[Congressional Record Volume 145, Number 135 (Thursday, October 7, 1999)]
[Senate]
[Pages S12234-S12243]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. CRAIG (for himself and Mr. Crapo):
  S. 1705. A bill to direct the Secretary of the Interior to enter into 
land exchanges to acquire from the private owner and to convey to the 
State of Idaho approximately 1,240 acres of land near the City of Rocks 
National Reserve, Idaho, and for other purposes; to the Committee on 
Energy and Natural Resources.


          castle rock ranch/hagerman fossil beds land exchange

 Mr. CRAIG. Mr. President, I rise today to introduce a bill to 
authorize the Castle Rocks Ranch/Hagerman Fossil Beds Land Exchange in 
my home state of Idaho.
  Mr. President, in Idaho we have one of the foremost rock climbing 
destination sites in the world. It is called the City of Rocks National 
Reserve and is located in South Central Idaho. Most of the Reserve is 
owned by the National Park Service with parts of it being owned by the 
State of Idaho, the Forest Service, the Bureau of Land Management, and 
private landowners. The State of Idaho runs the Reserve with a 
cooperative agreement with the National Park Service.
  The Reserve has unique geologic features--essentially, large rock 
formations jut out of the ground. I can't give it justice with my 
description--it is really something that must be seen, so I invite 
everyone to come to Idaho and visit the City of Rocks. Besides the rock 
formations, many of which are used extensively and known 
internationally for rock climbing, the site has unique historic 
significance. The California Trail, one of the major trails for 
Westward expansion during the 19th Century, passes through the Reserve. 
One of the Reserve's major attractions, Twin Sisters, was a landmark 
for this trail and is currently being protected for historic 
significance. Additionally, wagon trains often stopped in the area to 
maintain their wagons. During these stops, pioneers wrote their names 
on the rocks with wagon grease. Many of these names are still visible 
on the rocks today and serve as a record of our ancestors who passed 
through the area.
  Near the Reserve exists the Castle Rock Ranch, an approximately 1,240 
acre ranch containing similar rock formations, which are ideal for fork 
climbing. Additionally, the Ranch contains irrigated pasture land. The 
Ranch was recently purchased by The Conservation Fund and other 
conservation groups in order to put it into the public domain for 
recreation. It is currently being operated as a working ranch. However, 
the State of Idaho would like to acquire this Ranch to make it into a 
state park. They would open up the rock formations for rock climbing, 
provide for camping and hiking, and, where irrigated pasture land 
exists, trade that irrigated land for dry land inholdings within the 
Reserve. This would help local ranchers acquire irrigated land, which 
is more valuable than gold in Southern Idaho, and allow the state to 
consolidate inholdings within the Reserve.
  A couple of counties to the West and across the mighty Snake River 
exists the Hagerman Fossil Beds National Monument. This National 
Monument contains the Hagerman Fossil Beds, which is important because 
it contains the world's most important fossil deposits from a time 
period known as the late Pliocene epoch, 3.5 million years ago. They 
represent the last glimpse of time before the Ice Age. Additionally, 
the beds contain the largest concentration of Hagerman Horse fossils in 
North America. While the State of Idaho owns the actual fossil beds, 
the National Park Service runs and maintains the facility.
  The State of Idaho wants to divest its interest in the fossil beds 
and acquire the Castle Rock Ranch. Additionally, the National Park 
Service wants to acquire the Fossil Beds. This would make it easier for 
everyone to work to protect the resources we have and open up 
opportunities for recreation. Consequently, I am introducing this 
legislation.
  In brief, the legislation would authorize the National Park Service 
to acquire the Castle Rock Ranch, exchange the Ranch with the State of 
Idaho for the Hagerman Fossil Beds, and mandate that the State exchange 
land within the Ranch for inholdings within the City of Rocks. In the 
end, the National Park Service would run and own the Hagerman Fossil 
Beds, the State of Idaho would own and run a state park in part of the 
Castle Rock Ranch, and voluntary inholders in the

[[Page S12235]]

City of Rocks would be able to trade their inholdings for irrigated 
land on the Castle Rock Ranch.

  The only concern I have is the existence of an easement on the 
Hagerman Fossil Beds for the local irrigation company. This is the only 
way for farmers in the local area to get water to their farms--a 
necessity in that region. Section 4(e) of this legislation was included 
to ensure that this easement will continue to exist. It is vital to the 
existence of family farms in the area, and, for the record, it is not 
my intent to harm--and I will do all in my power to prevent this 
legislation from harming--this easement or the irrigation in the local 
area.
  Mr. President, this is a unique proposal that makes fiscal sense for 
taxpayers and has garnered the support of the National Park Service, 
the State of Idaho, The Conservation Fund, The Access Fund (a national 
climbing group), other conservation groups, local legislators, and many 
local residents. I hope that my colleagues will recognize the 
importance of this legislation and work for its enactment.
                                 ______
                                 
      By Mr. MOYNIHAN (for himself, Mr. Jeffords, Mr. Leahy, Mr. 
        Kerrey, Mr. Robb, Mr. Rockefeller, Mr. Sarbanes, Mr. Grams, and 
        Mr. Lieberman):
  S. 1708. A bill to amend the Employee Retirement Income Security Act 
of 1974 and the Internal Revenue Code of 1986 to require plans which 
adopt amendments that significantly reduce future benefit accruals to 
provide participants with adequate notice of the changes made by such 
amendments; to the Committee on Finance.


              the pension reduction disclosure act of 1999

  Mr. MOYNIHAN. Mr. President, I rise today, joined by Senators 
Jeffords, Leahy, Grams, Kerrey, Robb, Rockefeller, and Sarbanes, to 
introduce legislation to provide greater disclosure of the impact of 
pension plan conversions.
  This is the second bill I have sponsored this session aimed at 
achieving transparency of the effects of traditional pension plan 
conversions to ``cash balance'' plans, which have become extremely 
controversial in recent months. At least 300 large U.S. companies have 
converted to cash balance plans in the last few years.
  Cash balance plans combine certain features of ``defined benefit'' 
and ``defined contribution'' plans. Like defined contribution plans, 
cash balance plans provide each employee with an individual account 
representing a lump-sum benefit. Like traditional defined benefit 
plans, cash balance plan contributions are made primarily by the 
employer and are insured by the Pension Benefit Guaranty Corporation.
  The calculation of benefits under cash balance plans, however, 
differs from other defined benefit plans. Whereas a traditional defined 
benefit plan grows slowly in the early years and more rapidly as one 
approaches retirement, cash balance plans de-accelerate this later-year 
growth and increase the early-year growth. Consequently, younger 
employees tend to do better under cash balance plans than under 
traditional plans, while older employees typically do worse. In some 
cases, an older worker's starting account balance may remain static for 
years--typically referred to as the ``wear away'' period.
  The controversy over cash balance plans arises in part because 
present disclosure requirements are inadequate. Under present law, when 
an employer amends a defined benefit pension plan in a manner which 
significantly reduces the rate of future benefit accrual, the employer 
must provide participants with an advance written notice of the 
amendment. The law does not, however, require employers to disclose the 
effect the amendment will have on participants. In fact, it does not 
even require employers to disclose that benefits will be reduced. All 
that present law requires is that employers provide participants with a 
summary or copy of the plan amendment. Consequently, current law can be 
satisfied with a summary buried in an obscure document. In some cases, 
workers have complained that their employers purposefully obscured 
benefit reductions. As a result, employee anger over cash balance plans 
has grown, resulting in several class action lawsuits being filed in 
just the last three years.
  The Pension Reduction Disclosure Act will strengthen existing law by 
requiring disclosure of information which will enable employees to 
determine the effects of benefit reductions. Specifically, before the 
plan is changed, each adversely-affected employee must receive 
illustrative examples showing the effects of the change on various 
employee groups. Moreover, each employee must have the opportunity to 
receive the benefit formulas for the old and new versions of the plan 
so that he or she can make specific comparisons of both plans. Then, 90 
days after the plan is changed, each adversely-affected employee must 
have, upon request, the opportunity to receive an individual benefit 
comparison prepared by the employer. This information will provide 
employees with the knowledge they need regarding pension benefit 
reductions, while imposing minimal burden on employers.
  The Pension Reduction Disclosure Act, is a modified version of 
legislation I introduced in March entitled The Pension Right to Know 
Act (S. 659). The new measure attempts to address concerns raised by 
employers concerning S. 659. For example, the new measure requires 
disclosure only for adversely-affected employees, not all employees, in 
order to meet employer concerns that S. 659 was too broad in its reach. 
Moreover, the new bill addresses employer concerns that it would be 
difficult to provide individual benefit comparisons before the 
amendment effective date due to a lack of individual data. Under the 
bill introduced today, individual benefit comparisons would be required 
no earlier than 90 days after the effective date, and then only upon 
request. (To enable employees to compare the old and new plans before 
the effective date, this bill provides illustrative examples and, upon 
request, the benefit formulas for the old and new plans.) Another 
change is that the new bill allows the Secretary of Treasury to develop 
alternative and simplified compliance methods where appropriate, as in 
cases where there is no fundamental change in the manner in which 
benefits are determined. Moreover, the Secretary may reduce the advance 
notice period from 45 days to 15 days in cases in which the 45-day 
requirement would be unduly burdensome because the amendment is 
contingent on a merger, acquisition, disposition or other similar 
transaction.

  I believe that such disclosure not only is in the best interest of 
employees, but also of the employer. Several class action lawsuits have 
been filed in the last three years challenging conversions to cash 
balance plans. These suits will likely cost millions of dollars in 
attorneys' fees, but with proper disclosure they might not have 
occurred.
  I want to acknowledge the work of the Clinton Administration in 
helping to craft this measure. The bill largely follows the outline of 
a proposal suggested by the Administration in July which was developed 
in collaboration with my staff. The Departments of Treasury and Labor 
have provided great insight and creativity in developing this bill, and 
I thank them for their assistance. Two of our distinguished House 
colleagues, Congressman Robert Matsui of California and Congressman 
Jerry Weller of Illinois, are introducing this legislation in the other 
chamber, so hopefully it will become law this year.
  In closing, let me repeat what I have said in the past. I take no 
position on the underlying merit of cash balance plans. Ours is a 
voluntary pension system, and companies must do what is right for them 
and their employees. But I feel strongly that companies must fully and 
comprehensibly inform their employees regarding whatever pension 
benefits the company offers. Companies have no right to misrepresent or 
obfuscate the projected benefit employees will receive under a cash 
balance plan or any other pension arrangement, notwithstanding the fact 
that some pension consultants have advocated cash balance plans for 
that very purpose.
  As I said upon introduction of my earlier legislation on this topic, 
it is time to let the sun shine on pension plan conversions. I urge the 
Senate to support this important measure.
  I ask unanimous consent that a copy and summary of the bill be 
included in the Record.

[[Page S12236]]

  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1708

       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 ``Pension Reduction Disclosure 
     Act of 1999''.

     SEC. 2. NOTICE REQUIRED FOR CERTAIN PLAN AMENDMENTS REDUCING 
                   FUTURE BENEFIT ACCRUALS.

       (a) General Notice Requirements.--Section 204(h) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1054(h)) is amended to read as follows:
       ``(h) Notice Requirements for Pension Plan Amendments 
     Reducing Accruals.--
       ``(1) In general.--If an applicable pension plan is amended 
     so as to provide for a significant reduction in the rate of 
     future benefit accrual of 1 or more applicable individuals, 
     the plan administrator shall--
       ``(A) not later than the 45th day before the effective date 
     of the amendment, provide the written notice described in 
     paragraph (2) to each applicable individual (and to each 
     employee organization representing applicable individuals), 
     and
       ``(B) in the case of a large applicable pension plan--
       ``(i) include in the notice under paragraph (2) the 
     additional information described in paragraph (3),
       ``(ii) make available the information described in 
     paragraph (4) in accordance with such paragraph, and
       ``(iii) provide individual benefit statements in accordance 
     with section 105(e).
       ``(2) Basic written notice.--The notice under paragraph (1) 
     shall include a summary of the important terms of the 
     amendment, including--
       ``(A) the effective date of the amendment,
       ``(B) a statement that the amendment is expected to 
     significantly reduce the rate of future benefit accrual,
       ``(C) a description of the classes of applicable 
     individuals to whom the amendment applies, and
       ``(D) a description of how the amendment significantly 
     reduces the rate of future benefit accrual.
       ``(3) Additional information to be provided by large 
     applicable pension plans.--
       ``(A) In general.--The information described in this 
     paragraph is--
       ``(i) a description of the plan's benefit formulas 
     (including formulas for determining early retirement 
     benefits) both before and after the amendment and an 
     explanation of the effect of the different formulas on 
     applicable individuals,
       ``(ii) an explanation of the circumstances (if any) under 
     which (for appropriate categories of applicable individuals) 
     the amendment is reasonably expected to result in a temporary 
     period after the effective date of the amendment during which 
     there are no or minimal accruals,
       ``(iii) illustrative examples of normal or early retirement 
     benefits meeting the requirements of subparagraph (B), and
       ``(iv) notice of each applicable individual's right to 
     request, and of the procedures for requesting, the 
     information required to be provided under paragraph (4) and 
     under section 105(e).
       ``(B) Illustrative examples.--Illustrative examples meet 
     the requirements of this subparagraph if such examples 
     illustrate the adverse effects of the plan amendment. Such 
     examples shall be prepared by the plan administrator in 
     accordance with regulations prescribed by the Secretary of 
     the Treasury, and such regulations shall require that the 
     examples--
       ``(i) reflect fairly the different categories of applicable 
     individuals who are similarly affected by the plan amendment 
     after consideration of all relevant factors,
       ``(ii) show a comparison of benefits for each such category 
     of applicable individuals under the plan (as in effect before 
     and after the effective date) at appropriate future dates, 
     and
       ``(iii) illustrate any temporary period described in 
     subparagraph (A)(ii).

     Such comparison shall be based on benefits in the form of a 
     life annuity and on actuarial assumptions each of which is 
     reasonable (and is so certified by an enrolled actuary) when 
     applied to all participants in the plan.
       ``(4) Supporting information relating to calculation of 
     benefits.--
       ``(A) In general.--Each individual who receives or who is 
     entitled to receive the information described in paragraph 
     (3) may (after so receiving or becoming so entitled) request 
     the plan administrator to provide the information described 
     in subparagraph (B).
       ``(B) Information.--The plan administrator shall, within 15 
     days after the date on which a request under subparagraph (A) 
     is made, provide to the individual information (including 
     benefit formulas and actuarial factors) which is sufficient--
       ``(i) to confirm the benefit comparisons in the 
     illustrative examples described in paragraph (3)(B), and
       ``(ii) to enable the individual to use the individual's own 
     personal information to make calculations of the individual's 
     own benefits which are similar to the calculations made in 
     such examples.

     Nothing in this subsection shall be construed to require the 
     plan administrator to provide to an individual such 
     individual's personal information for purposes of clause 
     (ii).
       ``(C) Time limitation on requests.--This paragraph shall 
     apply only to requests made during the 12-month period that 
     begins on the later of the effective date of the amendment to 
     which it relates or the date the notice described in 
     paragraph (2) is provided.
       ``(5) Sanctions.--
       ``(A) In general.--In the case of any egregious failure to 
     meet any requirement of this subsection with respect to any 
     plan amendment, the provisions of the applicable pension plan 
     shall be applied as if such plan amendment entitled all 
     applicable individuals to the greater of--
       ``(i) the benefits to which they would have been entitled 
     without regard to such amendment, or
       ``(ii) the benefits under the plan with regard to such 
     amendment.
       ``(B) Egregious failure.--For purposes of subparagraph (A), 
     there is an egregious failure to meet the requirements of 
     this subsection if such failure is--
       ``(i) an intentional failure (including any failure to 
     promptly provide the required notice or information after the 
     plan administrator discovers an unintentional failure to meet 
     the requirements of this subsection),
       ``(ii) a failure to provide most of the individuals with 
     most of the information they are entitled to receive under 
     this subsection, or
       ``(iii) a failure which is determined to be egregious under 
     regulations prescribed by the Secretary of the Treasury.
       ``(B) Excise tax.--For excise tax on failure to meet 
     requirements, see section 4980F of the Internal Revenue Code 
     of 1986.
       ``(6) Special rules.--
       ``(A) Plain language.--The notice required under paragraph 
     (1) shall be written in a manner calculated to be understood 
     by the average plan participant who is an applicable 
     individual.
       ``(B) Notice to designees.--The notice and information 
     required to be provided under this subsection may be provided 
     to a person designated, in writing, by the person to which it 
     would otherwise be provided.
       ``(7) Alternative methods of compliance with enhanced 
     disclosure requirements in certain cases.--The Secretary of 
     the Treasury shall prescribe such regulations as may be 
     necessary to carry out this subsection. The Secretary of the 
     Treasury may--
       ``(A) prescribe alternative or simplified methods of 
     complying with paragraphs (3) and (4) in situations where--
       ``(i) there is no fundamental change in the manner in which 
     the accrued benefit of an applicable individual is determined 
     under the plan, and
       ``(ii) such other methods are adequate to reasonably inform 
     plan participants who are applicable individuals of the 
     impact of the reductions,
       ``(B) reduce the advance notice period in paragraph (1)(A) 
     from 45 days to 15 days before the effective date of the 
     amendment for cases in which compliance with the 45-day 
     advance notice requirement would be unduly burdensome because 
     the amendment is contingent on a merger, acquisition, 
     disposition, or other similar transaction involving plan 
     participants who are applicable individuals or because 45 
     days advance notice is otherwise impracticable,
       ``(C) permit the comparison of benefits under paragraph 
     (3)(B)(i) to be based on a form of payment other than a life 
     annuity, or
       ``(D) specify actuarial assumptions that are deemed to be 
     reasonable for purposes of the benefit comparisons under 
     paragraph (3)(B)(i).
       ``(8) Applicable individual.--For purposes of this 
     subsection, the term `applicable individual' means, with 
     respect to any plan amendment--
       ``(A) each participant in the plan, and
       ``(B) each beneficiary who is an alternate payee (within 
     the meaning of section 206(d)(3)(K)) under a qualified 
     domestic relations order (within the meaning of section 
     206(d)(3)(B)(i)),

     whose future benefit accruals under the plan may reasonably 
     be expected to be reduced by such plan amendment.
       ``(9) Terms relating to plans.--For purposes of this 
     subsection--
       ``(A) Applicable pension plan.--The term `applicable 
     pension plan' means--
       ``(i) a defined benefit plan, or
       ``(ii) an individual account plan which is subject to the 
     funding standards of section 302.
       ``(B) Large applicable pension plan.--The term `large 
     applicable pension plan' means an applicable pension plan 
     which had 100 or more active participants as of the last day 
     of the plan year preceding the plan year in which the plan 
     amendment becomes effective.''
       (b) Individual Statements.--Section 105 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1025) is 
     amended by adding at the end the following new subsection:
       ``(e)(1) The plan administrator of a large applicable 
     pension plan shall furnish an individual statement described 
     in paragraph (2) to each individual--
       ``(A) who receives, or is entitled to receive, under 
     section 204(h) the information described in paragraph (3) 
     thereof from such administrator, and
       ``(B) who requests in writing such a statement from such 
     administrator.
       ``(2) The statement described in this paragraph is a 
     statement which provides information which is substantially 
     the same as the information in the illustrative examples

[[Page S12237]]

     described in section 204(h)(3)(B) but which is based on data 
     specific to the requesting individual and, if the individual 
     so requests, information as of 1 other future date not 
     included in such examples.
       ``(3) Paragraph (1) shall apply only to requests made 
     during the 12-month period that begins on the later of the 
     effective date of the amendment to which it relates or the 
     date the notice described in section 204(h)(2) is provided. 
     In no case shall an individual be entitled under this 
     subsection to receive more than one such statement with 
     respect to an amendment.
       ``(4) Notwithstanding section 502(c)(1), the statement 
     required by paragraph (1) shall be treated as timely 
     furnished if furnished on or before--
       ``(A) the date which is 90 days after the effective date of 
     the plan amendment to which is relates, or
       ``(B) such later date as may be permitted by the Secretary 
     of Labor.
       ``(5) Any term used in this subsection which is used in 
     section 204(h) shall have the meaning given such term by such 
     section.
       ``(6) A statement under this subsection shall not be taken 
     into account for purposes of subsection (b).''

     SEC. 3. EXCISE TAX ON FAILURE TO PROVIDE NOTICE BY DEFINED 
                   BENEFIT PLANS SIGNIFICANTLY REDUCING FUTURE 
                   BENEFIT ACCRUALS.

       (a) In General.--Chapter 43 of the Internal Revenue Code of 
     1986 (relating to qualified pension, etc., plans) is amended 
     by adding at the end the following new section:

     ``SEC. 4980F. FAILURE OF DEFINED BENEFIT PLANS REDUCING 
                   BENEFIT ACCRUALS TO SATISFY NOTICE 
                   REQUIREMENTS.

       ``(a) Imposition of Tax.--There is hereby imposed a tax on 
     the failure of a plan administrator of an applicable pension 
     plan to meet the requirements of subsection (e) with respect 
     to any applicable individual.
       ``(b) Amount of Tax.--
       ``(1) In general.--The amount of the tax imposed by 
     subsection (a) on any failure with respect to any applicable 
     individual shall be $100 for each day in the noncompliance 
     period with respect to such failure.
       ``(2) Noncompliance period.--For purposes of this section, 
     the term `noncompliance period' means, with respect to any 
     failure, the period beginning on the date the failure first 
     occurs and ending on the date the failure is corrected.
       ``(c) Limitations on Amount of Tax.--
       ``(1) Overall limitation for unintentional failures.--
       ``(A) In general.--In the case of failures that are due to 
     reasonable cause and not to willful neglect, the tax imposed 
     by subsection (a) for failures during the taxable year of the 
     employer (or, in the case of a multiemployer plan, the 
     taxable year of the trust forming part of the plan) shall not 
     exceed $500,000 ($1,000,000 in the case of a large applicable 
     pension plan).
       ``(B) Taxable years in the case of certain controlled 
     groups.--For purposes of this paragraph, if all persons who 
     are treated as a single employer for purposes of this section 
     do not have the same taxable year, the taxable years taken 
     into account shall be determined under principles similar to 
     the principles of section 1561.
       ``(2) Waiver by secretary.--In the case of a failure which 
     is due to reasonable cause and not to willful neglect, the 
     Secretary may waive part or all of the tax imposed by 
     subsection (a) to the extent that the payment of such tax 
     would be excessive relative to the failure involved.
       ``(d) Liability for Tax.--The following shall be liable for 
     the tax imposed by subsection (a):
       ``(1) In the case of a plan other than a multiemployer 
     plan, the employer.
       ``(2) In the case of a multiemployer plan, the plan.
       ``(e) Notice Requirements for Pension Plan Amendments 
     Reducing Accruals.--
       ``(1) In general.--If an applicable pension plan is amended 
     so as to provide for a significant reduction in the rate of 
     future benefit accrual of 1 or more applicable individuals, 
     the plan administrator shall--
       ``(A) not later than the 45th day before the effective date 
     of the amendment, provide the written notice described in 
     paragraph (2) to each applicable individual (and to each 
     employee organization (as defined in section 3(4) of the 
     Employee Retirement Income Security Act of 1974) representing 
     applicable individuals), and
       ``(B) in the case of a large applicable pension plan--
       ``(i) include in the notice under paragraph (2) the 
     additional information described in paragraph (3), and
       ``(ii) make available the information described in 
     paragraph (4) in accordance with such paragraph.
       ``(2) Basic written notice.--The notice under paragraph (1) 
     shall include a summary of the important terms of the 
     amendment, including--
       ``(A) the effective date of the amendment,
       ``(B) a statement that the amendment is expected to 
     significantly reduce the rate of future benefit accrual,
       ``(C) a description of the classes of applicable 
     individuals to whom the amendment applies, and
       ``(D) a description of how the amendment significantly 
     reduces the rate of future benefit accrual.
       ``(3) Additional information to be provided by large 
     applicable pension plans.--
       ``(A) In general.--The information described in this 
     paragraph is--
       ``(i) a description of the plan's benefit formulas 
     (including formulas for determining early retirement 
     benefits) both before and after the amendment and an 
     explanation of the effect of the different formulas on 
     applicable individuals,
       ``(ii) an explanation of the circumstances (if any) under 
     which (for appropriate categories of applicable individuals) 
     the amendment is reasonably expected to result in a temporary 
     period after the effective date of the amendment during which 
     there are no or minimal accruals,
       ``(iii) illustrative examples of normal or early retirement 
     benefits meeting the requirements of subparagraph (B), and
       ``(iv) notice of each applicable individual's right to 
     request, and of the procedures for requesting, the 
     information required to be provided under paragraph (4) and 
     under section 105(e) of Employee Retirement Income Security 
     Act of 1974.
       ``(B) Illustrative examples.--Illustrative examples meet 
     the requirements of this subparagraph if such examples 
     illustrate the adverse effects of the plan amendment. Such 
     examples shall be prepared by the plan administrator in 
     accordance with regulations prescribed by the Secretary, and 
     such regulations shall require that the examples--
       ``(i) reflect fairly the different categories of applicable 
     individuals who are similarly affected by the plan amendment 
     after consideration of all relevant factors,
       ``(ii) show a comparison of benefits for each such category 
     of applicable individuals under the plan (as in effect before 
     and after the effective date) at appropriate future dates, 
     and
       ``(iii) illustrate any temporary period described in 
     subparagraph (A)(ii).

     Such comparison shall be based on benefits in the form of a 
     life annuity and on actuarial assumptions each of which is 
     reasonable (and is so certified by an enrolled actuary) when 
     applied to all participants in the plan.
       ``(4) Supporting information relating to calculation of 
     benefits.--
       ``(A) In general.--Each individual who receives or who is 
     entitled to receive the information described in paragraph 
     (3) may (after so receiving or becoming so entitled) request 
     the plan administrator to provide the information described 
     in subparagraph (B).
       ``(B) Information.--The plan administrator shall, within 15 
     days after the date on which a request under subparagraph (A) 
     is made, provide to the individual information (including 
     benefit formulas and actuarial factors) which is sufficient--
       ``(i) to confirm the benefit comparisons in the 
     illustrative examples described in paragraph (3)(B), and
       ``(ii) to enable the individual to use the individual's own 
     personal information to make calculations of the individual's 
     own benefits which are similar to the calculations made in 
     such examples.

     Nothing in this subsection shall be construed to require the 
     plan administrator to provide to an individual such 
     individual's personal information for purposes of clause 
     (ii).
       ``(C) Time limitation on requests.--This paragraph shall 
     apply only to requests made during the 12-month period that 
     begins on the later of the effective date of the amendment to 
     which it relates or the date the notice described in 
     paragraph (2) is provided.
       ``(5) Special rules.--
       ``(A) Plain language.--The notice required under paragraph 
     (1) shall be written in a manner calculated to be understood 
     by the average plan participant who is an applicable 
     individual.
       ``(B) Notice to designees.--The notice or information 
     required to be provided under this subsection may be provided 
     to a person designated, in writing, by the person to which it 
     would otherwise be provided.
       ``(6) Alternative methods of compliance with enhanced 
     disclosure requirements in certain cases.--The Secretary 
     shall prescribe such regulations as may be necessary to carry 
     out this subsection. The Secretary may--
       ``(A) prescribe alternative or simplified methods of 
     complying with paragraphs (3) and (4) in situations where--
       ``(i) there is no fundamental change in the manner in which 
     the accrued benefit of an applicable individual is determined 
     under the plan, and
       ``(ii) such other methods are adequate to reasonably inform 
     plan participants who are applicable individuals of the 
     impact of the reductions,
       ``(B) reduce the advance notice period in paragraph (1)(A) 
     from 45 days to 15 days before the effective date of the 
     amendment for cases in which compliance with the 45-day 
     advance notice requirement would be unduly burdensome because 
     the amendment is contingent on a merger, acquisition, 
     disposition, or other similar transaction involving plan 
     participants who are applicable individuals or because 45 
     days advance notice is otherwise impracticable,
       ``(C) permit the comparison of benefits under paragraph 
     (3)(B)(i) to be based on a form of payment other than a life 
     annuity, or
       ``(D) specify actuarial assumptions that are deemed to be 
     reasonable for purposes of the benefit comparisons under 
     paragraph (3)(B)(i).
       ``(7) Applicable individual.--For purposes of this 
     subsection, the term `applicable individual' means, with 
     respect to any plan amendment--
       ``(A) each participant in the plan, and

[[Page S12238]]

       ``(B) each beneficiary who is an alternate payee (within 
     the meaning of section 414(p)(8)) under a qualified domestic 
     relations order (within the meaning of section 414(p)(1)),

     whose future benefit accruals under the plan may reasonably 
     be expected to be reduced by such plan amendment.
       ``(8) Terms relating to plans.--For purposes of this 
     subsection--
       ``(A) Applicable pension plan.--The term `applicable 
     pension plan' means--
       ``(i) a defined benefit plan, or
       ``(ii) an individual account plan which is subject to the 
     funding standards of section 412.

     Such term shall not include any governmental plan (within the 
     meaning of section 414(d)) or any church plan (within the 
     meaning of section 414(e)) with respect to which the election 
     provided by section 410(d) has not been made.
       ``(B) Large applicable pension plan.--The term `large 
     applicable pension plan' means an applicable pension plan 
     which had 100 or more active participants as of the last day 
     of the plan year preceding the plan year in which the plan 
     amendment becomes effective.''
       (b) Conforming Amendment.--The table of sections for 
     chapter 43 of such Code is amended by adding at the end the 
     following new item:

``Sec. 4980F. Failure of defined benefit plans reducing benefit 
              accruals to satisfy notice requirements.''

     SEC. 4. EFFECTIVE DATES.

       (a) In General.--The amendments made by this Act shall 
     apply to plan amendments taking effect after the date of the 
     enactment of this Act.
       (b) Special Rules.--
       (1) In general.--The amendments made by this Act shall not 
     apply to any plan amendment for which there was written 
     notice before July 12, 1999, which was reasonably expected to 
     notify substantially all of the plan participants or their 
     representatives.
       (2) Transition.--Until such time as the Secretary of the 
     Treasury issues regulations under sections 4980F(e)(3) and 
     (4) of the Internal Revenue Code of 1986 and section 
     204(h)(3) and (4) of the Employee Retirement Income Security 
     Act of 1974 (as added by the amendments made by this 
     section), a plan shall be treated as meeting the requirements 
     of such sections if it makes a good faith effort to comply 
     with such requirements.
       (3) Notice and information not required to be furnished 
     before 120th day after enactment.--The period for providing 
     any notice or information required by the amendments made by 
     this section shall not end before the date which is 120 days 
     after the date of the enactment of this Act.
                                  ____


              The Pension Reduction Disclosure Act of 1999

       Present Law.--Under present law, when an employer amends a 
     defined benefit pension plan in a manner which significantly 
     reduces the rate of future benefit accrual, the employer must 
     provide participants with an advance written notice of the 
     amendment. The law does not, however, require employers to 
     disclose the effect the amendment will have on participants.


     summary of provisions of the pension reduction disclosure act

       Notice Requirements for Pension Plan Amendments Reducing 
     Future Benefit Accruals.--At least 45 days before the 
     effective date of a pension plan amendment that reduces the 
     rate of future benefit accruals, employees adversely affected 
     by the amendment must receive notice of a reduction, as 
     described below.
       Basic Notice.--Pension plans with fewer than 100 
     participants must provide a basic written notice including: 
     the effective date of the amendment; a statement that the 
     amendment is expected to significantly reduce the rate of 
     future benefit accrual; a description of the classes of 
     applicable individuals to whom the amendment applies; and a 
     description of how the amendment significantly reduces the 
     rate of future benefit accrual.
       Enhanced Notice.--Pension plans with 100 or more 
     participants must provide the following information in 
     addition to the basic written notice.
       A description of the plan's benefit formulas before and 
     after the amendments, and an explanation of the effects of 
     the different formulas on participants;
       An explanation of the circumstances under which any 
     ``wearaway'' or other temporary suspension of benefit 
     accruals may occur;
       Illustrative examples showing the adverse effects of the 
     plan amendment by comparing expected benefit accruals for 
     various categories of participants (e.g., participants of 
     similar age and years of service) under the old and new 
     versions of the plan.
       Alternative methods of compliance with enhanced notice in 
     certain cases. The Secretary of the Treasury may prescribe 
     alternative or simplified methods of compliance with the 
     enhanced notice requirements in situations where there is no 
     fundamental change in the manner in which benefits are 
     determined (e.g., where the benefit formula is reduced from 
     1.25 percent of compensation to 1.0 percent of compensation). 
     The Secretary may also reduce the advance notice period from 
     45 days to 15 days for cases in which compliance with the 45-
     day requirement would be unduly burdensome because the 
     amendment is contingent on a merger, acquisition, 
     disposition, or other similar transaction or because 45 days 
     advance notice is otherwise impracticable.
       In the case of plans with 100 or more participants, the 
     plan must provide adversely-affected participants, within 15 
     days of request, the specific benefit formulas and actuarial 
     factors used in the preparation of the illustrative examples. 
     The information must be sufficient to confirm the benefit 
     comparisons provided in the illustrative examples and to 
     enable participants to make calculations of their own 
     benefits under the old and new versions of the plan that are 
     similar to the calculations made in the examples.
       Individual Benefit Statements.--In the case of plans with 
     100 or more participants, an adversely-affected participant 
     may request and receive an individual benefit statement 
     providing information which is substantially the same as the 
     information in the illustrative examples described above, but 
     which is based on data specific to the requesting individual. 
     If the individual so requests, the individual statement must 
     reflect one other future date not included in the examples. 
     As with current law regarding accrued benefit calculations, 
     individual statements must be provided within 30 days of 
     request. The earliest required date for providing individual 
     statements shall be 90 days after the amendment effective 
     date.


                      sanctions for noncompliance

       Egregious Failure to Supply Notice.--Employers failing to 
     provide most of the required notice information to most 
     affected participants, or intentionally failing to provide 
     notice information to any affected participant, shall provide 
     the greater of the benefits available under the old and new 
     versions of the plan and shall also be subject to an excise 
     tax of $100 per day for every day of the noncompliance 
     period.
       Nonegregious Failure to Supply Notice.--Employers failing 
     to provide the required notice information, but not in the 
     egregious manner described above, shall be subject to an 
     excise tax of $100 per day for every day of the noncompliance 
     period.
       Maximum Excise Tax Where Failure Due to Reasonable Cause.--
     In a case where the failure was due to reasonable cause and 
     not willful neglect, the excise tax is limited to $1 million 
     for plans with 100 or more participants and $500,000 for 
     plans with fewer than 100 participants.

 Mr. JEFFORDS. Mr. President, I am pleased to join Senators 
Moynihan, Leahy, Robb, Kerrey, Rockefeller and Grams of Minnesota in 
the introduction of the Pension Reduction Disclosure Act. This bill 
greatly expands current law and will provide improved disclosure of the 
impact of the conversion of a traditional defined benefit pension plan 
to a cash balance or other hybrid pension plan. We believe that current 
law protections are insufficient to protect the interests of plan 
participants. The Pension Reduction Disclosure Act is an important 
first step in improving worker pension protections. I am also pleased 
that the President supports this bill.
  Appropriate disclosure for cash balance pension plans is a serious 
public policy issue affecting the retirement benefits of millions of 
Americans. At a minimum, employees should have meaningful notice when 
their employer plans to reduce pension benefits in the switch from a 
traditional to a cash balance plan.
  This bill does that.
  First, employers have not always been candid with employees about 
what the changes in pension plans will mean for the employee's 
retirement. Our bill will require that they spell it out in black and 
white, and do so in language that anyone who is not an actuary or tax 
attorney can understand.
  Second, plan sponsors will have to provide this information in a 
timely manner, so that employees can engage their employer and seek 
changes if they choose to do so. As we have seen at IBM and elsewhere, 
companies can misjudge the impact of these changes on their workforce.
  Third, plan sponsors will be required to provide their employees with 
specifics about the effect that the change will have on their 
retirement benefits so that individuals can understand the financial 
impact that the conversion will have on their pension. Once we pass 
this bill, my guess is that employers will think long and hard about 
what changes they want to make to their pension plans.
  Long-serving, loyal employees should not wake up to find their 
pension benefits slashed without even the chance to confront their 
employer. We can't expect people to save for retirement if the sand is 
forever shifting under their feet.
  This bill addresses but one part of the conversion issue. But I think 
it deserves widespread bipartisan support. I believe that there are 
more issues at stake for workers, such as my own concerns regarding the 
pension benefit

[[Page S12239]]

``wear away''. However, the Pension Reduction Disclosure Act is a good 
first step we ought to take to address the legitimate concerns that 
have been raised about these plans.
  We don't have a lot of time, but I hope we can send this bill to the 
President for his signature before we adjourn this fall.
  Mr. LEAHY. Mr. President, I am pleased to join Senator Moynihan and 
Senator Jeffords as a cosponsor of the Pension Reduction Disclosure Act 
of 1999. I believe this bill is a good first step to providing American 
workers with the information they deserve to know about changes to 
their pensions. President Clinton has endorsed our legislation and is 
ready to sign it into law.
  As the controversy surrounding IBM's decision to convert its 
traditional pension plan to a cash balance plan taught many Vermonters, 
Congress needs to revise our laws to require greater disclosure of 
pension changes. When IBM first announced its pension switch, many 
Vermont IBMers told me that they did not have enough information to 
judge the new plan's impact on their pensions. They discovered that 
current Federal law does not even require an employer to explain to its 
employees how any future pension benefits will be reduced. This is not 
right.
  Unfortunately, Vermont IBMers are not alone. At least 325 companies, 
with more than $330 billion in pension-defined benefit assets, have 
adopted cash-balance plans in recent years. This phenomenon is the 
biggest development in the pension world in years. But, as we all know 
now thanks to the tireless efforts of IBMers in Vermont and elsewhere, 
there is a dark side to this corporate trend: the fact that many 
experienced workers face deep cuts in their promised pensions when 
their company switches to a cash-balance plan.
  The Pension Reduction Disclosure Act would require all employers, 
regardless of the size of their pension plan, to notify their employees 
of pension plan changes that would reduce the future benefit accrual 
rate at least 45 days in advance of the change. In addition, this 
legislation would require employers to explain any differences in 
future accrual rates between the old and new plan in a clear and 
meaningful fashion, by providing employees with detailed examples 
showing the difference between the old and new plans.
  This bill complements the Pension Right to Know Act, which Senator 
Moynihan and I introduced earlier in the year. Our earlier bill would 
require employers to provide employees with individualized comparisons 
of future benefits under the old and new plans 15 days prior to the 
conversion for pension plans covering 1000 or more employees. Our 
legislation today also complements the Older Workers Pension Protection 
Act, S. 1600, which Senator Harkin, Senator Jeffords and I introduced 
last month to prevent the wear away of an employee's promised pension 
benefits after a cash balance plan conversion.
  Now is the time for Congress to act to ensure that all employers 
fully disclose the negative effects of their pension plan changes. 
Employees have a right to know how their futures will be affected by a 
company's decision to change its pension plan.
                                 ______
                                 
      By Mr. KYL (for himself, Mr. McCain, Mrs. Hutchison, Mr. 
        Domenici, Mr. Bingaman, and Mrs. Feinstein):
  S. 1709. A bill to provide Federal reimbursement for indirect costs 
relating to the incarceration of illegal aliens and for emergency 
health services furnished to undocumented aliens; to the Committee on 
the Judiciary.


   the state criminal alien assistance program ii and local medical 
                      emergency reimbursement act

  Mr. KYL. Mr. President, I rise today to introduce the State Criminal 
Alien Assistance Program II and Local Medical Emergency Reimbursement 
Act. Senators McCain, Hutchison, Domenici, Bingaman, and Feinstein join 
me.
  Border counties and other jurisdictions throughout the Southwest are 
incurring overwhelming costs to process and incarcerate illegal 
immigrants who commit crimes. Hospitals are also bearing steep costs to 
treat illegal immigrants for medical emergencies.
  Regarding the first issue, it should be pointed out that, when states 
and localities do not have the resources to deal with criminal illegal 
immigrants, disasters can happen. Just last week, it was discovered 
that illegal immigrants who, in some cases, had committed serious 
crimes in Maricopa County, Arizona--including first degree murder in 
one of the cases--were permitted to post bond to the county, were then 
released to the Immigration and Naturalization Service, and were then 
allowed to return to their home country. Needless to say, those cases 
did not go to trial. Because the alleged criminal aliens never returned 
for their court date, justice was not served.
  I continue to work toward better cooperation between the INS and 
local criminal justice systems, to make sure that illegal immigrants 
who are charged with crimes prosecuted under state law--and murder is 
prosecuted under state law--are held in Arizona. That means before, 
during, and after trial. It means, if the person is convicted, serving 
out his time in Arizona.
  I will continue to work toward full funding for the federal program 
Congress created in 1995 to reimburse states and localities for the 
costs of incarcerating criminal illegal immigrants, the State Criminal 
Alien Assistance Program (SCAAP). Incarceration of criminal illegal 
immigrants costs state and local governments over $1 billion a year. 
Last year's Commerce-Justice-State Appropriations bill provided $585 
million for the program, and reimbursed states approximately 39 cents 
on the dollar for such costs. I will work to increase federal funding 
for SCAAP, and will work to ensure that the FY 2000 C-J-S funding bill 
maintains, at the very least, the FY 1999 funding level of $585 
million.
  It is my hope that the bill I am introducing today will further 
enhance the ability of states and localities to prevent the release of 
criminal illegal immigrants by giving them the resources they need, not 
only to incarcerate but to process and sentence such individuals. My 
bill creates SCAAP II and provides an additional authorization of $200 
million per year between 2001 and 2004 to states and localities for 
such expenditures. When illegal immigrants commit crimes and are then 
caught, they drain the budgets of a locality's sheriff, justice court, 
county attorney, clerk of the court, superior and juvenile court, and 
juvenile detention departments, as well as using up a county's indigent 
defense budget. And, even though illegal immigration is a federal 
responsibility, states and local jurisdictions all along the 
southwestern border have incurred 100 percent of specifically 
processing-related costs to date. This bill will change that.
  Unfortunately, we do not yet know the full financial burden the 
states and localities are bearing. I am hopeful that the FY 2000 
Commerce-Justice-State Appropriations bill conference report will 
include funding for a study that will lay out realistic estimates of 
these costs.
  What is known is that such expenditures comprise approximately 39 
percent of the aforementioned budgets of just one Arizona county, Santa 
Cruz, with a population of just 36,000 residents. As a recent report 
conducted by the University of Arizona detailed, ``such illegal entry 
pressures place inequitable demands on the resources and taxpayers of 
Santa Cruz County.''
  Other counties throughout the Southwest are in the same boat. 
Maricopa County, Arizona, for example, incurs costs of $9 million to 
incarcerate illegal criminal immigrants. It is unclear what its costs 
are to process and sentence such aliens. Cochise County incurs costs of 
approximately $406,000 per year to incarcerate criminal illegal 
immigrants and, therefore, must also incur significant costs to process 
and sentence these individuals. Providing resources to states and 
localities with such burdens will help prevent the release of criminals 
onto our nation's streets, and is clearly the financial responsibility 
of the federal government.
  The second issue addressed by this bill is the burden borne by 
hospitals in southwestern states. The federal government is obligated 
to fully reimburse states, localities, and hospitals for the emergency 
medical treatment of illegal immigrants.
  According to a preliminary Congressional Budget Office estimate 
provided two years ago, the total annual cost to treat illegal 
immigrants for medical emergencies is roughly $2.8 billion a

[[Page S12240]]

year. It is roughly estimated that the federal government reimburses 
states for approximately half of those costs. That means states must 
pay the remaining $1.4 billion. The state of Arizona estimates that it 
incurs unreimbursed costs of $20 million annually to treat undocumented 
immigrants on an emergency basis.
  This legislation will provide states, localities, and hospitals an 
additional $200 million per year to help absorb the costs of adherence 
to federal law, under which all individuals, regardless of immigration 
status or ability to pay, must be provided with medical treatment in a 
medical emergency. I have heard from individual doctors in Arizona, and 
hospitals as well, conveying their frustration in the face of these 
daunting costs.
  Mr. President, I hope we can address these very pressing issues in 
the coming months, and that Members will consider joining my cosponsors 
and me in support of this bill.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1709

       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 ``State Criminal Alien 
     Assistance Program II and Local Medical Emergency 
     Reimbursement Act''.

          TITLE I--STATE CRIMINAL ALIEN ASSISTANCE PROGRAM II

     SEC. 101. SHORT TITLE.

       This Act may be cited as the ``State Criminal Alien 
     Assistance Program II Act of 1999''.

     SEC. 102. FINDINGS AND PURPOSES.

       (a) Findings.--Congress makes the following findings:
       (1) Federal policies and strategies aimed at curbing 
     illegal immigration and criminal alien activity implemented 
     along our Nation's southwest border influence the number of 
     crossings, especially their location.
       (2) States and local governments were reimbursed 
     approximately 60 percent of the costs of the incarceration of 
     criminal aliens in fiscal year 1996 when only 90 
     jurisdictions applied for such reimbursement. In subsequent 
     years, the number of local jurisdictions receiving 
     reimbursement has increased. For fiscal year 1999, 280 local 
     jurisdictions applied, and reimbursement amounted to only 40 
     percent of the costs incurred by those jurisdictions.
       (3) Certain counties, often with a small taxpayer base, 
     located on or near the border across from sometimes highly 
     populated areas of Mexico, suffer a substantially 
     disproportionate share of the impact of criminal illegal 
     aliens on its law enforcement and criminal justice systems.
       (4) A University of Arizona study released in January 1998 
     reported that at least 2 of the 4 counties located on 
     Arizona's border of Mexico, Santa Cruz, and Cochise Counties, 
     are burdened with this problem--
       (A) for example, in 1998, Santa Cruz County had 12.7 
     percent of Arizona's border population but 50 percent of 
     alien crossings and 32.5 percent of illegal alien 
     apprehensions;
       (B) for fiscal year 1998, it is estimated that, of its 
     total criminal justice budget of 5,000,000 ($5,033,000), 
     Santa Cruz County spent $1,900,000 (39 percent) to process 
     criminal illegal aliens, of which over half was not 
     reimbursed by Federal monies; and
       (C) Santa Cruz County has not obtained relief from this 
     burden, despite repeated appeals to Federal and State 
     officials.
       (5) In the State of Texas, the border counties of Cameron, 
     Dimmit, El Paso, Hidalgo, Kinney, Val Verde, and Webb bore 
     the unreimbursed costs of apprehension, prosecution, indigent 
     defense, and other related services for criminal aliens who 
     served more than 142,000 days in county jails.
       (6) Throughout Texas nonborder counties bore similar 
     unreimbursed costs for apprehension, prosecution, indigent 
     defense, and other related services for criminal aliens who 
     served more than 1,000,000 days in county jails.
       (7) The State of Texas has incurred substantial additional 
     unreimbursed costs for State law enforcement efforts made 
     necessary by the presence of criminal illegal aliens.
       (8) The Federal Government should reimburse States and 
     units of local government for the related costs incurred by 
     the State for the imprisonment of any illegal alien.
       (b) Purpose.--The purpose of this title is--
       (1) to assist States and local communities by providing 
     financial assistance for expenditures for illegal juvenile 
     aliens, and for related costs to States and units of local 
     government that suffer a substantially disproportionate share 
     of the impact of criminal illegal aliens on their law 
     enforcement and criminal justice systems; and
       (2) to ensure equitable treatment for those States and 
     local governments that are affected by Federal policies and 
     strategies aimed at curbing illegal immigration and criminal 
     alien activity implemented on the southwest border.

     SEC. 103. REIMBURSEMENT OF STATES FOR INDIRECT COSTS RELATING 
                   TO THE INCARCERATION OF ILLEGAL ALIENS.

       Section 501 of the Immigration Reform and Control Act of 
     1986 (8 U.S.C. 1365) is amended--
       (1) in subsection (a), by striking ``for'' and all that 
     follows through ``State'' and inserting ``for--
       ``(1) the costs incurred by the State for the imprisonment 
     of any illegal alien or Cuban national who is convicted of a 
     felony by such State; and
       ``(2) the indirect costs related to the imprisonment 
     described in paragraph (1).'';
       (2) by striking subsection (c) and inserting the following:
       ``(c) Indirect Costs Defined.--In subsection (a), the term 
     `indirect costs' includes--
       ``(1) court costs, county attorney costs, and criminal 
     proceedings expenditures that do not involve going to trial;
       ``(2) indigent defense; and
       ``(3) unsupervised probation costs.''; and
       (3) by amending subsection (d) to read as follows:
       ``(d) Authorization of appropriations.--There are 
     authorized to be appropriated $200,000,000 to carry out 
     subsection (a)(2) for each of the fiscal years 2001 through 
     2004.''.

     SEC. 104. REIMBURSEMENT OF STATES FOR COSTS OF INCARCERATING 
                   JUVENILE ALIENS.

       (a) In General.--Section 501 of the Immigration Reform and 
     Control Act of 1986 (8 U.S.C. 1365), as amended by section 
     103 of this Act, is further amended--
       (1) in subsection (a)(1), by inserting ``or illegal 
     juvenile alien who has been adjudicated delinquent or 
     committed to a juvenile correctional facility by such State 
     or locality'' before the semicolon;
       (2) in subsection (b), by inserting ``(including any 
     juvenile alien who has been adjudicated delinquent or has 
     been committed to a correctional facility)'' before ``who is 
     in the United States unlawfully''; and
       (3) by adding at the end the following:
       ``(f) Juvenile Alien Defined.--In this section, the term 
     `juvenile alien' means an alien (as defined in section 
     101(a)(3) of the Immigration and Nationality Act) who has 
     been adjudicated delinquent or committed to a correctional 
     facility by a State or locality as a juvenile offender.''.
       (b) Annual Report.--Section 332 of the Illegal Immigration 
     Reform and Immigrant Responsibility Act of 1996 (8 U.S.C. 
     1366) is amended--
       (1) by striking ``and'' at the end of paragraph (3);
       (2) by striking the period at the end of paragraph (4) and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(5) the number of illegal juvenile aliens (as defined in 
     section 501(f) of the Immigration Reform and Control Act) 
     that are committed to State or local juvenile correctional 
     facilities, including the type of offense committed by each 
     juvenile.''.
       (c) Conforming Amendment.--Section 241(i)(3)(B) of the 
     Immigration and Nationality Act (8 U.S.C. 1231(i)(3)(B)) is 
     amended--
       (1) by striking ``or'' at the end of clause (ii);
       (2) by striking the period at the end of clause (iii) and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(iv) is a juvenile alien with respect to whom section 501 
     of the Immigration Reform and Control Act of 1986 applies.''.

     SEC. 105. REIMBURSEMENT OF STATES BORDERING MEXICO OR CANADA.

       Section 501 of the Immigration Reform and Control Act of 
     1986 (8 U.S.C. 1365), as amended by sections 103 and 104 of 
     this Act, is further amended by adding at the end the 
     following new subsection:
       ``(g) Manner of Allotment of Reimbursements.--
     Reimbursements under this section shall be allotted in a 
     manner that takes into account special consideration for any 
     State that--
       ``(1) shares a border with Mexico or Canada; or
       ``(2) includes within the State an area in which a large 
     number of undocumented aliens reside relative to the general 
     population of the area.''.

 TITLE II--REIMBURSEMENT OF STATES AND LOCALITIES FOR EMERGENCY HEALTH 
                    SERVICES TO UNDOCUMENTED ALIENS.

     SEC. 201. AUTHORIZATION OF ADDITIONAL FEDERAL REIMBURSEMENT 
                   OF EMERGENCY HEALTH SERVICES FURNISHED TO 
                   UNDOCUMENTED ALIENS.

       (a) Total Amount Available for Allotment.--To the extent of 
     available appropriations under subsection (e), there are 
     available for allotments under this section for each of 
     fiscal years 2002 through 2005, $200,000,000 for payments to 
     certain States under this section.
       (b) State Allotment Amount.--
       (1) In general.--The Secretary shall compute an allotment 
     for each fiscal year beginning with fiscal year 2001 and 
     ending with fiscal year 2004 for each of the 17 States with 
     the highest number of undocumented aliens. The amount of such 
     allotment for each such State for a fiscal year shall bear 
     the same ratio to the total amount available for allotments 
     under subsection (a) for the fiscal year as the ratio of the 
     number of undocumented aliens in the State in the fiscal year 
     bears to the total of such numbers for all such States for 
     such fiscal year. The amount of allotment to a State provided 
     under this paragraph for a fiscal year that is not paid out

[[Page S12241]]

     under subsection (c) shall be available for payment during 
     the subsequent fiscal year.
       (2) Determination.--For purposes of paragraph (1), the 
     number of undocumented aliens in a State under this section 
     shall be determined based on estimates of the resident 
     illegal alien population residing in each State prepared by 
     the Statistics Division of the Immigration and Naturalization 
     Service as of October 1992 (or as of such later date if such 
     date is at least 1 year before the beginning of the fiscal 
     year involved).
       (c) Use of Funds.--
       (1) In general.--From the allotments made under subsection 
     (b) for a fiscal year, the Secretary shall pay to each State 
     amounts described in a State plan, submitted to the 
     Secretary, under which the amounts so allotted will be paid 
     to local governments, hospitals, and related providers of 
     emergency health services to undocumented aliens in a manner 
     that--
       (A) takes into account--
       (i) each eligible local government's, hospital's or related 
     provider's payments under the State plan approved under title 
     XIX of the Social Security Act for emergency medical services 
     described in section 1903(v)(2)(A) of such Act (42 U.S.C. 
     1396b(v)(2)(A)) for such fiscal year; or
       (ii) an appropriate alternative proxy for measuring the 
     volume of emergency health services provided to undocumented 
     aliens by eligible local governments, hospitals, and related 
     providers for such fiscal year; and
       (B) provides special consideration for local governments, 
     hospitals, and related providers located in--
       (i) a county that shares a border with Mexico or Canada; or
       (ii) an area in which a large number of undocumented aliens 
     reside relative to the general population of the area.
       (2) Special rules.--For purposes of this subsection:
       (A) A provider shall be considered to be ``related'' to a 
     hospital to the extent that the provider furnishes emergency 
     health services to an individual for whom the hospital also 
     furnishes emergency health services.
       (B) Amounts paid under this subsection shall not duplicate 
     payments made under title XIX of the Social Security Act for 
     the provision of emergency medical services described in 
     section 1903(v)(2)(A) of such Act (42 U.S.C. 1396b(v)(2)(A)).
       (d) Definitions.--In this section:
       (1) Hospital.--The term ``hospital'' has the meaning given 
     such term in section 1861(e) of the Social Security Act (42 
     U.S.C. 1395x(e).
       (2) Provider.--The term ``provider'' includes a physician, 
     another health care professional, and an entity that 
     furnishes emergency ambulance services.
       (3) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (4) State.--The term ``State'' means the 50 States and the 
     District of Columbia.
       (e) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $200,000,000 for 
     each of fiscal years 2001 through 2005.

  Mr. McCain. Mr. President, I rise today in support of legislation 
Senator Kyl and I are introducing with a number of our border-state 
colleagues to provide appropriate Federal reimbursement to states and 
localities whose budgets are disproportionately affected by the costs 
associated with illegal immigration. The premise of our bill, and of 
current law governing this type of Federal reimbursement to the states, 
is that controlling illegal immigration is principally the 
responsibility of the Federal government, not the states.
  Our legislation would expand the amount and scope of Federal funding 
to the states for incarceration and medical costs that arise from the 
detention or treatment of illegal immigrants. Such funding currently 
flows to all 50 states, the District of Columbia, and two U.S. 
territories. Although our bill gives special consideration to border 
States and States with unusually high concentrations of illegal aliens 
in residence, it would benefit communities across the Nation. It 
deserves the Senate's prompt consideration and approval.
  Many of my colleagues are probably not aware that the Federal 
government, under the existing State Criminal Alien Assistance Program 
(SCAAP), reimbursed states and counties burdened by illegal immigration 
for less than 40 percent of eligible alien incarceration costs in 
Fiscal Year 1998. Border counties estimate that more than 25 percent of 
their criminal justice budgets are spent processing criminal aliens. In 
my State of Arizona, Santa Cruz County last year spent 39 percent of 
its total criminal justice budget to process criminal illegal aliens, 
of which over half was not reimbursed by the Federal government. In its 
last budget cycle, New Mexico's tiny Luna County spent $375,000 on 
immigrant detention costs but received only $32,000 from the Federal 
government to offset jail expenses. Overall, SCAAP reimbursed states 
and counties along the border for only 33.7 percent of the cost of 
incarcerating illegal aliens in FY 1997 and 39.9 percent in FY 1998.
  The State of California spent nearly $600 million last year to keep 
criminal aliens behind bars, but was reimbursed for only $183 million 
of those expenses. In Texas, prosecution of drug and immigration crime, 
principally in the form of illegal entry into the United States, 
accounted for an astonishing 70 percent of criminal filings during 
fiscal 1998. That figure represents a one-year increase of 58 percent 
in the number of immigration cases brought before the courts, an 
increase that was not matched by Federal reimbursement for associated 
legal expenses and incarceration costs to the state and its counties.
  Earlier this year, the House voted to fund SCAAP at $585 million for 
FY 2000. This level is insufficient, but would at least roughly 
maintain existing levels of Federal support to states and localities 
for alien incarceration costs. Astonishingly, the Senate, in its 
version of the fiscal year 2000 Commerce, Justice, State, and the 
Judiciary Appropriations bill, proposed to slash SCAAP funding by 83 
percent, to only $100 million, for reasons that escape me. In the words 
of the U.S./Mexico Border Counties Coalition, ``Given this program's 
history of not meeting its obligations to state and local governments 
even at higher levels of funding, this latest action will in essence 
leave state and local taxpayers to foot the Federal government's bill 
for the incarceration of criminal undocumented immigrants.''
  A June 21, 1999, letter from the Governors of Arizona, California, 
New York, New Jersey, and Illinois to members of the United States 
Senate makes the same point: ``Control of the nation's borders is under 
the exclusive jurisdiction of the Federal government, yet State and 
local governments bear the brunt of the costs when the Federal 
government fails to meet its responsibility to prevent illegal 
immigration. By cutting funding for SCAAP by 83 percent, the Senate is 
abandoning its responsibility and forcing the states to pay for a 
Federally mandated service.'' It is my hope that Congress will restore 
SCAAP funding to at least $500 million, as the President requested for 
fiscal 2000 to help meet the needs of local communities across the 
country.
  The legislation Senator Kyl and I are introducing today would 
actually expand the State Criminal Alien Assistance Program by 
authorizing funding for state and local needs that currently go unmet. 
Although states receive Federal reimbursement for part of the cost of 
incarcerating illegal adult aliens, the Federal government does not 
reimburse States or units of local government for expenditures for 
illegal juvenile aliens. Nor does it reimburse states and localities 
for costs associated with processing criminal illegal aliens, including 
court costs, county attorney costs, costs for criminal proceedings that 
do not involve going to trial, indigent defense costs, and unsupervised 
probation costs. Our legislation would authorize the Federal government 
to reimburse such costs to States and localities that suffer a 
substantially disproportionate share of the impact of criminal illegal 
aliens on their law enforcement and criminal justice systems. It would 
also authorize additional Federal reimbursement for emergency health 
services furnished by States and localities to undocumented aliens.
  Reimbursement to States and localities for criminal alien 
incarceration is woefully underfunded according to the existing limited 
criteria for SCAAP, which do not take into account the full detention 
and processing costs for illegal aliens. Nor does the existing SCAAP 
provide necessary support to local communities for the cost of 
emergency care for illegal immigrants, a growing problem in the 
Southwest, and one exacerbated by the increasingly desperate measures 
taken by undocumented aliens to cross our border with Mexico. Our 
legislation thus authorizes the expansion of SCAAP to cover costs 
wrongly borne by local communities under current law--costs which are a 
Federal responsibility and should not be shirked by those in Washington 
who do not live with the problem of illegal immigration in their midst.
  As my colleagues know, illegal immigrants who successfully transit 
our

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Southwest border rapidly disperse throughout the United States. That 
SCAAP funds flow to all 50 states reflects the pressures such aliens 
place on public services around the country. I hope the Senate will act 
expeditiously on this important legislation to alleviate those 
pressures by compensating state and local units for the costs they 
incur as unwitting hosts to undocumented aliens, even as we continue to 
fund border enforcement measures to reduce the flow of illegal 
immigrants into this country.
  Mr. BINGAMAN. Mr. President, I rise to join with my colleagues from 
Arizona, California, and Texas in introducing the ``State Criminal 
Alien Assistance Program II and Local Medical Emergency Reimbursement 
Act of 1999.''
  The purpose of the bill is to expand to scope of the current SCAAP 
law to allow counties and states to be reimbursed not only for the 
costs of incarcerating illegal aliens, but also for the costs of 
prosecuting them, defending them and detaining them. Currently, SCAAP 
only pays for the costs of incarcerating illegal aliens convicted of a 
felony in the United States. This means that counties and states do not 
get reimbursed for the indirect and direct costs leading to such a 
conviction. Because many illegal aliens arrested for drug smuggling or 
alien smuggling by federal agents are prosecuted by the county 
prosecutors, this has put an enormous strain on the county's 
prosecution budgets and has burdened the already struggling indigent 
defense programs. With the expansion of SCAAP, the counties will 
finally get some relief.
  Another positive change to the SCAAP law is the addition of juvenile 
incarceration as a reimbursable expense. Many drug traffickers are 
using teenagers to transport drugs across the border, knowing that we 
do not currently have a good system for dealing with criminal illegal 
juvenile aliens. Because these teens' parents are not living in the 
United States, the county jails are required to detain the teens 
pending adjudication. The other option is to let the teens go. Neither 
option is good from a law enforcement perspective, but the cost of 
detaining a juvenile places an enormous burden on the counties' 
juvenile detention facilities. I am pleased that this bill considered 
the counties' concerns and included the costs of detaining juveniles as 
a reimbursable expense.
  In 1994 I supported the original SCAAP bill. Between 1996 and 1999, 
the federal government has reimbursed the State of New Mexico $4.5 
million for costs incurred in incarcerating criminal illegal aliens 
under this program. New Mexico counties have been reimbursed more than 
$1.4 million for similar costs. However, this $6 million reimbursement 
represents but a small fraction of the actual costs expended by New 
Mexico jails and prisons. This bill seeks to increase the amount 
available for reimbursement by raising the amount authorized to $200 
million between 2002 and 2005.
  The second part of this bill addresses another problem facing the 
border states. Because many towns near the US-Mexico border are a mere 
stones throw away from much larger Mexican towns and cities, many 
Mexican nationals often cross the border illegally in search of 
emergency medical services due to the lack of adequate facilities in 
Mexico. This bill will reimburse the health care providers required to 
provide emergency medical services to illegal aliens.
  The border counties in New Mexico have repeatedly expressed their 
concern about the lack of federal assistance for emergency medical 
services provided to undocumented immigrants. Yet, under current law, 
New Mexico border communities are not eligible to be reimbursed for 
providing such emergency medical services. This has placed a 
significant financial burden on the public and private hospitals who 
are just trying to do what they think is right--provide emergency 
treatment to those in need. This lack of federal assistance has been 
very detrimental to New Mexico because the number of undocumented 
immigrants seeking medical attention in New Mexico is very high 
compared with the population of the New Mexico border community.
  Between January 1, 1999 and August 31, 1999, Mimbres Memorial 
Hospital in Deming, New Mexico reported that 22 percent of its patients 
that were unable to pay for their medical care were residents of 
Mexico. These individuals accounted for $379,311 in charges that had to 
be absorbed by this hospital. In a town of roughly 10,000 people, this 
is a sizeable amount for a local hospital to write-off as 
uncollectible.
  With the passage of this bill, New Mexico will be eligible to 
participate in this federal reimbursement program. Because the 
authorized amount for this program will be increased to $200 million 
between 2002 and 2005, this change will not affect the reimbursements 
to other states. This increase in funding is sorely needed to 
adequately address the financial burdens that illegal immigration 
imposes on the border communities.
  I commend my fellow members of the Senate Southwest Border Caucus for 
working together on a bill what will make these necessary changes to 
the SCAAP program and address the financial hardship that illegal 
immigration imposes on our border communities.
  I thank Senator Kyl for introducing this bill and I encourage the 
Senate to take up this bill and pass this worthwhile legislation.
 Mrs. FEINSTEIN. Mr. President I am pleased to join my 
colleague Senator Kyl in introducing the ``State Criminal Alien 
Assistance Program II and Local Medical Emergency Reimbursement Act.''
  The control of illegal immigration is a Federal responsibility. 
However, more and more, this burden is shifting to the states. The 
``State Criminal Alien Assistance Program II and Local Medical 
Emergency Reimbursement Act'' (SCAAP II), properly shifts the fiscal 
burden of illegal immigration into the hands of the Federal Government. 
This bill builds upon the existing Federal obligations under the 
``State Criminal Alien Assistance Program'' (SCAAP I) by providing $200 
million for each of the fiscal years 2002 through 2005 to help border 
communities defray the indirect costs of illegal immigration, and an 
additional $200 million to help state and local governments cope with 
the cost of providing emergency medical care to illegal immigrants.
  The issue of illegal immigration, is one of national consequence that 
requires a Federal response. Unfortunately, Federal reimbursements have 
consistently failed to cover the actual costs borne by States and local 
communities confronting the effects of illegal immigration. For those 
communities that continue to shoulder this burden, the control of 
illegal immigration has become an unfunded mandate.
  Mr. President, while I consider illegal immigration an issue that 
pervades communities across the nation, I would like to share with my 
colleagues how this issue has affected my home State of California. As 
you might imagine, the border counties in California are among the 
hardest hit in terms of dollars spent on incarceration, court costs, 
and emergency medical care for those who have entered the U.S. 
illegally.
  San Diego County, for example, spent an estimated $10.1 million in 
1998 to cover the costs of illegal alien incarceration and spends an 
estimated $50 million annually to provide emergency medical care for 
illegal immigrants. Imperial County estimates that it spent more than 
$4 million last year in detention costs and another $1.36 million in 
emergency medical expenses.
  I am greatly concerned about the disproportionate burden these costs 
impose on the criminal justice system, hospitals and residents of San 
Diego and Imperial Counties, especially given the counties' limited tax 
base and fiscal resources. Given what I have witnessed in my own state, 
it is not hard for me to understand the frustration and concern of 
communities in a growing number of other states. Similar burdens have 
fallen on border communities in states like Arizona, New Mexico, and 
Texas. Each year, the costs borne by states to respond to illegal 
immigration continue to soar, while Federal involvement remains minimal 
at best.
  Unfortunately, we can only expect these costs for border states to 
swell over the next few years as border enforcement initiatives force 
illegal migration to shift further eastward from San Diego County to 
neighboring southern States and counties as well as to the more porous 
northern state borders. In launching Operation Gatekeeper, for example, 
the INS has

[[Page S12243]]

achieved considerable success in deterring illegal border crossings 
along the San Diego border.
  At the same time, Gatekeeper has had the effect of shifting a large 
volume of migrant crossings to the more rugged East San Diego County 
mountain area and the desert region of Imperial County where there have 
been numerous instances of illegal immigrants in need of emergency 
care. One county hospital in El Centro, for example, reports that the 
Border Patrol has dropped off countless numbers of undocumented aliens 
found in the desert suffering from hypothermia or dehydration, or from 
broken limbs and fractured skulls as result of failed attempts at 
scaling the fence along the San Diego border.
  The more ``fortunate'' border crossers are being detained at state 
and county jails. Although states receive Federal reimbursement for 
some of the direct costs of incarcerating adult illegal immigrants, the 
Federal Government does not reimburse states and localities for the 
indirect costs relating to the incarceration or the control of illegal 
aliens, including: court costs, county attorney costs, indigent 
defense, criminal juvenile detention, and unsupervised probation costs. 
Nor does it compensate state and local hospitals for the emergency 
medical care provided to illegal immigrants who are not in Federal 
custody.
  Mr. President, I join my colleagues in introducing the SCAAP II bill 
in hopes that it will alleviate some of the fiscal strains illegal 
immigration has imposed on border states and communities. I look 
forward to working with my colleagues to move it through the 
Senate.

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