[Congressional Record Volume 144, Number 79 (Wednesday, June 17, 1998)]
[Senate]
[Pages S6488-S6496]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. AKAKA:
  S. 2181. A bill to amend section 3702 of title 38, United Code, to 
make permanent the eligibility of former members of the Selected 
Reserve for veterans housing loans; to the Committee on Veterans' 
Affairs.
  Mr. AKAKA. Mr. President, I rise today to introduce legislation that 
would permanently authorize the Department of Veterans Affairs Home 
Loan Guaranty Program for members of the Selected Reserve.
  The eligibility of National Guard and Reserve members for VA-
guaranteed home loans will expire in October 1999. I believe that 
Section 3702 of Title 38, which allows Guard and Reserve members who 
complete 6 years of service to participate in the loan program, should 
be made permanent.
  The law extending eligibility for the VA Home Loan Guaranty Program 
to these service members was enacted in 1992 with bipartisan support in 
the Senate and in the House. As the sponsor of the original bill, I am 
pleased with the participation of Guard and Reserve members in the 
program, and am committed to ensuring that their eligibility for this 
program continues beyond the sunset date.
  With the downsizing of our active duty military forces, Guard and 
Reserve units are becoming an increasingly vital element of the total 
force. However, there are very few incentives to get qualified 
individuals to serve our country in the Selected Reserve. The VA Home 
Loan Guaranty Program for National Guard and Reserve members is an 
excellent incentive to join and remain in the Selected Reserve.
  Since the VA Home Loan Guaranty Program for Guard and Reserve members 
began in October 1992, the VA has guaranteed more than 33,000 loans 
through fiscal year 1996. In 1996 alone, approximately 11,000 loans 
totalling over $1 billion were made. According to the VA, only 93 out 
of all loans made to Reservists have been foreclosed upon, for a 
minimal default rate of about 0.4 percent. By comparison, the 
foreclosure rate for loans made to other veterans was two and one-half 
times higher than the rate for Reservists. Furthermore, 67 percent of 
loans to Reservists guaranteed by the VA in fiscal year 1996 were to 
first time home buyers, compared to 56 percent of loans to other 
veterans.
  As the statistics on VA-guaranteed home loans indicate, the inclusion 
of Guard and Reserve members actually stabilizes the financial 
viability of he program since this group is likely to have a lower 
default rate than other veterans. Reservists are generally an older, 
more mature, and stable group with established civilian jobs and ties 
to local communities.
  Mr. President, it is clear that the VA Home Loan Guaranty Program is 
not only good for members of the Selected Reserve, it is also 
beneficial for the VA Home Guaranty Program. Furthermore, the local 
economies where the homes are purchased also benefit from this program. 
So, therefore, I urge my colleagues to join me in supporting this 
legislation. Passage of this measure will ensure that the program 
continues to be made available to National Guard and Reserve members 
who have served our country.
  Mr. President, I ask unanimous consent that the text of my bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2181

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

     SECTION 1. PERMANENT ELIGIBILITY OF FORMER MEMBERS OF 
                   SELECTED RESERVE FOR VETERANS HOUSING LOANS.

       Section 3702(a)(2)(E) of title 38, United States Code, is 
     amended by striking out ``For the period beginning on October 
     28, 1992, and ending on October 27, 1999, each veteran'' and 
     inserting in lieu thereof ``Each veteran''.
                                 ______
                                 
      By Mr. GORTON (for himself, Mr. Kerrey, Mr. Jeffords, Mr. 
        Bumpers, and Mrs. Murray):
  S. 2182. A bill to amend the Internal Revenue Code of 1986 to provide 
tax-exempt bond financing of certain electric facilities; to the 
Committee on Finance.


               PRIVATE USE COMPETITION REFORM ACT OF 1998

 Mr. GORTON. Mr. President today I join with Senators Kerrey, 
Jeffords, and Bumpers, to introduce the Private Use Competition Reform 
Act of 1998. This legislation provides a fair balance among public 
financing concerns, principles of fair competition and customer choice 
in the electric utility industry. At the same time, it strikes an 
equitable balance between publicly-owned utilities and investor-owned 
utilities. Most importantly, it advances the interest of consumers.
  The challenge in developing this legislation was to determine the 
middle ground. Some publicly-owned utilities would like to change the 
Tax Reform Act of 1986 so that all existing and all future tax-exempt 
debt would be protected without restrictions. Some investor-owned 
utilities favor elimination of tax-exempt options for municipal 
electric utilities, including much of their existing debt. However, 
this approach would threaten the existence of publicly owned utilities, 
and raise rates for more than 40 million consumers.
  This bill will accomplish two objectives. First, it clarifies how the 
existing private-use requirements--the rules that limit the ability of 
publicly-owned utilities to sell or transport electricity to private 
parties from facilities financed by tax-exempt bonds--will work in a 
new competitive marketplace. Secondly, it provides options, with 
significant tradeoffs, for those utilities that need flexibility and 
encourages municipalities to open their transmission systems and 
provide retail choice to consumers.
  There are three categories of debt addressed in this legislation.
  The first consists of existing debt that has been issued for all 
segments of a public utility's system: generating plants, transmission 
lines, and local distribution systems. This debt was issued under the 
assumption that our existing system would not change, and electric 
utilities would remain closed and not be subject to retail competition.
  The second category of debt pertains to bonds issued after the 
effective date of the enacted bill and used to finance new generating 
facilities. There is a compelling argument that this type of debt 
should not be tax-exempt because power generation, unlike transmission 
and distribution, is emerging as a competitive market.
  The third category of future debt involves those areas of a utility's 
system that will not face competition: transmission and local 
distribution. Since these areas would remain de facto monopolies 
regulated by FERC or local governments and would be increasingly open 
to access by all market participants on a non-discriminatory basis, it 
is appropriate that they should continue to have access to tax-exempt 
financing.
  This bill addresses each area differently. To enable public power 
systems to one up their transmission and distribution systems, it 
provides limited relief to existing tax-exempt debt.

[[Page S6489]]

But there is a significant tradeoff for this relief: eliminating 
publicly-owned utilities' ability to issue tax-exempt debt for 
facilities that will be used in a competitive marketplace.


                          The Current Problem

  The Energy Policy Act of 1992 and the subsequent FERC Order 888 
mandating open transmission access, coupled with state restructuring 
efforts, have created a significant tax problem for public systems.
  To gain access to competitive wholesale markets, a publicly-owned 
utility must provide comparable access; some public power systems own 
vital transmission links within a geographical area. Also, customers of 
public systems--who are also their owners--will want access to other 
power suppliers.
  If publicly-owned systems open their transmission lines they can run 
afoul of the current ``private-use test'' in the tax code and force 
their bonds to become retroactively taxable.
  In sum, the current private use restrictions were written before 
anyone could anticipate a competitive electricity industry; 
consequently this places publicly-owned utilities in a complex bind. 
Allowing private entities to use their transmission facilities could 
trigger the private use tests, resulting in an expensive and chaotic 
defeasance of these bonds. Public systems also face penalties under 
private use regulations if they sell power to existing customers on a 
non-tariff basis or resell power that becomes excess when retail 
customers switch suppliers.
  The Department of Treasury released temporary regulations in January 
of 1998, (twelve years after the Tax Reform Act of 1986), but these 
temporary regulations still fail to provide the flexibility needed for 
public power systems as the electric utility industry transitions to 
retail competition.
  This legislation is needed to address these concerns, and to promote 
fair competition in the electricity industry. This bill will help 
ensure that all Americans can enjoy the benefits of competition--lower 
rates, new and innovative products, and better service.
  Mr. President, I ask unanimous consent that the text of the bill and 
the explanatory memorandum be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2182

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

     SECTION 1. TAX-EXEMPT BOND FINANCING OF CERTAIN ELECTRIC 
                   FACILITIES.

       (a) Permitted Open Access Transactions Not a Private 
     Business Use.--Section 141(b)(6) of the Internal Revenue Code 
     of 1986 (defining private business use) is amended by adding 
     at the end the following:
       ``(C) Permitted open access transactions not a private 
     business use.--
       ``(i) In general.--For purposes of this subsection, the 
     term `private business use' shall not include a permitted 
     open access transaction.
       ``(ii) Permitted open access transaction defined.--For 
     purposes of clause (i), the term `permitted open access 
     transaction' means any of the following transactions or 
     activities with respect to an electric output facility (as 
     defined in subsection (f)(5)(A)) owned or leased by a 
     governmental unit or in which a governmental unit has 
     capacity rights:
       ``(I) Providing open access transmission services and 
     ancillary services that meet the reciprocity requirements of 
     Federal Energy Regulatory Commission Order No. 888, or that 
     are ordered by the Federal Energy Regulatory Commission, or 
     that are provided in accordance with a transmission tariff of 
     an independent system operator approved by such Commission, 
     or are consistent with state administered laws, rules or 
     orders providing for open transmission access.
       ``(II) Participation in an independent system operator 
     agreement, regional transmission group, or power exchange 
     agreement approved by such Commission.
       ``(III) Delivery on an open access basis of electric energy 
     sold by other entities to end-users served by such 
     governmental unit's distribution facilities.
       ``(IV) If open access service is provided under subclause 
     (I) or (III), the sale of electric output of electric output 
     facilities on terms other than those available to the general 
     public if such sale is (1) to an on-system purchaser, (2) an 
     existing off-system sale, or (3) a qualifying load loss sale.
       ``(V) Such other transmissions or activities as may be 
     provided in regulations prescribed by the Secretary.
       ``(iii) Qualifying load loss sale.--For purposes of clause 
     (ii)(IV), a sale of eclectic energy by a governmental unit is 
     a qualifying load loss sale in any calendar year after 1997, 
     if it is a new off-system sale, and the aggregate of new off-
     system sales in such year does not exceed lost load, and if 
     the term of the sale does not exceed three years, and such 
     governmental unit has elected under subsection (f)(2) to 
     suspend issuance of certain tax-exempt bonds for not less 
     than the term of the sale (or for any period equal to the 
     term of the sale that includes the first year of the sale).
       ``(iv) Other definitions; special rules.--For purposes of 
     this subparagraph--
       ``(I) On-system purchaser.--The term `on-system purchaser' 
     means a person who purchases electric energy from a 
     governmental unit and who is directly connected with 
     transmission or distribution facilities that are owned or 
     leased by such governmental unit or in which such 
     governmental unit has capacity rights that are treated under 
     FERC tariffs or existing contracts as equivalent to 
     ownership.
       ``(II) Off-system purchaser.--The term `off-system 
     purchaser' means a purchaser of electric energy from a 
     governmental unit other than an on-system purchaser.
       ``(III) Existing off-system sale.--The term `existing off-
     system sale' means a sale of electric energy to a person that 
     was an off-system purchaser of electric energy in the base 
     year, but not in excess of the KWH purchased by such person 
     in such year.
       ``(IV) New off-system sale.--The term `new off-system sale' 
     means an off-system sale other than an existing off-system 
     sale.
       ``(V) Lost load.--The term `lost load' for the purposes of 
     determining qualifying load loss sales for any year, means 
     the amount (if any) by which (1) the sum of on-system sales 
     of electric energy and existing off-system sales of electric 
     energy in such year is less than (2) the sum of such sales of 
     electric energy in the base year.
       ``(VI) Base year.--The term `base year' means 1997 (or, at 
     the election of such unit, in 1995 or 1996).
       ``(VII) Joint action agencies.--A member of a joint action 
     agency that is entitled to make a qualifying load loss sale 
     in a year may transfer that entitlement to the joint action 
     agency in accordance with rules of the Secretary.''
       (b) Election To Terminate Tax Exempt Financing.--Section 
     141 of the Internal Revenue Code of 1986 (relating to private 
     activity bond; qualified bond) is amended by adding at the 
     end the following:
       ``(f) Election To Terminate or Suspend Tax-Exempt Bond 
     Financing for Certain Electric Output Facilities.--
       ``(1) Termination election.--An issuer may make an 
     irrevocable election under this paragraph to terminate 
     certain tax-exempt financing for electric output facilities. 
     If the issuer makes such election, then--
       ``(A) except as provided in paragraph (3), no bond the 
     interest on which is exempt from tax under section 103 may be 
     issued on or after the date of such election with respect to 
     an electric output facility; and
       ``(B) notwithstanding paragraph (1) or (2) of subsection 
     (a) or paragraph (5) of subsection (b), with respect to an 
     electric output facility no bond that was issued before the 
     date of enactment of this subsection, the interest on which 
     was exempt from tax on such date, shall be treated as a 
     private activity bond, for so long as such facility continues 
     to be owned by a governmental unit.
       ``(2) Suspension election.--For purpose of subsection 
     (b)(6)(C)(iii), an issuer may elect to suspend certain tax-
     exempt financing for electric output facilities for a 
     calendar year. If the issuer makes such election, then 
     (except as provided in paragraph (3)) no bond, the interest 
     on which is exempt from tax under section 103, may be issued 
     in such calendar year with respect to an electric output 
     facility.
       ``(3) Exceptions.--An election under paragraph (1) or (2) 
     does not apply to--
       ``(A) any qualified bond (as defined in subsection (e)),
       ``(B) any eligible refunding bond, or
       ``(C) any bond issued to finance a qualifying T&D facility, 
     or
       ``(D) any bond issued to finance repairs or pollution 
     control equipment for electric output facilities. Repairs 
     cannot increase by more than a de minimus degree the capacity 
     of the facility beyond its original design.
       ``(4) Form and effect of elections.--An election under 
     paragraph (1) or (2) shall be made in such a manner as the 
     Secretary prescribes and shall be binding on any successor in 
     interest to the issuer.
       ``(5) Definitions.--For purposes of this subsection--
       ``(A) Electric output facility.--The term `electric output 
     facility' means an output facility that is an electric 
     generation, transmission, or distribution facility.
       ``(B) Eligible refunding bond.--The term `eligible 
     refunding bond' means state or local bonds issued after an 
     election described in paragraph (1) or (2) that directly or 
     indirectly refund state or local bonds issued before such 
     election, if the weighted average maturity of the refunding 
     bonds do not exceed the remaining weighted average maturity 
     of the bonds issued before the election.
       ``(C) Qualifying t&d facility.--The term `qualifying T&D 
     facility' means--
       ``(i) transmission facilities over which services described 
     in subsection (b)(6)(C)(ii)(I) are provided, or
       ``(ii) distribution facilities over which services 
     described in subsection (b)(6)(C)(ii)(III) are provided.''
       (c) Effective Date, Applicability, and Transition Rules.--
       (1) Effective date.--The amendments made by this section 
     take effect on the date of enactment of this Act, except that 
     a governmental unit may elect to apply section

[[Page S6490]]

     141(b)(6)(C) of the Internal Revenue Code of 1986, as added 
     by subsection (a), with respect to permitted open access 
     transactions on or after July 9, 1996.
       (2) Applicability.--References in the Act to sections of 
     the Internal Revenue Code of 1986, as amended, shall be 
     deemed to include references to comparable sections of the 
     Internal Revenue Code of 1954, as amended.
       (3) Transition rules.--
       (A) Private business use.--Any activity that was not a 
     private business use prior to the effective date of the 
     amendment made by subsection (a) shall not be deemed to be a 
     private business use by reason of the enactment of such 
     amendment.
       (B) Election.--An issuer making the election under section 
     141(f) of the Internal Revenue Code of 1986, as added by 
     subsection (b), shall not be liable under any contract in 
     effect on the date of enactment of this Act for any claim 
     under section 141(f) of such Code arising from having made 
     the election.
       (d) Short Title.--This Act may be cited as the ``Private 
     Use Competition Reform Act of 1998''.
                                  ____


                         Explanation of S. 2182


                               background

       Interest on bonds issued by state and local governments is 
     generally exempt from Federal income taxes. One exception to 
     this general rule relates to bonds that finance output 
     facilities used in a private business. In the case of such 
     facilities, if the contractual arrangements for sale of the 
     output transfer the benefits and burdens of ownership of the 
     facility to private parties, the use is treated as a private 
     business use and the bonds issued to finance the facility may 
     not be tax-exempt. If at the time of issuance the issuer 
     reasonably expected that the private business use rules would 
     be violated or the issuer thereafter took deliberate action 
     that resulted in a violation, interest on the bonds is 
     retroactively taxable to date of issuance.
       There has been significant uncertainty as to how these 
     private business use rules apply to public power systems in 
     the emerging competitive wholesale and retail electricity 
     markets. In particular, questions have been raised as to 
     whether such systems may (1) provide open access transmission 
     services, (2) contractually commit their transmission systems 
     to an Independent System Operator (ISO), (3) open their 
     distribution facilities to retail competition, or (4) lower 
     prices to particular customers to meet competition.


                          proposed amendments

       S. 2182 would amend the Internal Revenue code of 1986 to 
     make two modifications to the private business use rules as 
     they apply to electric facilities: (1) to clarify the 
     application of the existing private business use rules in the 
     new competitive environment, and (2) to make the private 
     business use rules inapplicable to existing tax-exempt debt 
     issued by any public power system that elects not to issue 
     new tax-exempt debt for electric generation and certain other 
     facilities.
       1. Clarification of Existing Private Business Use Rules. 
     Subsection (a) of section 1 of the bill amends section 
     141(b)(6) of the Code to make it clear that the following 
     activities (referred to as ``permitted open access 
     transactions'') do not result in a private business use and 
     will not make otherwise tax-exempt bonds taxable:
       (a) Providing open access transmission service consistent 
     with Federal Energy Regulatory Commission (FERC) Order No. 
     888 or with State open transmission access rules.
       (b) Joining a FERC approved ISO, regional transmission 
     group (RTG), power exchange, or providing service in 
     accordance with an ISO, RTG, or power exchange tariff.
       (c) Providing open access distribution services to 
     competing retail sellers of electricity.
       (d) If open access transmission or distribution services 
     are offered, contracting for sale of power at non-tariff 
     rates--
       (i) with on-system purchasers or existing off-system 
     purchasers, or
       (ii) with new off-system purchasers for up to three years 
     to offset lost load, but only if the issuer elects to 
     temporarily suspend use of certain tax-exempt financing. A 
     sale qualifies under this provision if aggregate new off-
     system sales do not exceed lost load, and if the public power 
     system has elected to suspend issuance of certain tax-exempt 
     bonds for a period at least as long as the term of the sale. 
     ``Lost load'' means the amount by which on-system sales and 
     existing off-system sales in a year are reduced from such 
     sales in a 1995, 1996, or 1997 base year. A special rule 
     permits a member of a joint action agency that is entitled to 
     make a qualifying load loss sale in a year to transfer that 
     entitlement to the joint action agency.

     Treasury by regulation could add to the list of permitted 
     open access transactions.
       2. Election to Terminate or Suspend Issuing Future Tax-
     Exempt Debt. Subsection (b) of section 1 amends section 141 
     of the Code to permit a public power system to elect to 
     terminate or suspend issuing new tax-exempt bonds.
       (a) Termination Election.--Under new Code section 
     141(f)(1), if a public power system elects to terminate 
     issuance of new tax-exempt bonds, it may then undertake 
     transactions that are not otherwise permissible under the 
     private business use rules (as amended above) without 
     endangering the tax-exempt status of its existing bonds. 
     Specifically, if the issuer makes an irrevocable termination 
     election under this provision, then (subject to the 
     exceptions discussed below) no tax-exempt bond may be issued 
     on or after the date of such election with respect to an 
     electric output facility, and no tax-exempt bond that was 
     issued before the date of enactment will be treated as a 
     private activity bond. This treatment continues for so long 
     as such facility continues to be owned by a governmental 
     unit.
       Essentially, making this termination election will 
     eliminate the possibility of a private business use challenge 
     to existing tax-exempt debt. If a utility does not make the 
     election, its existing tax-exempt debt for electric 
     generation facilities would continue to be subject to 
     applicable private business use rules and the marketing 
     constraints thereunder.
       (b) Suspension Election. New section 141(f)(2) provides an 
     alternative to the election to permanently terminate issuing 
     tax-exempt bonds described above. Under the alternative, an 
     issuer may elect to suspend certain tax-exempt financing for 
     electric output facilities in return for temporary relief 
     from certain of the private business use rules, so as to 
     permit the issuer to make sales to offset lost load, as 
     described in 1(d) above.
       (c) Exceptions to Termination or Suspension. Under section 
     141(f)(4) even if a public power system made the suspension 
     or termination election, it could continue to issue tax-
     exempt bonds for the following purposes: for transmission and 
     distribution facilities used to provide open access 
     transmission and distribution services; for ``qualified 
     bonds'' as defined in section 141(e) of the Code (which are 
     not currently subject to private business use restrictions); 
     for eligible refunding bonds (bonds that refinance existing 
     bonds but do not extend their average maturity); and for 
     bonds issued to finance repairs of, or pollution control 
     equipment for, electrical output facilities, so long as the 
     capacity of the facility is not increased over a de minimis 
     amount.
       3. Effective Dates. Subsection (c) makes the provisions of 
     the bill effective on date of enactment, but an issuer may 
     elect to make the private business use rules as clarified by 
     the bill applicable retroactively to 1996 (when FERC issued 
     its Order No. 888). Paragraph (2) of subsection (c) makes it 
     clear that the provisions of the bill apply to bonds issued 
     under the Internal Revenue Code of 1954 as well as the 
     Internal Revenue Code of 1986. This subsection also makes 
     clear that any activity that was not a private business use 
     prior to the enactment of the bill will not be deemed to be a 
     private business use by reason of the bill's enactment. in 
     addition, an issuer making the election under the bill will 
     not be liable under any contract in effect on the date of 
     enactment of the bill for any contract claim arising from 
     having made the election.

 Mr. KERREY. Mr. President, consumers in Nebraska currently pay 
some of the lowest rates in the nation for their electric service. They 
receive power from 171 entities--more individual electric systems than 
any other state. Nebraska is also the only state in the nation which 
relies entirely on public power for its electric service.
  This structure has served Nebraskans well, and the legislation that 
Senators Gorton, Bumpers, Jeffords, and I are introducing today will 
ensure that consumers in my state continue to receive superior electric 
service as efforts to deregulate the electric industry move forward.
  Mr. President, the legislation we are introducing accomplishes three 
important goals:
  First, this bill enables public power systems to open their 
transmission lines to other power producers and to transfer control of 
their transmission facilities to an Independent System Operator without 
jeopardizing the status of their tax-exempt bonds. This will enable 
consumers throughout the country to receive electricity from their 
power producer of choice in an open access marketplace.
  Secondly, this bill enables public power systems to make non-tariff 
sales of lost ``load'' resulting from retail competition, without 
jeopardizing the ability of the utility to issue tax-exempt debt in the 
future. This will allow public utilities to continue to provide quality 
service to current customers and attract new customers in a deregulated 
environment.
  Finally, Mr. President, this legislation gives public power systems 
the option of terminating issuance of new tax-exempt debt for 
generation facilities, while grandfathering all existing debt. This 
provision will give public power systems the flexibility necessary to 
make business decisions about the future based on their financial 
status and the electricity demands in their individual service areas.
  Mr. President, I commend Senator Gorton for the time and energy that 
he has devoted to this issue. It is critical that Congress alleviate 
the burden which current private-use regulations place on the ability 
of public power

[[Page S6491]]

systems to function in a deregulated environment.
  While Congress moves toward electricity deregulation, I will continue 
to fight for the consumers of my state to ensure that their best 
interests are not compromised. The legislation my colleagues and I are 
introducing today is a realistic and workable solution to the private-
use dilemma, and I encourage my colleagues to give it their full 
support.
                                 ______
                                 
      By Mr. HARKIN:
  S. 2183. A bill to amend the Head Start Act to increase the 
reservation of funds for programs for low-income families with very 
young children, and for other purposes; to the Committee on Labor and 
Human Resources.


                         head start legislation

 Mr. HARKIN. Mr. President, most Americans are very familiar 
with Head Start. This popular preschool program was created in 1965 to 
provide health, nutrition and educational assistance to low-income four 
and five year old children. Head Start enjoys strong bipartisan support 
and is widely recognized as a success.
  In response to the growing body of research about the critical 
development which occurs during the first three years of a child's 
life, Head Start has been expanded in recent years to also serve 
infants and toddlers. The Early Head Start Program provides 
comprehensive child development and family support services to families 
with infants and toddlers from birth through age three and currently 
receives 5% of Head Start funding. An estimated 39,000 children 
currently receive services nationwide. In Iowa, 533 children are served 
by Early Head Start.
  However, these children and families represent only a fraction of 
those that need and could benefit from these activities. As a result, 
today I am introducing legislation that would increase the set-aside to 
10% in 2002--to double the number of participants.
  There were many exciting developments last year with respect to the 
education of young children. Science confirmed what many of us have 
believed for years--that the first three years of a child's life are 
the most important. We discovered that young children have unlimited 
potential to learn many things during this critical time. We learned 
how important it is for parents to read to their young children, talk 
with them and stimulate learning through play. We also learned that 
children who do not have enriched learning experiences during these 
important years can be stunted for life.
  Last year, the Labor, Health and Human Services and Education 
appropriations subcommittee, of which I am the ranking Democrat, held a 
hearing focused on the importance of early intervention activities. We 
heard compelling testimony on the benefits of providing support for 
early education and development activities. The President and First 
Lady also convened historic conferences to discuss early childhood 
education and child care and a public campaign was launched to spread 
the word to parents.
  Throughout the year, the message was always the same--we must make 
investments in early intervention programs a national priority. This is 
the right thing to do for the young children of our nation, but it is 
also the most cost-effective thing for us to do. Every dollar invested 
in quality pre-school programs saves $7 in future costs for special 
education, welfare or corrections.
  In 1991, the Committee for Economic Development called on the nation 
to rethink how we view education. This group of business leaders urged 
federal policy makers to view education as a process that begins at 
birth, with preparations beginning before birth. I strongly support 
this objective and have always been a strong advocate in early 
intervention activities such as Head Start, the WIC nutrition program 
and early intervention programs for infants and toddlers with 
disabilities.
  We must dedicate ourselves to making the CED vision a reality and 
build a strong foundation for education in this country. That begins 
with ensuring that all children get off to a good, strong start and 
enter school ready to learn.
  Last year, the Labor, Health and Human Services and Education 
appropriations subcommittee made investments in early intervention a 
priority at my request. The FY 1998 appropriations bill invested an 
additional $64 million in Early Head Start, an increase of 75%, and 
provided an 11% increase in the early intervention program for infants 
and toddlers with disabilities.
  The legislation I am introducing today takes another step toward 
building this foundation by doubling the set-aside for the Early Head 
Start Program for children ages 0-3 by the year 2002. This action will 
continue to improve access to education and development services for 
our youngest children to provide a good start in life. I urge my 
colleagues to support this legislation.
                                 ______
                                 
      By Mr. KERREY (for himself, Mr. Moynihan, Mr. Breaux, and Mr. 
        Lieberman):
  S. 2184. A bill to amend the Social Security Act to provide each 
American child with a KidSave Account; to the Committee on Finance.


                  social security kidsave accounts act

 Mr. KERREY. Mr. President, many of the things we do in the 
Senate require hypothetical analysis, shaky forecasts and hazy 
predictions. Indeed at times it could be said that we don't know what 
we're doing. Today Senator Moynihan and I are introducing a bill based 
on a mathematical certainty. Our bill would make every baby born in 
America wealthy. Guaranteed.
  This proposal, called KidSave, supplements S. 1792, the Social 
Security Solvency Act of 1998, which the Senator from New York 
introduced earlier this year and of which I am an original cosponsor. 
It would cut the payroll tax by $800 billion--the largest tax cut in 
American history, and the one most targeted to middle class families--
so individuals can harness the power of compounding interest rates to 
build wealth for retirement. One of the discoveries I have made in 
researching this idea is that the most important variable in 
compounding interest rates is time. The earlier you start, the more 
wealth you build.
  KidSave is based on that observation. It would use part of the 
savings created by S. 1792 to open a $1,000 account for every child at 
birth and contribute $500 a year to that account for the first five 
years. These KidSave accounts would be invested in broad funds 
administered by the Social Security Administration, and be similar to 
the Thrift Savings Plan available to federal employees and to members 
of this body.
  As I said, Mr. President, this is a mathematical proposition. Even at 
modest rates of return, the long stretch of time over which this 
investment would be compounded means every baby born in America would 
have a shot at the American dream. At just 5.4 percent return, less 
than the historical rates of return for the market, these birth 
accounts alone would allow every American to supplement his or her 
retirement income by $235 a month in 1998 dollars, and still leave more 
than $100,000 behind to his or her heirs.
  These accounts would supplement those opened by the payroll tax cut 
proposed in S. 1792. This approach to retirement security is two-
pronged. First, we shore up the solvency of Social Security so it 
continues to provide a reliable monthly check. But we also realize that 
check isn't enough to live on. The average Social Security check in 
Nebraska is $733 a month. Nationwide, sixteen percent of beneficiaries 
have no other source of income. Another 14 percent rely on Social 
Security for more than 90 percent of their income, and nearly two-
thirds overall derive more than half their income from that small 
check. For many of them, it's not enough. Our proposal is based on the 
idea that retirees need both income and wealth, and experience bears 
that idea out. Today retirees with asset income have more than double 
the retirement income of those who don't.
  But this is about much more than money. Not only is this a guaranteed 
route to retirement security, it's also a mathematically certain 
solution to one of the toughest problems we face: The rich are getting 
richer and the poor are getting poorer. To understand this problem, we 
must understand the difference between income and wealth. Income, Mr. 
President, consists of the paychecks we use to pay our bills. Wealth is 
what an individual owns in assets like a home, mutual fund or pension. 
We've heard a lot recently about

[[Page S6492]]

the gap between rich and poor in terms of income. The gap in wealth is 
even worse and, I would argue, more important. As our economy becomes 
more global and technology-intensive, it is disproportionately 
distributing its rewards to those who own a piece of our economy.
  Despite the growing importance of wealth, a stark gap has opened 
between those who have it and those who don't. The bottom 90 percent of 
Americans earn 60 percent of all income, but own less than 30 percent 
of net worth and less than 20 percent of financial assets. These 
Americans are being left behind as the economy apportions more and more 
of its rewards to owners of wealth. Social Security can be a vehicle 
for solving that problem.
  We believe wealth can transform Americans' attitudes about their 
future. Wealth enables higher living standards, but it also enables 
generosity and the optimism that comes with feeling secure about the 
future. Wealth can make every American an Oseola McCarty, 
the remarkable woman in Hattiesburg, Mississippi, who after more than 
seven decades of low-wage work as a washer woman donated $150,000 to 
the University of Southern Mississippi--wealth she had built by saving 
a little bit of money over a long period of time. Wealth can make every 
American like Al, a man who works as a printer for the U.S. Senate. His 
Thrift Savings Plan has boomed so much he is thinking of opening a 
savings account for his two-year-old boy. Wealth can give every 
American the opportunity to be like another man I recently met, whose 
firm was bought out but who became wealthier because he owned a piece 
of it. When I spoke with him, he didn't talk about his income. He said 
he had told his wife: ``Whatever else happens to us in life, we know 
the kids can go to college.''

  Each of these Americans has something in common, Mr. President. They 
own a piece of their country. When the economy grows, they grow. They 
have a stake in low inflation. They want trade barriers lowered. They 
are on the front lines of a transformation from an ``us-vs.-them'' 
economy to one in which the attitude is: ``We're all in this 
together.''
  And, Mr. President, that's an opportunity we can open today to every 
baby born in America. Guaranteed. I urge my colleagues to support this 
legislation.
 Mr. MOYNIHAN. Mr. President, Senator Kerrey and I, along with 
Senators Breaux and Lieberman, are pleased to introduce the Social 
Security KidSave Accounts Act, which nicely complements the Social 
Security Solvency Act of 1998 introduced by Senator Kerrey and me in 
March. In that proposal we reduced payroll taxes by $800 billion over 
10 years. The reduction in the payroll tax rate from 12.4 percent to 
10.4 allows the funding of personal savings accounts with the 2 
percentage point reduction in the payroll tax.
  A worker with average earnings depositing 2 percent of wages--one 
percent from the worker and one percent from the employer can--over 45 
years--accumulate almost one half of a million dollars. Add in the 
wealth generated over a lifetime of 70 years from the interest on the 
KidSave accounts of $3,500--$1,000 at birth and $500 for each of the 
next five years--and you have created a new class of millionaires. 
Workers will have estates which they can pass on to their heirs.
  Combined, these two bills create wealth without spending the budget 
surplus. The Congressional Budget Office estimates that for the ten 
year period 1999-2008, our bill, which saves Social Security 
indefinitely, increases the budget surplus by $170 billion. This 
KidSave bill spends only about $100-$120 billion of that increase. In 
short, we create private savings without reducing public savings.
  Together these bills provide for a more comprehensive approach to 
retirement savings. The foundation of this approach remains Social 
Security, the financial future of which is secured for 75 years and 
beyond. If this legislation is enacted, as I hope it will be, 
significant new private savings would be added to this 
foundation.
                                 ______
                                 
      By Mr. KENNEDY (for himself, Mrs. Boxer, Mr. Durbin, Mr. Dodd, 
        and Mr. Reed):
  S. 2185. A bill to protect children from firearms violence; to the 
Committee on the Judiciary.


                 children's gun violence prevention act

  Mr. KENNEDY. Mr. President, I rise to introduce the Children's Gun 
Violence Prevention Act, together with Senator Boxer, Senator Durbin, 
Senator Dodd and Senator Reed.
  The continuing epidemic of gun violence involving children demands 
action by Congress.
  The wave of school shootings in communities across the country is a 
wake-up call for the nation. We need to do more--and we can do more--to 
protect children from guns.
  Every day in the United States, 14 children are killed by a gun; 24 
percent of children say they have access to a gun at home; 10 percent 
have recently carried a gun to school.
  We need to deal more effectively with all aspects of the culture of 
violence that is killing our children. The legislation we propose today 
is a concrete step to do more to keep children safe from gun violence.
  I know that some in Congress are reluctant to challenge the National 
Rifle Association, but there are common sense steps that we can take 
and should take to protect children from guns. Our bill says that gun 
owners must take responsibility for securing their guns so that 
children can't use them. It says that gun dealers must be more vigilant 
in not selling guns and ammunition to children. It says we must develop 
child-proof safety locks and other child safety features for guns. We 
do more today to regulate the safety of toy guns than real guns, and 
that's a national disgrace.
  The legislation we are introducing today is the least we can do to 
stop more schoolyard tragedies and to deal more responsibly with the 
festering crisis of gun violence involving children.
  In a press conference earlier today, we heard what gun violence has 
done to Susan Wilson of Jonesboro with the loss of her daughter 
Brittheny, and what it has done to the families in Oregon, and the 
thousands of other families who lose children to gun violence every 
year, and we know that action is needed.
  I want to commend Sarah Brady and Handgun Control for their 
leadership on this legislation, and for bringing us to this point 
today.
  Practical steps can clearly be taken to protect children more 
effectively from guns, and to promote greater responsibility by 
parents, gun manufacturers, and gun dealers alike. This legislation 
calls for such steps and it deserves to be enacted this year by this 
Congress.
  Mr. President, I ask that the full text and a description of the bill 
be included in the Record.
  There being no objection, the items were ordered to be printed in the 
Record, as follows:

                                S. 2185

       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 ``Children's 
     Gun Violence Prevention Act of 1998''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

           TITLE I--THE CHILDREN'S FIREARM SAFETY ACT OF 1998

Sec. 101. Prohibition on manufacture or importation of unsafe handguns.
Sec. 102. Consumer Product Safety Commission study.

        TITLE II--THE CHILDREN'S FIREARMS AGE LIMIT ACT OF 1998

Sec. 201. Extension of juvenile handgun ban to semiautomatic assault 
              weapons.
Sec. 202. Increased penalty for transferring handgun or semiautomatic 
              assault weapon to juvenile for use in a crime of 
              violence.

 TITLE III--THE CHILDREN'S FIREARM DEALER'S RESPONSIBILITY ACT OF 1998

Sec. 301. Automatic revocation of license of firearms dealer who 
              willfully sells firearm to a minor.
Sec. 302. 2 forms of identification required from firearms purchasers 
              under age 24.
Sec. 303. Minimum safety and security standards for gun shops.

     TITLE IV--THE CHILDREN'S FIREARM ACCESS PREVENTION ACT OF 1998

Sec. 401. Short title.
Sec. 402. Children and firearms safety.

    TITLE V--THE CHILDREN'S FIREARM INJURY SURVEILLANCE ACT OF 1998

Sec. 501. Short title.
Sec. 502. Surveillance program regarding injuries to children resulting 
              from firearms.

[[Page S6493]]

         TITLE VI--THE CHILDREN'S FIREARM EDUCATION ACT OF 1998

Sec. 601. Short title; purposes.
Sec. 602. Competitive grants for children's firearm education.
Sec. 603. Dissemination of best practices.
Sec. 604. Definitions.
Sec. 605. Amendment to Safe and Drug-Free Schools and Communities Act 
              of 1994.

         TITLE VII--THE CHILDREN'S FIREARM TRACKING ACT OF 1998

Sec. 701. Youth Crime Gun Interdiction Initiative.
           TITLE I--THE CHILDREN'S FIREARM SAFETY ACT OF 1998

     SEC. 101. PROHIBITION ON MANUFACTURE OR IMPORTATION OF UNSAFE 
                   HANDGUNS.

       Section 922 of title 18, United States Code, is amended by 
     inserting after subsection (x) the following:
       ``(y)(1) Beginning on the date that is 18 months after the 
     date of enactment of this subsection it shall be unlawful for 
     any person to manufacture or import an unsafe handgun.
       ``(2) The term `unsafe handgun' means--
       ``(A) any handgun which the Secretary determines, when new, 
     fires in any of 5 successive trials in which the handgun 
     (loaded with an empty case with a primer installed and having 
     built-in manual handgun safety devices deactivated so that 
     the handgun is ready to fire) is dropped onto a solid slab of 
     concrete from a height of one meter from each of the 
     following positions:
       ``(i) normal firing position;
       ``(ii) upside down;
       ``(iii) on grip;
       ``(iv) on the muzzle;
       ``(v) on either side;
       ``(vi) on the exposed hammer or striker;
       ``(vii) if there is no hammer or striker, the rearmost part 
     of the firearm; and
       ``(viii) any other position which the Secretary determines 
     is necessary to determine whether the handgun is subject to 
     accidental discharge;
       ``(B) any handgun without a child resistant trigger 
     mechanism reasonably designed to prevent a child who has not 
     attained 5 years of age from operating the weapon when it is 
     ready to fire. Such mechanism may include:
       ``(i) any handgun without a trigger resistant to a ten 
     pound pull; or
       ``(ii) any handgun, under rules determined by the 
     Secretary, which is designed so that the hand of an average 
     child who has not attained 5 years of age is unable to grip 
     the trigger;
       ``(C) any semiautomatic pistol which does not have a 
     magazine safety disconnect that prevents the pistol from 
     being fired once the magazine or clip is removed from the 
     weapon.
       ``(D) a handgun sold without a mechanism reasonable 
     designed, under rules determined by the Secretary, to prevent 
     the discharge of the weapon by unauthorized users, including 
     but not limited to the following devices:
       ``(i) a detachable, key activated or combination lock which 
     prevents the trigger form being pulled or the hammer form 
     striking the primer; or
       ``(ii) a solenoid use-limitation device which prevents, by 
     use of a magnetically activated relay, the firing of the 
     weapon unless a magnet of the appropriate strength is placed 
     in proximity to the handle of the gun.
       ``(3) Paragraph (1) shall not apply to--
       ``(A) the manufacture or importation of a handgun, by a 
     licensed manufacturer or licensed importer, for use by the 
     United States or a department or agency of the United States 
     or a State or a department, agency, or political subdivision 
     of a State; or
       ``(B) the manufacture or importation by a licensed 
     manufacturer or licensed importer for the purposes of testing 
     or experimentation authorized by the Secretary.
       ``(4) This subsection shall not be construed to preempt or 
     limit in any way any causes of action available under the law 
     of any State against a manufacturer of a firearm.''.

     SEC. 102. CONSUMER PRODUCT SAFETY COMMISSION STUDY.

       (a) Study.--Notwithstanding any other provision of law, the 
     Consumer Product Safety Commission, in consultation with the 
     Bureau of Alcohol, Tobacco and Firearms, shall conduct a 
     study to determine how the safety of handguns can be improved 
     so as to prevent their unauthorized use or discharge by 
     children who have not attained 18 years of age. The study 
     shall include the testing and evaluation of--
       (1) locking devices that, while installed on a handgun, 
     prevent the handgun from being discharged, and that can be 
     removed or deactivated by means of a key or a mechanically, 
     electronically, or electro-mechanically operated combination 
     lock;
       (2) locking devices that are incorporated into the design 
     of a handgun, that, when activated, prevent a handgun from 
     being discharged, and that can be deactivated by means of a 
     key or a mechanically, electronically, or electro-
     mechanically operated combination lock;
       (3) storage boxes, cases, or safes equipped with a 
     mechanically, electronically, or electro-mechanically 
     operated lock that, when activated, prevents access to a 
     firearm located in the storage box, case, or safe.
       (b) Report to the Congress.--Within 1 year after the date 
     of the enactment of this Act, the Consumer Product Safety 
     Commission shall submit to the Congress a report that details 
     the results of the study required by subsection (a) and that 
     includes recommendations on how handgun safety can be 
     improved and how changes in handgun design can reduce 
     unauthorized access to guns by children who have not attained 
     18 years of age.
       (c) Limitation on Authorization of Appropriations.--To 
     carry out this section, there are authorized to be 
     appropriated to the Director of the Consumer Product Safety 
     Commission $1,500,000 for fiscal year 1999.
        TITLE II--THE CHILDREN'S FIREARMS AGE LIMIT ACT OF 1998

     SEC. 201. EXTENSION OF JUVENILE HANDGUN BAN TO SEMIAUTOMATIC 
                   ASSAULT WEAPONS.

       Section 922(x) of title 18, United States Code, is amended 
     in each of paragraphs (1) and (2)--
       (1) by striking ``or'' at the end of subparagraph (A);
       (2) by striking the period at the end of subparagraph (B) 
     and inserting ``; or''; and
       (3) by adding at the end the following:
       ``(C) a semiautomatic assault weapon.''.

     SEC. 202. INCREASED PENALTY FOR TRANSFERRING HANDGUN OR 
                   SEMIAUTOMATIC ASSAULT WEAPON TO JUVENILE FOR 
                   USE IN A CRIME OF VIOLENCE.

       Section 924(a)(6)(B)(ii) of title 18, United States Code, 
     is amended by striking ``10'' and inserting ``20''.
 TITLE III--THE CHILDREN'S FIREARM DEALER'S RESPONSIBILITY ACT OF 1998

     SEC. 301. AUTOMATIC REVOCATION OF LICENSE OF FIREARMS DEALER 
                   WHO WILLFULLY SELLS FIREARM TO A MINOR.

       Section 923(e) of title 18, United States Code, is amended 
     by inserting after the 3rd sentence the following: ``The 
     Secretary, after notice and opportunity for hearing, shall 
     revoke the license of a dealer who willfully sells a firearm 
     to an individual who has not attained 18 years of age.''.

     SEC. 302. 2 FORMS OF IDENTIFICATION REQUIRED FROM FIREARMS 
                   PURCHASERS UNDER AGE 24.

       Section 922(t)(1)(C) of title 18, United States Code, is 
     amended by inserting ``(or, if the licensee knows or has 
     reasonable case to believe that the transferee has not 
     attained 24 years of age, 2)'' before ``valid''.

     SEC. 303. MINIMUM SAFETY AND SECURITY STANDARDS FOR GUN 
                   SHOPS.

       (a) In General.--Section 923 of title 18, United States 
     Code, is amended by adding at the end the following:
       ``(m) Safety and Security Standards for Gun Shops.--
       ``(1) In general.--Not later than 1 year after the date of 
     enactment of this subsection, the Secretary of the Treasury, 
     acting through the Director of the Bureau of Alcohol, 
     Tobacco, and Firearms, shall issue final regulations that 
     establish minimum firearm safety and security standards that 
     shall apply to dealers who are issued a license under this 
     section.
       ``(2) Minimum standards.--The regulations issued under this 
     subsection shall include minimum safety and security 
     standards for--
       ``(A) a place of business in which a dealer covered by the 
     regulations conducts business or stores firearms;
       ``(B) windows, the front door, storage rooms, containers, 
     alarms, and other items of a place of business referred to in 
     subparagraph (A) that the Secretary of the Treasury, acting 
     through the Director of the Bureau of Alcohol, Tobacco and 
     Firearms, determines to be appropriate; and
       ``(C) the storage and handling of the firearms contained in 
     a place of business referred to in subparagraph (A).''.
       (b) Inspections.--Section 923(g)(1) of title 18, United 
     States Code, is amended--
       (1) in subparagraph (A)--
       (A) in clause (i), by striking ``, and'' and inserting a 
     semicolon;
       (B) in clause (ii), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(iii) with respect the place of business of a licensed 
     dealer, the safety and security measures taken by the dealer 
     to ensure compliance with the regulations issued under 
     subsection (m).''; and
       (2) in subparagraph (B)--
       (A) in the matter preceding clause (i), by inserting ``and 
     the place of business of a licensed dealer'' after ``licensed 
     dealer'';
       (B) in clause (ii), by striking ``or'' at the end;
       (C) in clause (iii), by striking the period at the end and 
     inserting ``; or''; and
       (D) by adding at the end the following:
       ``(iv) not more than once during any 12-month period, for 
     ensuring compliance by a licensed dealer with the regulations 
     issued under subsection (m).''.
       (c) Penalties.--Section 924(a)(1) of title 18, United 
     States Code, is amended--
       (1) in subparagraph (C), by striking ``or'' at the end;
       (2) by redesignating subparagraph (D) as subparagraph (E); 
     and
       (3) by inserting after subparagraph (C) the following:
       ``(D) being a licensed dealer, knowingly fails to comply 
     with any applicable regulation issued under section 923(m); 
     and''.
     TITLE IV--THE CHILDREN'S FIREARM ACCESS PREVENTION ACT OF 1998

     SEC. 401. SHORT TITLE.

       This title may be cited as the ``Children's Firearm Access 
     Prevention Act of 1998''.

     SEC. 402. 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:

[[Page S6494]]

       ``(34) The term `secure gun storage or safety device' 
     means--
       ``(A) a device that, when installed on a firearm, is 
     designed to prevent the firearm from being operated without 
     first deactivating or removing the device;
       ``(B) a device incorporated into the design of the firearm 
     that is designed to prevent 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 is designed to be unlocked only by means of a key, a 
     combination, or other similar means.''.
       (b) Prohibition and Penalties.--Section 922 of such title 
     is further amended by adding at the end the following:
       ``(z)(1) In this subsection, the term `juvenile' means an 
     individual who has not attained 18 years of age.
       ``(2) Except as provided in paragraph (3), any person who--
       ``(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, on 
     premises under the custody or control of the person; and
       ``(B) knows, or reasonably should know, that a juvenile is 
     capable of gaining access to the firearm without the 
     permission of a 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 any 
     other person, or exhibits the firearm 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) Paragraph (2) shall 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.
       ``(4) This subsection shall not 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, or to preempt or limit in any way any causes of 
     action available under the law of any State against a 
     manufacturer of a firearm.''.
       (c) Role of Licensed Firearms Dealers.--Section 926 of such 
     title is amended by adding at the end the following:
       ``(d) The Secretary shall ensure that a copy of section 
     922(z) appears on the form required to be obtained by a 
     licensed dealer from a prospective transferee of a 
     firearm.''.
    TITLE V--THE CHILDREN'S FIREARM INJURY SURVEILLANCE ACT OF 1998

     SEC. 501. SHORT TITLE.

       This title may be cited as the ``Children's Firearm Injury 
     Surveillance Act of 1998''.

     SEC. 502. SURVEILLANCE PROGRAM REGARDING INJURIES TO CHILDREN 
                   RESULTING FROM FIREARMS.

       (a) In General.--
       (1) Program of grants.--The Secretary of Health and Human 
     Services may make grants to State and local departments of 
     health and State and local law enforcement agencies for 
     purposes of establishing and maintaining children's firearm-
     related injury surveillance systems.
       (2) Administration of program.--The Secretary of Health and 
     Human Services shall carry out this section acting through 
     the Director of the Centers for Disease Control and 
     Prevention. Such Director shall carry out this section 
     through the Director of the National Center for Injury 
     Prevention and Control (in this section referred to as the 
     ``Director of the Center'').
       (b) Certain Uses of Grant.--The Director of the Center 
     shall ensure that grants under subsection (a) are used to 
     establish systems for gathering information regarding fatal 
     and nonfatal firearm injuries involving children who have not 
     attained 21 years of age, including information with respect 
     to--
       (1) mortality;
       (2) morbidity;
       (3) disability;
       (4) the type and characteristic of the firearm used in the 
     shooting;
       (5) the relationship of the victim to the perpetrator; and
       (6) the time and circumstances of the shooting.
       (c) Priority for Certain States.--In making grants under 
     this section, the Director of the Center shall give priority 
     to States and communities in which firearm-related injuries 
     for children are a significant public health problem.
       (d) Authorization of Appropriations.--For the purpose of 
     carrying out this section, there is authorized to be 
     appropriated $5,000,000 for each of the fiscal years 1999 
     through 2003.
         TITLE VI--THE CHILDREN'S FIREARM EDUCATION ACT OF 1998

     SEC. 601. SHORT TITLE; PURPOSES.

       (a) Short Title.--This title may be cited as the 
     ``Children's Firearm Education Act of 1998''.
       (b) Purposes.--The purposes of this title are--
       (1) to award grants to assist local educational agencies, 
     in consultation with community groups and law enforcement 
     agencies, to educate children about and preventing violence; 
     and
       (2) to assist communities in developing partnerships 
     between public schools, community organizations, law 
     enforcement, and parents in educating children about 
     preventing gun violence.

     SEC. 602. COMPETITIVE GRANTS FOR CHILDREN'S FIREARM 
                   EDUCATION.

       (a) Allocation of Competitive Grants.--
       (1) Grants by the secretary.--For any fiscal year in which 
     the amount appropriated to carry out this title does not 
     equal or exceed $50,000,000, the Secretary is authorized to 
     award competitive grants described under subsection (b).
       (2) Grants by the states.--For any fiscal year in which the 
     amount appropriated to carry out this title exceeds 
     $50,000,000, the Secretary shall make allotments to State 
     educational agencies pursuant to subsection (a)(3) to award 
     competitive grants described in subsection (b).
       (3) Formula.--Except as provided in paragraph (4), funds 
     appropriated to carry out this title shall be allocated among 
     the States as follows:
       (A) 75 percent of such amount shall be allocated 
     proportionately based upon the population that is less than 
     18 years of age in the State;
       (B) 25 percent of such amount shall be allocated 
     proportionately based upon the population that is less than 
     18 years of age in the State that is incarcerated.
       (4) Minimum allotment.--If the amount appropriated to carry 
     out this title exceeds $50,000,000, each State shall receive 
     a minimum grant award each fiscal year of not less than 
     $500,000.
       (b) Authorization of Competitive Grants.--The Secretary or 
     the State educational agency, as the case may be, is 
     authorized to award grants to eligible local educational 
     agencies for the purposes of educating children about 
     preventing gun violence.
       (1) Assurances.--
       (A) The Secretary or the State educational agency, as the 
     case may be, shall ensure that not less than 90 percent of 
     the funds allotted under this title are distributed to local 
     educational agencies.
       (B) In awarding the grants, the Secretary or the State 
     educational agency, as the case may be, shall ensure, to the 
     maximum extent practicable--
       (i) an equitable geographic distribution of grant awards;
       (ii) an equitable distribution of grant awards among 
     programs that serve public elementary school students, public 
     secondary school students, and a combination of both; and
       (iii) that urban, rural and suburban areas are represented 
     within the grants that are awarded.
       (2) Priority.--In awarding grants under this subsection, 
     the Secretary or the State educational agency, as the case 
     may be, shall give priority to a local educational agency 
     that--
       (A) coordinates with other Federal, State, and local 
     programs that educate children about personal health, safety, 
     and responsibility, including programs carried out under the 
     Safe and Drug-Free Schools and Communities Act of 1994 (20 
     U.S.C. 7101 et seq.);
       (B) serves a population with a high incidence of students 
     found in possession of a weapon on school property or 
     students suspended or expelled for bringing a weapon onto 
     school grounds or engaging in violent behavior on school 
     grounds;
       (C) forms a partnership that includes not less than 1 local 
     educational agency working in consultation with not less than 
     1 public or private nonprofit agency or organization with 
     experience in violence prevention or 1 local law enforcement 
     agency.
       (3) Peer review; consultation.--
       (A)(i) Before grants are awarded, the Secretary shall 
     submit grant applications to a peer review panel for 
     evaluation.
       (ii) Such panel shall be composed of not less than 1 
     representative from a local educational agency, State 
     educational agency, a local law enforcement agency, and a 
     public or private nonprofit organization with experience in 
     violence prevention.
       (B) The Secretary shall submit grant applications to the 
     Attorney General for consultation.
       (c) Eligible Grant Recipients.--
       (1) In general.--Except as provided in paragraph (2), an 
     eligible grant recipient is a local educational agency that 
     may work in partnership with 1 or more of the following:
       (A) A public or private nonprofit agency or organization 
     with experience in violence prevention.
       (B) A local law enforcement agency.
       (C) An institution of higher education.
       (2) Exception.--A State educational agency may, with the 
     approval of a local educational agency, submit an application 
     on behalf of such local educational agency or a consortium of 
     such agencies.
       (d) Local Applications; Reports.--
       (1) Applications.--Each local educational agency that 
     wishes to receive a grant under this title shall submit an 
     application to the Secretary and the State educational agency 
     that includes--

[[Page S6495]]

       (A) a description of the proposed activities to be funded 
     by the grant and how each activity will further the goal of 
     educating children about preventing gun violence;
       (B) how the program will be coordinated with other programs 
     that educate children about personal health, safety, and 
     responsibility, including programs carried out under the Safe 
     and Drug-Free Schools and Communities Act of 1994 (20 U.S.C. 
     7101 et seq.); and
       (C) the age and number of children that the programs will 
     serve.
       (2) Reports.--Each local educational agency that receives a 
     grant under this title shall submit a report to the Secretary 
     and to the State educational agency not later than 18 months 
     and 36 months after the grant is awarded. Each report shall 
     include information regarding--
       (A) the activities conducted to educate children about gun 
     violence;
       (B) how the program will continue to educate children about 
     gun violence in the future; and
       (C) how the grant is being coordinated with other Federal, 
     State, and local programs that educate children about 
     personal health, safety, and responsibility, including 
     programs carried out under the Safe and Drug-Free Schools and 
     Communities Act of 1994 (20 U.S.C. 7101 et seq.).
       (e) Authorized Activities.--
       (1) Required activities.--Grants authorized under 
     subsection (b) shall be used for the following activities:
       (A) Supporting existing programs that educate children 
     about personal health, safety, and responsibility, including 
     programs carried out under the Safe and Drug-Free Schools and 
     Communities Act of 1994 (20 U.S.C. 7101 et seq).
       (B) Educating children about the effects of gun violence.
       (C) Educating children to identify dangerous situations in 
     which guns are involved and how to avoid and prevent such 
     situations.
       (D) Educating children how to identify threats and other 
     indications that their peers are in possession of a gun and 
     may use a gun, and what steps they can take in such 
     situations.
       (E) Developing programs to give children access to adults 
     to whom they can report in a confidential manner about 
     problems relating to guns.
       (2) Permissible activities.--Grants authorized under 
     subsection (b) may be used for the following:
       (A) Encouraging schoolwide programs and partnerships that 
     involve teachers, students, parents, administrators, other 
     staff, and members of the community in reducing gun incidents 
     in public elementary and secondary schools.
       (B) Establishing programs that assist parents in helping 
     educate their children about firearm safety and the 
     prevention of gun violence.
       (C) Providing ongoing professional development for public 
     school staff and administrators to identify the causes and 
     effects of gun violence and risk factors and student behavior 
     that may result in gun violence, including training sessions 
     to review and update school crisis response plans and school 
     policies for preventing the presence of guns on school 
     grounds and facilities;
       (D) Providing technical assistance for school psychologists 
     and counselors to provide timely counseling and evaluations, 
     in accordance with State and local laws, of students who 
     possess a weapon on school grounds.
       (E) Improving security on public elementary and secondary 
     school campuses to prevent outside persons from entering 
     school grounds with firearms.
       (F) Assisting public schools and communities in developing 
     crisis response plans when firearms are found on school 
     campuses and when gun-related incidents occur.
       (f) State Applications; Activities and Reports.--
       (1) State applications.--
       (A) Each State desiring to receive funds under this title 
     shall, through its State educational agency, submit an 
     application to the Secretary of Education at such time and in 
     such manner as the Secretary shall require. Such application 
     shall describe--
       (i) the manner in which funds under this title for State 
     activities and competitive grants will be used to fulfill the 
     purposes of this title;
       (ii) the manner in which the activities and projects 
     supported by this title will be coordinated with other State 
     and Federal education, law enforcement, and juvenile justice 
     programs, including the Safe and Drug-Free Schools and 
     Communities Act of 1994;
       (iii) the manner in which States will ensure an equitable 
     geographic distribution of grant awards; and
       (iv) the criteria which will be used to determine the 
     impact and effectiveness of the funds used pursuant to this 
     title.
       (B) A State educational agency may submit an application to 
     receive a grant under this title under paragraph (1) or as an 
     amendment to the application it submits under the Safe and 
     Drug-Free Schools and Communities Act of 1994.
       (3) State activities.--Of appropriated amounts allocated to 
     the States under subsection (a)(2), the State educational 
     agency may reserve not more than 10 percent for activities to 
     further the goals of this title, including--
       (A) providing technical assistance to eligible grant 
     recipients in the State;
       (B) performing ongoing research into the causes of gun 
     violence among children and methods to prevent gun violence 
     among children; and
       (C) providing ongoing professional development for public 
     school staff and administrators to identify the causes and 
     indications of gun violence.
       (4) State reports.--Each State receiving an allotment under 
     this title shall submit a report to the Secretary and to the 
     Committees on Education and the Workforce and Judiciary of 
     the House of Representatives, and the Committees on Labor and 
     Human Resources and Judiciary of the Senate, not later than 
     12 months and 36 months after receipt of the grant award. 
     Each report shall include information regarding--
       (A) the progress of local educational agencies that 
     received a grant award under this title in the State in 
     educating children about firearms;
       (B) the progress of State activities under paragraph (1) to 
     advance the goals of this title; and
       (C) how the State is coordinating funds allocated under 
     this title with other State and Federal education, law 
     enforcement, and juvenile justice programs, including the 
     Safe and Drug-Free Schools and Communities Act of 1994 (20 
     U.C.S.C. 7101 et seq.).
       (g) Supplement Not Supplant.--A State or local educational 
     agency shall use funds received under this title only to 
     supplement the amount of funds that would, in the absence of 
     such Federal funds, be made available from non-Federal 
     sources for reducing gun violence among children and 
     educating children about firearms, and not to supplant such 
     funds.
       (h) Displacement.--A local educational agency that receives 
     a grant award under this title shall ensure that persons 
     hired to carry out the activities under this title do not 
     displace persons already employed.
       (i) Home Schools.--Nothing in this title shall be construed 
     to affect home schools.
       (j) Authorization of Appropriations.--There are authorized 
     to be appropriated for this section $60,000,000 for each of 
     fiscal years 1999, 2000, and 2001.

     SEC. 603. DISSEMINATION OF BEST PRACTICES.

       (a) Model Dissemination.-- The Secretary shall include on 
     the Internet site of the Department of Education a 
     description of programs that receive grants under section 
     602.
       (b) Grant Program Notification.--The Secretary shall 
     publicize the competitive grant program through its Internet 
     site, publications, and public service announcements.

     SEC. 604. DEFINITIONS.

       For purposes of this title--
       (1) the term ``local educational agency'' has the same 
     meaning given such term in section 14101(18) of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     8701).
       (2) the term ``Secretary'' means the Secretary of 
     Education; and
       (3) the term ``State'' means each of the 50 States, the 
     District of Columbia, the Commonwealth of Puerto Rico, Guam, 
     American Samoa, the Commonwealth of the Northern Mariana 
     Islands, and the United States Virgin Islands.

     SEC. 605. AMENDMENT TO SAFE AND DRUG-FREE SCHOOLS AND 
                   COMMUNITIES ACT OF 1994.

       Section 4116(a)(1) of the Safe and Drug-Free Schools and 
     Communities Act of 1994 (20 U.S.C. 7116) is amended--
       (1) by redesignating subparagraph (C) as subparagraph (D); 
     and by inserting after subparagraph (B) the following:
       ``(C) to the extent practicable, provide timely counseling 
     (without requiring the hiring of additional staff)--
       ``(i) and evaluations of any student, in accordance with 
     State and local law, who possesses a weapon on school grounds 
     or who threatens to bring or use a weapon on school grounds; 
     and
       ``(ii) and advice to public school students, staff, and 
     administrators after an incident of gun-related violence on 
     school grounds;''.
         TITLE VII--THE CHILDREN'S FIREARM TRACKING ACT OF 1998

     SEC. 701. YOUTH CRIME GUN INTERDICTION INITIATIVE.

       (a)(1) The Secretary of the Treasury shall endeavor to 
     expand the number of cities and counties directly 
     participating in the Youth Crime Gun Interdiction Initiative 
     (in this section referred to as the ``YCGII'') to 75 cities 
     or counties by October 1, 2000, to 150 cities or counties by 
     October 1, 2002, and to 250 cities or counties by October 1, 
     2003.
       (2) Cities and counties selected for participation in the 
     YCGII shall be selected by the Secretary of the Treasury and 
     in consultation with Federal, State and local law enforcement 
     officials.
       (b)(1) The Secretary of the Treasury shall, utilizing the 
     information provided by the YCGII, facilitate the 
     identification and prosecution of individuals illegally 
     trafficking firearms to individuals who have not attained 24 
     years of age.
       (2) The Secretary of the Treasury shall share information 
     derived from the YCGII with State and local law enforcement 
     agencies through on-line computer access, as soon as such 
     capability is available.
       (c)(1) The Secretary of the Treasury shall award grants (in 
     the form of funds or equipment) to States, cities, and 
     counties for purposes of assisting such entities in the 
     tracing of firearms and participation in the YCGII.
       (2) Grants made under this part shall be used--
       (A) to hire or assign additional personnel for the 
     gathering, submission and analysis of

[[Page S6496]]

     tracing data submitted to the Bureau of Alcohol, Tobacco and 
     Firearms under the YCGII;
       (B) to hire additional law enforcement personnel for the 
     purpose of identifying and arresting individuals illegally 
     trafficking firearms; and
       (C) to purchase additional equipment, including automatic 
     data processing equipment and computer software and hardware, 
     for the timely submission and analysis of tracing data.
                                  ____


           The Children's Gun Violence Prevention Act of 1998


           title i--the children's firearm safety act of 1998

       Imposes, after 18 months, new safety standards on the 
     manufacture and importation of handguns requiring: a child 
     resistant trigger standard; a child resistant safety lock, a 
     magazine disconnect safety for pistols; a manual safety and 
     practice of a drop test.
       Authorizes the Consumer Product Safety Commission to study, 
     test and evaluate various technologies and means of making 
     guns more child-resistant and reporting back to Congress 
     within 12 months on its findings.


         title ii--the children's firearm age limit act of 1998

       Extends the current ban on juvenile handguns transfers and 
     possession to semi-automatic assault rifles and assault 
     shotguns.


  title iii--the childrens firearm dealer's responsibility act of 1998

       Requires two forms of ID for purchases under the age of 24.


     title iv--the children's firearm access prevention act of 1998

       Imposes fines on a gun owner of up to $10,000 if a child 
     gains access to a loaded firearm and criminal penalties and 
     imprisonment if the gun is used in a act of violence.


    title v--the children's firearm injury surveillance act of 1998

       Authorizes $10 million to CDC's National Injury Prevention 
     and Control Center over three for grants to state and local 
     governments for development of children's firearm injury 
     surveillance systems.


    title vi--the children's firearm violence education act of 1998

       Authorizes $50 million a year for competitive Department of 
     Education grants to state and local education agencies for 
     children's firearm education programs.


         title vii--the children's firearm tracking act of 1998

       Authorizes $10 million over five years for expansion of the 
     Youth Crime Gun Interdiction Initiative.
                                 ______
                                 
      By Mr. DORGAN (for himself and Mr. Bumpers):
  S. 2186. A bill to terminate all United States assistance to the 
National Endowment for Democracy, and for other purposes; to the 
Committee on Foreign Relations.


          END FUNDING FOR THE NATIONAL ENDOWMENT FOR DEMOCRACY

 Mr. DORGAN. Mr. President, today I introduce a bill that would 
end federal funding for the National Endowment for Democracy, known as 
NED.
  Last year the Administration asked for $30 million in NED funding, 
and after a Senate debate on the program, the Congress met that 
request. This year the Administration has requested $31 million for NED 
for fiscal year 1999.
  In my view, the time has long since come for Congress to end our 
subsidy of NED. Let me take a brief moment to explain why.
  NED began back in the early 1980s, during the darkest days of the 
Cold War, when Solidarity was on the ropes in Poland and a former KGB 
chief ruled the Soviet Union. As we all know, Solidarity has given 
birth to political parties that have governed Poland, and Lech Walesa, 
the Solidarity union leader, was elected Poland's president. The Soviet 
Union and the KGB are no more, and Russia has a multi-party political 
system. There is no Warsaw Pact. In fact, the Senate has just decided 
to admit into NATO some of the countries that NED used to help.
  The historic fall of the Berlin Wall, the breakup of the Soviet 
Union, and the successes of democracy worldwide in the past 15 years 
should make us wonder whether NED is as necessary now as it was at the 
height of the Cold War. Democracy is on the march worldwide, most 
recently perhaps even in Indonesia. Yet the American taxpayer is still 
coughing up $30 million a year to foot the bill for NED.
  It's also worth noting that when NED started, back during the Cold 
War, it was supposed to be a public-private partnership. Federal money 
was supposed to ``prime the pump'' of private contributions. Private 
corporations, foundations and philanthropists were supposed to foot 
much of the bill. But it didn't happen.
  Since 1984 the American taxpayer has spent over $360 million on NED. 
And according to NED's most recent annual report, in 1996 NED's total 
revenue was $30.9 million, but its revenue from nonfederal sources was 
only $585,000. In that year, it took 53 taxpayer dollars to leverage 
one private dollar contributed to NED.
  These statistics show that NED is a very poor investment for the 
Federal Government. There is no public-private partnership funding NED. 
It's the public, the Federal Government, all the way.
  Of course, the Federal Government has some private partners when it 
comes to spending NED funds. Year after year, NED distributes taxpayer 
dollars to the same ``core grantees.'' This is despite the fact that 
everything we know about good government says that there should be 
competitive contracting for government work.
  NED isn't one sole-source contract. It isn't just one set-aside. It's 
four.
  Four private institutions got just over $4 million each in 1996 and 
1997. These private groups are: the National Democratic Institute, also 
known as the Democratic Party; the International Republican Institute, 
better known as the Republican Party; the Free Trade Union Institute, 
which is really the AFL-CIO; and the Center for International Private 
Enterprise, which we all know as the Chamber of Commerce.
  Mr. President, these four ``core grantees'' get the lion's share of 
NED funding, year after year. As our former colleague Senator Hank 
Brown of Colorado said four years ago, ``How long does it take for 
people to realize that what we are doing is not promoting democracy, 
but promoting these four organizations?''
  What do these four groups do with this money? They use it to send 
well-connected Democrats and Republicans, and business and labor 
leaders, around the world. These folks visit various countries and try 
to promote democracy.
  It sounds fine until you consider that this activity duplicates work 
done by the United States Information Agency, the Agency for 
International Development, and the Departments of State, Justice and 
Defense. In 1996 alone, AID spent $390 million, USIA spent $355 
million, and the Defense Department spent $38 million, all to promote 
democracy.
  There's no reason for another Federal program to achieve this same 
goal. The American people know that the time is past when we could 
spend money we didn't have on programs we don't need.
  Last year, I thought that my hope of ending federal funding for the 
National Endowment for Democracy had come true. The Commerce-State-
Justice appropriations bill actually zeroed out this program. Let me 
quote from the Appropriations Committee's report language on this 
issue:

       The Committee does not recommend funding for fiscal year 
     1998 for the National Endowment for Democracy. . . . The NED 
     was originally established in 1984 during the days of the 
     cold war as a public-private partnership to promote 
     democratic movements behind the Iron Curtain. Limited U.S. 
     Government funds were viewed as a way to help leverage 
     private contributions and were never envisioned as NED's sole 
     or major source of continuing funds. Since the cold war is 
     over, the Committee believes that the time has come to 
     eliminate Federal funding for this program.

  Unfortunately, the full Senate approved a floor amendment that 
restored the requested $30 million for the NED.
  So I am here today to call on Senators to accept the dictates of 
common sense this year, and to accept the recommendation of the 
Appropriations Committee. We are having great difficulty allocating 
funding among the different discretionary programs. The Senate is 
having to make difficult choices about federal spending. We need to 
determine what is a priority.
  I strongly believe that NED no longer deserves the Senate's support. 
The Cold War is over, and we have other, more effective ways to promote 
democracy abroad. I hope that the Senate will act favorably on the bill 
that I am introducing today, and that we will save the American 
taxpayer $30 million a year.

                          ____________________