF PAY TELEPHONE MARKET.

       (a) Study.--
       (1) In general.--The Federal Trade Commission shall, in 
     consultation with the Federal Communications Commission, 
     carry out a study of competition in the market for intrastate 
     payphone service, including--
       (A) whether or not locational monopolies in such service 
     exist by reason of the size of particular markets for such 
     service;
       (B) whether or not potential users of such service are 
     effectively barred from choice in such service in particular 
     markets by reason of difficulties in identifying a variety of 
     payphone service providers in such markets;
       (C) whether or not rates for local pay telephone calls are 
     market-based; and
       (D) whether or not there is evidence of monopoly pricing in 
     such service.
       (2) Scope of comment.--In carrying out the study, the 
     Federal Trade Commission shall seek comment from a variety of 
     sources, including State and local public entities, consumers 
     and consumer representatives, and payphone service providers 
     and their representatives.
       (b) Report.--Not later than one year after the date of 
     enactment of this Act, the Federal Trade Commission shall 
     submit to Congress a report on the results of the study 
     carried out under subsection (a). The report shall include 
     the findings of the Commission with respect to the matters 
     set forth under paragraph (1) of that subsection.
       (c) Federal Communications Commission Action.--
     Notwithstanding any provision of the Communications Act of 
     1934 (47 U.S.C. 151 et seq.), the Federal Communications 
     Commission may, as a result of the study under subsection 
     (a), conduct a rule-making proceeding in order to accomplish 
     any of the following:
       (1) To set limitations on rates for local pay telephone 
     calls.
       (2) To permit the States to establish rates for such calls 
     on a cost basis.
       (3) To set limitations on the commissions that payphone 
     service providers may pay to persons who lease space to such 
     providers for pay telephones.
       (4) To prohibit payphone service providers from entering 
     into exclusive contracts with persons who lease space to such 
     providers for pay telephones which contracts cover multiple 
     locations.
                                 ______
                                 
      By Mrs. HUTCHISON (for herself, Mr. Murkowski, Mr. Nickles, and 
        Mr. Domenici):
  S. 1929. A bill to amend the Internal Revenue Code of 1986 to provide 
tax incentives to encourage production of oil and gas within the United 
States, and for other purposes; to the Committee on Finance.


                  the u.s. ENERGY EcOnOmIc GRowTH aCT

  Mrs. HUTCHISON. Mr. President, a healthy domestic energy industry is 
critical to our nation's security and our economic well-being. That is 
why I am pleased today to introduce the U.S. Energy Economic Growth 
Act. My legislation provides much needed tax relief for the domestic 
oil and gas industry. It is a part of the omnibus Domestic Oil and Gas 
Security Enhancement Plan that I've developed with Senator Murkowski 
and Senator Nickles. Together, our comprehensive legislation represents 
the most sweeping tax and regulatory relief since before the Gulf War.
  Our package could not come at a more critical time. The price of 
crude

[[Page S3146]]

oil recently dipped to its lowest level since April 1994. This downturn 
in world oil prices has exposed America's independent producers to 
great risk. If current market conditions persist, as is expected, 
thousands of wells could become uneconomic and be shut-in or plugged. 
It is time we acted to ensure this does not happen, and my bill is the 
first step in that direction.
  The U.S. Energy Economic Growth Act will do three things.


                        marGINAL weLL taX RELief

  First, this bill provides tax relief for producers who operate 
marginal oil and gas wells. A marginal oil well is one that produces 
less than 15 barrels per day or produces heavy oil. A marginal gas well 
is one that produces less than 90 thousand cubic feet a day. Those who 
operate marginal wells are most at risk in times of lower oil prices. 
The National Petroleum Council (NPC) reported that America has over 
500,000 marginal wells that collectively produce nearly 700 million 
barrels of oil equivalent each year. Texas alone has over 100,000 
marginal wells. These wells contribute nearly 80,000 jobs and generate 
close to $14 billion each year in economic activity.
  In 1996, abandonment or plugging of these marginal wells led to a 
loss of more than 3,600 high-quality jobs and a loss of $84.1 million 
in earnings in 1996. States and federal governments lost $18.5 million 
in severance taxes and an equal amount of ad valorem taxes from wells 
plugged during 1996.
  Many domestic oil and gas businesses rely on these marginal wells as 
the backbone of their operations. However, as global market factors 
cause commodity prices to fluctuate, the economic viability of these 
wells is precarious. Marginal wells provide countless jobs, energy 
security and federal tax and royalty revenues. The tax credits in my 
bill will help keep these marginal wells in production and Americans 
employed. My bill provides for a maximum $3 per barrel tax credit for 
the first 3 barrels of daily production from an existing oil well. In 
addition, marginal gas well will receive $0.50 per mcf for the first 18 
mcf of daily natural gas production.
  In addition, this tax credit would only occur when prices are low. 
This credit is phased out when prices for oil and natural gas increase.


                        inactive well tax relief

  The second plank of my bill creates an incentive for independent oil 
and gas producers to recover abandoned wells and put them back into 
production. This provision allows producers to exclude income 
attributable to oil and natural gas from a recovered inactive well. In 
order to qualify, the oil or gas well must have been abandoned for at 
least two years prior to the date of enactment. In addition, this 
incentive would only apply to wells that are brought back on line 
within 5 years of the date of enactment.
  This economic incentive has a proven track record. In Texas, a 
similar law resulted in returning over 6,000 wells to production. The 
estimated annual production from these wells is worth $565 million at 
the wellhead, and approximately $1.65 billion to the economy of Texas 
each year. The wealth from this incentive provides over 10,000 direct 
and indirect jobs each year. The Texas legislature receives an 
estimated $22 million in additional annual tax revenues, over ten 
thousand jobs have been created, and $1.65 billion a year in wealth is 
generated. Over 90,000 idle wells remain in Texas. This incentive 
package would help return them to production and allow them to 
contribute to a strong economy in America.
  Thirteen states have inactive well recovery programs, including 
Alaska, Arkansas, California, Florida, Kansas, Louisiana, Mississippi, 
Montana, New Mexico, North Dakota, Oklahoma, Texas, Wyoming. This 
federal program would allow the benefits experienced by Texas and other 
states to continue to grow and to be shared by the rest of the country.
  Importantly, this provision increases the stream of revenue going 
into the federal government in two ways. First, royalty owners will pay 
federal taxes on income generated from the recovered well. Currently, 
no taxes are paid on these wells because they are inactive. Returning 
them to production will increase the royalties paid to the federal 
government. Secondly, the new jobs created will add significantly to 
the taxes paid on wages and earnings.
  This one-time shot-in-the-arm for the industry will provide countless 
jobs and considerable economic benefit to our communities.


                            other incentives

  The third provision of my bill makes changes to the tax code that 
makes it easier for producers to take full advantage of already 
existing tax credits. Under these provisions, both geological and 
geophysical expenditures on domestic production and delay rental 
payments would be allowed to be expensed at the time incurred rather 
than capitalized over the length of the well. This election would allow 
producers more control over their income stream without changing the 
amount of tax.
  In addition, two relatively new types of drilling methods are 
included as a qualified enhanced oil recovery method for purposes of 
the Enhanced Oil Recovery Tax Credit. These two drilling methods, 
hydro-injection and horizontal drilling, would be included on the list 
of qualified methods. They provide us with some of the most innovative 
means of drilling and we should encourage producers to utilize these 
and other productive methods.
  Mr. President, my legislation provides incentives for the most 
threatened parts of the oil and gas industry. Relief for marginal and 
inactive wells encourages full utilization of existing wells, clearly 
provides jobs and helps the local economy grow. I encourage my 
colleagues to support this legislation and their local communities by 
making marginal and inactive wells productive contributors to the local 
economy. Our energy security depends upon it.
  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. 1929

       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 ``United States Energy 
     Economic Growth Act''.
          TITLE I--PRODUCTION FROM MARGINAL AND INACTIVE WELLS

     SEC. 101. TAX CREDIT FOR MARGINAL DOMESTIC OIL AND NATURAL 
                   GAS WELL PRODUCTION.

       (a) Credit for Producing Oil and Gas From Marginal Wells.--
     Subpart D of part IV of subchapter A of chapter 1 of the 
     Internal Revenue Code of 1986 (relating to business credits) 
     is amended by adding at the end the following new section:

     ``SEC. 45D. CREDIT FOR PRODUCING OIL AND GAS FROM MARGINAL 
                   WELLS.

       ``(a) General Rule.--For purposes of section 38, the 
     marginal well production credit for any taxable year is an 
     amount equal to the product of--
       ``(1) the credit amount, and
       ``(2) the qualified crude oil production and the qualified 
     natural gas production which is attributable to the taxpayer.
       ``(b) Credit Amount.--For purposes of this section--
       ``(1) In general.--The credit amount is--
       ``(A) $3 per barrel of qualified crude oil production, and
       ``(B) 50 cents per 1,000 cubic feet of qualified natural 
     gas production.
       ``(2) Reduction as oil and gas prices increase.--
       ``(A) In general.--The $3 and 50 cents amounts under 
     paragraph (1) shall each be reduced (but not below zero) by 
     an amount which bears the same ratio to such amount 
     (determined without regard to this paragraph) as--
       ``(i) the excess (if any) of the applicable reference price 
     over $14 ($1.40 for qualified natural gas production), bears 
     to
       ``(ii) $4 ($0.40 for qualified natural gas production).

     The applicable reference price for a taxable year is the 
     reference price for the calendar year preceding the calendar 
     year in which the taxable year begins.
       ``(B) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 1999, each of the 
     dollar amounts contained in subparagraph (A) shall be 
     increased to an amount equal to such dollar amount multiplied 
     by the inflation adjustment factor for such calendar year 
     (determined under section 43(b)(3)(B) by substituting `1998' 
     for `1990').
       ``(C) Reference price.--For purposes of this paragraph, the 
     term `reference price' means, with respect to any calendar 
     year--
       ``(i) in the case of qualified crude oil production, the 
     reference price determined under section 29(d)(2)(C), and
       ``(ii) in the case of qualified natural gas production, the 
     Secretary's estimate of the annual average wellhead price per 
     1,000 cubic feet for all domestic natural gas.
       ``(c) Qualified Crude Oil and Natural Gas Production.--For 
     purposes of this section--

[[Page S3147]]

       ``(1) In general.--The terms `qualified crude oil 
     production' and `qualified natural gas production' mean 
     domestic crude oil or natural gas which is produced from a 
     marginal well.
       ``(2) Limitation on amount of production which may 
     qualify.--
       ``(A) In general.--Crude oil or natural gas produced during 
     any taxable year from any well shall not be treated as 
     qualified crude oil production or qualified natural gas 
     production to the extent production from the well during the 
     taxable year exceeds 1,095 barrels or barrel equivalents.
       ``(B) Proportionate reductions.--
       ``(i) Short taxable years.--In the case of a short taxable 
     year, the limitations under this paragraph shall be 
     proportionately reduced to reflect the ratio which the number 
     of days in such taxable year bears to 365.
       ``(ii) Wells not in production entire year.--In the case of 
     a well which is not capable of production during each day of 
     a taxable year, the limitations under this paragraph 
     applicable to the well shall be proportionately reduced to 
     reflect the ratio which the number of days of production 
     bears to the total number of days in the taxable year.
       ``(3) Definitions.--
       ``(A) Marginal well.--The term `marginal well' means a 
     domestic well which during the taxable year has marginal 
     production (as defined in section 613A(c)(6)).
       ``(B) Crude oil, etc.--The terms `crude oil', `natural 
     gas', `domestic', and `barrel' have the meanings given such 
     terms by section 613A(e).
       ``(C) Barrel equivalent.--The term `barrel equivalent' 
     means, with respect to natural gas, a conversion ratio of 
     6,000 cubic feet of natural gas to 1 barrel of crude oil.
       ``(d) Other Rules.--
       ``(1) Production attributable to the taxpayer.--In the case 
     of a marginal well in which there is more than one owner of 
     operating interests in the well and the crude oil or natural 
     gas production exceeds the limitation under subsection 
     (c)(2), qualifying crude oil production or qualifying natural 
     gas production attributable to the taxpayer shall be 
     determined on the basis of the ratio which taxpayer's revenue 
     interest in the production bears to the aggregate of the 
     revenue interests of all operating interest owners in the 
     production.
       ``(2) Operating interest required.--Any credit under this 
     section may be claimed only on production which is 
     attributable to the holder of an operating interest.
       ``(3) Production from nonconventional sources excluded.--In 
     the case of production from a marginal well which is eligible 
     for the credit allowed under section 29 for the taxable year, 
     no credit shall be allowable under this section unless the 
     taxpayer elects not to claim the credit under section 29 with 
     respect to the well.''.
       (b) Credit Treated as Business Credit.--Section 38(b) of 
     such Code is amended by striking ``plus'' at the end of 
     paragraph (11), by striking the period at the end of 
     paragraph (12) and inserting ``, plus'', and by adding at the 
     end the following new paragraph:
       ``(13) the marginal oil and gas well production credit 
     determined under section 45D(a).''.
       (c) Credit Allowed Against Regular and Minimum Tax.--
       (1) In general.--Subsection (c) of section 38 of such Code 
     (relating to limitation based on amount of tax) is amended by 
     redesignating paragraph (3) as paragraph (4) and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) Special rules for marginal oil and gas well 
     production credit.--
       ``(A) In general.--In the case of the marginal oil and gas 
     well production credit--
       ``(i) this section and section 39 shall be applied 
     separately with respect to the credit, and
       ``(ii) in applying paragraph (1) to the credit--

       ``(I) subparagraphs (A) and (B) thereof shall not apply, 
     and
       ``(II) the limitation under paragraph (1) (as modified by 
     subclause (I)) shall be reduced by the credit allowed under 
     subsection (a) for the taxable year (other than the marginal 
     oil and gas well production credit).

       ``(B) Marginal oil and gas well production credit.--For 
     purposes of this subsection, the term `marginal oil and gas 
     well production credit' means the credit allowable under 
     subsection (a) by reason of section 45D(a).''.
       (2) Conforming amendment.--Subclause (II) of section 
     38(c)(2)(A)(ii) of such Code is amended by inserting ``or the 
     marginal oil and gas well production credit'' after 
     ``employment credit''.
       (d) Carryback.--Subsection (a) of section 39 of such Code 
     (relating to carryback and carryforward of unused credits 
     generally) is amended by adding at the end the following new 
     paragraph:
       ``(3) 10-year carryback for marginal oil and gas well 
     production credit.--In the case of the marginal oil and gas 
     well production credit--
       ``(A) this section shall be applied separately from the 
     business credit (other than the marginal oil and gas well 
     production credit),
       ``(B) paragraph (1) shall be applied by substituting `10 
     taxable years' for `1 taxable years' in subparagraph (A) 
     thereof, and
       ``(C) paragraph (2) shall be applied--
       ``(i) by substituting `31 taxable years' for `22 taxable 
     years' in subparagraph (A) thereof, and
       ``(ii) by substituting `30 taxable years' for `21 taxable 
     years'.''.
       (e) Coordination With Section 29.--Section 29(a) of such 
     Code is amended by striking ``There'' and inserting ``At the 
     election of the taxpayer, there''.
       (f) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1 of such Code is 
     amended by adding at the end the following item:

``45D. Credit for producing oil and gas from marginal wells.''

       (g) Effective Date.--The amendments made by this section 
     shall apply to production after the date of the enactment of 
     this Act.

     SEC. 102. EXCLUSION OF CERTAIN AMOUNTS RECEIVED FROM 
                   RECOVERED INACTIVE WELLS.

       (a) In General.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to items 
     specifically excluded from gross income) is amended by 
     redesignating section 139 as section 140 and by inserting 
     after section 138 the following new section:

     ``SEC. 139. OIL OR GAS PRODUCED FROM A RECOVERED INACTIVE 
                   WELL.

       ``(a) In General.--Gross income does not include income 
     attributable to independent producer oil from a recovered 
     inactive well.
       ``(b) Definitions.--For purposes of this section--
       ``(1) Independent producer oil.--The term `independent 
     producer oil' means crude oil or natural gas in which the 
     economic interest of the independent producer is attributable 
     to an operating mineral interest (within the meaning of 
     section 614(d)), overriding royalty interest, production 
     payment, net profits interest, or similar interest.
       ``(2) Crude oil and natural gas.--The terms `crude oil' and 
     `natural gas' have the meanings given such terms by section 
     613A(e).
       ``(3) Recovered inactive well.--The term `recovered 
     inactive well' means a well if--
       ``(A) throughout the 2-year period ending on the date of 
     the enactment of this section, such well is inactive or has 
     been plugged and abandoned, as determined by the agency of 
     the State in which such well is located that is responsible 
     for regulating such wells, and
       ``(B) during the 5-year period beginning on the date of the 
     enactment of this section, such well resumes producing crude 
     oil or natural gas.
       ``(4) Independent producer.--The term `independent 
     producer' means a producer of crude oil or natural gas whose 
     allowance for depletion is determined under section 613A(c).
       ``(c) Deductions.--No deductions directly connected with 
     amounts excluded from gross income by subsection (a) shall be 
     allowed.
       ``(d) Election.--
       ``(1) In general.--This section shall apply for any taxable 
     year only at the election of the taxpayer.
       ``(2) Manner.--Such election shall be made, in accordance 
     with regulations prescribed by the Secretary, not later than 
     the time prescribed for filing the return (including 
     extensions thereof) and shall be made annually on a property-
     by-property basis.''
       (b) Minimum Tax.--Section 56(g)(4)(B) of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new clause:
       ``(iii) Inactive wells.--In the case of income attributable 
     to independent producers of oil recovered from an inactive 
     well, clause (i) shall not apply to any amount allowable as 
     an exclusion under section 139.''
       (c) Clerical Amendment.--The table of sections for part III 
     of subchapter B of chapter 1 of such Code is amended by 
     striking the item relating to section 139 and inserting the 
     following:

``Sec. 139. Oil or gas produced from a recovered inactive well.
``Sec. 140. Cross references to other Acts.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.
                       TITLE II--OTHER INCENTIVES

     SEC. 201. ELECTION TO EXPENSE GEOLOGICAL AND GEOPHYSICAL 
                   EXPENDITURES.

       (a) In General.--Section 263 of the Internal Revenue Code 
     of 1986 (relating to capital expenditures) is amended by 
     adding at the end the following new subsection:
       ``(j) Geological and Geophysical Expenditures for Domestic 
     Oil and Gas Wells.--Notwithstanding subsection (a), a 
     taxpayer may elect to treat geological and geophysical 
     expenses incurred in connection with the exploration for, or 
     development of, oil or gas within the United States (as 
     defined in section 638) as expenses which are not chargeable 
     to capital account. Any expenses so treated shall be allowed 
     as a deduction in the taxable year in which paid or 
     incurred.''
       (b) Conforming Amendment.--Section 263A(c)(3) of the 
     Internal Revenue Code of 1986 is amended by inserting 
     ``263(j),'' after ``263(i),''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to expenses paid or incurred after the date of 
     enactment of this Act.
       (2) Transition rule.--In the case of any expenses described 
     in section 263(j) of the Internal Revenue Code of 1986, as 
     added by this section, which were paid or incurred on or 
     before the date of enactment of this Act, the

[[Page S3148]]

     taxpayer may elect, at such time and in such manner as the 
     Secretary of the Treasury may prescribe, to amortize the 
     unamortized portion of such expenses over the 36-month period 
     beginning with the month in which the date of enactment of 
     this Act occurs. For purposes of this paragraph, the 
     unamortized portion of any expense is the amount remaining 
     unamortized as of the first day of the 36-month period.

     SEC. 202. ELECTION TO EXPENSE DELAY RENTAL PAYMENTS.

       (a) In General.--Section 263 of the Internal Revenue Code 
     of 1986 (relating to capital expenditures), as amended by 
     section 201(a), is amended by adding at the end the following 
     new subsection:
       ``(k) Delay Rental Payments for Domestic Oil and Gas 
     Wells.--
       ``(1) In general.--Notwithstanding subsection (a), a 
     taxpayer may elect to treat delay rental payments incurred in 
     connection with the development of oil or gas within the 
     United States (as defined in section 638) as payments which 
     are not chargeable to capital account. Any payments so 
     treated shall be allowed as a deduction in the taxable year 
     in which paid or incurred.
       ``(2) Delay rental payments.--For purposes of paragraph 
     (1), the term `delay rental payment' means an amount paid for 
     the privilege of deferring development of an oil or gas 
     well.''
       (b) Conforming Amendment.--Section 263A(c)(3) of the 
     Internal Revenue Code of 1986, as amended by section 201(b), 
     is amended by inserting ``263(k),'' after ``263(j),''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to payments made or incurred after the date of 
     enactment of this Act.
       (2) Transition rule.--In the case of any payments described 
     in section 263(k) of the Internal Revenue Code of 1986, as 
     added by this section, which were made or incurred on or 
     before the date of enactment of this Act, the taxpayer may 
     elect, at such time and in such manner as the Secretary of 
     the Treasury may prescribe, to amortize the unamortized 
     portion of such payments over the 36-month period beginning 
     with the month in which the date of enactment of this Act 
     occurs. For purposes of this paragraph, the unamortized 
     portion of any payment is the amount remaining unamortized as 
     of the first day of the 36-month period.

     SEC. 203. EXTENSION OF SPUDDING RULE.

       (a) In General.--Section 461(i)(2)(A) of the Internal 
     Revenue Code of 1986 (relating to special rule for spudding 
     of oil or gas wells) is amended by striking ``90th day'' and 
     inserting ``180th day''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1997.

     SEC. 204. ENHANCED OIL RECOVERY CREDIT EXTENDED TO CERTAIN 
                   NONTERTIARY RECOVERY METHODS.

       (a) In General.--Clause (i) of section 43(c)(2)(A) of the 
     Internal Revenue Code of 1986 (defining qualified enhanced 
     oil recovery project) is amended to read as follows:
       ``(i) which involves the application (in accordance with 
     sound engineering principles) of--

       ``(I) one or more tertiary recovery methods (as defined in 
     section 193(b)(3)) which can reasonably be expected to result 
     in more than an insignificant increase in the amount of crude 
     oil which will ultimately be recovered, or
       ``(II) one or more nontertiary recovery methods which are 
     required to recover oil with traditionally immobile 
     characteristics or from formations which have proven to be 
     uneconomical or noncommercial under conventional recovery 
     methods.''

       (b) Qualified Nontertiary Recovery Methods.--Section 
     43(c)(2) of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following new subparagraphs:
       ``(C) Qualified nontertiary recovery method.--For the 
     purposes of this paragraph--
       ``(i) In general.--The term `qualified nontertiary recovery 
     method' means any recovery method described in clause (ii), 
     (iii), or (iv), or any combination thereof.
       ``(ii) Enhanced gravity drainage (egd) methods.--The 
     methods described in this clause are as follows:

       ``(I) Horizontal drilling.--The drilling of horizontal, 
     rather than vertical, wells to penetrate any hydrocarbon-
     bearing formation which has an average in situ calculated 
     permeability to fluid flow of less than or equal to 12 or 
     less millidarcies and which has been demonstrated by use of a 
     vertical wellbore to be uneconomical unless drilled with 
     lateral horizontal lengths in excess of 1,000 feet.
       ``(II) Gravity drainage.--The production of oil by gravity 
     flow from drainholes that are drilled from a shaft or tunnel 
     dug within or below the oil-bearing zone.

       ``(iii) Marginally economic reservoir repressurization 
     (merr) methods.--The methods described in this clause are as 
     follows, except that this clause shall only apply to the 
     first 1,000,000 barrels produced in any project:

       ``(I) Cyclic gas injection.--The increase or maintenance of 
     pressure by injection of hydrocarbon gas into the reservoir 
     from which it was originally produced.
       ``(II) Flooding.--The injection of water into an oil 
     reservoir to displace oil from the reservoir rock and into 
     the bore of a producing well.

       ``(iv) Other methods.--Any method used to recover oil 
     having an average laboratory measured air permeability less 
     than or equal to 100 millidarcies when averaged over the 
     productive interval being completed, or an in situ calculated 
     permeability to fluid flow less than or equal to 12 
     millidarcies or oil defined by the Department of Energy as 
     being immobile.
       ``(D) Authority to add other nontertiary recovery 
     methods.--The Secretary shall provide procedures under 
     which--
       ``(i) the Secretary may treat methods not described in 
     clause (ii), (iii), or (iv) of subparagraph (C) as qualified 
     nontertiary recovery methods, and
       ``(ii) a taxpayer may request the Secretary to treat any 
     method not so described as a qualified nontertiary recovery 
     method.

     The Secretary may only specify methods as qualified 
     nontertiary recovery methods under this subparagraph if the 
     Secretary determines that such specification is consistent 
     with the purposes of subparagraph (C) and will result in 
     greater production of oil and natural gas.''
       (c) Conforming Amendment.--Clause (iii) of section 
     43(c)(2)(A) of the Internal Revenue Code of 1986 is amended 
     to read as follows:
       ``(iii) with respect to which--

       ``(I) in the case of a tertiary recovery method, the first 
     injection of liquids, gases, or other matter commences after 
     December 31, 1990, and
       ``(II) in the case of a qualified nontertiary recovery 
     method, the implementation of the method begins after 
     December 31, 1997.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after December 31, 1997.
                                 ______
                                 
      By Mr. NICKLES (for himself, Mr. Domenici, Mr. Murkowski, Mrs. 
        Hutchison, Mr. Breaux, and Mr. Craig):
  S. 1930. A bill to provide certainty for, reduce administrative and 
compliance burdens associated with, and streamline and improve the 
collection of royalties from Federal and outer continental shelf oil 
and gas leases, and for other purposes; to the Committee on Energy and 
Natural Resources.


                  The Royalty Enhancement Act of 1998

  Mr. NICKLES. Mr. President, once again, our domestic oil and gas 
producers are facing devastating losses due to a significant drop in 
oil prices. This crisis creates a dangerous situation for the industry 
and for our national security. Unfortunately, the policies and 
practices of the Administration have exacerbated the problem, not 
helped. If we are to maintain a viable domestic petroleum industry, we 
must reverse these practices. An important step towards this end is 
reforming the Department of Interior's erratic, ever-changing royalty 
valuation practices. The Royalty Enhancement Act, that I am introducing 
today, will reduce regulatory costs and promote development of federal 
oil and gas resources vital to our national security. It will also 
significantly reduce the administrative costs associated with the 
federal royalty payment system.
  Minerals Management Service (MMS), the agency within the Department 
of Interior given responsibility for administering royalties from 
federal leases, has imposed on oil and gas producers a bureaucratic 
labyrinth of rules and regulations. One of the most fundamental 
concepts of our society is the ability of any citizen, in particular, 
citizens who are parties to contracts with the federal government to be 
assured that the Federal government will not overreach and unilaterally 
interpret those contracts. Such a situation is what we have today with 
oil and gas producers who have contracted with the Federal government 
to expend their capital and resources to explore for, drill and produce 
valuable oil and gas reserves in the United States and offshore.
  In the past few years oil and gas producers, both independent and 
major, have become increasingly frustrated with the unwillingness by 
MMS to produce a simplified and certain valuation method that 
accurately captures the value of oil or gas at the lease. This is the 
value that a federal oil and gas lessee owes and the American taxpayer 
deserves to be paid.
  Recently, the MMS has proposed a new oil valuation rule which is the 
most administratively burdensome and complex method, available to the 
government. This new rule looks like the Clinton health care plan and 
makes the IRS code look simple. In short, the current MMS valuation 
system is badly broken and their outstanding oil proposal will only 
make it worth.
  In 1995, I introduced the Federal Oil and Gas Royalty Simplification 
and Fairness Act because of the importance of federal royalty revenues 
to the United States Treasury and States.

[[Page S3149]]

The purpose of that legislation was to streamline and simplify the 
royalty management program for the over 20,000 federal lessees who are 
required to file over 3,000,000 reports annually. Despite the 
bipartisan support for my bill, MMS resisted this much needed reform 
during the entire legislative process. Fortunately, Congress saw the 
wisdom and need for the law and sent it to the President and it became 
effective in August, 1996.
  Why is Congressional action needed, Mr. President? Despite the 
obvious importance of the oil and gas industry to our national economy 
and global stability, the MMS has failed to get the message we sent 
them in 1996 that the American people can no longer tolerate their 
ineffective and inefficient bureaucracy. The MMS valuation rules 
contain complicated formulas that can be both confusing and inaccurate. 
These ambiguous rules lead inevitably to expensive disputes and 
litigation that unnecessarily drain resources of the federal government 
and the lessees.
  To ensure that the American people receive their full and fair value 
of production royalties from oil and gas produced on federal lands, we 
need to create a royalty valuation system that provides certainty, 
simplicity and fairness to the federal government, States, oil and gas 
producers and the American taxpayers. Only by doing this will companies 
want to take the risk of spending their capital to develop and produce 
federal oil and gas for our nation's use and benefit. It is important 
that we maintain the viability of existing production on federal lands 
and encourage development of the new frontiers of production in the 
deep waters off our coastlines.
  Mr. President, my colleagues from New Mexico, Alaska, Texas and 
Louisiana, Senators Domenici, Murkowski, Hutchison and Breaux, join me 
today in introducing the Royalty Enhancement Act which is the Senate 
companion of H.R. 3334, a bill introduced this session by Congressman 
Thornberry. This bill cuts through the horrendously complicated and 
ambiguous current rules and provides certainty, simplicity and fairness 
to both the taxpayers and the companies who enter into oil and gas 
leases with the federal government.
  This legislation will replace the current complicated and complex 
system of royalty valuation with a much clearer, simpler method of 
royalty payment that would avoid valuation disputes. This method will 
allow companies to pay the federal government its royalty share in 
actual barrels of oil or cubic feet of natural gas.
  The bill contains a comprehensive well-designed royalty payment 
method that will streamline auditing and accounting systems for both 
the government and the producers and will reduce administrative costs. 
Reduced costs will help keep production economic for a longer period, 
extending the life of producing wells and thus providing more royalties 
from this continued production. The best way to be absolutely certain 
that the government receives fair market value at the lease is for the 
government to take production in-kind and have it marketed and sold by 
qualified private sector marketers who possess the expertise and 
experience to receive the best value for the United States.
  Mr. President, it is not fair to subject companies who produce oil 
and gas on federal lands to the whim of the MMS with their record of 
retroactive second-guessing of valuation years after oil and gas has 
been produced and sold. It is fundamentally unfair to the American 
people for the agency's uncertain and ambiguous rules and practices to 
create delay in receipt of royalty revenues to the Treasury and to bear 
the expense of the government's bureaucracy. For these reasons, I am 
introducing the Royalty Enhancement Act of 1998.
  Mr. President, I ask unanimous consent that the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1930

       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 ``Royalty 
     Enhancement Act of 1998.''
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Rights, obligations, and responsibilities.
Sec. 4. Costs responsibility.
Sec. 5. Transporter charges.
Sec. 6. Imbalances.
Sec. 7. Royalty-in-kind for trucked, tankered, or barged oil or gas.
Sec. 8. Limitations on application.
Sec. 9. Reporting.
Sec. 10. Audit.
Sec. 11. Lease terms not affected.
Sec. 12. Eligible and small refiners.
Sec. 13. Applicable laws.
Sec. 14. Indian lands.
Sec. 15. Effective date; regulations.

     SEC. 2. DEFINITIONS.

       In this Act:
       (1) Affiliate; affiliated.--
       (A) The term ``affiliate'' or ``affiliated'' means that a 
     person controls, is controlled by, or is under common control 
     with another person. Affiliation shall be determined on a 
     lease-by-lease and asset-by-asset basis.
       (B) For the purposes of this Act, based on the instruments 
     of ownership--
       (i) Ownership in excess of 50 percent constitutes control.
       (ii) Ownership of at least 10 percent and not more than 50 
     percent creates a rebuttable presumption of control only if 
     each owner has a separate and independent right to control or 
     utilize the capacity of the asset.
       (iii) Ownership of less than 10 percent does not constitute 
     control.
       (2) Compensatory royalty.--The term ``compensatory 
     royalty'' means a payment made to a royalty owner as 
     compensation for loss of income that it may suffer due to a 
     lease being drained of oil and gas by wells drilled on lands 
     adjacent to the lands subject to the lease.
       (3) Compression.--The term ``compression'' means the 
     process of raising the pressure of gas.
       (4) Condensate.--The term ``condensate'' means liquid 
     hydrocarbons (normally exceeding 40 degrees of API gravity) 
     recovered at the surface without resorting to processing. 
     Condensate is that stabilized mixture of liquid hydrocarbons 
     at atmospheric pressure that results from condensation of 
     petroleum hydrocarbons existing initially in a gaseous phase 
     in an underground reservoir.
       (5) Delivery point.--The term ``delivery point'' means--
       (A) for a lease premise for which a production measurement 
     meter is approved in accordance with applicable laws before 
     the date of enactment of this Act--
       (i) subject to clause (ii), the existing approved meter 
     location, or
       (ii) a delivery point requested by a lessee and approved in 
     accordance with subparagraph (B); or
       (B) for a lease premise for which no production measurement 
     meter is approved before the date of the enactment of this 
     Act, that point on or near the lease premises, approved by 
     the appropriate agency in accordance with applicable laws and 
     regulations, where lease production can be measured and 
     reported in a manner that is practical, economical, and 
     verifiable, except that such point may be at a location off 
     the lease premises where, if necessary, production can be 
     allocated back to the lease premises.
       (6) Eligible small refiner.--The term ``eligible small 
     refiner'' means a refiner that--
       (A) has applied to the Secretary for certification as an 
     eligible small refiner;
       (B) has a total crude oil and condensate refining capacity 
     (including the refining capacity of any person who controls, 
     is controlled by, or is under common control with such 
     refiner) not exceeding 100,000 barrels per day;
       (C) is a corporation, company, partnership, trust or estate 
     organized under the laws of the United States or of any 
     State, territory, or municipality thereof, or is a person who 
     is a United States citizen; and
       (D) has continuously operated a refinery in the United 
     States for no less than 6 months immediately preceding the 
     date of application for certification as an eligible small 
     refiner.
       (7) Eligible small refiner portion.--The term ``eligible 
     small refiner portion'' means the portion of all royalty oil 
     volumes required to be offered for sale to eligible small 
     refiners. The eligible small refiner portion shall be 40 
     percent of all royalty oil volumes, unless the Secretary 
     determines that a greater share is in the public interest.
       (8) FERC.--The term ``FERC'' means the Federal Energy 
     Regulatory Commission.
       (9) Field.--The term ``field'' means a geographic region 
     situated over one or more subsurface oil or gas reservoirs 
     that encompass at least the outermost boundaries of all oil 
     and gas accumulations known to be within those reservoirs 
     vertically projected to the land service.
       (10) Force majeure.--The term ``force majeure'' means 
     foreseen and unforeseen acts of God, strikes, lockouts, or 
     other industrial disturbances, acts of the public enemy, 
     wars, blockades, insurrections, riots, epidemics, landslides, 
     lightning, hurricanes or storms, hurricane or storm warnings 
     which, in the judgment of the party affected by such event, 
     require the precautionary shutdown or evacuation of 
     Production facilities, earthquakes, fires, floods, washouts, 
     disturbances, explosions, accidental breakage to lines of 
     pipe, machine breakage, freezing of wells or lines of pipe, 
     partial or entire failure of wells, and any other cause of a 
     similar nature beyond the reasonable control

[[Page S3150]]

     of the party affected which renders that party unable to 
     carry out its obligations under this Act. Force majeure as 
     used in this Act shall not include market conditions.
       (11) Gas.--The term ``gas'' means any fluid, whether 
     combustible, noncombustible, hydrocarbon, or nonhydrocarbon, 
     that--
       (A) is extracted from a reservoir;
       (B) has neither independent shape nor volume;
       (C) tends to expand indefinitely; and
       (D) exists in a gaseous or rarefied state under standard 
     temperature and pressure conditions.
       (12) Gathering.--The term ``gathering'' means the movement 
     of unseparated, unidentifiable lease production upstream of 
     the delivery point to a central accumulation point on or 
     immediately adjacent to the lease premises, unit, or 
     communitized area.
       (13) GISB.--The term ``GISB'' means the Gas Industry 
     Standards Board, as incorporated in the State of Delaware on 
     September 26, 1994.
       (14) Lease operator; operator.--Each of the terms ``lease 
     operator'' and ``operator'' means any person, including a 
     lessee, who has control of or who manages operations on lease 
     premises, according to the terms of the joint operating 
     agreement or any other agreement or method by which an 
     operator is designated, on Federal onshore lands or who has 
     been designated as an operator on the outer continental shelf 
     by applicable law.
       (15) Lease premises.--The term ``lease premises'' means all 
     land and interests in land owned by the United States that 
     are subject to an oil and gas lease issued under the mineral 
     leasing laws, including mineral resources of mineral estates 
     reserved to the United States in the conveyance of a surface 
     or non-mineral estate.
       (16) Lease production.--The term ``lease production'' means 
     any produced oil or gas that is attributable to, originating 
     from, or allocated to a Federal onshore or an outer 
     continental shelf lease premises.
       (17) Lessee.--The term ``lessee'' means any person to whom 
     the United States issues an oil and gas lease, or any person 
     to whom operating rights under an oil and gas lease have been 
     assigned.
       (18) Merchantable condition; marketable condition.--Each of 
     the terms ``merchantable condition'' and ``marketable 
     condition'' means the condition of oil or gas that is 
     sufficiently free of impurities to meet the requirements of 
     or is accepted by the first transporter of royalty oil and 
     royalty gas from that lease premises either prior to or at 
     the delivery point. Whether or not lease production is in 
     merchantable condition shall not affect the responsibility 
     for the bearing of costs of gathering or transportation, as 
     provided by this Act.
       (19) Minimum royalty.--The term ``minimum royalty'' means 
     that minimum amount of annual royalty that a lessee must pay, 
     as specified in the lease or in applicable leasing 
     regulations.
       (20) Net profit share lease royalty prior to payout.--The 
     term ``net profit share lease royalty prior to payout'' means 
     the specified share of the net profit from production of oil 
     and gas as provided in the lease.
       (21) Oil.--The term ``oil''--
       (A) means a mixture of hydrocarbons that exists in the 
     liquid phase in natural underground reservoirs and remains 
     liquid at atmospheric pressure after passing through surface 
     separating facilities; and
       (B) includes condensate.
       (22) Oil and gas lease; lease.--Each of the terms ``oil and 
     gas lease'' and ``lease'' means any contract, profit-share 
     arrangement, or other agreement issued or maintained in 
     accordance with the Outer Continental Shelf Lands Act (43 
     U.S.C. 1301 et seq.) or the Mineral Land Leasing Act (30 
     U.S.C. 181 et seq.) and issued or approved by the United 
     States that authorizes exploration for, extraction of, or 
     removal of oil or gas.
       (23) Operating rights.--The term ``operating rights'' means 
     the interest created by a lease or derived therefrom 
     authorizing the holder of that interest to enter upon the 
     lease premises to conduct drilling and related operations, 
     including production of oil or gas from such lands in 
     accordance with the terms of the lease. A record title owner 
     is the owner of operating rights under a lease except to the 
     extent that the operating rights or a portion thereof have 
     been transferred from record title.
       (24) Person.--The term ``person'' means an individual 
     natural person, proprietorship, firm (private or public), 
     corporation, business, limited liability company, 
     unincorporated association, association, partnership, trust, 
     consortium, joint venture, joint stock company.
       (25) Processing; Process.--Each of the terms ``processing'' 
     and ``process''--
       (A) means any process designed to remove elements or 
     compounds (hydrocarbon and nonhydrocarbon) from oil or gas;
       (B) includes absorption, adsorption, or refrigeration; and
       (C) does not include lease or field processes, such as 
     natural pressure reduction, mechanical separation, heating, 
     cooling, dehydration, and compression on the upstream side of 
     the delivery point.
       (26) Producing; produced; production.--The term 
     ``producing'', ``produced'', or ``production'' means the act 
     of bringing hydrocarbons to the surface.
       (27) Qualified marketing agent.--The term ``qualified 
     marketing agent'' means a person with whom the Secretary has 
     contracted to receive, handle, transport, deliver, market, 
     process, dispose of, broker, or sell, or any combination 
     thereof, royalty oil or royalty gas taken in kind by the 
     United States from, or that is attributable to, an oil and 
     gas lease.
       (28) Regulated pipeline; regulated facility.--Each of the 
     terms ``regulated pipeline'' and ``regulated facility''--
       (A) means a pipeline, truck, tanker, barge, or other 
     modality of carriage for oil or gas, the operation of which 
     is subject to regulation by a State governmental authority or 
     Federal governmental authority (or both) with respect to the 
     rates that may be charged shippers for transportation 
     service; and
       (B) includes, but is not limited to--
       (i) a pipeline performing the interstate movement of gas 
     subject to regulation by the Federal Energy Regulatory 
     Commission under the Natural Gas Act (15 U.S.C. 717 et seq.);
       (ii) a pipeline whose movements of oil are subject to 
     regulation by the Federal Energy Regulatory Commission under 
     the Interstate Commerce Act (49 U.S.C. 1 et seq.); and
       (iii) any pipeline, truck, tanker, barge or other modality 
     of carriage for Oil or Gas whose rates for carriage are 
     regulated by a governmental authority under State law.
       (29) Royalty gas.--The term ``royalty gas'' means that 
     fraction or percentage of gas produced from or attributable 
     to lease premises, that the United States as lessor is 
     entitled to take in kind under the terms of an oil and gas 
     lease.
       (30) Royalty oil.--The term ``royalty oil'' means that 
     fraction or percentage of oil produced from or attributable 
     to lease premises, that the United States as lessor is 
     entitled to take in kind under the terms of an oil and gas 
     lease.
       (31) Royalty share.--The term ``royalty share'' means that 
     fraction or percentage of royalty oil or royalty gas (or 
     both) produced from or attributable to lease premises, that 
     the United States as lessor is entitled to take in kind under 
     the terms of an oil and gas lease.
       (32) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.
       (33) Tender.--The term ``tender'' means the act by which a 
     lessee makes royalty oil or royalty gas produced from lease 
     premises available to the United States for receipt.
       (34) Transportation; transport.--Each of the terms 
     ``transportation'' and ``transporting'' means any movement 
     (including associated or related activities to facilitate 
     movement such as compression and dehydration), upstream or 
     downstream of the delivery point of royalty oil or royalty 
     gas that is not gathering as defined herein including 
     movement described as transportation in this paragraph. Such 
     transportation shall include but not limited to--
       (A) the movement of unseparated, unidentifiable lease 
     production to a point not on or immediately adjacent to the 
     lease premises, unit, or communitized area; and
       (B) any movement of separated, identifiable lease 
     production regardless of whether such movement is on or off 
     the lease premises, unit or communitized area.
       (35) Transporter.--The term ``transporter'' means a person 
     or entity who is transporting or providing transportation.
       (36) United States.--The term ``United States'' means the 
     United States of America and any agency, department, or 
     instrumentality thereof.

     SEC. 3. RIGHTS, OBLIGATIONS, AND RESPONSIBILITIES.

       (a) Rights, Obligations, and Responsibilities of the United 
     States.--
       (1) General rule.--Except as otherwise provided in section 
     8 of this Act, all royalty oil and royalty gas accruing to 
     the United States under any oil and gas lease shall be taken 
     in kind by the United States at the applicable delivery point 
     for each lease premises.
       (2) Ownership and receipt by united states.--Ownership of 
     all right, title and interest in royalty oil and royalty gas 
     produced from oil and gas lease premises governed by this Act 
     shall remain in the United States until sale or other 
     disposition by the United States. Nothing in this Act shall 
     limit the right of the United States to have royalty oil or 
     royalty gas stored after its production in such tanks or 
     other surface facilities as the lessee may be expressly 
     obligated to furnish under any applicable lease term. The 
     United States shall not delay or defer the receipt of lease 
     production, delay receipt of new production, or physically 
     segregate the royalty share prior to receipt by the United 
     States. The United States shall have custody, possession, and 
     responsibility attendant thereto for royalty oil and royalty 
     gas at and beyond the delivery point.
       (3) Selection of and contracts with a qualified marketing 
     agency.--(A) Except as provided in subsection (b), the 
     Secretary shall, for each lease premises, contract with a 
     person to act as a qualified marketing agent to market and 
     dispose of royalty oil and royalty gas. Each qualified 
     marketing agent shall be authorized to advise and consult 
     with the Secretary on the sale and disposition of the royalty 
     oil and royalty gas and to directly sell and broker the 
     royalty oil and royalty gas.
       (B) To be eligible for a contract under this paragraph to 
     act as a qualified marketing agent, a person must have the 
     expertise necessary to receive, handle, transport, deliver, 
     market, process, dispose, broker, or sell royalty oil and 
     royalty gas in accordance with

[[Page S3151]]

     this Act. Under rules promulgated by the Secretary, the 
     Secretary may designate any person as ineligible or place 
     other requirements on a person to act as a qualified 
     marketing agent for a particular lease premises under this 
     paragraph by reason of such person being affiliated with 
     persons engaged in the, transporting, processing, or 
     purchasing of oil or gas for that lease premises.
       (C) The Secretary shall contract with not more than one 
     qualified marketing agent for each lease premises for royalty 
     oil and not more than one qualified marketing agent for each 
     lease premises for royalty gas.
       (D) The Secretary shall solicit competitive bids for 
     contracts for qualified marketing agents. The Secretary shall 
     promulgate final rules within 12 months after the date of the 
     enactment of this Act regarding the competitive manner in 
     which qualified marketing agents shall be selected.
       (E) The compensation of each qualified marketing agent--
       (i) shall be determined and made by the Secretary without 
     further appropriation based on the services to be performed 
     by the qualified marketing agent; and
       (ii) shall be established in the contract between the 
     qualified marketing agent and the United States.
       (F) Except as otherwise provided in subsection (b), the 
     Secretary shall be solely responsible for obtaining and 
     contracting with qualified marketing agents and shall be 
     authorized to pay qualified marketing agents from proceeds 
     derived from the sale of royalty oil and royalty gas without 
     further appropriation.
       (G) Each contract shall--
       (i) require the qualified marketing agent to dispose of and 
     sell royalty oil and royalty gas in an open, 
     nondiscriminatory, and competitive manner; and
       (ii) prohibit the qualified marketing agent from precluding 
     any person from competing for the handling, gathering, 
     transporting, marketing, processing, or purchasing of royalty 
     oil and royalty gas solely by reason of the person being a 
     lessee or person affiliated with a lessee, qualified 
     marketing agent; gatherer, royalty payor, transporter, 
     processor, or purchaser.
       (8) To further the purposes of this Act the Secretary shall 
     be provided the greatest latitude in contracting with 
     qualified marketing agents to market and dispose of royalty 
     oil or royalty gas, contracts with qualified marketing agents 
     under this Act shall be exempted from otherwise applicable 
     federal procurement and property disposition laws, including 
     but not limited to the Armed Services Procurement Act of 
     1947, 10 U.S.C. 2304, et seq. or the Federal Property 
     Administration Services Act, 41 U.S.C. 253, et seq., or their 
     implementing regulations.
       (4) Transportation Cost.--Each contract under paragraph (3) 
     shall require the Secretary to bear the costs of any 
     transportation of royalty oil and royalty gas without further 
     appropriation as specified by this Act incurred prior to the 
     sale or other disposition of the royalty oil and royalty gas 
     by the qualified marketing agent.
       (5) Processing.--The qualified marketing agent under 
     paragraph (3) shall--
       (A) have the right to process royalty oil and royalty gas, 
     after receipt at the delivery point for the recovery and sale 
     of valuable products; and
       (B) require the Secretary to bear any applicable costs of 
     exercising such right without further appropriation.
       (6) Compliance with standards.--In taking in kind, 
     processing, and shipping royalty oil and royalty gas, the 
     United States and its qualified marketing agent shall comply 
     with all procedures which are customary or required of 
     processors and shippers, including but not limited to the 
     applicable FERC-approved GISB standards, nominations of 
     volumes, scheduling of deliveries, and the movement of oil or 
     gas in or through the facilities of the initial transporter 
     and any subsequent transporter. The United States and its 
     qualified marketing agent shall separately contract with 
     transporters, purchasers, and processors. The Secretary and 
     his qualified marketing agent shall assume responsibility and 
     any liability associated with such duties.
       (7) Fair market value requirements.--The net proceeds 
     received by the United States from the sale of royalty oil 
     and royalty gas shall satisfy in full the Secretary's 
     responsibility to receive fair market value as defined by any 
     applicable statute or lease provision.
       (b) Rights, Obligations and Responsibilities of States.--
       (1) Selection of qualified marketing agents.--At its option 
     and for the mutual benefit of the United States and the 
     State, a State entitled to revenues under the provisions of 
     section 35 of the Mineral Leasing Act (30 U.S.C. 191) or 
     section 8(g) of the Outer Continental Shelf Lands Act (43 
     U.S.C. 1353) may elect to act on behalf of the Secretary in 
     selecting qualified marketing agents to sell or dispose of 
     royalty oil or royalty gas produced from lease premises with 
     the State or from section 8(g) lease premises adjacent to the 
     State, whichever is applicable. If it makes such an election, 
     the State shall enjoy all the rights and assume all 
     obligations that the United States would otherwise have 
     under this Act. If a State selects a qualified marketing 
     agent that has contracted to market production from State 
     leases, the contract with the qualified marketing agent 
     shall be on terms no less favorable to the interests of 
     the United States than the contract with the State. A 
     State may make such an election from time to time in 
     accordance with paragraph (4).
       (2) Compliance with requirements.--A State that elects to 
     act under this section shall--
       (A) exercise such rights in accordance with the 
     requirements established by this Act governing royalty in 
     kind; and
       (B) be subject to the rights, responsibilities, and 
     obligations of the United States under this Act, as may be 
     applicable, including those set forth in subsection (a) and 
     in no event shall regulations be applicable to a State which 
     do not apply in substance to the United States to the extent 
     required by applicable law.
       (3) Notice; effective period of election.--A State may 
     elect to act under this section after giving the Secretary 90 
     days notice. The election is effective 90 days after the date 
     the Secretary receives notice of the election. The election 
     shall remain in effect for a period of not less than 3 years. 
     After the initial term, a State must give sufficient notice 
     to the United States, but in no event less than 180 days, to 
     terminate an election period.
       (4) Covered oil and gas.--A State's election under this 
     subsection shall apply to all royalty oil and royalty gas 
     within the State and section 8(g) lands adjacent to the 
     State, as applicable.
       (5) Existing contracts.--If a contract between a qualified 
     marketing agent and the United States exists that has not 
     expired, the State's election shall be subject to that 
     existing contract.
       (6) Limitation on deductions from state share of 
     receipts.--If a State makes an election under this section, 
     payment of the State's share of receipts for the sale of 
     royalty oil and royalty gas shall be made without deductions 
     for costs applicable to the services provided by the State 
     under the net receipts sharing provisions of the Mineral 
     Leasing Act.
       (c) Rights, Obligations, and Responsibilities of the 
     Lessee.--
       (1) Effect of tender by lessee.--A lessee shall tender 
     royalty oil and royalty gas to the United States at the 
     delivery point for each lease premises, except as provided in 
     section 6. Upon such tender for any lease premises, all 
     royalty obligations of the lessee shall be considered 
     fulfilled and fully satisfied for the amount tendered, 
     including any express or implied obligation or duty to 
     market, except as provided in section 6. If the United States 
     fails to take in kind the entire volume tendered, the 
     lessee's obligation or duty shall nonetheless be fully 
     satisfied.
       (2) Measurement of lease production.--A lessee shall 
     measure or cause to be measured lease production, including 
     royalty oil and royalty gas, at the delivery point in 
     accordance with any applicable laws and lease terms.
       (3) Termination of responsibilities of lessee.--A lessee 
     shall have no responsibility or obligation for royalty oil or 
     royalty gas after tendering it in accordance with paragraph 
     (1) and shall not be liable for any costs or liability 
     downstream of the delivery point associated with the royalty 
     oil or royalty gas.
       (4) Reporting and recordkeeping.--With respect to royalty 
     oil and royalty gas taken in kind by the United States, a 
     lessee shall not be subject to the reporting and RECORD 
     KEEPING requirements of the Federal Oil and Gas Royalty 
     Management Act (30 U.S.C. 1701 et seq.) or other applicable 
     laws for any lease, other than records or reports necessary 
     to verify the quantity of royalty oil or royalty gas produced 
     from a lease premises.
       (d) Rights, Obligations, and Responsibilities of Qualified 
     Marketing Agents.--
       (1) In general.--In accordance with the terms of its 
     contract with the United States, a qualified marketing agent 
     shall--
       (A) advise and consult with the United States regarding the 
     terms and conditions of sales to purchasers;
       (B) arrange for the receipt, handling, transporting, 
     delivery, marketing, processing, disposition, brokering and 
     sale of royalty oil and royalty gas; and
       (C) be authorized to enter into sales contracts on behalf 
     of the United States.
       (2) Movement of royalty oil and royalty gas.--A qualified 
     marketing agent shall be authorized to make any arrangements 
     necessary to move royalty oil and royalty gas downstream of 
     the applicable delivery point, and shall be authorized to 
     enter into transportation and processing contracts on behalf 
     of the United States.
       (3) Requirement to take.--A qualified marketing agent shall 
     be required to take 100 percent of the royalty share tendered 
     by the lessee from each lease premises on a daily basis.
       (4) Enhancement of revenues to united states.--In handling, 
     marketing, and disposing of royalty oil and royalty gas, a 
     qualified marketing agent shall utilize its experience and 
     expertise to seek opportunities to enhance revenues to the 
     United States, including opportunities for the sale of 
     royalty oil and royalty gas at or away from the lease 
     premises, depending on the facts and circumstances relevant 
     to receiving, handling, transporting, delivering, marketing, 
     processing, disposition, brokering, and sale of the royalty 
     oil or royalty gas.
       (5) Affiliate transactions.--Qualified marketing agent 
     sales to itself or an affiliate shall be made in accordance 
     with the following standards:
       (A) When selling royalty oil and royalty gas to an 
     affiliate, a qualified marketing

[[Page S3152]]

     agent shall not give preference to an affiliate, including 
     but not limited to, favoring the affiliate with lower sales 
     prices, rights of first refusal or more favorable terms than 
     those offered to nonaffiliated purchasers of royalty oil and 
     royalty gas.
       (B) The managing employee of the qualified marketing agent 
     shall periodically certify that it has complied with these 
     provisions. The civil penalty provisions of section 109(d) of 
     the Federal Oil and Gas Royalty Management Act of 1982 (30 
     U.S.C. 1719(d)) shall apply to any qualified marketing agent 
     who violates subparagraph (A).

     SEC. 4. COSTS RESPONSIBILITY.

       (a) Merchantable Condition.--The lessee shall bear the 
     costs of placing royalty oil and royalty gas in merchantable 
     condition at the delivery point, if not produced in such 
     condition at the well: Provided, however, That gathering and 
     transportation costs under this Act shall be governed solely 
     by section 4(b) and section 5, and responsibility for such 
     costs shall not be dependent upon whether the royalty oil or 
     royalty gas is in merchantable condition at the time of 
     gathering or transportation.
       (b) Gathering and Transportation of Royalty Oil and Royalty 
     Gas.--
       (1) Gathering.--The lessee shall bear the costs of 
     gathering royalty oil and royalty gas.
       (2) Transportation.--The United States shall bear the costs 
     of transporting royalty oil and royalty gas to and beyond the 
     delivery point until disposition or sale by the United 
     States. Transportation costs shall include associated or 
     related activities to facilitate movement, such as the costs 
     of compression and dehydration associated with 
     transportation. The movement of unseparated, unidentifiable 
     lease production to a point not on or immediately adjacent to 
     the lease premises, unit or communitized area and the 
     movement of separated, identifiable lease production 
     regardless of whether such movement on or off the lease 
     premises, unit or communitized area shall be considered 
     transportation. Transportation costs shall be governed solely 
     by the definitions and provisions in this Act relating to 
     transportation and responsibility for the payment of such 
     costs shall not be dependent upon whether the royalty oil and 
     royalty gas is in merchantable condition at the time of 
     transportation.
       (c) Limitation on Lessee's Responsibility for Costs.--With 
     respect to all royalty oil and royalty gas taken in kind by 
     the United States, the lessee shall bear no costs other than 
     those specifically identified in this section. After the 
     royalty share is taken in kind, the United States shall 
     dispose of and market its royalty oil and royalty gas and the 
     lessee shall have no obligation to dispose of or market the 
     United States royalty share of production.
       (d) Reimbursement of Costs.--In bearing the cost of 
     transporting royalty oil and royalty gas, the United States 
     shall reimburse the lessee for transportation costs without 
     further appropriation in accordance with the provisions of 
     subsection (b) of this section and section 5.

     SEC. 5 TRANSPORTER CHARGES.

       (a) Determination.--The lessee or its affiliate shall 
     determine and calculate, where applicable, the transportation 
     charges governed by this Act in accordance with subsections 
     (b) and (c).
       (b) Reimbursement for Transportation Costs Prior to the 
     Delivery Point.--
       (1) Transport by regulated pipeline or facility.--
     Reimbursement to a lessee for costs of transporting royalty 
     oil and royalty gas produced by the lessee and subsequently 
     transported through a regulated pipeline or facility before 
     the delivery point shall be--
       (A) for nonaffiliated transactions, the actual rate paid 
     under the tariff by the lessee, or
       (B) for affiliated transactions, the lower of the tariff 
     rate or the actual rate paid under the tariff.
       (2) Transport by shipment-by-shipment tariff jurisdiction 
     pipeline or facility.--Reimbursement to a lessee for 
     transportation costs incurred to transport royalty oil 
     through a pipeline or facility for which jurisdiction for 
     purposes of a tariff is determined on a shipment-by-shipment 
     basis, shall be the tariff rate for all shipments by the 
     lessee through the same pipeline or facility if there is a 
     shipment through the pipeline or facility to which a tariff 
     applies.
       (3) Transport by unregulated pipeline or facility.--(A) 
     Reimbursement to a lessee for transportation costs incurred 
     to transport royalty oil or royalty gas through an 
     unregulated pipeline or facility before the delivery point 
     shall be--
       (i) for nonaffiliated transactions, the actual costs 
     incurred by the lessee; or
       (ii) for affiliated transactions--
       (I) if third party oil or gas is being transported through 
     the pipeline or facility, the weighted average (by volume) 
     third party charge; or
       (II) if no third party oil or gas is being transported 
     through the pipeline or facility, not to exceed the pipeline 
     or facility owner's or its affiliate's costs of operating the 
     pipeline or facility, including a return on undepreciated 
     capital investment, subject to paragraph (4).
       (B) For purposes of subparagraph (A)(ii)(II) the term 
     ``costs of operating'' means the sum of the following:
       (i) Direct operating, maintenance, and repair costs and 
     expenses.
       (ii) Indirect costs (including but not limited to costs 
     such as information systems, business services and technical 
     services) allocated to the pipeline or facility, in an amount 
     not exceeding 15 percent of the amount of direct costs that 
     applies under clause (I).
       (iii) An allowance for capital investment calculated on the 
     basis of either of the following, as may be, elected by the 
     lessee:
       (I) depreciation, plus a return on the undepreciated 
     capital, or
       (II) a return on depreciable capital investment.

     Return under subclauses (I) and (II) shall be at a rate equal 
     to twice the rate payable for bonds with a Standard and 
     Poor's industrial BBB bond rating.
       (4) Allowance of higher transportation costs.--If the 
     amount specified in paragraph (3)(A)(ii) does not adequately 
     reflect the costs of the transportation services provided by 
     a lessee or its affiliate, the lessee may request a different 
     transportation reimbursement from the Secretary. For 
     pipelines in more than 200 meters of water, the Secretary may 
     allow a higher rate of return, sufficient for an investment 
     in the fabricating, installing, operating, and maintaining 
     such pipelines as compared to pipelines in waters of less 
     than 200 meters.
       (5) Restriction on disclosure.--The United States and its 
     qualified marketing agent shall keep confidential and shall 
     not disclose the transportation charge or any facts or 
     information related thereto used by a lessee or its affiliate 
     for reimbursement under this subsection.
       (c) Charges for Transportation Costs Beyond the Delivery 
     Point.--
       (1) In general.--Charges by the lessee or its affiliate for 
     transportation of royalty oil or royalty gas through an 
     unregulated pipeline or facility beyond the delivery point 
     shall be a negotiated rate, that--
       (A) shall not exceed the highest rate charged for 
     transportation provided to a third party, if third party oil 
     or gas is being transported through the pipeline or facility; 
     or
       (B) shall be the fair commercial value of the 
     transportation services provided by the lessee or its 
     affiliate if no third party oil or gas is being transported 
     through the pipeline or facility.
       (2) Determination of commercial value.--The standard to be 
     used to determine the commercial value for purposes of 
     paragraph (1)(B) shall be based upon the transportation 
     services provided and not on the ownership of the pipeline or 
     facility by the lessee or its affiliate.
       (d) Arbitration.--
       (1) In general.--If negotiations between a qualified 
     marketing agent and an entity owning the pipeline or facility 
     do not result in a mutually agreeable negotiated charge for 
     transportation under subsection (c), then the qualified 
     marketing agent on behalf of the Secretary or the entity 
     owning the pipeline or facility may, at any time during the 
     negotiation, require that such matter be submitted to 
     arbitration in accordance with this subsection.
       (2) Selection of arbitrators.--Any dispute regarding a 
     charge for transportation that is not resolved by agreement 
     shall be determined by a panel of 3 arbitrators upon written 
     notice given by either party to the other, which notice shall 
     also name one arbitrator. The party receiving such notice 
     shall, within 10 business days thereafter, by written notice 
     to the other party, name the second arbitrator, or failing to 
     do so, the first party who gave notice shall name the second 
     arbitrator. The two arbitrators so appointed shall name the 
     third, or failing to do so within 5 business days then upon 
     the request of either party, the third arbitrator shall be a 
     certified arbitrator appointed by a professional arbitrator 
     association. Whether appointed by the two party-named 
     arbitrators or by a professional arbitration association, the 
     third arbitrator shall be knowledgeable about and experienced 
     in the transportation of oil or gas or both, as applicable.
       (3) Hearing.--An arbitration hearing shall be held within 
     20 calendar days following the selection of the third 
     arbitrator. At the hearing, each party shall submit a 
     proposed transportation rate and evidence to support such 
     rate as it sees fit.
       (4) Decision.--The panel of arbitrators shall determine 
     which of the rates submitted by the parties shall be the 
     transportation charge used. The arbitrators shall render a 
     written decision within 10 calendar days after the hearing 
     under paragraph (3) based on a majority vote of the 3 
     arbitrators. Such decision shall be final and binding on the 
     United States, the qualified marketing agent, and the lessee 
     and its affiliate, and shall be enforceable in any court 
     having jurisdiction.
       (5) Expenses.--Each party shall bear its expenses of 
     prosecuting its own case in any arbitration, and the parties 
     shall share equally any other expenses of the arbitration, 
     including compensation for the third arbitrator at a rate 
     that is fair and reasonable to the United States.
       (6) Use of employee of party as arbitrator.--(A) Any 
     arbitrator named by the parties may be permanent or temporary 
     officer or employee of the Federal or State Government, or an 
     employee of any party to the dispute, if all parties agree 
     that the person may serve.
       (B) In implementing this paragraph, the qualified marketing 
     agent on behalf of the Secretary may use the services of one 
     or more employees of other agencies to serve as arbitrators 
     to be named by the qualified

[[Page S3153]]

     marketing agent. The Secretary may enter into an interagency 
     agreement that provides for the reimbursement by the user 
     agency or the parties of the full or partial costs of the 
     services of such an employee.
       (7) Limitation on disclosure.--Any party (including the 
     United States and its qualified marketing agent) to an 
     arbitration proceeding shall keep confidential and shall not 
     disclose the results of the arbitration or any facts, 
     evidence, or information related thereto provided in 
     confidence to the arbitrators.
       (8) Interim rate.--(A) The royalty oil and royalty gas 
     shall be transported at the dispute rate during the interim 
     period, subject to an obligation to refund if the rate is 
     later reduced as a result of arbitration.
       (B) Any refund under subparagraph (A) shall be made with 
     interest at the average short-term rate as specified in 
     section 6621 of the Internal Revenue Code of 1986.
       (9) Delay or curtailment of production prohibited.--At no 
     time during such arbitration or dispute shall lease 
     production be delayed or curtailed.

     SEC. 6. IMBALANCES.

       (a) Requirement To Resolve Imbalances.--
       (1) In general.--If the amount of royalty oil or royalty 
     gas production taken by the United States from a lease 
     premises during a calendar month differs from the amount of 
     royalty oil or royalty gas production attributable to that 
     lease premises for that calendar month, and the difference 
     results from the circumstances described in paragraph (2), 
     the difference (in this section referred to as a ``royalty 
     share imbalance'') shall be resolved in accordance with this 
     section.
       (2) Circumstances.--The circumstances referred to in 
     paragraph (1) are the following:
       (A) A force majeure event at the delivery point that 
     prevents the United States transporter from receiving royalty 
     oil or royalty gas;
       (B) A failure by the United States or its qualified 
     marketing agent to receive, transport, and market its royalty 
     oil or royalty gas tendered for a one-time occurrence of not 
     more than 3 consecutive days in any calendar quarter; or
       (C) A difference between the amount made available to the 
     United States at the delivery point by the lease operator on 
     behalf of the lessee and the United States royalty share of 
     total production.
       (b) Imbalance Accounts.--
       (1) Maintenance of information.--Each lease operator shall 
     maintain information on the quantity of royalty oil and 
     royalty gas produced from or attributable to each lease 
     premises and the amount of royalty oil or royalty gas 
     production taken by the United States from each lease 
     premises. The information shall include--
       (A) the quantities of royalty oil and royalty gas taken in 
     kind by the United States at the delivery point;
       (B) the quantities of royalty oil and royalty gas produced 
     from and attributed to the lease premises; and
       (C) the current month and cumulative royalty share 
     imbalances.
       (2) Report.--(A) Each lease operator shall--
       (i) submit a royalty share imbalance report to the 
     qualified marketing agent for the United States with respect 
     to the lease no later than 60 days after the expiration of 
     each month of production from the lease; or
       (ii) if all information for the report is not available by 
     such date, file or cause to be filed with the qualified 
     marketing agent a report that contains estimated quantities, 
     and file a revised final report showing actual quantities no 
     later than 60 days after information on all actual quantities 
     is received.
       (B) The royalty share imbalance report submitted under 
     subparagraph (A) to the qualified marketing agent shall 
     constitute formal notice of a royalty share imbalance, which 
     shall be remedied in accordance with subsection (c).
       (c) Managing Imbalances.--
       (1) In general.--If a royalty share imbalance occurs during 
     any calendar month, the lease operator shall work with the 
     United States (through its qualified marketing agent) to 
     settle the royalty share imbalance in a manner consistent 
     with the existing production balancing agreements or 
     practices among operating rights owners.
       (2) Royalty oil imbalance.--In the case of a royalty share 
     imbalance with respect to royalty oil, and in the absence of 
     multiple operating rights owners, additional quantities of 
     oil may be taken by either a lessee or the United States 
     through its qualified marketing agent to expeditiously settle 
     such royalty share imbalance as soon as is reasonably 
     practicable, as determined by the lease operator.
       (3) Royalty gas imbalance.--(A) In the case of a royalty 
     share imbalance with respect to royalty gas during any 
     calendar month and in the absence of multiple operating 
     rights owners, the lease operator shall work with the United 
     States (through its qualified marketing agent) to arrange for 
     increased or decreased quantities of gas to be taken 
     beginning the month after receipt of such notice by qualified 
     marketing agent, to expeditiously settle such royalty share 
     imbalances as soon as is reasonably practicable.
       (B) Additional quantities taken in a month by either a 
     lessee or the United States to reduce a royalty share 
     imbalance with respect to royalty gas shall not exceed 25 
     percent of that month's royalty gas.
       (C) Until final settlement pursuant to subsection (d), 
     royalty share imbalances with respect to royalty gas shall be 
     reduced chronologically in the order in which they were 
     created.
       (d) Final Imbalance Report and Final Settlement.--
       (1) Final imbalance report.--Upon permanent cessation of 
     production from a lease, the lease operator shall file a 
     final imbalance report that--
       (A) contains the information described in subsection (b); 
     and
       (B) states that the lease premises has permanently ceased 
     production and that a royalty share imbalance exists.
       (2) Final settlement.--The parties to a royalty share 
     imbalance shall settle such royalty share imbalance using the 
     same final settlement procedures as set forth in the existing 
     production balancing agreement between the operating rights 
     owners, if any. In the absence of such an agreement, within 
     60 days of the final imbalance report, each party that 
     received excess quantities shall, at its option, make 
     delivery of the excess quantities or make a cash payment, to 
     the parties who received insufficient quantities. The cash 
     payment shall be based on the net proceeds (in terms of 
     actual value received) from the sale of such excess 
     quantities for value at the lease premises or the lessee may 
     make delivery of the imbalance volume. No interest shall 
     accrue, prior to the date of any settlement, on any 
     imbalance.

     SEC. 7. ROYALTY-IN-KIND FOR TRUCKED, TANKERED, OR BARGED OIL 
                   OR GAS.

       (a) Application.--This section shall apply to royalty oil 
     or royalty gas produced from onshore or offshore lease 
     premises for which there is no pipeline connection at the 
     well such that the royalty oil and royalty gas is transported 
     by truck, tanker, or barge from the lease premises.
       (b) Selection of Transporter.--
       (1) In general.--To further the efficient and cost-
     effective taking of royalty oil or royalty gas in kind from 
     such lease premises, the qualified marketing agent shall 
     select and utilize a transporter who is transporting oil or 
     gas for a lessee from the lease premises, or for the operator 
     of the lease premises.
       (2) Exception.--Royalty oil or royalty gas taken in kind 
     may be transported in any other manner agreed to by the 
     qualified marketing agent and the lessee or lease operator.
       (c) Relationship to Other Laws.--
       (1) Laws regarding oil or gas transportation.--This section 
     shall not alter or abridge any State or Federal law 
     regulating the transportation of oil or gas by truck, tanker, 
     or barge.
       (2) Federal royalty prepayment provisions.--Nothing in this 
     Act shall modify, abridge, or alter the provisions of section 
     7(b) of the Federal Oil and Gas Royalty Simplification and 
     Fairness Act (30 U.S.C. 1726) with respect to the prepayment 
     of royalty.

     SEC. 8. LIMITATIONS ON APPLICATION.

       (a) Lease Royalty Clauses and Royalty Payments.--This Act 
     does not apply to royalty payments of the following types:
       (1) Compensatory royalties.
       (2) Minimum royalties.
       (3) Net profit share lease royalties prior to payout.
       (b) Prior Royalty Rate Reduction Determinations.--This Act 
     shall not modify or alter any royalty rate reduction 
     determination made by the Secretary before or after the date 
     of enactment of this Act. The amount of royalty oil and 
     royalty gas taken in kind by the Secretary shall be the 
     amount calculated by such reduced royalty rate.
       (c) Audit of Eligible Small Refiner.--The Secretary shall 
     have the right to audit the reports of eligible small 
     refiners related to the volume of royalty oil received as are 
     required under the provisions of this Act during normal 
     business hours, at reasonable times, to verify the accuracy 
     of such reports.

     SEC. 9. REPORTING.

       (a) Reporting by Lease Operator.--A lease operator on 
     behalf of the lessee shall provide or cause to be provided 
     all volume reports required under the oil and gas lease to 
     the United States, but shall be relieved of the obligation of 
     providing any royalty related and all royalty-in-value 
     reports for any royalty oil or royalty gas taken in kind by 
     the United States required pursuant to the oil and gas lease 
     terms or applicable statutes. A lease operator on behalf of 
     the lessee shall make available or cause to be made available 
     such information as is customarily provided to third party 
     sellers of lease production on a timely basis.
       (b) Reporting by Qualified Marketing Agent.--A qualified 
     marketing agent shall provide or cause to be provided to the 
     United States any valuation or related royalty reports 
     required by the Secretary.

     SEC. 10. AUDIT.

       (a) Audit of Lease Operator.--The Secretary shall have the 
     right to audit the reports the Lease Operator files on behalf 
     of lessees related to the volume of oil and gas produced as 
     are required under this Act during normal business hours, at 
     reasonable times to verify the accuracy of such reports.
       (b) Audit of Qualified Marketing Agent.--The Secretary 
     shall have the right to audit the reports of qualified 
     marketing agents required under this Act during normal 
     business hours, at reasonable times, to verify the accuracy 
     of such reports. Any information and records regarding sales 
     of royalty oil and royalty gas shall be obtained, where 
     necessary, from a qualified marketing agent.

[[Page S3154]]

     SEC. 11. LEASE TERMS NOT AFFECTED.

       In accordance with the terms of oil and gas leases issued 
     by the Secretary, the Secretary shall exercise the right to 
     be paid oil and gas royalties in amount pursuant to this Act 
     and lessee shall pay such oil and gas royalties in amount 
     pursuant to provisions of this Act. Nothing in this Act shall 
     alter or abridge the rights of a lessees under an oil and gas 
     lease, including the right to explore for, operate, drill 
     for, or produce oil and gas or to otherwise operate the 
     lease. The rights, duties, or obligations that exist between 
     the United States and a lessee which arise under an oil and 
     gas lease with respect to oil or gas used on the lease 
     premises or gas unavoidably lost prior to the delivery point 
     shall not be affected, abridged, or altered by this Act. When 
     oil or gas is used on, or for the benefit of, a lease 
     premises at a facility handling production from more than one 
     lease premise, or at a facility handling unitized or 
     communitized production, the proportionate share of each 
     lease's production (actual or allocated) necessary to operate 
     the facility may be used royalty-free.

     SEC. 12. ELIGIBLE AND SMALL REFINERS.

       (a) Sale of Royalty Oil to Eligible Small Refiners.--(1) 
     The Secretary shall direct qualified marketing agents to 
     offer for sale to eligible small refiners the eligible small 
     refiner portion in accordance with the provisions set forth 
     in this section.
       (2) The sale of royalty oil from the eligible small refiner 
     portion to an eligible small refiner is intended for 
     processing, or trading for equivalent barrels for processing, 
     in the eligible small refiner's refineries located in the 
     United States and not for resale in-kind or value.
       (3) The Secretary shall annually review and recertify or 
     withdraw the continuing eligibility of previously certified 
     eligible small refiners.
       (4) The eligible small refiner portion shall be offered to 
     eligible small refiners from royalty oil volumes to be sold 
     by each qualified marketing agent. The Secretary shall 
     maintain a current list of all Eligible Small Refiners. Upon 
     the selection of a Qualified Marketing Agent by the 
     Secretary, the Secretary shall promptly notify all Eligible 
     Small Refiners of the selection of the Qualified Marketing 
     Agent. The notification shall contain the name and address of 
     the Qualified Marketing Agent as well as a brief description 
     of the federal leases and lease products to be marketed by 
     that Qualified Marketing Agent. Within 15 days after notice 
     by the Secretary, any Eligible Small Refiner who is 
     interested in receiving Royalty Oil from the leases of the 
     Qualified Marketing Agent, shall submit a Notice of Interest 
     to the Qualified Marketing Agent. The Notice shall generally 
     state the volumes location and quality of Royalty Oil desired 
     by the Small Refiner. When marketing Royalty Oil, the 
     Qualified Marketing Agent shall contact the Small Refiner(s) 
     who has (have) submitted a Note of Interest and shall offer 
     to sell the 40% portion to the Small Refiner(s) who submitted 
     a Notice. The Small Refiner shall purchase such Royalty Oil 
     at the weighted average price for the remaining volumes of 
     like quality at the same location sold by the Qualified 
     Marketing Agent.
       (5) Nothing in this section shall preclude any eligible 
     small refiner from participating in any open and advertised 
     or negotiated sale by qualified marketing agents. Royalty oil 
     volumes obtained by any eligible small refiner in any open 
     and advertised or negotiated sale shall not be included in 
     calculating limitations on eligibility as defined in 
     subsection (b).
       (b) Limitations on Eligibility.--No eligible small refiner 
     may purchase royalty oil from the eligible small refiner 
     portion for delivery at a rate that exceeds 60 percent of the 
     combined crude oil and condensate distillation capacity of 
     that eligible small refiner's currently operating refineries 
     located in the United States unless the Secretary determines 
     that it is in the public interest to allow all eligible small 
     refiners to purchase royalty oil at a greater rate. The 
     Secretary shall promulgate rules and regulations to determine 
     an eligible small refiner's current operating capacity.
       (c) Fees, Creditworthiness, and Surety Requirements.--(1) 
     The purchase of royalty oil from the eligible small refiner 
     portion pursuant to this section shall not be subject to any 
     fees or charges not required of all purchasers of royalty 
     oil.
       (2) The Secretary shall establish conditions for each 
     eligible small refiner's creditworthiness at the time of 
     determining and reviewing eligibility.
       (3) Creditworthiness requirements for eligible small 
     refiners shall not exceed standard industry requirements 
     governing non-Federal crude oil purchasers, and the Secretary 
     may not require surety in excess of the estimated value of 60 
     days anticipated deliveries of royalty oil from the eligible 
     small refiner portion to individual eligible small refiners.
       (d) Eligible Small Refiner Advisory Panel.--The Secretary 
     shall convene an eligible small refiner advisory panel to 
     assist in developing policies and procedures to implement the 
     provisions of this Act. The eligible small refiner advisory 
     panel shall be comprised of representatives from 3 small 
     refiners, 3 qualified marketing agents and 3 lesses who have 
     participated in the small refiner program established 
     pursuant to section 36 of the Mineral leasing Act (30 U.S.C. 
     192) or section 1353 of the Outer Continental Shelf Lands Act 
     (43 U.S.C. 1353).
       (e) Pursuant to the recommendations of the Small Refiner's 
     Advisory Group, the Secretary shall develop and implement 
     procedures to ensure a fair and equitable opportunity for 
     interested eligible small refiners to purchase royalty oil 
     from the eligible small refiner portion.
       (f) Reports on RIK.--The Secretary may require any eligible 
     small refiner to submit a report demonstrating the eligible 
     small refiner's compliance with subsection (a)(2).
       (g) Repeal of Existing Royalty-in-Kind Authority.--Section 
     36 of the Mineral Leasing Act (30 U.S.C. 192) and section 
     1353 of the Outer Continental Shelf Lands Act (43 U.S.C. 
     1353) are repealed.

     SEC. 13. APPLICABLE LAWS.

       (a) Movement, Disposition, and Sale of Royalty Oil and 
     Royalty Gas.--In arranging for the movement, disposition and 
     sale of royalty oil and royalty gas, the United States and 
     its qualified marketing agents shall be subject to all laws 
     that apply to the movement, disposition, and sale of oil and 
     gas.
       (b) No Additional Priority of Service or Movement.--In any 
     pipeline, truck, barge, railroad, or other carrier downstream 
     of the delivery point, royalty oil and royalty gas shall not 
     be afforded a priority of service or movement, nor assigned a 
     capacity right which is superior to that identified in--
       (1) the contract for carriage of royalty oil and royalty 
     gas entered into by the transporter with the United States or 
     the qualified marketing agent, or
       (2) the tariff applicable to such carrier, if any.
       (c) Meaning of Terms Used.--The meaning of the terms used 
     in this Act shall be supplemented by reference to generally 
     accepted accounting principles and prevailing industry 
     practices and procedures.
       (d) Laws Applicable to Stripper or Marginal Production Not 
     Affected.--Nothing in this Act shall modify, abridge or alter 
     the provisions of the Deep Water Royalty Relief Act of 1995 
     (43 U.S.C. 1337), or any other Federal law applicable to 
     stripper or marginal production.

     SEC. 14. INDIAN LANDS.

       This Act shall not apply with respect to Indian lands.

     SEC. 15. EFFECTIVE DATE; REGULATIONS.

       (a) In General.--Except as provided in subsection (b), this 
     Act shall become no later than effective 18 months after the 
     date of enactment of this Act, and shall apply with respect 
     to the production of oil and gas on or after the first day of 
     the month following the effective date of this Act.
       (b) Regulations.--The Secretary shall issue all regulations 
     required for implementation of this Act within one year after 
     the date of enactment of this Act.

  Mr. DOMENICI. Mr. President, the current royalty system is an 
elaborate after-the-fact game of ``Gotch ya.''
  Producers are put in the unenviable position of being second-guessed, 
some times years later, by the Minerals Management Service (MMS). This 
current system is unfair to oil and gas producers. It is expensive and 
inefficient for the federal government.
  Under the current system, only the lawyers benefit. It results in a 
lot of law suits and big legal bills.
  The MMS tried to fix the system by proposing a ``producer is always 
the loser rule.''
  Under the proposed rules, (now abandoned) the producers would have 
always lost. The MMS tried a rule tying the fair market value to the 
NYMEX.
  If producers sold their production for less than the NYMEX price, 
they would have had to pay the royalty on the ``phantom'' income i.e. 
the difference between the price they actually received and the NYMEX 
price. If, on the other hand, they sold their production for more than 
the NYMEX, they would have had to pay the royalty on the amount they 
actually received. This would have been a very unsatisfactory approach.
  Fortunately, most independent producers don't have to use that 
approach. However, the existing valuation formula for calculating fair 
market value is complicated, fraught with exceptions, and hard to 
administer.
  The question: What is fair market value for oil is not as simple as 
it sounds.
  Some of the variable factors include the quality or refinery value of 
crude oil; the transportation costs necessary to move that oil to a 
refiner; relative access to various refineries or markets which may 
value a particular type of crude oil differently; the supply, vis-a-
vis, the demand for certain types of oil or alternative supplies, and 
whether the contract is a long-term or short-term commitment made by 
either the refiner or the producer.
  Other factors that influence value include: the volume of the crude 
oil produced at the lease. This could affect the unit logistical costs; 
seasonality; and service requirements of the producer.

[[Page S3155]]

  Another question more complicated than it sounds is this: What are 
the appropriate, allowable, deductible expenses?
  Under the current system it costs the MMS about $60 million annually 
to debate this question and to administer our royalty collection 
program. It takes several hundred employees, many of them auditors, to 
oversee the current royalty program. In contrast, royalty-in-kind 
programs in Canada need only 33 employees to administer their approach.
  With a royalty-in-kind system, the producer would give some of its 
production from the federal lands as a royalty-in-kind payment.
  A royalty-in-kind program is an accurate way to determine a fair 
market value. The federal government would sell its share of the oil on 
an open and competitive market. What you can sell it for is, per se, 
fair market value. That is the essence of what the ``Royalty-in-Kind'' 
Program, along with the use of the Qualified Marketing Agents 
(``QMA''), would allow.
  The goal should be treating the producers fairly, maximizing revenues 
for the federal government, and distributing an accurate amount of 
royalties to the states.
  The bill being introduced today by Senator Nickles, Murkowski, 
Hutchinson and I would provide a better way for the federal government 
and the Minerals Management Service (MMS) to collect, with certainly, a 
fair value for its crude oil.


                         provisions of the bill

  The federal government would take its royalty ``in kind'' at the 
applicable delivery point for each federal onshore and offshore lease.
  Title of the royalty share taken in-kind would be in the name of the 
federal government.
  The U.S. would contract with qualified marketing agents (QMAs).
  The federal government would select a QMA for each lease on a 
competitive bid basis.
  States entitled to revenues under the net receipts sharing provisions 
of the Mineral Leasing Act or Section 8(g) of the Outer Continental 
Shelf Lands Act would be allowed to elect to select the QMA.
  In selecting a QMA, the State would act for the mutual benefit of the 
State and the federal government. The payment from the federal 
government to any State for its share of royalty taken in-kind from 
federal leases within a State's boundary would not be subject to cost 
deductions under the net receipts sharing provisions of the applicable 
statutes.
  The lessee must tender the royalty share at the delivery point. This 
would completely satisfy the lessee's royalty obligation.
  The lessee would bear the costs of place royalty oil and royalty gas 
in a merchantable condition at the delivery point. The lessee would be 
responsible for gathering costs. Transportation costs would be borne by 
the federal government.
  Mr. President, this is an excellent approach. My only concern is that 
the final legislative product adequately address the problem of the 
marginal well that produces a few barrels a day and is in an isolated 
area. The legislation needs to make sure that there is a workable 
mechanism for these isolated wells.
  I also note that some, including the New Mexico state lands 
commissioner, have suggested a multi-state pilot program prior to 
moving to the nation-wide royalty-in-kind program. I respect those 
views.
  I hope, that as we move through the hearing process the Committee can 
take testimony on whether to proceed with a multi-state pilot program 
or whether existing pilots have provided sufficient information for us 
to implement a national program.
  I want to recognize Senator Nickles for his leadership on this issue 
and look forward to working with him, Senator Murkowski and Senator 
Hutchison on moving this legislation through the process so that we can 
start a royalty-in-kind program in the near future.

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