[Congressional Record Volume 144, Number 117 (Tuesday, September 8, 1998)]
[Senate]
[Pages S9973-S9982]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. DURBIN (for himself and Mr. Kennedy):
  S. 2441. A bill to amend the Nicaraguan Adjustment and Central 
American Relief Act to provide to nationals of El Salvador, Guatemala, 
Honduras, and Haiti an opportunity to apply for adjustment of status 
under that Act, and for other purposes; to the Committee on the 
Judiciary.


   THE CENTRAL AMERICAN AND CARIBBEAN REFUGEE ADJUSTMENT ACT OF 1998

 Mr. DURBIN. Mr. President, today I introduce the Central 
American and Caribbean Refugee Adjustment Act of 1998. This legislation 
will provide deserved and needed relief to thousands of immigrants from 
Central America and the Caribbean who came to the United States fleeing 
political persecution.
  In the 1980's, thousands of Salvadorans and Guatemalans fled civil 
wars in their countries and sought asylum in the United States. The 
vast majority had been persecuted or feared persecution in their home 
countries. The people of Honduras had a similar experience. While civil 
war was not formally waged within Honduras, the geography of the region 
made it impossible for Honduras to be unaffected by the violence and 
turmoil that surrounded it. The country of Haiti has also experienced 
extreme upheaval. Haitians for many years were forced to seek the 
protection of the United States because of oppression, human rights 
abuses and civil unrest.
  Salvadorans, Guatemalans, Haitians and Hondurans have now established

[[Page S9974]]

roots in the United States. Some have married here and many have 
children that were born in the United States. Yet many still live in 
fear. They cannot easily leave the United States and return to the 
great uncertainty in their countries of origin. If they are forced to 
return, they will face enormous hardship. Their former homes are either 
occupied by strangers or not there at all. The people they once knew 
are gone and so are the jobs they need to support their families. They 
also cannot become permanent residents of the United States, which 
severely limits their opportunities for work and education. This 
situation is unacceptable and requires a more permanent solution.
  Before outlining how this bill will provide a permanent solution, it 
is important to review the evolution of deportation remedies. Prior to 
the passage of the Illegal Immigration Reform and Responsibility Act in 
1996, aliens in the United States could apply for suspension of 
deportation and adjustment of status in order to obtain lawful 
permanent residence. Suspension of deportation was used to ameliorate 
the harsh consequences of deportation for aliens who had been present 
in the United States for long periods of time.
  In September of 1996, Congress passed the Illegal Immigration Reform 
and Responsibility Act. This law retroactively made thousands of 
immigrants ineligible for suspension of deportation and left them with 
no alternate remedy. The 1996 Act eliminated suspension of deportation 
and established a new form of relief entitled cancellation of removal 
that required an applicant to accrue ten years of continuous residence 
as of the date of the initial notice charging the applicant with being 
removable.
  In 1997, this Congress recognized that these new provisions could 
result in grave injustices to certain groups of people. So in November 
of 1997, the Nicaraguan and Central American Relief Act (NACARA) 
granted relief to certain citizens of former Soviet block countries and 
several Central American countries. This select group of immigrants 
were allowed to apply for permanent residence under the old, pre-IIRRA 
standards.
  Such an alteration of IIRRA made sense. After all, the U.S. had 
allowed Central Americans to reside and work here for over a decade, 
during which time many of them established families, careers and 
community ties. The complex history of civil wars and political 
persecution in parts of Central America left thousands of people in 
limbo without a place to call home. Many victims of severe persecution 
came to the United States with very strong asylum cases, but 
unfortunately these individuals have waited so long for a hearing they 
will have difficulty proving their cases because they involve incidents 
which occurred as early as 1980. In addition, many victims of 
persecution never filed for asylum out of fear of denial, and 
consequently these people now face claims weakened by years of delay.
  Mr. President, the bill I introduce today is a necessary and fair 
expansion of NACARA. It provides a permanent solution for thousands of 
people who desperately need one. Specifically, the bill amends the 
Nicaraguan Adjustment and Central American Relief Act and provides 
nationals of El Salvador, Guatemala, Honduras and Haiti an opportunity 
to apply for adjustment of status under the same standards as 
Nicaraguans and Cubans. While the restoration of democracy in Central 
America and the Caribbean has been encouraging, the situation remains 
delicate. Providing immigrants from these politically volatile areas an 
opportunity to apply for permanent resident status in the United States 
instead of deporting them to politically and economically fragile 
countries will provide more stability in the long run. Such an approach 
is the best solution not only for the United States but also for new 
and fragile democracies in Central America and the Caribbean. 
Immigrants have greatly contributed to the United States, both 
economically and culturally and the people of Central America and the 
Caribbean are no exception. If we continue to deny them a chance to 
live in the United States by deporting them, we not only hurt them, we 
hurt us too.
  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. 2441

       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 ``Central American and 
     Caribbean Refugee Adjustment Act of 1998''.

     SEC. 2. ADJUSTMENT OF STATUS FOR CERTAIN NATIONALS FROM 
                   CENTRAL AMERICA, CUBA, AND THE CARIBBEAN.

       Section 202 of the Nicaraguan Adjustment and Central 
     American Relief Act (8 U.S.C. 1255 note) is amended--
       (1) in the section heading, by striking ``Nicaraguans and 
     Cubans.'' and inserting ``Nationals From Central America, 
     Cuba, and the Caribbean.'';
       (2) in subsection (b)(1), by striking ``Nicaragua or Cuba'' 
     and inserting ``Nicaragua, Cuba, El Salvador, Guatemala, 
     Honduras, or Haiti''; and
       (3) in subsection (d)(1)(A), by striking ``Nicaragua or 
     Cuba;'' and inserting ``Nicaragua, Cuba, El Salvador, 
     Guatemala, Honduras, or Haiti;''.

     SEC. 3. CONFORMING AMENDMENTS TO TRANSITION RULES.

       (a) Special Rule for Certain Aliens Granted Temporary 
     Protection From Deportation.--Section 309(c)(5)(C)(i) of the 
     Illegal Immigration Reform and Immigrant Responsibility Act 
     of 1996 (8 U.S.C. 1101 note), as amended by section 203 of 
     the Nicaraguan Adjustment and Central American Relief Act, is 
     amended by striking subclauses (I) through (V) and inserting 
     the following:

       ``(I) is an alien who entered the United States on or 
     before December 31, 1990, who filed an application for asylum 
     on or before December 31, 1991, and who, at the time of 
     filing such application, was a national of the Soviet Union, 
     Russia, any republic of the former Soviet Union, Latvia, 
     Estonia, Lithuania, Poland, Czechoslovakia, Rumania, Hungary, 
     Bulgaria, Albania, East Germany, Yugoslavia, or any state of 
     the former Yugoslavia;
       ``(II) is the spouse or child (as defined in section 
     101(b)(1) of the Immigration and Nationality Act) of an 
     individual, at the time a decision is rendered to suspend the 
     deportation, or cancel the removal, of such individual, if 
     the individual has been determined to be described in 
     subclause (I); or
       ``(III) is the unmarried son or daughter of an alien 
     parent, at the time a decision is rendered to suspend the 
     deportation, or cancel the removal, of such alien parent, 
     if--

       ``(aa) the alien parent has been determined to be described 
     in this subclause (I); and
       ``(bb) in the case of a son or daughter who is 21 years of 
     age or older at the time such decision is rendered, the son 
     or daughter entered the United States on or before October 1, 
     1990.''.
       (b) Temporary Reduction in Diversity Visas.--Section 203(d) 
     of the Nicaraguan Adjustment and Central American Relief Act 
     (8 U.S.C. 1151 note) is amended by striking ``subclauses (I), 
     (II), (III), and (IV)'' and inserting ``subclauses (II) and 
     (III)''.
                                 ______
                                 
      By Mr. DeWINE (for himself, Mr. Grassley, Mr. Kohl, Mr. Abraham, 
        Mr. Sessions and Mr. Coverdell):
  S. 2242. A bill to amend the Controlled Substances Import and Export 
Act to place limitations on controlled substances brought into the 
United States from Canada and Mexico; to the Committee on the 
Judiciary.


 Repeal of Limitation on Foreign Tax Credit Under Alternative Minimum 
                                  Tax

 Mr. D'AMATO. Mr. President, today I introduce a bill with my 
friend and colleague, Senator Moynihan, that would eliminate a 
fundamental unfairness in the application of the U.S. tax law to 
taxpayers that have income from foreign sources.
  A U.S. citizen or domestic corporation that earns income from sources 
outside the United States generally is subject to tax by a foreign 
government on that income. The taxpayer also is subject to U.S. tax on 
that same income, even though it is earned outside the United States. 
Thus, the same income is subject to tax both in the country in which it 
is earned and in the United States.
  However, the United States allows taxpayers to treat the foreign 
taxes paid on their foreign-source income as an offset against the U.S. 
tax with respect to that same income. This offset is accomplished 
through the foreign tax credit. In other words, the foreign tax paid on 
foreign-source income is treated as a credit against the U.S. tax that 
otherwise would be payable on that same income. Although the details of 
the foreign tax credit rules are extraordinarily complex (as are the 
international provisions of the International Revenue Code generally), 
the basic principle is simple: to provide relief from double taxation.

[[Page S9975]]

  When it comes to the alternative minimum tax (AMT), this basic 
principle of providing relief from double taxation falls by the 
wayside. The AMT was enacted to ensure that individuals and businesses 
that qualify for various ``preferences'' in the tax rules nevertheless 
are subject to a minimum level of taxation. However, the foreign tax 
credit provisions of the AMT operate to ensure double taxation. Under 
these AMT rules, the allowable foreign tax credit is limited to 90 
percent of the taxpayer's alternative minimum tax liability. Because of 
this limitation, income that is subject to foreign tax is subject also 
to the U.S. AMT. The result is double (and even triple) taxation of 
income that is used to support U.S. jobs, R&D and other activities.
  Mr. President, there is no rational basis for denying relief from 
double taxation to that class of taxpayers that are subject to the AMT. 
Accordingly, the bill Senator Moynihan and I are introducing today will 
eliminate the 90 percent limitation on foreign tax credits for AMT 
purposes. By repealing this limitation, relief from double taxation 
will be provided to taxpayers that are subject to the AMT in the same 
manner as it is provided to those taxpayers that are subject to the 
regular tax.
  I would hope that our colleagues on both sides of the aisle will join 
in cosponsoring this necessary legislation.
  I ask unanimous consent that the text of the bill be included in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2242

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

     SECTION 1. REPEAL OF LIMITATION ON FOREIGN TAX CREDIT UNDER 
                   ALTERNATIVE MINIMUM TAX.

       (a) In General.--Section 59(a) of the Internal Revenue Code 
     of 1986 (relating to alternative minimum tax foreign tax 
     credit) is amended by striking paragraph (2) and by 
     redesignating paragraphs (3) and (4) as paragraphs (2) and 
     (3), respectively.
       (b) Conforming Amendments.--Section 53(d)(1)(B)(i)(II) of 
     such Code is amended by striking ``and if section 59(a)(2) 
     did not apply''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.
                                 ______
                                 
      By Ms. MOSELEY-BRAUN:
  S. 2443. A bill to amend title I of the Omnibus Crime Control and 
Safe Streets Act of 1968 to reauthorize the public safety and community 
policy program and to encourage the use of school resource officers 
under that program; to the Committee on the Judiciary.


                safe communities and schools act of 1998

 Ms. MOSELEY-BRAUN. Mr. President, today I am pleased to 
introduce the Safe Communities and Schools Act of 1998. This 
legislation, I believe, will help American communities continue to 
prevail in their fight against crime, and will arm local law 
enforcement agencies and schools with the tools they need to fight the 
recent outbreak of school-yard violence.
  The Community Oriented Policing Program, or the COPS program as it is 
commonly called, has played a vital role in reducing our nation's crime 
rate. Since the inception of the program in 1994, the Department of 
Justice has authorized an additional 76,000 police officers to walk the 
beat. These additional police officers have been instrumental in 
helping reduce crime and making people feel safe in their communities.
  It is not coincidental that, in my own home state of Illinois, where 
the COPS program has put an additional 4,113 police officers on the 
street, we have experienced a substantial drop in crime in recent 
years. For example, in 1996--the last year for which statistics are 
available--crime in Illinois was down 11 percent.
  I strongly believe that the key to the COPS program's success lies in 
the community policing strategy that is its guiding philosophy. As the 
daughter and sister of law enforcement officers and a former federal 
prosecutor, I can attest to the fact that community policing works. 
Putting beat cops back into communities allows them to have more 
contact with the people they protect and gives them an opportunity to 
prevent crimes before they happen.
  But despite the gains that have been made with the advent of the COPS 
program, the recent spate of violence in our nation's schools is 
evidence that our crime-prevention efforts are far from complete. 
Although we are seeing record reductions in youth-on-youth crime, the 
horrifyingly violent nature of the crimes now being committed by 
juveniles demands government action.
  For this reason, my legislation would use COPS program grants to 
establish partnerships between local law enforcement agencies and local 
school systems. Under my legislation, career law enforcement officers, 
trained in community-oriented police activities, would be deployed to 
work in collaboration with schools and community-based organizations 
to, among other things: Combat crime and disorder problems, as well as 
gang and drug activities occurring in or around elementary and 
secondary schools; Educate likely school-age victims about crime 
prevention and safety; and Assist schools in developing policies to 
reduce crime.
  Under my legislation, no new funding beyond that which has already 
been allocated to the COPS program would be required to finance these 
school-police partnerships.
  By the year 2000, the COPS program will have served to fulfill 
President Clinton's pledge to put 100,000 new police officers on the 
street. Currently, the program is only funded through that year, but I 
believe that it has clearly been successful enough to justify at least 
a two-year extension. Accordingly, in addition to facilitating new 
school-police partnership grants, my legislation would authorize that 
extension and provide the necessary funding to allow local police 
departments across America to put an additional 25,000 officers on the 
street.
  Providing funds to communities to combat school violence will give 
local school systems and law enforcement agencies the opportunity to 
develop new and innovative approaches to reducing youth crime. It is 
time to stop wringing our hands over the scourge of youth violence and 
begin to take action. The American people are demanding leadership on 
this issue and the time has come for those of us who serve in 
Washington to provide it.
  If we are truly serious about preparing the next generation of 
Americans for the challenges they will face in the 21st century's 
global economy, we must take action--right now--to guarantee that they 
are educated in a safe environment. That is why I have fought for a 
partnership between the federal government and state and local school 
systems to address the disgrace of our nation's crumbling schools, and 
that is why I am introducing the COPS legislation I have just outlined. 
We owe the next generation of Americans at least as much as our 
generation was given--and the fact is that we were given schools that 
were physically safe and violence-free.
  The success of the COPS program to date demonstrates the wisdom of 
using it as the vehicle for promoting school safety and for expanding 
it to put an additional 25,000 officers on community policing beats. 
The data is in and the results are clear: Community policing works. 
That is why I am confident that safer schools and safer communities 
will be the result if the COPS legislation I am proposing today is 
passed by Congress and signed into law. I urge my colleagues to join me 
in sponsoring.
  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. 2443

       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 ``Safe Communities and Schools 
     Act of 1998''.

     SEC. 2. PUBLIC SAFETY AND COMMUNITY POLICING.

       (a) School Resource Officers.--Part Q of title I of the 
     Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 
     3796dd et seq.) is amended--
       (1) in section 1701(d)--
       (A) by redesignating paragraphs (8) through (10) as (9) 
     through (11), respectively; and
       (B) by inserting after paragraph (7) the following:
       ``(8) establish school-based partnerships between local law 
     enforcement agencies and local school systems by using school 
     resource officers who operate in and around elementary and 
     secondary schools to combat school-related crime and disorder 
     problems, gangs, and drug activities;''; and

[[Page S9976]]

       (2) in section 1709--
       (A) by inserting ``(1)'' before ``  `career'';
       (B) by inserting ``(2)'' before ``  `citizens' police'';
       (C) by inserting ``(3)'' before ``  `Indian''; and
       (D) by adding at the end the following:
       ``(4) `school resource officer' means a career law 
     enforcement officer, with sworn authority, deployed in 
     community-oriented policing, and assigned by the employing 
     police department or agency to work in collaboration with 
     schools and community-based organizations--
       ``(A) to address crime and disorder problems, gangs, and 
     drug activities affecting or occurring in or around an 
     elementary or secondary school;
       ``(B) to develop or expand crime prevention efforts for 
     students;
       ``(C) to educate likely school-age victims in crime 
     prevention and safety;
       ``(D) to develop or expand community justice initiatives 
     for students;
       ``(E) to train students in conflict resolution, restorative 
     justice, and crime awareness;
       ``(F) to assist in the identification of physical changes 
     in the environment that may reduce crime in or around the 
     school; and
       ``(G) to assist in developing school policy that addresses 
     crime, and to recommend procedural changes.''.
       (b) Reauthorization.--Section 1001(a)(11)(A) of title I of 
     the Omnibus Crime Control and Safe Streets Act of 1968 (42 
     U.S.C. 3793(a)(11)(A)) is amended--
       (1) in clause (v), by striking ``and'' at the end;
       (2) in clause (vi), by striking the period at the end and 
     inserting a semicolon; and
       (3) by adding at the end the following:
       ``(vii) $1,240,000,000 for fiscal year 2001; and
       ``(viii) $1,240,000,000 for fiscal year 2002.''.
                                 ______
                                 
      By Mr. THOMPSON (for himself, Mr. Nickles, Mr. Craig, Mr. 
        Thurmond and Mr. Hutchinson):
  S. 2445. A bill to provide that the formulation and implementation of 
policies by Federal departments and agencies shall follow the 
principles of federalism, and for other purposes; to the Committee on 
Governmental Affairs.


                  THE FEDERAL ENFORCEMENT ACT OF 1998

 Mr. THOMPSON. Mr. President, today I rise to introduce the 
Federalism Enforcement Act, a bill to promote the principles of 
federalism and to restore the proper respect for State and local 
governments and the communities they serve. I am pleased that Senators 
Nickles, Craig, Thurmond, and Hutchinson have joined me as cosponsors 
of this legislation.
  Federalism is the cornerstone of our Democracy. It is the principle 
that the Federal Government has limited powers and that government 
closest to the people--States and localities--play a critical role in 
our governmental system. Our Founding Fathers had grave concerns about 
the tendency of a central government to aggrandize itself and thus 
encroach on State sovereignty, and ultimately, individual liberty. 
Federalism is our chief bulwark against Federal encroachment and 
individual liberty. Our Founders also knew that keeping decision making 
powers closer to home led to more accountable and effective government. 
Their federalist vision is clearly reflected in the 10th amendment, 
which states:

       The powers not delegated to the United States by the 
     Constitution, nor prohibited by it to the States, are 
     reserved to the States respectively, or to the people.

  The legislation I am introducing today requires agencies to respect 
this vision of federalism when formulating policies and implementing 
the laws passed by Congress. It will preserve the division of 
responsibilities between the States and the Federal Government 
envisioned by the Framers of the Constitution and established in 
Executive order by President Ronald Reagan.
  The Reagan order on federalism had it right. It directed Federal 
departments and agencies to refrain from imposing one-size-fits-all 
regulation on the States. It held that the laws passed by Congress were 
not presumed to preempt State law unless done so explicitly. It 
required agencies to assess the impact of agency action on federalism. 
But the people running the executive branch today, from the top on 
down, do not seem to feel the Reagan order applies to them. They made 
this abundantly clear when they tried to revoke it with Clinton 
Executive Order 13083.
  In May, President Clinton quietly signed Executive Order 13083, which 
by its terms claims to promote federalism. Ironically, this order that 
is supposed to promote better communication between Federal and local 
government was issued in secret--without even talking to State and 
local officials at all. Worse still, the order would seriously 
undermine federalism and effectively turn the 10th amendment on its 
head. The Reagan Executive Order 12612 promoted the 10th amendment and 
set a clear presumption against Federal meddling in local affairs. The 
new Clinton order would create, but not be limited to, nine new policy 
justifications for Federal meddling. The list is so ambiguous that it 
would give Federal bureaucrats free rein to trample on local matters. 
The new Clinton order also would revoke President Clinton's own 1993 
Executive Order 12875 that directed Federal agencies not to impose 
unfunded mandates on the States.
  Understandably, State and local officials were deeply offended by the 
Clinton order and the White House snub in drafting it. On July 17, the 
major groups representing State and local officials sent a remarkable 
letter to the President, urging him to withdraw the order and to 
restore the Reagan federalism order and the 1993 unfunded mandates 
order. On July 22, several of my colleagues and I supported State and 
local officials by sponsoring a resolution calling on President Clinton 
to repeal his new order. That resolution passed the Senate unanimously. 
The House also has voiced opposition to the Clinton order. Congressman 
McIntosh held a hearing, and joined with six of his colleagues to 
introduce a bill nullifying Executive Order 13083.
  The White House had a chance to extinguish the firestorm of protest 
from Governors, State legislators, mayors, county executives, and other 
local officials around the country by permanently revoking Executive 
Order 13083. Instead, the White House chose to preserve some wiggle 
room by ``suspending'' the order on August 5, leading some to ask if 
that action is permanent or just an effort to delay the order until the 
opposition dies down. If the President can admit that he made a mistake 
in signing his federalism order, he should permanently revoke it, plain 
and simple.
  Unfortunately, the White House has yet to correct its insult to State 
and local officials and the communities they serve. Instead of revoking 
the Clinton order, the administration is preparing for belated 
consultations with State and local government representatives. This 
effort at damage control does not hide the fact that the Clinton order 
is an open invitation for Federal interference in local affairs, and in 
the administration's eyes, it is still on the table.

  In light of this threat to the tenth amendment principle of a limited 
Federal Government, Congress must stand ready to act. The Federalism 
Enforcement Act is necessary to ensure that the current administration 
exercises some restraint when regulating in areas that affect our 
States and communities, and respects the principles of State 
sovereignty and limited Federal Government on which our Nation was 
founded.
  First, the bill directs Federal agencies to adhere to constitutional 
principles and not to encroach on the constitutional authority of the 
States. The Clinton federalism order would have shifted the presumption 
against Federal intervention to provide new policy justifications for 
Federal interference in State and local affairs. My bill returns us to 
the language of the Reagan order.
  Second, the bill would restore the preemption standards established 
in the Reagan order. The Clinton order would have encouraged Federal 
agencies to intrude into State affairs and deleted the Reagan 
preemption principle that, when in doubt, agencies should err on the 
side of State sovereignty.
  Third, the bill would direct agencies to prepare a federalism 
assessment of certain agency actions, such as regulations that have 
significant federalism implications. The Clinton order would have 
deleted this requirement.
  Finally, the Federalism Enforcement Act would express the sense of 
the Congress that Federal agencies should not propose legislation that 
would regulate the States in ways that would interfere with their 
separate and independent functions, attach conditions to Federal grants 
which are unrelated to the purposes of the grant, or preempt State law 
in ways inconsistent with the act. Because only the President can 
enforce

[[Page S9977]]

this requirement using his article II constitutional powers, it is 
expressed as a resolution urging him to do so.
  The principles of federalism rightly are being reinvigorated. Much of 
the innovation that has improved this country began at the State and 
local level. People want important decisions that affect their daily 
lives to be made in their community--not dictated on high from 
Washington. And federalism is blossoming in recent constitutional 
interpretations of the Supreme Court. The Federalism Enforcement Act I 
am introducing today will continue this restoration of the balance 
between national and State power as conceived by the Framers of the 
Constitution.
                                 ______
                                 
      By Mr. LUGAR:
  S. 2447. A bill to require the Secretary of Agriculture, in 
consultation with the heads of other agencies, to conduct a feasibility 
and cost-benefit study of options for the design, development, 
implementation, and operation of a national database to track 
participation in Federal means-tested public assistance programs; to 
the Committee on Governmental Affairs.


                 FOOD STAMP INTERSTATE FRAUD PREVENTION

 Mr. LUGAR. Mr. President, I rise today to introduce a bill to 
combat fraud and waste in the food stamp program--overpayments 
resulting from individuals receiving benefits in two or more states at 
the same time. This bill is the result of the last in a series of 
General Accounting Office studies that I requested dealing with groups 
of ineligible people receiving food stamps. In the report being 
released today, GAO identifies over 20,000 individuals who received 
benefits in at least two states at the same time during 1996. Using 
administrative records from four states (California, Texas, New York 
and Florida), the GAO estimates overpayments of $3.9 million in those 
states alone.
  Last year the GAO reported to the Agriculture Committee that over $3 
million in food stamp benefits were overpaid to prisoners' households. 
In response we passed legislation to stop prisoners from receiving 
benefits. Earlier this year, the GAO reported that 26,000 deceased 
individuals in four states were counted as members of a food stamp 
household. According to the GAO this resulted in overpayments of an 
estimated $8.6 million. The Agriculture Committee reported a bill to 
match food stamp files with Social Security Administration data.
  My bill will require the United States Department of Agriculture to 
conduct a feasibility study to identify options for a national database 
to track food stamp participants and combat interstate fraud. The GAO's 
report validates a Department of Health and Human Services computer 
match of 15 states which found 18,000 potential duplicated Temporary 
Assistance for Needy Families (TANF) cases. This suggests that the 
problem is not confined to USDA. My bill would direct the USDA to work 
in consultation with other agencies to develop a systematic approach to 
developing a national database.
  At present there is no appropriate national database that tracks in 
means-tested benefit programs. States have been working individually on 
the problem of benefits paid in multiple jurisdictions. For example, 
some states have developed cooperative agreements with neighboring 
states to share data. Current state efforts are effective, but anything 
short of a national system is inefficient.
  Mr. President, the welfare reform bill required states to guard 
against fraud and abuse, and specifically prohibited participants from 
receiving benefits in two states. However, the bill did not give states 
tools to combat this type of fraud. The welfare bill also did not give 
states the tools to implement other important provisions. To 
effectively implement the TANF and food stamp time limits, some type of 
national tracking system is necessary.
  Therefore, this bill directs the agencies involved to address a 
broader range of issues than simply the receipt of benefits in 
different states at the same time. HHS has already fulfilled a 
congressional mandate to look into some of these issues, so I expect 
the participants in this new study to use the completed project as a 
base upon which to build.
  Further, I believe that the study should explore the possibility of a 
``real time'' database, so that eligibility workers will instantly know 
if there are any problems with an application. This will avoid the 
``pay-and-chase'' problem that forces states to recoup overpayments 
from beneficiaries after the fact--sometimes years later. This method 
of fraud enforcement is inefficient, and often a burden on the 
recipient as well. A national database should not be seen as purely an 
enforcement tool. There are many cross program benefits for the poor, 
benefits which may not be apparent today. As with any large 
governmental database, the study should address how the system will 
safeguard recipients' privacy and limit unauthorized use and disclosure 
of data.
  Means-tested benefits, including food stamps, provide a safety net 
for millions of people. We cannot allow fraud and abuse to undermine 
the food stamp program and welfare reform. Integrity is essential to 
ensure a program that can serve those in need. It is our responsibility 
to help end fraud and abuse in all federally funded programs. This 
legislation is an important step in that direction and will help ensure 
that welfare reform is a success.
  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. 2447

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

     SECTION 1. FINDINGS.

       Congress finds that--
       (1) during 1997, the Federal Government spent over 
     $21,000,000,000 to deliver food stamp benefits under the Food 
     Stamp Act of 1977 (7 U.S.C. 2011 et seq.) to over 23,000,000 
     individuals;
       (2) a portion of the funds spent on food stamp benefits 
     annually is misspent through overpayments and fraud, which 
     undermines the integrity and confidence in the food stamp 
     program;
       (3) the Comptroller General of the United States has found 
     that--
       (A) as many as 20,000 individuals were receiving food stamp 
     benefits in at least 2 to 4 States at the same time during 
     1996;
       (B) due to this duplication, overpayments to the households 
     in those States during 1996 totaled approximately $3,900,000; 
     and
       (C) there was a similar duplication of payments in other 
     Federal means-tested public assistance programs, such as the 
     temporary assistance to needy families (TANF) program funded 
     under part A of title IV of the Social Security Act (42 
     U.S.C. 601 et seq.);
       (4) certain States currently have cooperative agreements 
     under which matches of recipients of means-tested public 
     assistance programs are tracked and coordinated with 
     neighboring States, but there is no comprehensive national 
     database or information system to track participation across 
     State lines;
       (5) the Personal Responsibility and Work Opportunity 
     Reconciliation Act of 1996 (Public Law 104-193) created a 
     number of requirements to track means-tested assistance 
     throughout the United States, including time-limited receipt 
     of assistance under the food stamp program and the temporary 
     assistance to needy families (TANF) program;
       (6) a centralized database would be the most effective tool 
     to prevent receipt of means-tested assistance in multiple 
     jurisdictions and would avoid duplicated effort on the part 
     of States;
       (7) according to the Director of the Office of Management 
     and Budget, improved mechanisms to provide accurate 
     information to employees who determine eligibility for means-
     tested assistance would help prevent overpayments and improve 
     service to clients; and
       (8) data sharing at the time of application for means-
     tested assistance could change enforcement efforts from a 
     pay-and-chase method to a method that would be more proactive 
     and efficient.

     SEC. 2. STUDY ON NATIONAL DATABASE FOR FEDERAL MEANS-TESTED 
                   PUBLIC ASSISTANCE PROGRAMS.

       (a) In General.--The Secretary of Agriculture, in 
     consultation with the Secretary of Health and Human Services, 
     the Secretary of Labor, the Commissioner of Social Security, 
     and the Secretary of the Treasury, shall conduct a 
     feasibility and cost-benefit study of options for the design, 
     development, implementation, and operation of a national 
     database to track participation in Federal means-tested 
     public assistance programs.
       (b) Administration.--In conducting the study, the Secretary 
     of Agriculture shall--
       (1) study an option under which information in the national 
     database is collected and made available in real-time; and
       (2) provide safeguards to protect against the unauthorized 
     use or disclosure of information in the national database.
       (c) Report.--Not later than 180 days after the date of 
     enactment of this Act, the Secretary of Agriculture shall 
     submit to Congress a report on the results of the study 
     conducted under this section.
       (d) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section 
     $250,000.

[[Page S9978]]

                                 ______
                                 
      By Mr. KERRY (for himself, Mr. Wellstone, Mr. Harkin, and Ms. 
        Landrieu):
  S. 2448. A bill to amend title V of the Small Business Investment Act 
of 1958, relating to public policy goals and real estate appraisals, to 
amend section 7(a) of the Small Business Act, relating to interest 
rates and real estate appraisals, and to amend section 7(m) of the 
Small Business Act with respect to the loan loss reserve requirements 
for intermediaries, and for other purposes; to the Committee on Small 
Business.


                  SMALL BUSINESS LOAN ENHANCEMENT ACT

 Mr. KERRY. Mr. President, today I am joined by Senators 
Wellstone, Harkin, and Landrieu, to introduce the ``Small Business Loan 
Enhancement Act.'' To give small businesses more of an advantage, we 
propose small but significant changes to the Small Business 
Administration's three primary lending programs: the 7(a) guaranteed 
business loan program, the 504 Development Company program, and the 
Microloan program. These changes would foster loans to growing women-
owned businesses and enhance small business lending by saving costs for 
small business borrowers, reducing paperwork for lenders, and 
increasing available capital for microloans and technical assistance. 
This bill will also enable small businesses to use SBA's most popular 
loan guarantee program to fix year 2000 problems.
  Women-owned businesses are increasing in number, range, diversity and 
earning power. They constitute one-third of the 23 million small 
businesses in the United States, contribute more than $2.38 trillion 
annually in revenues to the economy and range in industry from 
advertising agencies to manufacturing. Addressing the special needs of 
women-owned businesses serves not only these entrepreneurs, but also 
the economic strength of this nation as a whole. Since 1992, SBA has 
managed to increase access to capital for women and has worked in 
earnest to move women entrepreneurs away from expensive credit card 
financing to more affordable loans for financing their business 
ventures. While the percentage of 504 loans to women-owned businesses 
has increased from 4.2 percent in 1987 to 14.7 percent in 1998, we need 
to increase lending opportunities to better reflect that 40 percent of 
all businesses are owned by women. By expanding the public policy goals 
of the 504 loan program to include women-owned businesses, we are 
ensuring that loans to eligible women business owners aren't capped at 
$750,000 but are now available for as much as $1 million. According to 
Certified Development Company professionals, loan underwriters are 
conservative when it comes to approving loans for more than $750,000 
and that this directive would undoubtedly help eligible women business 
owners get the financing they need to expand their facilities and buy 
equipment as their businesses grow.
  In addition to increasing access to capital, the SBA plays a critical 
role in eliminating barriers that keep entrepreneurs from entering the 
economy, reducing regulatory burdens and lowering transaction costs. 
The Senate has an opportunity to reduce time and costs to both lenders 
and small business borrowers in real estate transactions by modernizing 
appraisal requirements for real estate transactions for 7(a) and 504 
loans. Under current operating procedures, where more than $100,000 of 
the authorized loan proceeds in a financing package includes real 
estate (acquisition, construction and improvement to land and 
buildings), SBA requires a state-certified or state-licensed appraisal. 
Our bill would raise the requisite appraisal amount to $250,000, 
consistent with other agencies, including, among others, the Federal 
Reserve System, the Federal Deposit Insurance Corporation and the 
Office of Thrift Supervision. Raising the threshold does not increase 
the government's risk in these loans because the bill specifies that 
lenders must require a state-certified or state-licensed appraisal on 
loans less than $250,000 if that is their standard for similar non-SBA 
loans. Depending on the area of the country, savings in the 7(a) and 
504 programs are estimated to be from $1,000 to $5,000 per loan by 
requiring an evaluation instead of a state-certified or state-licensed 
appraisal. In the 504 program, this change is estimated to save money 
for 2,000 out of the some 6,000 annual 504 borrowers, which are often 
minority and women-owned businesses.
  To complement those regulatory improvements, this bill also 
encourages lenders to use the 7(a) program for their borrowers by 
streamlining paperwork requirements those lenders must complete after a 
7(a) loan defaults. Two years ago, Congress enacted a requirement that 
reduced by one percent the interest rate paid on the guaranteed portion 
of defaulted 7(a) loans. Although the change was expected to 
substantially decrease the subsidy costs of the program, this has not 
proved to be the case. Instead, it has created a paperwork burden 
disproportionately high compared to the savings realized.
  To help small businesses meet the escalating challenges of the Year 
2000 computer problem, also called the Y2K problem, this bill clarifies 
Congressional intent that the 7(a) guaranteed loan program be used for 
this purpose. As amended, the 7(a) loan program will specify that small 
businesses can use these loans to finance the cost of making their 
systems and computers Y2K-compliant. In addition to legitimate concerns 
about function and survival that make this provision important for 
small businesses, Y2K compliance will also be a regulatory concern for 
bankers and small business borrowers. We understand that bank 
regulators will be requiring lenders to survey their borrowers and to 
certify that they are Y2K-compliant. Congress recognizes that small 
businesses may be harmed by the Y2K problem and that the 7(a) program 
is an appropriate means and established SBA program that can 
immediately help them deal with it. In fiscal year 1997, the 7(a) loan 
program reached more than 40,000 businesses, making 45,288 loans and 
approving loans totalling $9.5 billion.
  The last component of this bill amends SBA's Microloan program. This 
important economic development tool has, in six short years, provided 
close to 7,000 microloans worth some $68 million. More than 40 percent 
of those loans went to women, 42 percent went to minorities, and 11 
percent went to veterans. This program, which provides loans that 
average $10,000 and can be for as little as a few hundred dollars, has 
improved the landscape of some our country's poorest communities, 
creating jobs, helping people move from public assistance to weekly 
paychecks, and contributing to the tax base. As stated in a July Boston 
Business Journal article, ``There are many people out there who can't 
get traditional bank loans because they have bad credit histories, or 
no credit histories or no assets.'' In spite of these realities that 
make microentrepreneurs too risky for banks, the government has 
suffered no losses in this program. It is successful because it helps 
entrepreneurs turn their talents into businesses, such as a furniture 
upholsterer or a pet shop, and then augments the capital infusion by 
providing technical assistance to teach microentrepreneurs how to run a 
successful business.
  This amendment would authorize the SBA Administrator to reduce an 
microlender's loan loss reserve (a reserve of cash to guarantee that 
the government is paid back if a loan defaults) from 15 percent to not 
less than ten percent after an intermediary has been participating in 
the microloan program for at least five years and has demonstrated its 
ability to maintain a healthy loan fund. Each microlender's loan loss 
reserve will be established based on its average loss rate for the 
previous five-year period. Because of the program's success so far, 36 
out of 42 microlenders would qualify under this bill's requirements to 
maintain a loan loss reserve of ten percent rather than 15 percent. The 
proposed change would continue to protect the government's interest in 
these loans and at the same time enhance the program because it frees 
up cash that microlenders can reprogram for more microloans or 
technical assistance.
  In closing, I want to again thank my colleagues for supporting this 
bill. If enacted, they will have improved the business climate and 
taken a few more steps to ensure that small businesses have access to 
capital, are less burdened by regulations and paperwork, have the 
resources to meet Y2K problems and that women-owned businesses can get 
loans of sufficient size to expand their businesses.
  Mr. President, I thank my colleagues for their support and ask 
unanimous

[[Page S9979]]

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. 2448

       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 ``Small Business Loan 
     Enhancement Act''.

     SEC. 2. LOANS FOR PLANT ACQUISITION, CONSTRUCTION, 
                   CONVERSION, AND EXPANSION.

       (a) Public Policy Goals.--Section 501(d)(3)(C) of Small 
     Business Investment Act of 1958 (15 U.S.C. 695(d)(3)(C)) is 
     amended by inserting ``or women-owned business development'' 
     before the comma.
       (b) Real Estate Appraisals.--Section 502(3) of the Small 
     Business Investment Act of 1958 (15 U.S.C. 696(3)) is amended 
     by adding at the end the following:
       ``(F) Real estate appraisals.--
       ``(i) Loans exceeding $250,000.--Notwithstanding any other 
     provision of law, if a loan under this section involves the 
     use of more than $250,000 of the loan proceeds for a real 
     estate transaction, prior to disbursement of the loan, the 
     Administrator shall require an appraisal of the real estate 
     by a State licensed or certified appraiser.
       ``(ii) Loans of $250,000 or less.--Notwithstanding any 
     other provision of law, if a loan under this subsection 
     involves the use of $250,000 or less of the loan proceeds for 
     a real estate transaction, prior to disbursement of the loan, 
     the participating lender may, in accordance with the policy 
     of the participating lender with respect to loans made 
     without a government guarantee, require an appraisal of the 
     real estate by a State licensed or certified appraiser.
       ``(iii) Definition.--In this subparagraph, the term `real 
     estate transaction' includes the acquisition or construction 
     of land or a building and any improvement to land or to a 
     building.''.

     SEC. 3. SECTION 7(A) LOAN PROGRAM.

       (a) Year 2000 Technology Requirements.--Section 7(a) of the 
     Small Business Act (15 U.S.C. 636(a)) is amended, in the 
     matter preceding paragraph (1), by inserting ``and to assist 
     small business concerns in meeting technology requirements 
     for the Year 2000,'' after ``and working capital,''.
       (b) Real Estate Appraisals.--Section 7(a) of the Small 
     Business Act (15 U.S.C. 636(a)) is amended by adding at the 
     end the following:
       ``(27) Real estate appraisals.--
       ``(A) Loans exceeding $250,000.--Notwithstanding any other 
     provision of law, if a loan guaranteed under this subsection 
     involves the use of more than $250,000 of the loan proceeds 
     for a real estate transaction, prior to disbursement of the 
     loan, the Administrator shall require an appraisal of the 
     real estate by a State licensed or certified appraiser.
       ``(B) Loans of $250,000 or less.--Notwithstanding any other 
     provision of law, if a loan guaranteed under this subsection 
     involves the use of $250,000 or less of the loan proceeds for 
     a real estate transaction, prior to disbursement of the loan, 
     the participating lender may, in accordance with the policy 
     of the participating lender with respect to loans made 
     without a government guarantee, require an appraisal of the 
     real estate by a State licensed or certified appraiser.
       ``(C) Definition.--In this paragraph, the term `real estate 
     transaction' includes the acquisition or construction of land 
     or a building and any improvement to land or to a 
     building.''.
       (c) Interest Rates.--Section 7(a)(4) of the Small Business 
     Act (15 U.S.C. 636(a)(4)) is amended--
       (1) by striking ``(4)'' and all that follows through 
     ``Notwithstanding'' and inserting the following:
       ``(4) Interest rates.--Notwithstanding''; and
       (2) by striking subparagraph (B).

     SEC. 4. MICROLOAN PROGRAM.

       Section 7(m)(3)(D) of the Small Business Act (15 U.S.C. 
     636(m)(3)(D)) is amended--
       (1) in the first sentence, by striking ``The 
     Administrator'' and inserting the following:
       ``(i) In general.--The Administrator''; and
       (2) by striking the second sentence and inserting the 
     following:
       ``(ii) Level of loan loss reserve fund.--

       ``(I) In general.--Subject to subclause (II), the 
     Administration shall require the loan loss reserve fund to be 
     maintained at a level equal to not more than 15 percent of 
     the outstanding balance of the microloans owed to the 
     intermediary.
       ``(II) Reduction of loan loss reserve requirement.--After 
     the initial 5 years of an intermediary's participation in the 
     program under this subsection, upon the initial request of 
     the intermediary made at any time after that period, the 
     Administrator shall annually conduct a review of the average 
     annual loss rate of the intermediary and, if the intermediary 
     demonstrates to the satisfaction of the Administrator that 
     the average annual loss rate for the intermediary during the 
     preceding 5-year period is less than 15 percent, and the 
     Administrator determines that no other factor exists that is 
     likely to impair the ability of the intermediary to repay all 
     obligations owed to the Administration under this subsection, 
     the Administrator shall reduce that annual loan loss reserve 
     requirement to reflect the actual average annual loss rate 
     for that intermediary during that period, except that in no 
     case shall the loan loss reserve requirement for an 
     intermediary be reduced to less than 10 percent of the 
     outstanding balance of the microloans owed to the 
     intermediary.''.

                                 ______
                                 
      By Mr. CLELAND:
  S. 2449. A bill to amend the Controlled Substance Act relating to the 
forfeiture of currency in connection with illegal drug offenses, and 
for other purposes; to the Committee on the Judiciary.


                     DRUG CURRENCY FORFEITURES ACT

 Mr. CLELAND. Mr. President, there have been a series of recent 
cases in which courts have ruled against one of law enforcement's most 
effective anti-drug tools--asset forfeiture. Just consider:
  Law enforcement agents at an airport found almost $50,000 wrapped 
inside a pair of jeans. A drug dog responded positively to the presence 
of narcotics on the money, and the traveler, when confronted by the 
agents, produced a fake driver's license and offered other false 
evidence. United States v. $49,576.00 in U.S. Currency, l16 F.3d 425 
(9th Cir. 1997).
  In another instance, narcotics agents found $30,000 wrapped in 
bundles and stashed under the seat of a car. Despite the courier's 
demonstrably false explanation of the source of the money, the court 
nevertheless found insufficient evidence to establish probable cause 
for forfeiture. United States v. U.S. Currency, $30,060.00, 39 F.3d 
1039 (9th Cir. 1994).
  These are but two in a series of cases in which the courts found 
circumstantial evidence sufficient to establish that the money was 
derived from some form of criminal activity, but insufficient to 
establish that the illegal activity involved drug trafficking. The 
courts therefore ruled that the money seized was not subject to 
forfeiture, and the proceeds were returned to the trafficker. See also 
United States v. $13,570.00 in U.S. Currency, 1997 WL 722947 (E.D. La. 
1997) (seizure of cash at airport lacked probable cause despite dog 
sniff, evasive answers, fake ID, courier profile, and prior drug 
arrest); United States v. $14,876.00 in U.S. Currency, 1997 WL 722942 
(E.D. La. 1997) (same); United States v. $40,000 in U.S. Currency, 999 
F. Supp. 234 (D.P.R. 1998) (dog sniff, drug courier profile, quantity 
of currency and evasive answers are not sufficient to establish 
probable cause where government fails to establish any connection 
between claimant and any drug trafficker).
  Mr. President, these court decisions are coming at a time when drug 
sales in this country are generating $60 billion in illegal proceeds 
every year. Most of this drug money finds its way to drug kingpins in 
Mexico and Colombia. And the drugs find their way to Americans of all 
ages and walks of life. The consequences are devastating. Substance 
abuse is now the single largest preventable cause of death in this 
country, with illegal drugs and alcohol killing 120,000 Americans each 
year.
  It's an enemy that respects neither class nor age group. High school 
athletes, runaways, soccer players, gang members, and class 
valedictorians use and sell drugs. Nationwide, the percentage of teens 
reporting illegal drug use has doubled over the last 5 years. And now 
the National Household Survey on Drug Abuse reports that teen drug use 
rose in 1997, led by increasing marijuana smoking among teenagers who 
view it as a low-risk ``soft drug.'' It is no wonder that in survey 
after survey, Americans are reporting that illegal drugs top their list 
of national concerns.
  In recent testimony before the Senate Select Committee on 
Intelligence, a top official at the Drug Enforcement Administration 
(DEA) painted a chilling portrait of the powerful threat to the United 
States posed by international drug organizations. He said, and I quote, 
``These individuals, from headquarters located outside the U.S., 
influence the choices that many Americans make about where to live, or 
where they send their children to school. The drugs, and the attendant 
violence which accompanies the drug trade, have reached into every 
American community and, in essence, have robbed many Americans of the 
dreams they once cherished.''
  These organized crime leaders are sophisticated and possess the power 
that comes with unlimited resources. Because they are worth billions of 
dollars, these drug lords have at their disposal some of the world's 
most technically advanced airplanes, boats,

[[Page S9980]]

radar, and communications equipment. They possess weapons in quantities 
that, DEA testified, ``rival the capabilities of some legitimate 
governments.'' These drug kingpins send thousands of couriers into the 
United States who answer to them on a daily basis via faxes, cellular 
phones, or pagers.
  Since the disruption of the notorious Cali cartel leadership, we know 
that traffickers from Mexico have joined together with Colombian 
traffickers in an emerging alliance which has largely taken over U.S. 
heroin distribution from Asian organizations and is now producing some 
of the world's most potent heroin. The manufacture of the vast majority 
of cocaine in South America is still under the control of the Colombian 
cartels, which use commercial maritime vessels, containerized cargo and 
private aircraft to transport the cocaine from their laboratories in 
the jungles of southeast Colombia through Mexico and the Caribbean into 
U.S. border points of entry. In fact, 50 to 60 percent of all the 
cocaine, as well as 25 percent of the heroin and 80 percent or more of 
the meth coming into the United States, are transported into our 
country through the U.S.-Mexico border.
  The DEA testified that the influence of Colombian trafficking 
organizations in the Caribbean is ``overwhelming.'' Several Colombian 
drug syndicates have set up command and control bases in Puerto Rico 
and the Dominican Republic and use the Caribbean Basin to ferry tons of 
cocaine into the United States each year. According to the DEA, 
seizures of 500 to 2,000 kilos of cocaine in the Caribbean are now 
commonplace. Unlike the monopoly-like rule of the Cali cartel, many of 
the new Colombian cartels have chosen to franchise a large portion of 
their wholesale heroin and cocaine operations. As a result, criminals 
from the Dominican Republic have now become the dominant force in the 
wholesale cocaine and heroin trade on the East Coast of the United 
States.
  In addition to heroin and cocain, methamphetamine has become a 
growing threat within our borders. Methamphetamine trafficking, which 
until recently had been stopped west of the Mississippi River, is 
aggressively moving eastward and is now rapidly challenging cocaine as 
the primary focus of illegal drug trafficking in Georgia and other 
eastern seaboard States. According to the DEA Atlanta Field Division, 
Washington may soon declare Atlanta the meth capital of the Southeast.
  During February alone, DEA seized almost 90 pounds of methamphetamine 
in metropolitan Atlanta. Ten pounds of the drug was seized from 
passengers on buses originating in Texas and California. Acting on a 
tip, DEA agents found another 25 pounds stashed in hidden compartments 
in a vehicle. And law enforcement agents apprehended two Los Angeles 
passengers at Hartsfield Airport who had smuggled 20 pounds of meth 
into the State. These drugs are being ferried into my State by couriers 
employed by Mexican trafficking organizations operating out of Mexico 
and California. DEA has determined that a number of its recent meth 
seizures in Georgia are directly linked to the AMEZCUA drug trafficking 
organization--one of Mexico's principal drug cartels.
  The amounts of money generated by these illegal drug transactions are 
staggering. The DEA reported that one Mexican drug syndicate forwards 
$20 to $30 million to Colombia for each major drug operation, and makes 
tens of millions of dollars in profits each week. Moving this money 
from Mexico to Colombia, or from the U.S. to Mexico, is a relatively 
simple matter. The most popular method is to ship the currency in bulk 
by courier or cargo, or transport it overland or by air. Oftentimes, 
the same vehicle or even the same courier that originally transported 
the drugs into the United States will carry the drug proceeds out.
  It was not long ago that a Customs investigation made front page 
headlines. Three of Mexico's largest banks were indicted by the U.S. 
for laundering hundreds of millions of dollars in drug money from this 
country. The three-year sting was unprecedented on two counts. This was 
the largest money laundering case in the history of U.S. law 
enforcement. And it was the first time ever that Mexican banks and bank 
officials have been directly linked to laundering U.S. drug profits.
  The sting resulted in the arrest of 70 people, including 14 Mexican 
banking officials. Thirty-five million dollars in illegal drug proceeds 
was seized immediately. One hundred and twenty-two million dollars more 
is expected to be recovered from over 100 bank accounts frozen in this 
country and in Europe. While unprecedented, this operation netted only 
a drop in the bucket compared to the estimated $60 billion in illegal 
proceeds reaped from U.S. drug sales each year. Like most of the drug 
proceeds, this money was earmarked for drug lords in Mexico and 
Colombia. In this case, Mexican bankers allegedly aided the Juarez 
cartel in Mexico and the Cali cocaine and heroin syndicate in Colombia.
  If we ever expect to make in-roads in the so-called ``war on drugs,'' 
it is not enough just to apprehend the drug trafficker. We must seize 
his assets as well. Let me give just one example. The Rodriguez-
Orejuela brothers in Colombia once ran the most powerful international 
organized crime group in history. Based on evidence supplied by the 
U.S. Government, Miguel Rodriguez-Orejuela has been sentenced to 21 
years in prison, although it is expected that he will serve only 12. 
Last year his brother Gilberto was sentenced to 10\1/2\ years in prison 
on drug trafficking charges. Even now, the Rodriguez-Orejuela brothers 
are able to run their drug trafficking business from prison through the 
use of private quarters and telephones. They are by no means the 
exception. Last year the Colombia National Police took control of four 
maximum security prisons from the Bureau of Prisons, in an effort to 
halt jailed traffickers from continuing their illegal operations from 
behind prison walls. In the final analysis, the only way to destroy the 
drug cartels is to hit them where it hurts the most--their pocket 
books.
  The transportation and transmission (by electronic means) of drug 
proceeds are enormous problems for law enforcement, but they also 
present law enforcement with an enormous opportunity. Because drug 
proceeds in the form of cash occupy much more space than the drugs 
themselves--often filling suitcases, vehicles, and even airplanes--the 
movement of the cash is often the most vulnerable part of the drug 
operation. Indeed, law enforcement agents are frequently successful in 
intercepting such cash shipments by stopping couriers at airports, 
opening containers at Customs checkpoints, and encountering cars 
stuffed with cash during routine traffic stops.

  However, the ability of law enforcement to confiscate the money--and 
thus break the drug trafficking cycle--hinges on the government's 
ability to establish that the money is, in fact, drug proceeds, and not 
the proceeds of some other form of unlawful activity. Therefore, today 
the distinguished chairman of the Senate Caucus on International 
Narcotics Control, Senator Grassley, and I are introducing the Drug 
Currency Forfeitures Act. Our bill enhances the ability of law 
enforcement agents to interdict and confiscate the huge quantities of 
drug money that are being moved through our airports, up and down our 
major highways, through our ports, and in and out of financial 
institutions here and abroad--while at the same time it upholds Fourth 
Amendment constitutional protections against illegal searches and 
seizures. Specifically, our bill would create a ``rebuttable 
presumption'' that money is subject to forfeiture as drug proceeds in 
cases involving drug couriers carrying large amounts of cash through 
drug transit areas, and in cases involving international money 
laundering. The presumption would apply if any of the following factors 
is established by the government.
  Factor one: There is more than $10,000 in currency being transported 
in one of the transit places commonly used by drug traffickers--for 
example, an airport, an interstate highway, or port of entry--and any 
of the following circumstances commonly associated with the 
transportation of drug proceeds exists: the money is packaged in a 
highly unusual manner; or the courier makes a false statement to a law 
enforcement officer or inspector; or the money is found in close 
proximity to drugs; or a properly trained dog gives a positive alert.
  I note here that there has been much criticism of the use of drug 
dogs to

[[Page S9981]]

interdict drug money, on the ground that so much currency now in 
circulation in the U.S. is tainted with drug residue that the drug 
dog's positive alert is meaningless. Let me say, however, that recent 
scientific research has refuted this notion and indeed supports the 
proposition that a drug dog's alert to currency is highly relevant in a 
forfeiture case. A study by Dr. Kenneth Furton, Director of the 
Criminalistics Program in the Chemistry Department at Florida 
International University, has established that a properly trained drug 
dog does not alert to the cocaine residue on currency, but alerts 
instead to methyl benzoate--a highly volatile chemical by-product of 
the cocaine manufacturing process that remains on the currency only for 
a short period of time. Thus, even if it is true that a high percentage 
of our currency is contaminated with cocaine residue, the drug dogs are 
alerting only to money that has recently, or just before packaging, 
been in close proximity to a significant amount of cocaine. See K.G. 
Furton, Y.L. Hsu, N. Alvarez and P. Lagos, ``Novel Sample Preparation 
Methods and Field Testing Procedures Used to Determine the Chemical 
Basis of Cocaine Detection by Canines,'' Forensic Evidence and Crime 
Science Investigation, Proc. SPIE 2941, 56-62 (1997). I am attaching to 
my remarks an article describing Dr. Furton's work.
  Factor two: The property subject to forfeiture was acquired during a 
period of time when the person who acquired it was engaged in a drug 
trafficking offense, and there is no other likely source for the money. 
I note that this presumption already exists in criminal forfeiture 
cases. See 21 U.S.C. Sec.  853(d).
  Factor three: The property was involved in a transaction that 
occurred, in part, in a bank secrecy jurisdiction or was conducted by, 
to or through a shell corporation. These two factors appear repeatedly 
in cases involving international money laundering and therefore are 
highly indicative of illegal money laundering activity. However, to 
ensure that the presumption is focused narrowly on the problem this 
bill is designed to address, it would apply only where the money was 
being moved in or out of one of the countries the President has listed 
as a ``major drug-transit country,'' a ``major illicit drug producing 
country,'' or a ``major money laundering country,'' all of which are 
defined terms in the Foreign Assistance Act.
  Factor four: Any person involved in the transaction has been 
convicted of a drug trafficking or money laundering offense, or is a 
fugitive from prosecution for such an offense. This factor reflects the 
obvious fact that the movement of money by a convicted drug trafficker, 
money launderer or fugitive is highly likely to involve drug proceeds.
  The existence of any one of these four factors would be sufficient--
by itself, or in some cases, in combination with the facts and 
circumstances which led to the seizure of the money--to establish 
probable cause to believe that the money represents drug proceeds, and 
if left unrebutted, would be sufficient to establish that the money is 
subject to forfeiture under the Controlled Substances Act, 21 U.S.C. 
Sec. 881(a)(6), or the Money Laundering Control Act, 18 U.S.C. Sec.  
981(a)(1), by a preponderance of the evidence. The owner of the money, 
of course, would be free to rebut the presumption by submitting 
admissible evidence that the money was derived from a legitimate 
source, and the government would have to respond either by impeaching 
the reliability of such evidence, or by offering admissible evidence of 
its own to support the forfeiture of the money. See United States v. 
$129,727.000 U.S. Currency, 129 F.3d 486 (9th Cir. 1997). In this way, 
legitimate owners of untainted money will be protected. However, drug 
traffickers and money launderers will no longer be able to rely on the 
ambiguities inherent in the movement of cash and electronic funds--as 
well as the ambiguities inherent in the standard of proof in civil 
forfeiture law--to win the release of their ill-gotten gains without 
having to come forward with any evidence whatsoever.
  On June 22, the Supreme Court handed down a highly controversial 
decision which is certain to have far-reaching ramifications on U.S. 
drug interdiction policy. That sharply divided ruling involved the case 
of Hosep Bajakajian, who had attempted to take $357,000 in undeclared 
cash to Syria, and who had lied about the amount of money he had with 
him when questioned by a Customs inspector. By ruling that the federal 
government cannot seize the money of a person trying to carry funds out 
of the country when that individual fails to declare it, unless the 
government can show it is tainted money, the High Court's decision may 
very well reinforce the recent lower court decisions against 
forfeiture--a critically important weapon in our drug interdiction 
arsenal. Our bill would address these adverse court decisions by 
providing needed statutory guidance on the important and contentious 
issue of property subject to seizure.
  Our bill has been endorsed by the Fraternal Order of Police, the 
International Association of Chiefs of Police, the International 
Brotherhood of Police Officers, and the Federal Law Enforcement 
Officers Association. I hope that my colleagues will support this bill.
  Mr. President, I ask unanimous consent that the text of our bill be 
printed in the Record together with appropriate relevant materials.
  There being no objection, the items were ordered to be printed in the 
Record, as follows:

                                S. 2449

       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 ``Drug Currency Forfeitures 
     Act''.

     SEC. 2. DRUG CURRENCY FORFEITURES.

       (a) In General.--Section 511 of the Controlled Substances 
     Act (21 U.S.C. 881) is amended by inserting after subsection 
     (j) the following:
       ``(k) Rebuttable Presumption.--
       ``(1) Definitions.--In this subsection--
       ``(A) the term `drug trafficking offense' means--
       ``(i) with respect to an action under subsection (a)(6), 
     any illegal exchange involving a controlled substance or 
     other violation for which forfeiture is authorized under that 
     subsection; and
       ``(ii) with respect to an action under section 981(a)(1)(B) 
     of title 18, United States Code, any offense against a 
     foreign nation involving the manufacture, importation, sale, 
     or distribution of a controlled substance for which 
     forfeiture is authorized under that section; and
       ``(B) the term `shell corporation' means any corporation 
     that does not conduct any ongoing and significant commercial 
     or manufacturing business or any other form of commercial 
     operation.
       ``(2) Presumption.--In any action with respect to the 
     forfeiture of property described in subsection (a)(6) of this 
     section, or section 981(a)(1)(B) of title 18, United States 
     Code, there is a rebuttable presumption that property is 
     subject to forfeiture, if the Government offers a reasonable 
     basis to believe, based on any circumstance described in 
     subparagraph (A), (B), (C), or (D) of paragraph (3), that 
     there is a substantial connection between the property and a 
     drug trafficking offense.
       ``(3) Circumstances.--The circumstances described in this 
     paragraph are that--
       ``(A) the property at issue is currency in excess of 
     $10,000 that was, at the time of seizure, being transported 
     through an airport, on a highway, or at a port-of-entry, 
     and--
       ``(i) the property was packaged or concealed in a highly 
     unusual manner;
       ``(ii) the person transporting the property (or any portion 
     thereof) provided false information to any law enforcement 
     officer or inspector who lawfully stopped the person for 
     investigative purposes or for purposes of a United States 
     border inspection;
       ``(iii) the property was found in close proximity to a 
     measurable quantity of any controlled substance; or
       ``(iv) the property was the subject of a positive alert by 
     a properly trained dog;
       ``(B) the property at issue was acquired during a period of 
     time when the person who acquired the property was engaged in 
     a drug trafficking offense or within a reasonable time after 
     such period, and there is no likely source for such property 
     other than that offense;
       ``(C)(i) the property at issue was, or was intended to be, 
     transported, transmitted, or transferred to or from a major 
     drug-transit country, a major illicit drug producing country, 
     or a major money laundering country, as determined pursuant 
     to section 481(e) of 490(h) of the Foreign Assistance Act of 
     1961 (22 U.S.C. 2291(e) and 2291j(h)), as applicable; and
       ``(ii) the transaction giving rise to the forfeiture--
       ``(I) occurred in part in a foreign country whose bank 
     secrecy laws render the United States unable to obtain 
     records relating to the transaction by judicial process, 
     treaty, or executive agreement; or
       ``(II) was conducted by, to, or through a shell corporation 
     that was not engaged in any legitimate business activity in 
     the United States; or

[[Page S9982]]

       ``(D) any person involved in the transaction giving rise to 
     the forfeiture action--
       ``(i) has been convicted in any Federal, State, or foreign 
     jurisdiction of a drug trafficking offense or a felony 
     involving money laundering; or
       ``(ii) is a fugitive from prosecution for any offense 
     described in clause (i).
       ``(4) Other presumptions.--The establishment of the 
     presumption in this subsection shall not preclude the 
     development of other judicially created presumptions, or the 
     establishment of probable cause based on criteria other than 
     those set forth in this subsection.''.
       (b) Money Laundering Forfeitures.--Section 981 of title 18, 
     United States Code, is amended by adding at the end the 
     following:
       ``(k) Rebuttable Presumption.--In any action with respect 
     to the forfeiture of property described in subsection 
     (a)(1)(A), there is a rebuttable presumption that the 
     property is the proceeds of an offense involving the 
     felonious manufacture, importation, receiving, concealment, 
     buying, selling, or otherwise dealing in a controlled 
     substance (as defined in section 102 of the Controlled 
     Substances Act), and thus constitutes the proceeds of 
     specified unlawful activity (as defined in section 1956(c)), 
     if any circumstance set forth in subparagraph (A), (B), (C), 
     or (D) section 511(k)(3) of the Controlled Substances Act (21 
     U.S.C. 881(k)(3)) is present.''.
                                  ____

                                        Fraternal Order of Police,


                                 National Legislative Program,

                                   Washington, DC, August 6, 1998.
     Hon. Max W. Cleland,
     U.S. Senate, Washington, DC.
       Dear Senator Cleland: I am writing to advise you of the 
     strong support of the more than 272,000 members of the 
     Fraternal Order of Police for your draft legislation, ``The 
     Drug Currency Forfeitures Act.''
       This bill will amend the ``Controlled Substances Act'' as 
     it relates to the forfeiture of currency deemed to be in 
     connection with illegal drug trafficking or money laundering 
     operations. In order to stem the flow of drugs into the 
     United States, and to reduce the risks to law enforcement 
     officers, government at all levels must have the ability to 
     take away the resources of drug traffickers--whether it is 
     currency, property, or other ill-gotten gains from their 
     illegal narcotics transactions.
       One of the most frustrating aspects of law enforcement is 
     seeing those who poison our cities and neighborhoods with the 
     scourge of drugs amass sizable fortunes as a result of their 
     actions. Your legislation addresses this issue by taking 
     money away from those who threaten the lives of our children 
     and our nation's law enforcement officers, and is a major 
     step toward tackling the problems posed by drug traffickers 
     and their considerable financial resources.
       Forfeiture of drug money, and the assets of money 
     laundering operations, increases the penalty for drug dealing 
     and reduces the benefits of engaging in illegal drug 
     trafficking. On behalf of the more than 272,000 members of 
     the Fraternal Order of Police, I want to commend and applaud 
     your leadership on this issue. If I can be of any further 
     assistance, please do not hesitate to contact me, or 
     Executive Director Jim Pasco, at my Washington office, (202) 
     547-8189.
           Sincerely,
                                              Gilbert G. Gallegos,
     National President.
                                  ____

                                      International Brotherhood of


                                              POLICE OFFICERS,

                                    Alexandria, VA, July 13, 1998.
     Hon. Max Cleland,
     U.S. Senate, Washington, DC.
       Dear Senator Cleland: The International Brotherhood of 
     Police Officers (IBPO) is an affiliate of the Service 
     Employees International Union, the third largest union in the 
     AFL-CIO. The IBPO is the largest police union in the AFL-CIO.
       On behalf of the entire membership of the IBPO, I want to 
     thank you for introducing legislation that would create a 
     ``rebuttable presumption'' that money is subjected to 
     forfeiture as drug proceeds in cases involving drug couriers 
     carrying large amounts of cash through airports and on major 
     highways, and in cases involving international money 
     laundering. The IBPO officially endorses your legislation and 
     looks forward to working with you to see this bill become 
     law.
       Your legislation will hurt drug dealers in the most 
     effective way--in the pocketbook. Forfeiture of this money 
     will also benefit the many police departments across the 
     country who supplement their budgets with these types of 
     seizures.
       The IBPO wishes to thank you for all your support on behalf 
     of the law enforcement community. Be assured that the IBPO 
     will make your legislation a top priority in the 105th 
     Congress.
           Sincerely,
                                                 Kenneth T. Lyons,
     National President.
                                  ____


Comments of Bobby D. Moody, President of the International Association 
     of Chiefs of Police and Chief of the Marietta, Georgia Police 
                               Department

       One of the most effective weapons that law enforcement has 
     in the domestic drug war is the ability to deprive drug 
     dealers of the proceeds of their illegal activities or the 
     instruments used to commit their crime through the use of 
     civil asset forfeiture proceedings. Senator Cleland's 
     legislation will preserve and enhance law enforcement's 
     ability to seize the assets of drug dealers and their 
     associates. I want to thank my friend, and law enforcement 
     supporter, Senator Cleland for his efforts to protect the 
     most valuable tool law enforcement has in combating drug 
     traffickers and money launderers.


                             about the iacp

       Founded in 1893, the International Association of Chiefs of 
     Police is the world's oldest and largest organization of 
     police executives with more than 16,000 members in 102 
     countries. IACP's Leadership consists of operating chief 
     executives of federal, state, local and international 
     agencies of all sizes.
                                  ____

                                           Federal Law Enforcement


                                         Officers Association,

                               East Northport, NY, August 7, 1998.
     Hon. Max W. Cleland,
     U.S. Senator, Washington, DC.
       Dear Senator Cleland: On behalf of the over 14,000 members 
     of the Federal Law Enforcement Officers Association (FLEOA) I 
     wish to express FLEOA's views regarding your proposed 
     legislation concerning asset forfeiture. This proposed 
     legislation will enhance the ability of law enforcement 
     officers, at all levels, to seize the assets of drug dealer. 
     FLEOA wishes to inform you of our overwhelming support for 
     this legislation.
       FLEOA represents criminal investigators and special agents 
     from over fifty-five federal agencies, as listed on the left 
     masthead. We feel that legislation that creates a rebuttable 
     presumption that currency in excess of $10,000 is subject to 
     forfeiture as drug proceeds when transported through an 
     airport, on a highway, or at a port-of-entry, and is found in 
     close proximity to a measurable quantity of a controlled 
     substance would assist law enforcement in our fight against 
     narcotics.
       We would be pleased to meet with you, or your staff, to 
     discuss our views on this issue in more detail. I can be 
     reached at (516) 368-6117, or you may contact FLEOA's 
     Executive Vice President Walt Wallmark at (202) 433-9230.
           Thank you for your time.
                                                 Richard J. Gallo,
     President.

                          ____________________