Congressional Record, Volume 145 Issue 163 (Wednesday, November 17, 1999)

[Congressional Record Volume 145, Number 163 (Wednesday, November 17, 1999)]
[Senate]
[Pages S14696-S14739]
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, Mr. Thomas, Mr. Crapo, and Mr. Burns):
S. 1938. A bill to provide for the return of fair and reasonable fees
to the Federal Government for the use and occupancy of National Forest
System land under the recreation residence program, and for other
purposes; to the Committee on Agriculture, Nutrition, and Forestry.

cabin user fee fairness act of 1999

Mr. CRAIG. Mr. President, I am introducing legislation today that
will set a new course for the Forest Service in determining fees for
forest lots on which families and individuals have been authorized to
build cabins for seasonal recreation since the early part of this
century. I am pleased to have Senators Mike Crapo, Craig Thomas, and
Conrad Burns joining me in sponsoring this legislation, which is a
companion bill to H.R. 3327, introduced in the House of Representatives
by Congressman George Nethercutt.
In 1915, under the Term Permit Act, Congress set up a program to give
families the opportunity to recreate on our public lands through the
so-called recreation residence program. Today, 15,000 of these forest
cabins remain, providing generation after generation of families and
their friends a respite from urban living and an opportunity to use our
public lands.
These cabins stand in sharp contrast to many aspects of modern
outdoor recreation, yet are an important aspect of the mix recreation
opportunities for the American public. While many of us enjoy fast,
off-road machines and watercraft or hiking to the backcountry with
high-tech gear, others enjoy a relaxing weekend at their cabin in the
woods with their family and friends.
The recreation residence programs allows families all across the
country an opportunity to use our national forests. This quiet,
somewhat uneventful

[[Page S14697]]

program continues to produce close bonds and remarkable memories for
hundreds of thousands of Americans, but in order to secure the future
of the cabin program, this Congress needs to reexamine the basis on
which fees are now being determined.
Roughly 20 years ago, the Forest Service saw the need to modernize
the regulations under which the cabin program is administered.
Acknowledging that the competition for access and use of forest
resources has increased dramatically since 1915, both the cabin owners
and the agency wanted a formal understanding about the rights and
obligations of using and maintaining these structures.
New rules that resulted nearly a decade later reaffirmed the cabins
as a valid recreational use of forest land. At the same time, the new
policy reflected numerous limitations on use that are felt to be
appropriate in order to keep areas of the forest where cabins are
located open for recreational use by other forest visitors. Commercial
use of the cabins is prohibited, as is year-round occupancy by the
owner. Owners are restricted in the size, shape, paint color and
presence of other structures or installations on the cabin lot. The
only portion of a lot that is controlled by the cabin owner is that
portion of the lot that directly underlies the footprint of the cabin
itself.
At some locations, the agency has determined a need to remove cabins
for a variety of reasons related to ``higher public purposes'' and
cabin owners wanted to be certain in the writing of new regulations
that a fair process would guide any future decisions about cabin
removal. At other locations, some cabins have been destroyed by fire,
avalanche or falling trees, and a more reliable process of determining
whether such cabins might be rebuilt or relocated was needed. It was
determined, therefore, that this recreational program would be tied
more closely to the forest planning process.

The question of an appropriate fee to be paid for the opportunity of
constructing and maintaining a cabin in the woods was also addressed at
that time. Although the agency's policies for administration of the
cabin program have, overall, held up well over time, the portion
dealing with periodic redetermination of fees proved in the last few
years to be a failure.
A base fee was determined 20 years ago by an appraisal of sales of
comparable undeveloped lots in the real estate market adjacent to the
national forest where a cabin was located. The new policy called for
reappraisal of the value of the lot 20 years later--a trigger that led
to initiation of the reappraisal process in 1995.
In the meantime, according to the policy, annual adjustments to the
base fee would be tracked by the Implicit Price Deflator (IPD), which
proved to be a faulty mechanism for this purpose. Annual adjustments to
the fee based on movements of the IPD failed entirely to keep track of
the booming land values associated with recreation development.
As the results of actual reappraisals on the ground began reaching my
office in 1997, it became clear that far more than the inoperative IPD
was out of alignment in determining fees for the cabin owners.
At the Pettit Lake tract in Idaho's Sawtooth National Recreation
Area, the new base fees skyrocketed into alarming five-digit amounts--
so high that a single annual fee was nearly enough money to buy raw
land outside the forest and construct a cabin. Meanwhile, the agency's
appraisal methodology was resulting in new base fees in South Dakota,
in Florida, and in some locations in Colorado that were actually lower
than the previous fee.
Very generally speaking, the value of the use of the forest lot is
approximately the same for any cabin owner, whether they are tucked
into what has become in recent years the Sawtooth National Recreation
Area of Idaho, or high in the Sierra Mountain range of California, or
in the lowland forests of the southeastern States. Yet Idaho cabin
owners are now expected to pay a new average fee of $9,221 each year,
while cabin owners in Kentucky will be paying a new average fee of
$140.
At the request of the chairman of the House Committee on Agriculture
in 1998, the cabin owners named a coalition of leaders of their various
national and State cabin owner associations to examine the methodology
being used by the Forest Service to determine fees. It became obvious
to these laymen that analysis of appraisal methodology and the
determination of fees was beyond their grasp, and a prestigious
consulting appraiser was retained to guide the cabin owners through
their task. The report and recommendations of the coalition's
consulting appraiser is available from my office for those who might
wish to examine the details.
At the bottom line, it was learned that the Forest Service--contrary
to its own policy--was appraising and affixing value to the lots being
provided to cabin owners as if this land were fully developed, legally
subdivided, fee simple residential land.
In other words, the agency has been capturing the values associated
with a variety of structures and services that the homeowners
themselves (not the agency) provide. The Forest Service, in setting
fees on this basis, has been capturing incremental values assigned by a
developer at various stages of development for risk, expectations of
profit and other factors.
My goal is to see that the cabin program remains affordable for
American families. Consistent with the recommendations of the
coalition's consulting appraiser, the methodology for determining fees
is directed toward the value of the use to the cabin owner--not what
the market would bear, should the Forest Service decide to sell off its
assets.
This is highly technical legislation. Its purpose is to send a clear
set of instructions to appraisers in the field and a clear set of
instructions to forest managers to respect the results of appraisals
undertaken to place value on the raw land being offered cabin owners.
I intend to hold hearings on this legislation early in the next
session. I urge each of my colleagues to be in contact with cabin
owners in their State during the congressional recess. There are more
than 15,000 families out there who fear that the long tradition of
cabin-based forest recreation is nearing an end because the agencies
fee mechanism has made the program unaffordable for all but the
wealthy. These cabin owners and I would wholeheartedly welcome the
support and cosponsorship of all Senators for this important
legislation.
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. 1938

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 ``Fair Cabin User Fee Act of
1999''.

SEC. 2. FINDINGS.

Congress finds that--
(1) the recreation residence program is--
(A) a valid use of forest land and 1 of the multiple uses
of the National Forest System; and
(B) an important component of the recreation program of the
Forest Service;
(2) cabins located on forest land have provided a unique
recreation experience to a large number of cabin owners,
their families, and guests each year since Congress
authorized the recreation residence program in 1915;
(3) tract associations, cabin owners, their extended
families, guests, and others that regularly use and enjoy
forest cabin tracts have contributed significantly toward
efficient management of the program and the stewardship of
forest land;
(4) cabin user fees have traditionally generated income to
the Federal Government in amounts significantly greater than
the Federal cost of administering the program;
(5) the rights and privileges granted to owners of cabins
authorized under the program have steadily diminished while
regulatory restrictions and fees charged under the program
have steadily increased; and
(6) the current fee determination procedure has been shown
to incorrectly reflect market value and value of use.

SEC. 3. PURPOSES.

The purposes of this Act are--
(1) to ensure, to the maximum extent practicable, that the
National Forest System recreation residence program is
managed to preserve the opportunity for individual and
family-oriented recreation at a reasonable cost; and
(2) to develop and implement a more efficient, cost-
effective procedure for determining cabin user fees that
better reflects the probable value of that use by the cabin
owner, taking into consideration the limitations of the
authorization and other relevant market factors.

[[Page S14698]]

SEC. 4. DEFINITIONS.

In this Act:
(1) Agency.--The term ``agency'' means the Forest Service.
(2) Authorization.--The term ``authorization'' means a
special use permit for the use and occupancy of National
Forest System land by a cabin owner under the authority of
the program.
(3) Base cabin user fee.--The term ``base cabin user fee''
means the initial fee for an authorization that results from
the appraisal of a lot in accordance with sections 6 and 7.
(4) Cabin.--The term ``cabin'' means a privately built and
owned structure authorized for use and occupancy on National
Forest System land.
(5) Cabin user fee.--The term ``cabin user fee'' means a
special use fee paid annually by a cabin owner to the
Secretary in accordance with this Act.
(6) Cabin owner.--The term ``cabin owner'' means--
(A) a person authorized by the agency to use and to occupy
a cabin on National Forest System land; and
(B) an heir or assign of such a person.
(7) Caretaker cabin.--The term ``caretaker cabin'' means a
caretaker residence occupied in limited cases in which
caretaker services are necessary to maintain the security of
a tract.
(8) Center.--The term ``Center'' means the Federal Center
for Dispute Resolution of the American Arbitration
Association.
(9) Current cabin user fee.--The term ``current cabin user
fee'' means the most recent cabin user fee that results from
an annual adjustment to the base cabin user fee in accordance
with section 8.
(10) Lot.--The term ``lot'' means a parcel of land of the
National Forest System on which a cabin owner is authorized
to build, use, occupy, and maintain a cabin and related
improvements.
(11) Program.--The term ``program'' means the recreation
residence program established under the Act of March 4, 1915
(38 Stat. 1101, chapter 144).
(12) Secretary.--The term ``Secretary'' means the Secretary
of Agriculture, acting through the Chief of the Forest
Service.
(13) Tract.--The term ``tract'' means an established
location within a National Forest containing 1 or more cabins
authorized in accordance with the program.
(14) Tract association.--The term ``tract association''
means a cabin owner association in which all cabin owners
within a tract are eligible for membership.

SEC. 5. ADMINISTRATION OF RECREATION RESIDENCE PROGRAM.

(a) In General.--The Secretary shall ensure, to the maximum
extent practicable, that the basis and procedure for
calculating cabin user fees results in a reasonable and fair
fee for an authorization that reflects the probable value of
the use and occupancy of a lot to the cabin owner in
accordance with subsection (b).
(b) Determination of Value.--The value of the use and
occupancy of a lot referred to in subsection (a)--
(1) shall not be equivalent to a rental fee of the lot; and
(2) shall reflect regional economic influences, as
determined by an appraisal of the value of use of the
National Forest in which the lot is located.

SEC. 6. APPRAISALS.

(a) Requirements for Conducting Appraisals.--In
implementing and conducting an appraisal process for
determining cabin user fees, the Secretary shall--
(1) establish an appraisal process to determine the value
of the fee simple estate of a typical lot or lots within a
tract, with adjustments to reflect limitations arising from
the authorization and special use permit;
(2) enter into a contract with an appropriate professional
organization for the development of specific appraisal
guidelines in accordance with subsection (b), subject to
public comment and congressional review;
(3) require that an appraisal be performed by a State-
certified general real estate appraiser, selected by the
Secretary and licensed to practice in the State in which the
lot is located;
(4) provide the appraiser with--
(A) appraisal guidelines developed in accordance with this
Act; and
(B) a copy of the special use permit associated with the
typical lot to be appraised, with an instruction to the
appraiser to consider any prohibitions or limitations
contained in the authorization;
(5) notwithstanding any other provision of law, require the
appraiser to coordinate the assignment closely with affected
parties by seeking advice, cooperation, and information from
cabin owners and tract associations;
(6) require that the appraiser perform the appraisal in
compliance with--
(A) the most current edition of the Uniform Standards of
Professional Appraisal Practice on the date of the appraisal;
(B) the most current edition of the Uniform Appraisal
Standards for Federal Land Acquisitions on the date of the
appraisal; and
(C) the specific appraisal guidelines developed in
accordance with this Act;
(7) require that the appraisal report be a self-contained
report (as defined by the Uniform Standards of Professional
Appraisal Practice);
(8) require that the appraisal report comply with the
reporting guidelines established by the Uniform Appraisal
Standards for Federal Land Acquisitions; and
(9) before accepting any appraisal, conduct a review of the
appraisal to ensure that the guidelines made available to the
appraiser have been followed and that the appraised values
are properly supported.
(b) Specific Appraisal Guidelines.--In the development of
specific appraisal guidelines in accordance with paragraph
(a)(2), the instructions to an appraiser shall require, at a
minimum, the following:
(1) Appraisal of a typical lot.--
(A) In general.--In conducting an appraisal under this
paragraph, the appraiser shall appraise a typical lot or lots
within a tract that are selected by the cabin owners and the
agency in a manner consistent with the policy of the program.
(B) Appraisal.--In appraising a typical lot or lots within
a tract, the appraiser shall--
(i) consult with affected cabin owners; and
(ii) appraise the typical lot or lots selected for purposes
of comparison with other lots or groups of lots in the tract
having similar value characteristics (rather than appraising
each individual lot).
(B) Estimate of market value of typical lot.--
(i) In general.--The appraiser shall estimate the market
value of a typical lot as a parcel of undeveloped, raw land
that has been made available for use and occupancy by the
cabin owner on a seasonal or periodic basis.
(ii) No equivalence to legally subdivided lot.--The
appraiser shall not appraise the typical lot as being
equivalent to a legally subdivided lot.
(2) Requirement for analysis of comparable sales.--The
appraisal shall be based on a prioritized analysis of 1 or
more categories of sales of comparable land as follows:
(A) Larger parcels.--Sales of larger, privately-owned, and
preferably unimproved parcels of rural land, generally
similar in size to the tract being examined, shall be given
the most weight in the analysis.
(B) Smaller parcels.--Sales of smaller, privately-owned,
and preferably unimproved parcels of rural land that are not
part of an established subdivision shall be given secondary
weight in the analysis.
(C) Mapped and recorded parcels.--Sales of privately-owned
parcels in a mapped and recorded rural subdivision shall be
given the least weight in the analysis.
(3) Exception for certain sales of land.--In conducting an
analysis under paragraph (2), the appraiser shall select
sales of comparable land that are outside the area of
influence of--
(A) land affected by urban growth boundaries;
(B) land for which a government or institution holds a
conservation or recreational easement; or
(C) land designated for conservation or recreational
purposes by Congress, a State, or a political subdivision of
a State.
(4) Adjustments for typical value influences.--
(A) In general.--The appraiser shall consider and adjust
the price of sales of comparable land for all typical value
influences described in subparagraph (B).
(B) Value influences.--The typical value influences
referred to in subparagraph (A) include--
(i) differences in the locations of the parcels;
(ii) accessibility, including limitations on access
attributable to--

(I) weather;
(II) the condition of roads or trails; or
(III) other factors;

(iii) the presence of marketable timber;
(iv) limitations on, or the absence of, services such as
law enforcement, fire control, road maintenance, or snow
plowing;
(v) the condition and regulatory compliance of any site
improvements; and
(vi) any other typical value influences described in
standard appraisal literature.
(5) Adjustments for restrictions on use.--In evaluating the
sale of a comparable fee simple parcel, an adjustment to the
sale price of the parcel shall be made to reflect the
influence of prohibitions or limitations on use or benefits
imposed by the agency that affect the value of the subject
cabin lot, including--
(A) any prohibition against year-round use and occupancy or
any other restriction that limits or reduces the type or
amount of cabin use and occupancy;
(B) any limitation on the right of the cabin owner to sell,
lease, or rent the cabin without restrictions imposed by the
Secretary;
(C) any limitation on, or prohibition against, improvements
to the lot, such as remodeling or enlargement of the cabin,
construction of additional structures, landscaping, signs,
fencing, clothes drying lines, mail boxes, swimming pools, or
other recreational facilities; and
(D) any limitation on, or prohibition against, use of the
lot for placement of amenities such as playground equipment,
domestic livestock, recreational vehicles, or boats.
(6) Adjustments to sales of comparable parcels.--
(A) In general.--
(i) Utilities provided by agency.--Only utilities (such as
water, sewer, electricity, or telephone) or access roads or
trails that are clearly established as of the date of the
appraisal as having been provided and maintained by the
agency at a lot shall be included in the appraisal.
(ii) Features provided by cabin owner.--All cabin
facilities, decks, docks, patios, and

[[Page S14699]]

other nonnatural features (including utilities or access)--

(I) shall be presumed to have been provided by, or funded
by, the cabin owner; and
(II) shall be excluded from the appraisal by adjusting any
comparable sales with the nonnatural features referred to in
subparagraph (B)(ii).

(iii) Withdrawal of utility or access by agency.--If,
during the term of an authorization, the agency makes a
substantial and materially adverse change in the provision or
maintenance of any utility or access, the cabin owner shall
have the right to request and obtain a new determination of
the base cabin user fee at the expense of the agency.
(B) Adjustment for improvements.--
(i) In general.--The appraiser shall consider and adjust
the price of each sale of a comparable parcel for all
nonnatural features referred to in subparagraph (A)(ii)
that--

(I) are present at, or add value to, the parcel; but
(II) are not present at the lot being appraised or not
included in the appraisal under subparagraph (A).

(ii) Adjustments.--An adjustment to the price of a parcel
sold under this subparagraph shall include allowances for
matters such as--

(I) depreciated current replacement costs of installing
nonnatural features referred to in clause (i) at the typical
lot being appraised, including an allowance for
entrepreneurial profit and overhead;
(II) likely construction difficulties for nonnatural
features referred to in clause (i) at the lot being
appraised; and
(III) the deduction in price that would be taken in the
market as a risk allowance if--

(aa) a parcel does not have adequate access or adequate
sewer or water systems; and
(bb) there is a risk of failure or material cost overruns
in attempting to provide the systems referred to in item
(aa).
(C) Reappraisal for and recalculation of base cabin user
fee.--Periodically, but not less often than once every 10
years, the Secretary shall recalculate the base cabin user
fee (including conducting any reappraisal required to
recalculate the base cabin user fee).

SEC. 7. CABIN USER FEES.

(a) In General.--The Secretary shall establish the cabin
user fee as the amount that is equal to 5 percent of the
value of the lot, as determined in accordance with section 6,
reflecting an adjustment to the market rate of return based
solely on--
(1) the limited term of the authorization;
(2) the absence of significant property rights normally
attached to fee simple ownership; and
(3) the public right of access to, and use of, any open
portion of the lot on which the cabin or other enclosed
improvements are not located.
(b) Fee for Caretaker Residences.--The base cabin user fee
for a lot on which a caretaker residence is located shall not
be greater than the base cabin user fee charged for the
authorized use of a similar typical lot in the tract.
(c) Annual Cabin User Fee in the Event of Determination Not
To Reissue Authorization.--If the Secretary determines that
an authorization should not be reissued at the end of a term,
the Secretary shall--
(1) establish as the new base cabin user fee for the
remaining term of the authorization the amount charged as the
cabin user fee in the year that was 10 years before the year
in which the authorization expires; and
(2) calculate the current cabin user fee for each of the
remaining 9 years of the term of the authorization by
multiplying--
(i) \1/10\ of the new base cabin user fee; by
(ii) the number of years remaining in the term of the
authorization after the year for which the cabin user fee is
being calculated.
(d) Annual Cabin User Fee in Event of Changed Conditions.--
If a review of a decision to convert a lot to an alternative
public use indicates that the continuation of the
authorization for use and occupancy of the cabin by the cabin
owner is warranted, and the decision is subsequently
reversed, the Secretary may require the cabin owner to pay
any portion of annual cabin user fees, as calculated in
accordance with subsection (d), that were forgone as a result
of the expectation of termination of use and occupancy of the
cabin by the cabin owner.
(e) Termination of Fee Obligation in Loss Resulting From
Acts of God or Catastrophic Events.--On a determination by
the agency that, due to an act of God or a catastrophic
event, a lot cannot be safely occupied and that the
authorization for the lot should accordingly be terminated,
the fee obligation of the cabin owner shall terminate
effective on the date of the occurrence of the act or event.

SEC. 8. ANNUAL ADJUSTMENT OF CABIN USER FEE.

(a) In General.--The Secretary shall adjust the cabin user
fee annually, using a rolling 5-year average of a published
price index in accordance with subsection (b) or (c) that
reports changes in rural or similar land values in the State,
county, or market area in which the lot is located.
(b) Initial Index.--
(1) In general.--For the period of 10 years beginning on
the date of enactment of this Act, the Secretary shall use
changes in agricultural land prices in the appropriate State
or county, as reported in the Index of Agricultural Land
Prices published by the Department of Agriculture, to
determine the annual adjustment to the cabin user fee in
accordance with subsections (a) and (d).
(2) Statewide changes.--In determining the annual
adjustment to the cabin user fee for an authorization located
in a county in which agricultural land prices are influenced
by the factors described in section 6(b)(3), the Secretary
shall use average statewide changes in the State in which the
lot is located.
(c) New Index.--
(1) In general.--Not later than 10 years after the date of
enactment of this Act, the Secretary may select and use an
index other than the index described in subsection (b)(2) to
adjust a cabin user fee if the Secretary determines that a
different index better reflects change in the value of a lot
over time.
(2) Selection process.--Before selecting a new index, the
Secretary shall--
(A) solicit and consider comments from the public; and
(B) not later than 60 days before the date on which the
Secretary makes a final index selection, submit any proposed
selection of a new index to--
(i) the Committee on Resources of the House of
Representatives; and
(ii) the Committee on Energy and Natural Resources of the
Senate.
(d) Limitation.--In calculating an annual adjustment to the
base cabin user fee, the Secretary shall--
(1) limit any annual fee adjustment to an amount that is
not more than 5 percent per year when the change in
agricultural land values exceeds 5 percent in any 1 year; and
(2) apply the amount of any adjustment that exceeds 5
percent to the annual fee payment for the next year in which
the change in the index factor is less than 5 percent.

SEC. 9. PAYMENT OF CABIN USER FEES.

(a) Due Date for Payment of Fees.--A cabin user fee shall
be paid or prepaid annually by the cabin owner on a monthly,
quarterly, annual, or other schedule, as determined by the
Secretary.
(b) Payment of Equal or Lesser Fee.--If, in accordance with
section 7, the Secretary determines that the amount of a new
base cabin user fee is equal to or less than the current base
cabin user fee, the Secretary shall require payment of the
new base cabin user fee by the cabin owner in accordance with
subsection (a).
(c) Payment of Greater Fee.--If, in accordance with section
7, the Secretary determines that the amount of a new base
cabin user fee is greater than the current base cabin user
fee, the Secretary shall--
(1) require full payment of the new base cabin user fee in
the first year following completion of the fee determination
procedure if the increase in the amount of the new base cabin
user fee is not more than 100 percent of the most recently
paid cabin user fee; or
(2) phase in the increase over the current cabin user fee
in approximately equal increments over 3 years if the
increase in the amount of the new base cabin user fee is
greater than 100 percent of the most recently paid base cabin
user fee.
(d) Requirement for Payment During Arbitration, Appeal, or
Judicial Review.--If arbitration, an appeal, or judicial
review concerning a cabin user fee is brought in accordance
with section 11 or 12, the Secretary shall--
(1) suspend annual payment by the cabin owner of any
increase in the cabin user fee, pending completion of the
arbitration, appeal, or judicial review; and
(2) make any adjustments, as necessary, that result from
the findings of the arbitration, appeal, or judicial review
by providing to the cabin owner--
(A)(i) a credit toward future cabin user fee payments; or
(ii) a refund for any overpayment of the cabin user fee;
and
(B) a supplemental billing for any additional amount of the
cabin user fee that is due.

SEC. 10. RIGHT OF SECOND APPRAISAL.

(a) Right of Second Appraisal.--On receipt of notice from
the Secretary of the determination of a new base cabin user
fee, the cabin owner--
(1) not later than 60 days after the date on which the
notice is received, shall notify the Secretary of the intent
of the cabin owner to obtain a second appraisal; and
(2) may obtain, within 1 year following the date of receipt
of the notice under this subsection, at the expense of the
cabin owner, a second appraisal of the typical lot on which
the initial appraisal was conducted.
(b) Conduct of Second Appraisal.--In conducting a second
appraisal, the appraiser selected by the cabin owner shall--
(1) consider all relevant factors in accordance with this
Act (including guidelines developed under section 6(a)(2));
and
(2) notify the Secretary of any material differences of
fact or opinion between the initial appraisal conducted by
the agency and the second appraisal.
(c) Request for Reconsideration of Base Cabin User Fee.--A
cabin owner shall submit to the Secretary any request for
reconsideration of the base cabin user fee, based on the
results of the second appraisal, not later than 60 days after
the receipt of the report for a second appraisal.
(d) Reconsideration of Base Cabin User Fee.--On receipt of
a request from the cabin owner under subsection (c) for
reconsideration of a base cabin user fee, not later than 60
days after the date of receipt of the request, the Secretary
shall--

[[Page S14700]]

(1) review the initial appraisal of the agency;
(2) review the results and commentary from the second
appraisal;
(3) determine a new base cabin user fee in an amount that
is--
(A) equal to the fee determined by the initial or the
second appraisal; or
(B) within the range of values, if any, between the initial
and second appraisals; and
(4) notify the cabin owner of the amount of the new base
cabin fee.

SEC. 11. RIGHT OF ARBITRATION.

(a) In General.--
(1) Request for arbitration.--Not later than 30 days after
the receipt of notice of a new base cabin fee under section
10(d)(4), the tract association may request arbitration if a
cabin owner in the tract and the Secretary are unable to
reach agreement on the amount of the base cabin user fee
determined in accordance with section 10.
(2) Identification of Third-Party Neutrals.--If arbitration
is requested under paragraph (1), the Secretary shall
promptly request the Center to develop a list of the names of
not fewer than 20 appraisers and 10 attorneys who possess
appropriate training and experience in valuations of land and
interest in land to serve as qualified third-party neutrals.
(b) Arbitration.--Not later than 30 days after the receipt
of a request from the tract association for arbitration, the
Secretary shall--
(1) notify the Center of the request; and
(2) request the Center to provide to the Secretary and the
tract association, within 15 days--
(A) instructions related to arbitration procedures; and
(B) the list of qualified third-party neutrals described in
subsection (a)(2).
(c) Arbitration Panel.--
(1) In general.--Not later than 15 days after the receipt
of the list described in subsection (a)(2), the Secretary and
the tract association may each recommend the names of 2
appraisers and 1 attorney from the list for consideration in
the selection of an arbitration panel by the Center.
(2) Availability of list.--The Secretary and the tract
association shall disclose to each other the names of third-
party neutrals recommended under paragraph (1).
(3) Option to eliminate recommended neutrals.--The
Secretary and the tract association may each peremptorily
eliminate from consideration for the arbitration panel 1
third-party neutral recommended under paragraph (1).
(4) Selection by center.--From the third-party neutrals
recommended to the Center under paragraph (1) that are not
eliminated from consideration under paragraph (3), the Center
shall select and retain an arbitration panel consisting of 2
appraisers and 1 attorney.
(5) Notification of establishment.--Not later than 5 days
after the selection of members of the arbitration panel, the
Center shall notify the Secretary and the tract association
of the establishment of the arbitration panel.
(d) Arbitration Procedure.--
(1) Submission of information.--Not later than 30 days
after notification by the Center of the establishment of the
arbitration panel under subsection (c)(3), each party shall
submit to the arbitration panel--
(A) the appraisal report of each party, including comments,
if any, of material differences of fact or opinion related to
the initial appraisal or the second appraisal;
(B) a copy of the authorization associated with any typical
lot that was subject to appraisal;
(C) a copy of this Act; and
(D) a copy of appraisal guidelines developed in accordance
with section 6(a)(2).
(2) Hearing or field inspection.--On agreement of both
parties, the arbitration may be conducted without a hearing
or a field inspection.
(3) Schedule for decision.--
(A) In general.--Except as provided in subparagraph (B),
not later than 60 days after the receipt of all materials
described in paragraph (1), the arbitration panel shall
prepare and forward to the Secretary a written advisory
decision on the appropriate amount of the base cabin user
fee.
(B) Extension.--If the arbitration panel or the parties to
the arbitration determine that a hearing or field inspection
is necessary, the date for submission of the advisory
decision under subparagraph (A) shall be extended for--
(i) not more than 30 days; or
(ii) in the case of difficult or hazardous road or weather
conditions, such an additional period of time as is necessary
to complete the inspection.
(4) Determination of recommended base cabin user fee.--The
base cabin user fee recommended by the arbitration panel
shall fall within the range of values, if any, between the
initial and second appraisals submitted to the arbitration
panel by the parties.
(e) Adoption of Recommended Base Cabin User Fee.--
(1) In general.--Not later than 45 days after the receipt
of the recommendation by the arbitration panel, the Secretary
shall make a determination to adopt or reject the recommended
base cabin user fee.
(2) Notice to tract association.--Not later than 15 days
after making the determination under paragraph (1), the
Secretary shall provide notice of the determination to the
tract association.
(f) No Admission of Fact or Recommendation.--Neither the
fact that arbitration in accordance with this section has
occurred, nor the recommendation of the arbitration panel,
shall be admissible in any court or administrative
proceeding.
(g) Costs of Arbitration.--
(1) Fees.--
(A) In general.--In addition to amounts collected under
paragraph (2), the Center may charge a reasonable fee to each
party to an arbitration under this Act for the provision of
arbitration services.
(B) Transfer.--Fees collected under this paragraph shall be
transferred to the Secretary for use in the administration of
the program without further Act of appropriation.
(2) Cost sharing.--The agency and the tract association
shall each pay 50 percent of the costs incurred by the Center
in establishing and administering an arbitration in
accordance with this section, unless the arbitration panel
recommends that either the agency or the tract association
bear the entire cost of establishing and administering the
arbitration.
(h) Funding.--
(1) Authorization of appropriations for initial costs.--
There is authorized to be appropriated to the agency for the
initial costs of establishing and administering the program
not to exceed $15,000.
(2) Arbitration fees.--Any amounts exceeding the amount
authorized by paragraph (1) that are required for the
administration of the program shall be derived from
arbitration fees charged under subsection (g)(1).

SEC. 12. RIGHT OF APPEAL AND JUDICIAL REVIEW.

(a) Rights of Appeal.--Notwithstanding any action of a
cabin owner to exercise rights in accordance with section 10
or 11, the Secretary shall by regulation grant the cabin
owner the right to an administrative appeal of the
determination of a new base cabin user fee.
(b) Judicial Review.--A cabin owner that is adversely
affected by a final decision of the Secretary under this Act
may commence a civil action in United States district court.

SEC. 13. CONSISTENCY WITH OTHER LAW AND RIGHTS.

(a) Consistency With Rights of the United States.--Nothing
in this Act limits or restricts any right, title, or interest
of the United States in or to any land or resource.
(b) Special Rule for Alaska.--In determining a cabin user
fee in the State of Alaska, the Secretary shall not establish
or impose a cabin fee or a condition affecting a cabin fee
that is inconsistent with the requirements under section
1303(d) of the Alaska National Interest Lands Conservation
Act (16 U.S.C. 3193(d)).

SEC. 14. REGULATIONS.

Not later than 1 year after the date of enactment of this
Act, the Secretary shall promulgate regulations to implement
this Act.

SEC. 15. TRANSITION PROVISIONS.

(a) In General.--On enactment of this Act, the Secretary
shall--
(1) suspend appraisal activities related to existing
authorizations until new rules, policies, and procedures are
promulgated in accordance with this Act; and
(2) temporarily charge an annual cabin user fee for each
lot that is--
(A) an amount equal to the cabin user fee for the lot that
was in effect on September 30, 1995, adjusted by application
of the Implicit Price Deflator-Gross National Product Index,
if no appraisal of the lot on which the cabin is located was
completed after that date and before the date of enactment of
this Act;
(B) an amount that is not more than 100 percent greater
than the cabin user fee in effect on September 30, 1995,
adjusted by application of the Implicit Price Deflator-Gross
National Product Index prior to reappraisal, if an appraisal
conducted after that date but before the date of enactment of
this Act resulted in the increase; or
(C) the cabin user fee in effect on the date of enactment
of this Act, if an appraisal conducted after September 30,
1995, including adjustments resulting from application of the
Implicit Price Deflator-Gross National Product Index before
the date of enactment of this Act, resulted a base cabin user
fee that is not greater than the fee in effect before the
appraisal.
(b) Conduct of Appraisals Under New Law.--On publication of
new rules, policies, and procedures under this Act, the
Secretary shall carry out any appraisals of lots and
determinations of fees that were not completed between
September 30, 1995, and the date of enactment of this Act.
(c) Request for New Appraisal Under New Law.--Not later
than 2 years after the promulgation of final regulations and
policies and the development of appraisal guidelines in
accordance with section 6(a)(2), a cabin owner whose base
cabin user fee was adjusted subject to an appraisal completed
after September 30, 1995, but before the date of enactment of
this Act, may request that the Secretary conduct a new
appraisal and determine a new fee in accordance with this
Act.
(d) Conduct of New Appraisal.--On receiving a request under
subsection (c), the Secretary shall conduct, and bear all
costs incurred in conducting, a new appraisal and fee
determination in accordance with this Act.
(e) Assumption of New Base Cabin User Fee.--In the absence
of a request under subsection (c) for a new appraisal and fee
determination from a cabin owner whose cabin

[[Page S14701]]

user fee was determined as a result of an appraisal conducted
after September 30, 1995, but before the date of enactment of
this Act, the Secretary may consider the base cabin user fee
resulting from the appraisal conducted between September 30,
1995, and the date of enactment of this Act to be the base
cabin user fee that complies with the transition provisions
of this Act.
(f) Transitional Cabin User Fee Obligation.--
(1) In general.--In determining the liability of the cabin
owner for payment of fees for the period of time between the
date of enactment of this Act and the determination of a base
cabin user fee in accordance with this Act, the Secretary
shall--
(A) require the cabin owner to remit any balance owed for
any underpayment of an annual cabin user fee; or
(B) if an overpayment of a cabin user fee has occurred,
credit the cabin owner, or an heir or assign of the cabin
owner, toward future cabin user fee obligations.
(2) Billing.--The agency shall bill a cabin owner for
amounts determined to be owed under paragraph (1)(A) in
approximately equal increments over 3 years.
______

By Mr. LEAHY (for himself, Mr. Brownback, Mr. Feingold, Mr.
Kennedy, Mr. Kerry, Mr. Jeffords, and Mr. Lautenberg):
S. 1940. A bill to amend the Immigration and Nationality Act to
reaffirm the United States' historic commitment to protecting refugees
who are fleeing persecution or torture; to the Committee on the
Judiciary.

the refugee protection act

Mr. LEAHY. Mr. President, today Senators Brownback, Feingold,
Kennedy, Kerry, Jeffords, and I are introducing the Refugee Protection
Act of 1999, a bill to limit and reform the expedited removal system
currently operating in our ports of entry.
In 1996, I introduced an amendment that would have only authorized
the use of expedited removal at times of immigration emergencies. The
bill I introduce today--with the cosponsorship of two Republican and
three Democratic Senators--is modeled on that proposal. That amendment
passed the Senate with bipartisan support, but was omitted from the
bill that was reported out of a partisan, closed conference. As a
result, expedited removal took effect on April 1, 1997. America's
historic reputation as a beacon for refugees has suffered as a
consequence.
Expedited removal allows INS inspections officers summarily to remove
aliens who arrive in the United States without travel documents, or
even with facially valid travel documents that the officers merely
suspect are fraudulent, unless the aliens utter the magic words
``political asylum'' upon their first meeting with American immigration
authorities. This policy is fundamentally unwise and unfair, both in
theory and in practice.
First, this policy ignores the fact that many deserving asylum
applicants are forced to travel without papers. For example, victims of
repressive governments often find themselves forced to flee their
homelands at a moment's notice, without time or means to acquire proper
documentation. Or a government may systematically strip refugees of
their documentation, as we saw Serb soldiers do in Kosovo earlier this
year.
Second, expedited removal places an undue burden on refugees, and
places too much authority in the hands of low-level INS officers.
Refugees typically arrive at our borders ragged and tired from their
ordeals, and often with little or no knowledge of English. Our policy
forces them to undergo a secondary inspection interview with a low-
level INS officer who can deport them on the spot, subject only to a
supervisor's approval. By law, anyone who indicates a fear of
persecution or requests asylum during this interview is to be referred
for an interview with an asylum officer. But no safeguards exist to
guarantee that this happens, and the secondary inspection interviews
take place behind closed doors with no witnesses. Indeed, this
interview often becomes unduly confrontation and intimidating. As the
Lawyers Committee for Human Rights has documented, refugees are
detained for as long as 36 hours, are deprived of food and water, and
are often shackled. If they are lucky, they will be provided with an
interpreter who speaks their language. If they are unlucky, they will
receive no interpreter at all, or an interpreter who works for the
airline owned by the government that they claim is persecuting them.
Such a system is a betrayal of our ideals, and is already producing a
human cost.
Indeed, only a few years into this new regime, there are
extraordinary troubling stories of bona fide refugees who were turned
away unjustly at our borders. I will talk about two such refugees
today.
``Dem'' (a pseudonym) was a 21-year-old ethnic Albanian student in
Kosovo. In October 1998, Serbian police seized him and tortured him for
10 days, accusing him of terrorism and threatening to kill his family.
Immediately after this experience, Dem fled Kosovo, without travel
documents. He traveled through Albania to Italy, where he purchased a
Slovenian passport. In January of this year, he flew via Mexico City to
California, hoping to find refuge in the United States.
Dem's hopes were not realized. The INS referred him for a secondary
inspection interview and provided for a Serbian translator to
participate by telephone. Since Dem could speak only Albanian, the
interpreter was useless. Instead of finding an interpreter who could
speak Albanian, the INS officers simply closed Dem's case, handcuffed
his hands behind his back and put him on a plane back to Mexico City.
In other words, Dem--a victim of an ethnic conflict that was already
front page news in America's newspapers--was removed from the United
States without ever being asked in a language he could understand
whether he was afraid to return to Kosovo. Luckily, Dem succeeded in a
second attempt to enter the United States, has since been found to have
a credible fear of persecution, and is now awaiting an asylum hearing.
One can only wonder how many refugees in Dem's position never receive
such a second chance.
While Dem was arriving in Los Angeles this January, a Tamil from Sri
Lanka named Arumugam Thevakumar arrived at JFK Airport in New York
seeking asylum. Mr. Thevakumar had escaped from Sri Lanka and its
bloody civil war, but only after being persecuted by the army because
he is a Tamil. When he had his secondary inspection interview, he told
the interpreter that he was a refugee and sought asylum. The translator
laughed and said that he was unable to translate Mr. Thevakumar's
request into English. In addition to battling a language barrier and an
uncooperative translator, Mr. Thevakumar's ability to convince the INS
of his sincerity was further handicapped by the fact that he was
handcuffed and shackled for significant portions of the interview.
Following his interview, Mr. Thevakumar was briefly detained and was
allowed to telephone a cousin, who arranged for a lawyer. The lawyer
contacted the INS to clarify that Mr. Thevakumar wanted to apply for
asylum. But the INS sent Mr. Thevakumar back to Istanbul, where his
flight to New York had originated, without affording him even the
opportunity to show that he was deserving of asylum. Indeed, the INS
faulted him for not making his intention to apply for asylum clear
during his secondary inspection interview.
Mr. Thevakumar's ordeal did not end there. When he landed in Turkey,
he was jailed for four days by immigration officials, who beat and
interrogated him before handing him over to regular police. When he was
finally released by the police, he was referred to a United Nations
office in Ankara, halfway across the country from Istanbul. After 15
days of travel wearing clothes that were completely unsuitable for the
Turkish winter, he finally arrived at the U.N. office and requested
refugee status and asked not to be sent back to Sri Lanka. He is
currently living in a Red Cross facility in Turkey.
These stories--just two of the many stories demonstrating the human
cost of expedited removal--go a long way toward showing the inhumanity
of the new immigration regime that Congress imposed in 1996. But
refugees are not the only people affected by expedited removal. Human
rights groups have also documented numerous cases where people
traveling to the United States on business, with proper travel
documents, have been removed based on the so-called ``sixth sense'' of
a low-level INS officer who suspected that their facially valid
documents were fraudulent. In other words, the damage done by expedited
removal also threatens the increasingly international American
economy--if businesspeople from

[[Page S14702]]

around the world are treated disrespectfully at our ports of entry,
they are likely to take their business elsewhere.
But perhaps the most distressing part of expedited removal is that
there is no way for us to know how many deserving refugees have been
excluded. Because secondary inspection interviews are conducted in
secret, we typically only learn about mistakes when refugees manage to
make it back to the U.S. a second time, like Dem, or when they are
deported to a third country they passed through on their way to the
U.S., like Mr. Thevakumar. This uncertainty should lead us to be
especially wary of continuing this failed experiment.
As I said, my bill would limit the use of expedited removal to times
of immigration emergencies, defined as the arrival or imminent arrival
of aliens that would substantially exceed the INS' ability to control
our borders. The bill gives the Attorney General the discretion to
declare an emergency migration situation, and the declaration is good
for 90 days. During those 90 days, the INS would be authorized to use
expedited removal. The Attorney General is given the power to extend
the declaration for further periods of 90 days, in consultation with
the House and Senate Judiciary Committees. s
This framework allows the government to take extraordinary steps when
a true immigration emergency threatens our ability to patrol our
borders. At the same time, it recognizes that expedited removal is an
extraordinary step, and is not an appropriate measure under ordinary
circumstances.
This bill also provides safeguards that will ensure that refugees are
assured of some due process rights, even during immigration
emergencies. First, aliens would be given the right to have an
immigration judge review a removal order, and would have the right both
to speak before the immigration judge on their own behalf and to be
represented at the hearing at their own expense. To make these rights
meaningful, immigration officers would be required to inform aliens of
their rights before they are removed or withdraw their application to
enter the country. This provision takes away from low-level INS
officers the unilateral power to remove an alien from the United
States.
Second, expedited removal will not apply to aliens who have fled from
a country that engages in serious human rights violations. The Attorney
General, in consultation with the Assistant Secretary of State for
Democracy, Human Rights, and Labor, will develop and maintain a list of
such countries. This will help ensure that even during an immigration
emergency, we will provide added protection for many of our most
vulnerable refugees.
Third, this bill reforms the procedures used to determine whether an
applicant who seeks asylum has a credible fear of persecution. If an
asylum officer determines that an applicant does not have a credible
fear of persecution, the applicant will now have a right to a prompt
review by an immigration judge. The applicant will have the right to
appear at that review hearing and to be represented, at the applicant's
expense. In addition to providing procedural guarantees, the bill also
redefines ``credible fear of persecution'' as a claim for asylum that
is not clearly fraudulent and is related to the criteria for granting
asylum. In combination, these changes will make it easier for aliens
requesting asylum in the United States to receive an appropriate asylum
hearing before an immigrant judge.
Fourth, the bill clarifies that the Attorney General is not obligated
to detain asylum applicants while their claims are pending. Asylum
seekers are not criminals and they do not deserve to be imprisoned or
detained against their will. There may be cases where detention is
appropriate, and this bill allows for such cases, but I believe that
that power should only be used in very rare cases. After all, these
applicants have by definition demonstrated a credible fear of
persecution. Moreover, detaining asylum applicants imposes a
significant burden on the taxpayers, who of course must foot the bill
for the detention. This bill also gives the Attorney General the
ability to release an asylum applicant from detention pending a final
determination of credible fear of persecution.
Finally, this Refugee Protection Act also addresses a few other
problems that have arisen under the restrictive immigration laws
Congress passed in 1996. First, it gives aliens the opportunity to
demonstrate good cause for filing for asylum after the one-year time
limit for claims has expired. By definition, worthy asylum applicants
have arrived in the United States following traumatic experiences
abroad. They often must spend their first months here learning the
language and adjusting to a culture that in many cases is
extraordinarily different from the one they know. Therefore, although I
can understand the desire to have asylum seekers submit timely
applications, we must apply the one-year rule with some discretion and
common sense. Indeed, when the Senate passed the 1996 immigration law,
it contained a broad ``good cause'' exception that did not survive to
become part of the final legislation. The Senate should take up this
issue again; we were right in 1996, and the need is still there today.
In a similar vein, the bill allows asylum applicants whose claims
have been rejected to submit a second application where they can show
good cause. No one wants to allow aliens to submit repeated
applications and drain the resources of our INS officers and
immigration courts. But there are exceptional cases where a second
application is justified, beyond the ``changed circumstances''
exception that exists under current law. For example, extraordinarily
worthy asylum applicants, unfamiliar with the United States and its
legal system, might submit an application without the benefit of
counsel and without an understanding of the legal requirements of a
successful asylum claim. Such people deserve a second chance to
demonstrate that they deserve to receive asylum.
In conclusion, I point out that even in 1996, a year in which
immigration was as unpopular in this Capitol as I can remember, this
body agreed that expedited removal was inappropriate for a country of
our ideals and our historic commitment to human rights. And that
agreement cut across party lines, as many of my Republican colleagues
voted to implement expedited removal only in times of immigration
emergencies. I urge them, as well as my fellow Democrats, to support
this legislation and to work for its passage before the end of the
106th Congress.
Mr. BROWNBACK. Mr. President, I join my distinguished colleagues from
Vermont, Senator Leahy and Senator Jeffords, among others, to introduce
this bill entitled The Refugee Protection Act of 1999, which restores
fairness to our treatment of refugees who arrive at our shores seeking
freedom from persecution and oppression. This bill should dramatically
reduce incidences where refugees are wrongly returned to their
countries to face imprisonment, torture, and even death.
It was about 400 years when the refugee Pilgrims arrived in this new
land seeking religious liberty. Defined by such events since the
earliest days of the Republic, America has provided asylum to those
fleeing tyranny and seeking liberty. George Washington urged his fellow
citizens ``to render this country more and more a safe and propitious
asylum for the unfortunates of other countries.'' In his 1801 First
Annual Message, President Thomas Jefferson asked, ``Shall oppressed
humanity find no asylum on this globe?''
In 1996, Congress changed the procedures by which arriving asylum
seekers ask for protection in the United States, which our legislation
corrects. Previously, arriving asylum seekers presented their claims
directly to an immigration judge at an evidentiary hearing. The
applicant could present witnesses and documentation to support their
claim. Decisions by the immigration judge were subject to
administrative and judicial review.
The new 1996 law did away with these fundamental due process
protections, and instead, granted lower level INS officers the power to
make life and death decisions that previously were entrusted to
professional immigration judges. This new, unfortunate system of
``expedited removal'' presently allows for the immediate deportation of
individuals who arrive without valid travel documents, such as a
passport and visa. It can even be used against an individual who has a
facially valid visa that INS inspectors suspect was obtained under
false pretenses. In short,

[[Page S14703]]

the process is so expedited and summary that it has resulted in the
improper deportation of refugees fleeing persecution and torture.
Simply put, our legislation restores the pre-1996 due process
procedures, including a judicial review.
Last year, Congress addressed the problems of religious persecution
which continues to be a serious problem worldwide. Enactment of the
International Religious Freedom Act was the first time in the history
of democracy that any country had adopted comprehensive, national
legislation on religious liberty. That legislation ensures that
religious liberty will be an important factor in our nation's foreign
policy considerations. In the May 17, 1999 final report to the
Secretary of State and to President of the United States, the Advisory
Committee on Religious Freedom Abroad said:

Putting an end to such (religious) persecution cannot be
accomplished without providing meaningful protection to the
victims of religious persecution. We must upgrade domestic
procedures that identify and protect refugees and asylum
seekers fleeing religious persecution. We must strengthen our
overseas refugee processing mechanisms to reach those in need
of rescue. . . And, here at home we must eliminate processes
such as ``expedited removal'' that can make victims of those
fleeing religious persecution rather than providing access to
protection.

Consistent with this commitment to protect international religious
liberty, we must also ensure that persons fleeing religious persecution
are not wrongly turned away at our shores because of unfair procedures.
This will be accomplished through this Act.
The Refugee Protection Act returns fairness to the system by limiting
expedited removal procedures only to emergency situations. An
``emergency'' must be declared as such by the Attorney General, and
typically involves large numbers of immigrants arriving en masse, so as
to overwhelm the INS review system. In the event that ``expedited
removal'' is employed, the Act requires an immigration judge to review
the summary deportation order. Also, it permits claims for asylum to be
filed beyond the one-year deadline created by the 1996 legislation, if
there is good cause for the delay or when consideration of the claims
is clearly in the interest of justice.
Our refugee asylum system reflects both the best and the worst
policies, throughout our history as a nation. In 1939, more than 900
Jews aboard the SS St. Louis, who were within sight of Miami, were
rejected and forced to return to Europe where they were murdered in
concentration camps. Yet when World War II ended, the United States led
the effort to establish universally recognized fundamental rights. As a
result of this advocacy, the General Assembly of the United Nations
adopted the Universal Declaration of Human Rights on December 10, 1948
which recognized a right of asylum.
Over the next 30 years the United States provided refuge to numerous
people fleeing communism, including to those involved in `underground'
democracy movements in Hungary, Cuba, and Southeast Asia. Yet it was
not until 1980 that Congress enacted a comprehensive asylum system
using the criteria of the 1951 Convention Relating to the Status of
Refugees. The Convention defines a refugee as someone with a ``well-
founded fear of being persecuted for reasons of race, religion,
nationality, membership of a particular social group or political
opinion.'' Under the procedures of this Refugee Act of 1980, requests
for asylum were decided by an immigration judge, thus providing a
fundamental due process protection. Notably, this judicial review was
stripped in the 1996 legislation, and is a flaw which our legislation
seeks to correct.
Fair procedures are critically important in making life or death
decisions, as asylum cases can be. At a June 24, 1999 hearing of the
Senate Subcommittee on International Operations and Human Rights, Ms.
Lavinia Limon, Director of the Office of Refugee Resettlement at the
Department of Health and Human Services, noted:

Once released, torture victims often attempt to flee to
countries such as the United States to become invisible and
safe, and to survive. But they retain the impact of
torture: they are not able to speak of their experiences
for fear officials will not believe them or understand
them or will regard them as criminals. They often cannot
express themselves effectively in asylum interviews
because they cannot speak articulately of their
experiences and they feel vulnerable to all officials.
They have learned to fear government and the police and
they do not trust any government officials and authorities
to help them. They have been weakened and disabled
psychologically from the torture. Many times the victims
must flee alone, enduring long periods of separation from
their families who might otherwise provide emotional
support.

Today the need for proper asylum reviews is greater than ever.
Worldwide, religious intolerance and ethnic strife turn religious
leaders and ordinary citizens into desperate asylum seekers. According
to Amnesty International, government-sanctioned torture is practiced in
125 countries.
This legislation helps those fleeing intolerable injustices in the
name of religious freedom and democracy. Placing the decision squarely
in the hands of an immigration judge does not impose an unreasonable or
impossible burden on the government. Congress should enact the Refugee
Protection Act because it restores the fundamental due process
protections needed to ensure that legitimate asylum seekers are not
wrongly turned away.
Mr. FEINGOLD. Mr. President, I rise today to join my distinguished
colleagues, Senators Leahy, Brownback, and Jeffords, to introduce a
bill that will reduce the likelihood that people fleeing genuine
persecution in their homelands and seeking refuge in America will be
unfairly returned to their countries.
Mr. President, as you know, our nation has been built by people who
arrived on our shores from all over the world. Immigrants have enriched
our nation economically, culturally, and in so many other invaluable
ways. I don't think anyone can dispute that, of all the countries in
the world, our nation has the deepest, richest commitment to welcoming
all people who want to make a new home and a new life.
At the same time, Mr. President, our nation also has a deep tradition
of welcoming those who are fleeing oppression in their native land.
From the pilgrims who set foot in present day Massachusetts and
Virginia, to the Kosovars who fled brutality in their homeland earlier
this year, America has been a safe refuge for those fleeing
persecution. Our nation's first president, George Washington, said:
``America is open to receive not only the opulent and respectable
stranger, but the oppressed and persecuted of all nations and
religions.'' George Washington said those words in 1783. One hundred
and one years later, France would present our country with a gift, a
statue called ``Liberty Enlightening the World.'' In 1884, that title
was a profound statement of our nation's past, our present and hope for
the future. ``Liberty Enlightening the World'' later became known as
the Statue of Liberty. The Statue of Liberty has these words inscribed
on her:

. . . Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!

Unfortunately, Mr. President, our current asylum and immigration laws
have nearly slammed the door shut on victims of persecution, even those
who are sure to suffer if returned to their home countries. Current law
originates with the passage in 1996 of the Illegal Immigration Reform
and Immigrant Responsibility Act. That law was an attempt to combat
illegal immigration. But in the process, Congress denied victims of
persecution the protection that our nation historically has offered.
The current system provides for the immediate deportation of
individuals who arrive without travel documents precisely in order.
Now, Mr. President, it's appropriate that we require these documents,
but people who have fled torture and great brutality may not have
proper documentation because of the circumstances under which they fled
their homelands. As a result, genuine victims of persecution face the
risk of being turned away at our borders and put on the next plane back
to face imprisonment, torture or death. The 1996 law effectively
empowers low level INS officers to summarily make the life and death
decision as to whether to deport an asylum seeker. Prior to 1996, those
decisions were made by an immigration judge. We must return a judicial
role to the review of asylum claims.

As my colleagues who were here in 1995 and 1996 may recall, the 1996
law

[[Page S14704]]

was enacted in reaction to a flurry of concern that our border controls
were too lax. The debate on the 1996 law was fueled by legitimate
concern over criminals who managed to enter the country and commit acts
of terrorism or other crimes. In response, the INS began a sensible
tightening of the asylum process. In 1994 and 1995, the INS ceased
issuing work authorizations at the border. Instead, asylum seekers had
to wait until an adjudication of their case before receiving work
authorization. As a result, claims for asylum dropped dramatically--
those who were seeking work but did not have a legitimate fear of
persecution were no longer claiming asylum. The INS reforms were
effective. But the 1996 law went too far. In our rush to keep
undesirable asylum applicants out, Congress created a system where
those with bona fide asylum claims face the great risk of being
immediately deported to face the wrath of oppressive home governments
without a real chance to make their case.
Because an INS officer has the authority to deport refugees
immediately, with no record keeping requirement, it has been difficult
to determine exactly how many genuine refugees with a valid fear of
persecution in their home countries have been turned away at our
airports and borders as a result of the 1996 law. Organizations like
the Lawyers Committee for Human Rights, however, have been able to
collect some data on the extent of the problem.
One of the most troubling stories is the case of a 21-year-old
Kosovar Albanian known as ``Dem.'' In October 1998, Serb police seized
Dem at his home, beat him, and threatened to kill his family. This
abuse occurred over a period of ten days. When the Serb police finally
released Dem, he fled Kosovo. He eventually made his way to the United
States in January of this year, landing in California via Mexico City.
When he arrived, the INS arranged for a Serbian translator to assist by
telephone with its questioning of Dem. But Dem, a Kosovar Albanian,
could not speak Serbian. After the translator spoke with Dem, the
translator said something to the INS officer. The INS officer promptly
handcuffed and fingerprinted Dem and then put him on a plane back to
Mexico City.
Fortunately, Dem was not returned to Kosovo. Dem tried re-entering
the United States and on this second attempt, he was allowed to apply
for asylum. But the facts supporting Dem's asylum claim had not
changed. We must fix a system that produces such arbitrary results
where people's lives, and American ideals, are at stake.
We don't know exactly how many victims of real persecution have been
immediately deported, and we obviously don't know exactly what has
happened to each victim since enactment of the 1996 law. What we do
know is that an asylum seeker who is fleeing torture, abuse or death
faces the risk of being kicked out of our country, without even
obtaining a perfunctory hearing before an immigration judge.
The Refugee Protection Act of 1999 will return fairness and due
process to the treatment of asylum seekers. For non-emergency migration
situations, the bill would restore the pre-1996 law, when immigration
judges were involved in the decision to deport someone who claimed
asylum. The current process will continue to apply in emergency
migration situations and would designate the Attorney General as the
official with authority to determine when an emergency migration
situation exists. The bill also would provide that an emergency cannot
exist for more than 90 days, unless the Attorney General, after
consultation with the Senate and House Judiciary Committees, determines
that the emergency situation continues to exist.
Mr. President, this is a sensible bill that allows us to scrutinize
those who come to our borders, but honors our best traditions and
returns fairness and humanity to our treatment of those who are fleeing
persecution. I urge my colleagues to join me and Senators Leahy,
Brownback and Jeffords in fighting for basic human dignity, decency and
justice. Let us lift the torch of ``Liberty Enlightening the World''
once again. Let us not reflexively turn away those whose very lives may
depend on a fair hearing as they seek refuge in the United States.
______

By Mr. DODD (for himself and Mr. DeWine):
S. 1941. A bill to amend the Federal Fire Prevention and Control Act
of 1974 to authorize the Director of the Federal Emergency Management
Agency to provide assistance to fire departments and fire prevention
organizations for the purpose of protecting the public and firefighting
personnel against fire and fire-related hazards; to the Committee on
Commerce, Science, and Transportation.

Firefighter Investment and Response Enhancement Act

Mr. DODD. Mr. President, I rise today with my colleague and
friend, Senator DeWine of Ohio, to introduce legislation that would
represent our nation's first comprehensive commitment to fire safety.
The Firefighter Investment and Response Enhancement Act (the FIRE
bill), will, for the first time, provide volunteer and professional
firefighters with the resources they need to protect the people and
property of their towns and cities.
In communities throughout America, firefighters are almost always the
first to respond to a call for help. They respond to a fire alarm. They
are on the scene of traffic accidents and construction accidents.
Emergency medical technicians, who often belong to fire departments,
each day answer tens of thousands of calls for medical assistance. And,
when a natural or manmade calamity strikes--from hurricanes to school
shootings to bombings--firefighters are there without fail, restoring
order and saving lives.
Given all that they do, it should surprise no one that, across the
Nation, fire departments struggle to find resources to help keep our
communities safe. As the demands placed on fire departments have grown
in volume and magnitude, the ability of local residents to support them
has been put to a severe test. As a result, towns and cities throughout
the country are struggling mightily to provide the fire departments
with the resources they require.
The FIRE Act will help localities meet that critical objective. It
will provide grants to help localities hire more firefighters, train
new and existing personnel to handle the volume and intensity of
today's tragedies, and purchase badly needed equipment.
This legislation will also provide critical resources to communities
to fund fire prevention and education programs so that they can
anticipate disasters and respond appropriately. Such programs are
critical means of preventing tragedies from occurring in the first
place. Eight out of ten fire deaths occur in a place where people feel
the safest--their homes. Tragically, our children and the elderly
account for a disproportionate number of these deaths. Indeed,
preschool children face a risk of death from fire that is more than
twice the risk for all age groups combined. While we can and should
ensure that the fire equipment and personnel are available to respond
to these tragedies, our best defense remains education and prevention.
Yet, it is a painful irony that when resources are scarce, education
and prevention efforts are often the first to be put on the budgetary
chopping block. The legislation Senator DeWine and I are introducing
will help ensure that no locality is put in the painful position of
choosing between prevention and responding to emergencies.
This legislation will enable our fire departments to worry more about
saving lives and less about finding dollars. It will enable communities
to better prevent disasters, and better train firefighters.
I look forward to working with Senator DeWine to successfully advance
this legislation in the Senate. It is our shared hope that our
colleagues will come to realize that this bill is one whose time has
come. Our Nation's firefighters deserve the support that this bill will
provide, and I hope that we will give it to them before the end of this
Congress.
Mr. DeWINE. Mr. President, each day, we entrust our lives and
the safety of our families, friends, and neighbors to the capable hands
of the brave men and women in our local police and fire departments.
These individuals have decided that they are willing to risk their
lives and safety out of a dedication to their citizens and their
commitment to public service.
In Congress, we have recognized the dangers inherent in police work
by

[[Page S14705]]

dedicating federal resources to help local police departments. In fact,
this year, Fiscal Year (FY) 1999, the federal government spent $11
billion on law enforcement initiatives, such as the COPS program, to
help local law enforcement face the daily challenges of their
communities. In contrast, though, the federal government spent only $32
million on fire prevention and training.
We ask local firefighters to risk no less than their lives every time
they respond to a fire alarm. We ask them to risk their lives
responding to the approximately two million reports of fire that they
receive on an annual basis. We expect them to be willing to give their
lives in exchange for the lives of our families, neighbors, and friends
once every 71 seconds while responding to the 400,000 residential
fires--fires which represent only about 22% of all fires reported. We
count on them to protect our lives and the lives of our loved ones.
I believe the Federal Government needs to show a greater commitment
to the fire services. So, today, along with my colleague and friend
from Connecticut, Senator Dodd, I rise to introduce the Firefighter
Investment and Response Enhancement Act--or, FIRE bill. This bill is
very simple. It authorizes, over five years, $5 billion in grants to
local fire departments. These grants can be used for just about any
purpose--training, equipment, hiring more firefighters, or education
and prevention programs. A new office, established by this bill under
the Federal Emergency Management Agency (FEMA), would be responsible
for distributing grants to local departments based on a competitive
process, involving needs assessment. To ensure that the funding is not
spent solely on brand new state-of-the-art fire trucks, it mandates
that no more than 25% of the grant funding can be used to purchase new
fire vehicles. Finally, it requires that at least 10% of the funds are
used for fire prevention programs.
Our bill is supported by the National Safe Kids Campaign, the
International Association of Fire Fighters, International Association
of Fire Chiefs, national Volunteer Fire Council, International
Association of Arson Investigators, International Society of Fire
Service Instructors, and the National Fire Protection Association. It
is also a companion measure to legislation introduced in the House by
Congressmen Pascrell and Weldon, where almost 200 members of the House
of Representatives have cosponsored it. I am proud to introduce this
bill with my friend from Connecticut and look forward to working to
ensure that the federal government increases its commitment to the men
and women who make up our local fire departments. We owe it to
them.
______

By Mr. JEFFORDS:
S. 1942. A bill to amend the Older Americans Act of 1965 to establish
grant programs to provide State pharmacy assistance programs and
medication management programs; to the Committee on Health, Education,
Labor, and Pensions.

PHARMACEUTICAL AID FOR OLDER AMERICANS ACT

Mr. JEFFORDS. Mr. President, there has been considerable attention
rightfully paid by our colleagues this year to the issue of providing
prescription drug coverage for our older American citizens. Estimates
of the number of older Americans without some form of added coverage
for prescription drugs vary between a low of 16.7 percent to 50
percent. About 7.7 million Medicare beneficiaries with annual incomes
below 200 percent of poverty have no prescription drug coverage,
despite some evidence indicating they are in poorer health than those
beneficiaries with coverage. Those without added coverage for
prescription benefits spend approximately 50 percent of their total
income on out-of-pocket health care costs, and there are anecdotal
reports that some elders forgo taking their prescribed medicines in
order to have food to eat. Finally, there are econometric studies that
conclude that a $1 increase in pharmaceutical expenditure is associated
with a $3.65 reduction in hospital care expenditure.
The problems posed by the lack of prescription drug coverage for the
neediest elders is compounded by the well-documented effects of
inappropriate drug use among the elderly. In 1995, the General
Accounting Office (GAO) found that inappropriate drug use among elders
is acute and that elders were particularly susceptible to unintended,
adverse drug events (ADEs), due in part to the natural aging process
and also to the likelihood that they are taking multiple medications.
One study of drug use by the elderly, done by the Vermont Program for
Quality in Health Care, found that it was not uncommon for elders to be
taking more than a dozen drugs at one time. In fact, the Vermont study
actually documented one case in which ``a single individual received
prescriptions for 71 different drugs in a single year, several of which
probably should not have been taken in combination.''
The GAO report also cited studies showing that hospitalizations for
elderly patients due to ADEs were six times greater than for the
general population, with an estimated annual cost of $20 billion.
However, a recent Journal of the American Medical Association article
indicated that the level of ADEs could be reduced 66 percent, if a
pharmacist participated in grand rounds. Clearly, more must be done to
recognize the importance of medication management programs that ensure
the quality of drug therapy, including patient evaluations, compliance
assessments, and drug therapy reviews.
We are all aware that prescription drug costs continue to grow at an
alarming rate. Seniors are being forced to spend greater and greater
portions of their fixed incomes on prescription drugs which they need
to live. Research and development of prescription drugs have come a
long way since Medicare was originally enacted in 1965. Today, drugs
are just as important as hospital visits, and in many cases more
important, and it just doesn't make sense for Medicare to reimburse
hospitals for surgery but not to provide coverage for the drugs that
might prevent surgery. We need to modernize the Medicare program so
that it does not go bankrupt in the next 10 to 15 years, and at the
same time we must ensure that any Medicare reform proposal we consider
includes a prescription drug benefit that helps all seniors.
Mr. President, I have already introduced two measures that will help
our older citizens obtain the medicines they need and at prices they
can afford. My first bill, S. 1462, the ``Personal Use Prescription
Drug Importation Act of 1999,'' allows Americans of all ages to avail
themselves of the lower prices for prescription medicines that are
available in Canada. A second measure, S. 1725, the ``DrugGap Insurance
for Seniors Act of 1999,'' would provide for a more comprehensive
access to prescription drugs by Medicare beneficiaries through reform
and modernization of the Medicare Supplemental, Medigap, program. Under
this approach, all existing Medigap plans, and three new drug-only
Medigap plans, would provide various levels of prescription drug
benefits from which seniors could choose. And our neediest elders'
needs would be supported through Federal contributions for the cost of
their premiums.
During the 1st Session of the 106th Congress, no fewer than eight
bills have been introduced in the Senate to provide a prescription drug
benefit for Medicare beneficiaries--with most proposals estimated to
cost between $5 billion and $40 billion per year. While I'm hopeful
that we will all work hard to include a prescription drug benefit for
Medicare beneficiaries, I am also concerned that at the end of the
Congress we may not be successful. That is why I am introducing a
measure today, the ``Pharmaceutical Aid to Older Americans Act,'' which
will serve as a backstop for our neediest elders. This program builds
on State pharmacy assistance programs that are already in place, and it
encourages States to begin them where they don't already exist.
Fifteen States are cutting new and innovative paths for providing
prescription drug coverage for their neediest citizens. Most of these
programs are for elder citizens (more than half also cover people with
disabilities), and cover a wide variety of drugs--though some are
limited to certain drugs or conditions, some require cost sharing for
prescription medicines, and some have annual enrollment fees or monthly
premiums. As of 1997, these programs aided over 700,000 people. The

[[Page S14706]]

Pharmaceutical Aid to Older Americans Act is designed to assist States
in their efforts to provide medicines and appropriate pharmacy
counseling benefits for their neediest elders.
This Act will strengthen the Older Americans Act by authorizing two
discretionary grant programs, subject to appropriations, to fund State-
based pharmaceutical assistance and medication management programs.
Under this measure, States would develop models that work best for them
and would have the latitude to design and implement innovative
approaches for providing benefits to their neediest elders. States
awarded grant money would agree to: match Federal funds with 30 percent
new or existing State funds or in-kind contributions and not supplant
current State expenditures with Federal funds. In-kind contributions
counting toward the match requirement could include assistance from
pharmaceutical companies and organization- and community-based
pharmacies, thereby making this approach a truly public-private
partnership.
Each application for pharmaceutical assistance funds must include a
medication management program that ensures the quality of drug
therapies through patient evaluations, compliance assessments, and drug
therapy reviews. Federal funds could be used to provide drug coverage
benefits only to eligible beneficiaries, defined as Medicare
beneficiaries with incomes up to 200 percent of poverty but without any
other coverage for prescription drug benefits (States could expand
eligibility with State resources). All senior citizens could utilize
the medication management portion of the program.

This is not government control of drug prices or price-fixing. The
States can purchase pharmaceuticals from any willing seller, including
pharmaceutical manufacturers, pharmaceutical distributors, wholesalers,
pharmacy benefit management firms (PBMs), and chain or local
pharmacies, without any Federal requirement for wholesale prices or
Medicaid-based rebates. In some instances, it's likely that States may
be able to negotiate better purchasing prices than any of those set by
some artificial, imposed ceiling. Finally, for those States that choose
not to provide pharmaceutical benefits, the Act authorizes grants to
States to create or support stand-alone Medication Management Programs
that will involve the States in collaborative efforts with community,
chain-based, and institutional pharmacists to implement medication
management programs.
As I mentioned earlier, Mr. President, I am fully committed to
providing a prescription benefit for all our elders as we move forward
on comprehensive reform of the Medicare program. I am equally committed
to seeing that the Older Americans Act is reauthorized this Congress,
and I will work diligently to get these jobs accomplished. However, if
the latter effort succeeds and the former doesn't, then the
Pharmaceutical Assistance for Older Americans Act will be in place to
provide much-needed medicines for our neediest elders. I'm very pleased
Mr. President, that this measure has received endorsement of two of the
key advocacy organizations associated with the Older Americans Act, the
National Association of Area Agencies on Aging and the National
Association of State Units on Aging. Note that these guardians of the
aged support this measure, like me, if and only if we are unsuccessful
in passing a prescription drug benefit for the Medicare program.
Mr. President, I ask unanimous consent that the bill and the text of
these letters and this measure be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

S. 1942

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 ``Pharmaceutical Aid to Older
Americans Act''.

SEC. 2. AMENDMENT TO OLDER AMERICANS ACT OF 1965.

Part B of title IV of the Older Americans Act of 1965 (42
U.S.C. 3034 et seq.) is amended by adding at the end the
following:

``SEC. 429K. GRANTS FOR STATE PHARMACY ASSISTANCE PROGRAMS.

``(a) Program Authorized.--The Assistant Secretary may
award grants to States to provide and administer State
pharmacy assistance programs.
``(b) Preference.--In awarding grants under subsection (a),
the Assistant Secretary shall give preference to States that
propose to develop and implement State pharmacy assistance
programs, or to provide assistance to State pharmacy
assistance programs in existence on the date of enactment of
this section, that provide services for underserved
populations or for populations residing in rural areas.
``(c) Use of Funds.--A State that receives a grant under
subsection (a) shall use funds made available through the
grant to--
``(1) develop and implement a State pharmacy assistance
program, or to provide assistance to a State pharmacy
assistance program in existence on the date of enactment of
this section; and
``(2) prepare and submit an evaluation to the Assistant
Secretary on the implementation of, or provision of, or
assistance to a program described in paragraph (1).
``(d) Application.--To be eligible to receive a grant under
subsection (a), a State shall submit to the Assistant
Secretary an application at such time, in such manner, and
containing such information as the Assistant Secretary may
require, including--
``(1) a description of a State pharmacy assistance program
that such State plans to develop and implement, including
information on the anticipated number of individuals to be
served, eligibility criteria of individuals to be served,
such as the age and income level of such individuals, drugs
to be covered by the program, and performance measures to be
used to evaluate the program; or
``(2) a description of a State pharmacy assistance program
in existence on the date of enactment of this section that
such State plans to assist with funds received under
subsection (a), including information on the number of
individuals served, eligibility criteria of individuals
served, such as the age and income level of such individuals,
drugs covered by the program, and performance measures used
to evaluate the program.
``(e) Minimum Amount.--In awarding grants under subsection
(a), from the amount appropriated under subsection (l)(1) for
each fiscal year, the Assistant Secretary shall award, to
each eligible State, an amount that is not less than
$250,000.
``(f) Duration of Grant.--In awarding grants under
subsection (a), the Assistant Secretary shall award such
grants for periods of 2 years.
``(g) Matching Requirement.--The Assistant Secretary shall
not award a grant to a State under subsection (a) unless that
State agrees that, with respect to the costs to be incurred
by the State in carrying out the program for which the grant
was awarded, the State will make available (directly or
through donations from public or private entities) non-
Federal contributions in an amount that is not less than 30
percent of Federal funds provided under the grant.
``(h) Supplement Not Supplant.--Funds made available under
this section shall be used to supplement, and not supplant,
any other Federal, State, or local funds expended by a State
to provide the services for programs described in this
section.
``(i) Evaluations and Report.--
``(1) Program evaluations.--Not later than 6 months after
the end of the period for which the grant is awarded under
subsection (a), the State shall prepare an evaluation of the
effectiveness of programs carried out with funds received
under this section. Not later than 6 months after the end of
such period, the State shall submit to the Assistant
Secretary a report containing the results of the evaluation,
in such form and containing such information as the Assistant
Secretary may require.
``(2) Report to congress.--Not later than 36 months after
the date of enactment of this section, the Assistant
Secretary shall prepare and submit to the Speaker of the
House of Representatives and the President pro tempore of the
Senate a report that describes the effectiveness of the
programs carried out with funds received under this section.
``(j) Sunset Provision.--This section shall not apply
beginning on the date of enactment of legislation that
provides comprehensive health care coverage for prescription
drugs under the medicare program under title XVIII of the
Social Security Act (42 U.S.C. 1395 et seq.) for all medicare
beneficiaries.
``(k) Definitions.--In this section:
``(1) Medication management.--The term `medication
management program' means a program of services for older
individuals, including pharmacy counseling, medicine
screening, or patient and health care provider education
programs, that--
``(A) provides information and counseling on the
prescription drug purchases that are currently the most
economical, and safe and effective;
``(B) provides services to minimize unnecessary or
inappropriate use of prescription drugs; and
``(C) provides services to minimize adverse events due to
unintended prescription drug-to-drug interactions.
``(2) State pharmacy assistance programs.--The term `State
pharmacy assistance program' means a program that provides
coverage for prescription drugs and medication management
programs for individuals who--
``(A) are not less than 65 years of age;

[[Page S14707]]

``(B) are not eligible for medical assistance under title
XIX of the Social Security Act (42 U.S.C. 1396 et seq.);
``(C) are from families with incomes at or below 200
percent of the poverty line; and
``(D) have no coverage for prescription drugs other than
coverage provided by a State pharmacy assistance program.
``(l) Authorization of Appropriations.--
``(1) In general.--There are authorized to be appropriated
to carry out this section, $25,000,000 for fiscal year 2001,
and such sums as may be necessary for each of fiscal years
2002 through 2005.
``(2) Reservation.--From the amount appropriated under
paragraph (1), for each fiscal year, the Assistant Secretary
shall reserve not less than 33.3 percent of such amount to
enable States to assist State pharmacy assistance programs in
existence on the date of enactment of this section.

``SEC. 429L. GRANTS FOR MEDICATION MANAGEMENT PROGRAMS.

``(a) Program Authorized.--The Assistant Secretary may
award grants to State agencies to assist such agencies or
area agencies on aging in providing and administering
medication management programs.
``(b) Use of Funds.--A State agency or area agency on aging
that receives funds through a grant awarded under subsection
(a) shall use such funds to--
``(1) develop and implement a medication management
program, or to provide assistance to a medication management
program in existence on the date of enactment of this
section; and
``(2) prepare an evaluation on the implementation of or
provision of assistance to a program described in paragraph
(1), and, in the case of an area agency on aging, submit the
evaluation to the appropriate State agency.
``(c) Application.--To be eligible to receive a grant under
subsection (a), a State agency shall submit to the Assistant
Secretary an application at such time, in such manner, and
containing such information as the Assistant Secretary may
require.
``(d) Minimum Amount.--In awarding grants under subsection
(a), from the amount appropriated under subsection (j) for
each fiscal year, the Assistant Secretary shall award, to
each eligible State agency, an amount that is not less than
$50,000.
``(e) Duration of Grant.--In awarding grants under
subsection (a), the Assistant Secretary shall award such
grants for a period of 2 years.
``(f) Matching Requirement.--The Assistant Secretary shall
not award a grant to a State agency under subsection (a)
unless that State agency agrees that, with respect to the
costs to be incurred in carrying out programs for which the
grant was awarded, the State agency will make available
(directly or through donations from public or private
entities) non-Federal contributions in an amount that is not
less than 30 percent of Federal funds provided under the
grant.
``(g) Supplement Not Supplant.--Funds made available under
this section shall be used to supplement, and not supplant,
any other Federal, State, or local funds expended by a State
agency or area agency on aging to provide the services for
programs described in this section.
``(h) Reports.--
``(1) Report to assistant secretary.--Not later than 24
months after receipt of a grant under subsection (a), a State
agency shall prepare and submit to the Assistant Secretary a
report on the medication management programs carried out by
the State agency or area agencies on aging in the State in
such form and containing such information as the Assistant
Secretary may require, including an analysis of the
effectiveness of the programs. Such report shall in part be
based on evaluations submitted under subsection (b)(2).
``(2) Report to congress.--Not later than 36 months after
grants have been awarded under subsection (a), the Assistant
Secretary shall prepare and submit to the Speaker of the
House of Representatives and the President pro tempore of the
Senate a report that describes the effectiveness of the
programs carried out with funds received under this section.
``(i) Medication Management Programs.--In this section, the
term `medication management program' means a program of
services for older individuals, including pharmacy
counseling, medicine screening, or patient and health care
provider education programs, that--
``(1) provides information and counseling on the
prescription drug purchases that are currently the most
economical, and safe and effective;
``(2) provides services to minimize unnecessary or
inappropriate use of prescription drugs; and
``(3) provides services to minimize adverse events due to
unintended prescription drug-to-drug interactions.
``(j) Authorization of Appropriations.--There are
authorized to be appropriated to carry out this section,
$15,000,000 for fiscal year 2001, and such sums as may be
necessary for each of fiscal years 2002 through 2005.''.
____

National Association of

Area Agencies on Aging,

Washington, DC, November 9, 1999.
Hon. James Jeffords,
Chair, Committee on Health, Education, Labor & Pensions, U.S.
Senate, Washington, DC.
Dear Senator Jeffords: The National Association of Area
Agencies on Aging (N4A) is pleased that you are introducing
the Pharmaceutical Aid to Older Americans Act. We believe
implementation of this Act could be an ideal interim measure
until a Medicare prescription drug benefit is enacted.
As you know, a fast-growing aging population coupled with
escalating pharmaceutical costs makes the lack of
prescription drug coverage one of the most pressing problems
facing our nation's older Americans. The proposed State
Pharmacy Assistance Program would allow states with existing
benefit programs to expand services and provide a strong
incentive for other states to implement a prescription drug
program.
Your legislative measure also goes far in addressing drug
misuse, which is another escalating and dangerous problem.
The proposed Medication Management Program would provide
states with a financial base to implement a statewide
information, education and counseling program that would
significantly benefit the health and welfare of older adults.
While N4A supports your proposal in concept, we have some
specific questions about the implementation of these programs
and concerns about the roles and responsibilities of Area
Agencies on Aging (AAAs) and Title IV Native American
grantees. We welcome the opportunity to meet with you in the
near future to address these concerns.
Again, we applaud your efforts and look forward to working
with you next session as you further define the proposal and
shepherd it through the legislative process.
Sincerely,
Janice Jackson,
Executive Director.
____

National Association of

State Units on Aging,

Washington, DC, November 10, 1999.
Sean Donohue,
U.S. Senate, Committee on Health, Education, Labor, and
Pensions, Washington, DC.
Dear Sean: Dan Quirk and I reviewed the draft you sent last
week outlining Senator Jeffords' proposed Pharmaceutical Aid
to Older Americans Act. Overall, the proposal to provide
grants to states to support the development or expansion of
pharmaceutical assistance programs and medication management
programs is a good one, and using the existing infrastructure
of the Older Americans Act makes good sense. The aging
network is well suited to develop and administer these types
of programs. Your proposal was well developed and thoughtful.
Both programs would provide valuable assistance to older
people who do not have any other prescription drug coverage
available. The requirement for a 30-percent state match seems
high, but allowing contributions to be ``in-kind'' will help
states in that regard. The income eligibility level of 200-
percent of the federal poverty level may conflict with the
eligibility levels set by states in existing programs, though
I haven't done an analysis of this yet. As with other
programs under the Older Americans Act, if state-funded
programs already exist that provide the same services, and
eligibility or cost sharing requirements are at odds with the
federal program, it requires states essentially to manage two
different funding streams for the same program or set of
services. As always, giving states the flexibility to blend
federal funds with state funds to develop one program would
decrease administrative expenses for the states and allow the
money saved to be used for direct services.
NASUA continues to support overall reform of the Medicare
program that would provide a comprehensive prescription drug
benefit to beneficiaries. In the meantime, state-funded
programs that are being developed and which would be
supported under this proposal continue to fill in the gaps
for people with no coverage for prescription drugs. This
proposal would strengthen the existing infrastructure, and
perhaps could serve to support a prescription program under
Medicare whenever it may be implemented in the future.
We hope this proposal will generate some further interest
in reauthorizing the Older Americans Act as soon as possible,
hopefully before the end of the 106th Congress. We were very
disappointed that reauthorization was stalled over long-
standing disagreements over the Title V program.
If there is anything NASUA can do to support Senator
Jeffords proposal and reauthorization, please let me know.
Thanks for the opportunity to review the Pharmaceutical Aid
to Older Americans Act.
Sincerely,
Kathleen C. Konka,
Policy Associate.
______

By Mrs. MURRAY:
S. 1943. A bill to provide for an inexpensive book distribution
program; to the Committee on Health, Education, Labor, and Pensions.

first book distribution program act

Mrs. MURRAY. Mrs. MURRAY. Mr. President, today I introduce
legislation on another topic I will be discussing with Chairman
Jeffords as we move forward with reauthorization of the Elementary and
Secondary Education Act in the Senate Health, Education, Labor, and
Pensions Committee.

I am introducing legislation today to fund an innovative book
distribution

[[Page S14708]]

program targeted at giving low-income students their own ``first
book.''
The ``First Book'' program is a non-profit private organization that
has been tremendously successful gathering and distibuting new
children's books to needy children throughout the nation. Key to the
success of ``First Book'' are local boards called ``First Book Local
Advisory Boards.'' Under my legislation, which would provide $5 million
a year federal investment to such boards, will help them leverage
millions more in funds from other sources. ``First Book'' has been
successful because it is locally-driven, and reflects private industry
initiative. ``First Book'' provides new books, which the program
purchases from publishers at discount rates, to disadvantaged children
and families primarily through tutoring, mentoring, and family literacy
programs.
This bill builds on successful efforts underway in communities across
the country. It takes what has been a successful but very targeted
program, and will increase its reach and effect into many more American
communities. ``First Book'' makes a very real difference for
disadvantaged children and their families, and with this investment, it
will make a difference for thousands more.
______

By Mrs. MURRAY:
S. 1944. A bill to provide national challenge grants for innovation
in the education of homeless children and youth; to the Committee on
Health, Education, Labor, and Pensions.

stuart mc kinney homeless education improvement act

Mrs. MURRAY. Mr. President, today I introduce legislation on
another topic I will be discussing with Chairman Jeffords as we move
forward with reauthorization of the Elementary and Secondary Education
Act in the Senate Health, Education, Labor, and Pensions Committee.

The bill deals with an improvement I hope we can make in the Stuart
McKinney Homeless Education program. While the McKinney program is
relatively small, my hope is that we can greatly improve its
effectiveness by recognizing and funding innovative approaches for
serving homeless students.
Chairman Jeffords and others have recognized that keeping a homeless
child in their school district of origin is vital to their success.
Children, especially homeless children, need continuity in their lives.
Yet as a nation, we have not yet focused on funding the innovative
practices that will show how this can be done and done effectively.
In addition, there are chronic problems facing homeless children,
such as the problems of trying to reach out to unaccompanied homeless
youth, those young people who do not have parents or guardians with
them in their homeless situation. Homeless preschoolers present another
whole range of issues that many schools struggle to overcome.
My legislation will provide $2 million each year in national
competitive challenge grants for innovation in the education of
homeless children and youth. We follow this same approach in education
technology and other areas, and challenge grants are remarkably
successful in sparking innovation and dissemination of new methods of
instruction.
Homeless students face many challenges, and schools face challenges
in serving them. Creating a small challenge grant for homeless
education is one necessary step we can take to help schools help these
students succeed and achieve.
______

By Mr. LOTT:
S. 1948. A bill to amend the provisions of title 17, United States
Code, and the Communications Act of 1934, relating to copyright
licensing and carriage of broadcast signals by satellite; to the
Committee on the Judiciary.

intellectual property and communications omnibus reform act of 1999

Mr. LOTT: Mr. President, I ask unanimous consent that the following
section-by-section analysis be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

S. 1948--Section-by-Section Analysis

Section 1. Short Title. This Act may be cited as the
``Intellectual Property and Communications Omnibus Reform Act
of 1999.''

TITLE I--SATELLITE HOME VIEWER IMPROVEMENT ACT OF 1999

When Congress passed the Satellite Home Viewer Act in 1988,
few Americans were familiar with satellite television. They
typically resided in rural areas of the country where the
only means of receiving television programming was through
use of a large, backyard C-band satellite dish. Congress
recognized the importance of providing these people with
access to broadcast programming, and created a compulsory
copyright license in the Satellite Home Viewer Act that
enabled satellite carriers to easily license the copyrights
to the broadcast programming that they retransmitted to their
subscribers.
The 1988 Act fostered a boom in the satellite television
industry. Coupled with the development of high-powered
satellite service, or DSS, which delivers programming to a
satellite dish as small as 18 inches in diameter, the
satellite industry now serves homes nationwide with a wide
range of high quality programming. Satellite is no longer
primarily a rural service, for it offers an attractive
alternative to other providers of multichannel video
programming; in particular, cable television. Because
satellite can provide direct competition with the cable
industry, it is in the public interest to ensure that
satellite operates under a copyright framework that permits
it to be an effective competitor.
The compulsory copyright license created by the 1988 Act
was limited to a five year period to enable Congress to
consider its effectiveness and renew it where necessary. The
license was renewed in 1994 for an additional five years, and
amendments made that were intended to increase the
enforcement of the network territorial restrictions of the
compulsory license. Two-year transitional provisions were
created to enable local network broadcasters to challenge
satellite subscribers' receipt of satellite network service
where the local network broadcaster had reason to believe
that these subscribers received an adequate off-the-air
signal from the broadcaster. The transitional provisions were
minimally effective and caused much consumer confusion and
anger regarding receipt of television network stations.
The satellite license is slated to expire at the end of
this year, requiring Congress to again consider the copyright
licensing regime for satellite retransmissions of over-the-
air television broadcast stations. In passing this
legislation, the Conference Committee was guided by several
principles. First, the Conference Committee believes that
promotion of competition in the marketplace for delivery of
multichannel video programming is an effective policy to
reduce costs to consumers. To that end, it is important that
the satellite industry be afforded a statutory scheme for
licensing television broadcast programming similar to that of
the cable industry. At the same time, the practical
differences between the two industries must be recognized and
accounted for.
Second, the Conference Committee reasserts the importance
of protecting and fostering the system of television networks
as they relate to the concept of localism. It is well
recognized that television broadcast stations provide
valuable programming tailored to local needs, such as news,
weather, special announcements and information related to
local activities. To that end, the Committee has structured
the copyright licensing regime for satellite to encourage and
promote retransmissions by satellite of local television
broadcast stations to subscribers who reside in the local
markets of those stations.
Third, perhaps most importantly, the Conference Committee
is aware that in creating compulsory licenses, it is acting
in derogation of the exclusive property rights granted by the
Copyright Act to copyright holders, and that it therefore
needs to act as narrowly as possible to minimize the effects
of the government's intrusion on the broader market in which
the affected property rights and industries operate. In this
context, the broadcast television market has developed in
such a way that copyright licensing practices in this area
take into account the national network structure, which
grants exclusive territorial rights to programming in a local
market to local stations either directly or through
affiliation agreements. The licenses granted in this
legislation attempt to hew as closely to those arrangements
as possible. For example, these arrangements are mirrored in
the section 122 ``local-to-local'' license, which grants
satellite carriers the right to retransmit local stations
within the station's local market, and does not require a
separate copyright payment because the works have already
been licensed and paid for with respect to viewers in those
local markets. By contrast, allowing the importation of
distant or out-of-market network stations in derogation of
the local stations' exclusive right--bought and paid for in
market-negotiated arrangements--to show the works in question
undermines those market arrangements. Therefore, the specific
goal of the 119 license, which is to allow for a life-line
network television service to those homes beyond the reach of
their local television stations, must be met by only allowing
distant network service to those homes which cannot receive
the local network television stations. Hence, the ``unserved
household'' limitation that has been in the license since its
inception. The Committee is mindful and respectful of the

[[Page S14709]]

interrelationship between the communications policy of
``localism'' outlined above and property rights
considerations in copyright law, and seeks a proper balance
between the two.
Finally, although the legislation promotes satellite
retransmissions of local stations, the Conference Committee
recognizes the continued need to monitor the effects of
distant signal importation by satellite. To that end, the
compulsory license for retransmission of distant signals is
extended for a period of five years, to afford Congress the
opportunity to evaluate the effectiveness and continuing need
for that license at the end of the five-year period.
Section 1001. Short Title
This title may be cited as the ``Satellite Home Viewer
Improvement Act.''
Section 1002. Limitations on Exclusive Rights; Secondary
Transmissions by Satellite Carriers Within Local Markets
The House and the Senate provisions were in most respects
highly similar. The conference substitute generally follows
the House approach, with the differences described here.
Section 1002 of this Act creates a new statutory license,
with no sunset provision, as a new section 122 of the
Copyright Act of 1976. The new license authorizes the
retransmission of television broadcast stations by satellite
carriers to subscribers located within the local markets of
those stations.
Creation of a new statutory license for retransmission of
local signals is necessary because the current section 119
license is limited to the retransmission of distance signals
by satellite. The section 122 license allows satellite
carriers for the first time to provide their subscribers with
the television signals they want most: their local stations.
A carrier may retransmit the signal of a network station (or
superstation) to all subscribers who reside within the local
market of that station, without regard to whether the
subscriber resides in an ``unserved household.'' The term
``local market'' is defined in Section 119(j)(2), and
generally refers to a station's Designated Market Area as
defined by Nielsen.
Because the section 122 license is permanent, subscribers
may obtain their local television stations without fear that
their local broadcast service may be turned off at a future
date. In addition, satellite carriers may deliver local
stations to commercial establishments as well as homes, as
the cable industry does under its license. These amendments
create parity and enhanced competition between the satellite
and cable industries in the provision of local television
broadcast stations.
For a satellite carrier to be eligible for this license,
this Act, following the House approach, provides both in new
section 122(a) and in new section 122(d) that a carrier may
use the new local-to-local license only if it is in full
compliance with all applicable rules and regulations of the
Federal Communications Commission, including any requirements
that the Commission may adopt by regulation concerning
carriage of stations or programming exclusivity. These
provisions are modeled on similar provisions in section 111,
the terrestrial compulsory license. Failure to fully comply
with Commission rules with respect to retransmission of one
or more stations in the local market precludes the carrier
from making use of the section 122 license. Put another way,
the statutory license overrides the normal copyright scheme
only to the extent that carriers strictly comply with the
limits Congress has put on that license.
Because terrestrial systems, such as cable, as a general
rule do not pay any copyright royalty for local
retransmissions of broadcast stations, the section 122
license does not require payment of any copyright royalty by
satellite carriers for transmissions made in compliance with
the requirements of section 122. By contrast, the section 119
statutory license for distant signals does require payment of
royalties. In addition, the section 122 statutory license
contains no ``unserved household'' limitation, while the
section 119 license does contain that limitation.
Satellite carriers are liable for copyright infringement,
and subject to the full remedies of the Copyright Act, if
they violate one or more of the following requirements of the
section 122 license. First, satellite carriers may not in any
way willfully alter the programming contained on a local
broadcast station.
Second, satellite carriers may not use the section 122
license to retransmit a television broadcast station to a
subscriber located outside the local market of the station.
Retransmission of a station to a subscriber located outside
the station's local market is covered by section 119, and is
permitted only when all conditions of that license are
satisfied. Accordingly, satellite carriers are required to
provide local broadcasters with accurate lists of the street
addresses of their local-to-local subscribers so that
broadcasters may verify that satellite carriers are making
proper use of the license. The subscriber information
supplied to broadcasters is for verification purposes only,
and may not be used by broadcasters for any other reason. Any
knowing provision of false information by a satellite carrier
would, under section 122(d), bar use of the Section 122
license by the carrier engaging in such practices. The
section 122 license contains remedial provisions parallel to
those of Section 119, including a ``pattern or practice''
provision that requires termination of the Section 122
statutory license as to a particular satellite carrier if it
engages in certain abuses of the license.
Under this provision, just as in the statutory licenses
codified in sections 111 and 119, a violation may be proven
by showing willful activity, or simple delivery of the
secondary transmission over a certain period of time. In
addition to termination of service on a nationwide or local
or regional basis, statutory damages are available up to
$250,000 for each 6-month period during which the pattern or
practice of violations was carried out. Satellite carriers
have the burden of proving that they are not improperly
making use of the section 122 license to serve subscribers
outside the local markets of the television broadcast
stations they are providing. The penalties created under this
section parallel those under Section 119, and are to deter
satellite carriers from providing signals to subscribers in
violation of the licenses.
The section 122 license is limited in geographic scope to
service to locations in the United States, including any
commonwealth, territory or possession of the United States.
In addition, section 122(j) makes clear that local
retransmission of television broadcast stations to
subscribers is governed solely by the section 122 license,
and that no provision of the section 111 cable compulsory
license should be interpreted to allow satellite carriers to
make local retransmissions of television broadcast stations
under that license. Likewise, no provision of the section 119
license (or any other law) should be interpreted as
authorizing local-to-local retransmissions. As with all
statutory licenses, these explicit limitations are consistent
with the general rule that, because statutory licenses are in
derogation of the exclusive rights granted under the
Copyright Act, they should be interpreted narrowly.
Section 1002(a) of this Act contains new standing
provisions. Adopting the approach of the House bill, section
122(f)(1) of the Copyright Act is parallel to section 119(e),
and ensures that local stations, in addition to any other
parties that qualify under other standing provisions of the
Act, will have the ability to sue for violations of section
122. New section 122(f)(2) of the Copyright Act enables a
local television station that is not being carried by a
satellite carrier in violation of the license to file a
copyright infringement lawsuit in federal court to enforce
its rights.
Section 1003. Extension of Effect of Amendments to Section
119 of Title 17, United States Code
As in both the House bill and the Senate amendment, this
Act extends the section 119 satellite statutory license for a
period of five years by changing the expiration date of the
legislation from December 31, 1999, to December 31, 2004. The
procedural and remedial provisions of section 119, which have
already been interpreted by the courts, are being extended
without change. Should the section 119 license be allowed to
expire in 2004, it shall do so at midnight on December 31,
2004, so that the license will cover the entire second
accounting period of 2004.
The advent of digital terrestrial broadcasting will
necessitate additional review and reform of the distant
signal statutory license. And responsibility to oversee the
development of the nascent local station satellite service
may also require for review of the distant signal statutory
license in the future. For each of these reasons, this Act
establishes a period for review in 5 years.
Although the section 119 regime is largely being extended
in its current form, certain sections of the Act may have a
near-term effect on pending copyright infringement lawsuits
brought by broadcasters against satellite carriers. These
changes are prospective only; Congress does not intend to
change the legality of any conduct that occurred prior to the
date of enactment. Congress does intend, however, to benefit
consumers where possible and consistent with existing
copyright law and principles.
This Act attempts to strike a balance among a variety of
public policy goals. While increasing the number of potential
subscribers to distant network signals, this Act clarifies
that satellite carriers may carry up to, but no more than,
two stations affiliated with the same network. The original
purpose of the Satellite Home Viewer Act was to ensure that
all Americans could receive network programming and other
television services provided they could not receive those
services over-the-air or in any other way. This bill reflects
the desire of the Conference to meet this requirement and
consumers' expectations to receive the traditional level of
satellite service that has built up over the years, while
avoiding an erosion of the programming market affected by the
statutory licenses.
Section 1004. Computation of Royalty Fees for Satellite
Carriers
Like both the House bill and the Senate amendment, this Act
reduces the royalty fees currently paid by satellite carriers
for the retransmission of network and superstations by 45
percent and 30 percent, respectively. These are reductions of
the 27-cent royalty fees made effective by the Librarian of
Congress on January 1, 1998. The reductions take effect on
July 1, 1999, which is the beginning of the second accounting
period for 1999, and apply to all accounting periods for the
five-year extension of the section 119 license. The Committee
has drafted this provision such that, if the section 119
license is renewed after 2004, the 45 percent and 30 percent
reductions of the 27-cent fee will remain in effect, unless
altered by legislative amendment.

[[Page S14710]]

In addition, section 119(c) of title 17, United States
Code, is amended to clarify that in royalty distribution
proceedings conducted under section 802 of the Copyright Act,
the Public Broadcasting Service may act as agent for all
public television copyright claimants and all Public
Broadcasting Service member stations.
Section 1005. Distant Signal Eligibility for Consumers
The Senate bill contained provisions retaining the existing
Grade B intensity standard in the definition of ``unserved
household.'' The House agreed to the Senate provisions with
amendments, which extend the ``unserved household''
definition of section 119 of title 17 intact in certain
respects and amend it in other respects. Consistent with the
approach of the Senate amendment, the central feature of the
existing definition of ``unserved household''--inability to
receive, through use of a conventional outdoor rooftop
receiving antenna, a signal of Grade B intensity from a
primary network station--remains intact. The legislation
directs the FCC, however, to examine the definition of
``Grade B intensity,'' reflecting the dBu levels long set by
the Federal Communications Commission in 47 C.F.R.
Sec. 73.683(a), and issue a rulemaking within 6 months after
enactment to evaluate the standard and, if appropriate, make
recommendations to Congress about how to modify the analog
standard, and make a further recommendation about what an
appropriate standard would be for digital signals. In this
fashion, the Congress will have the best input and
recommendations from the Commission, allowing the Commission
wide latitude in its inquiry and recommendations, but reserve
for itself the final decision-making authority over the scope
of the copyright licenses in question, in light of all
relevant factors.
The amended definition of ``unserved household'' makes
other consumer-friendly changes. It will eliminate the
requirement that a cable subscriber wait 90 days to be
eligible for satellite delivery of distant network signals.
After enactment, cable subscribers will be eligible to
receive distant network signals by satellite, upon choosing
to do so, if they satisfy the other requirements of section
119.
In addition, this Act adds three new categories to the
definition of ``unserved household'' in section 119(d)(10):
(a) certain subscribers to network programming who are not
predicted to receive a signal of Grade A intensity from any
station of the relevant network, (b) operators of
recreational vehicles and commercial trucks who have complied
with certain documentation requirements, and (c) certain C-
band subscribers to network programming. This Act also
confirms in new section 119(d)(10)(B) what has long been
understood by the parties and accepted by the courts, namely
that a subscriber may receive distant network service if all
network stations affiliated with the relevant network that
are predicted to serve that subscriber give their written
consent.
Section 1005(a)(2) of the bill creates a new section
119(a)(2)(B)(i) of the Copyright Act to prohibit a satellite
carrier from delivering more than two distant TV stations
affiliated with a single network in a single day to a
particular customer. This clarifies that a satellite carrier
provides a signal of a television station throughout the
broadcast day, rather than switching between stations
throughout a day to pick the best programming among different
signals.
Section 1005(a)(2) of this Act creates a new section
119(a)(2)(B)(ii)(I) of the Copyright Act to confirm that
courts should rely on the FCC's ILLR model to presumptively
determine whether a household is capable of receiving a
signal of Grade B intensity. The conferees understand that
the parties to copyright infringement litigation under the
Satellite Home Viewer Act have agreed on detailed procedures
for implementing the current version of ILLR, and nothing in
this Act requires any change in those procedures. In the
future, when the FCC amends the ILLR model to make it more
accurate pursuant to section 339(c)(3) of the Communications
Act of 1934, the amended model should be used in place of the
current version of ILLR. The new language also confirms in
new section 119(a)(2)(B)(ii)(II) that the ultimate
determination of eligibility to receive network signals shall
be a signal intensity test pursuant to 47 C.F.R.
Sec. 73.686(d), as reflected in new section 339(c)(5) of the
Communications Act of 1934. Again, the conferees understand
that existing Satellite Home Viewer Act court orders already
incorporate this FCC-approved measurement method, and nothing
in this Act requires any change in such orders. Such a signal
intensity test may be conducted by any party to resolve a
customer's eligibility in litigation under section 119.
Section 1005(a)(2) of this Act creates a new section
119(a)(2)(B)(iii) of the Copyright Act to permit continued
delivery by means of C-band transmissions of network stations
to C-band dish owners who received signals of the pertinent
network on October 31, 1999, or were recently required to
have such service terminated pursuant to court orders or
settlements under section 119. This provision does not
authorize satellite delivery of network stations to such
persons by any technology other than C-band.
Section 1005(b) also adds a new provision (E) to section
119(a)(5). The purpose of this provision is to allow certain
longstanding superstations to continue to be delivered to
satellite customers without regard to the ``unserved
household'' limitation, even if the station now technically
qualifies as a ``network station'' under the 15-hour-per-week
definition of the Act. This exception will cease to apply if
such a station in the future becomes affiliated with one of
the four networks (ABC, CBS, Fox, and NBC) that qualified as
networks as of January 1, 1995.
Section 1005(c) of this Act adds a new section 119(e) of
the Copyright Act. This provision contains a moratorium on
terminations of network stations to certain otherwise
ineligible recent subscribers to network programming whose
service has been (or soon would have been) terminated and
allows them to continue to be eligible for distant signal
services. The subscribers affected are those predicted by the
current version of the ILLR model to receive a signal of less
than Grade A intensity from any network station of the
relevant network defined in section 73.683(a) of Commission
regulations (47 C.F.R. 73.683(a)) as in effect January 1,
1999. As the statutory language reflects, recent court orders
and settlements between the satellite and broadcasting
industries have required (or will in the near future require)
significant numbers of terminations of network stations to
ineligible subscribers in this category. Although the
conferees strongly condemn lawbreaking by satellite carriers,
and intend for satellite carriers to be subject to all other
available legal remedies for any infringements in which the
carriers have engaged, the conferees have concluded that the
public interest will be served by the grandfathering of this
limited category of subscribers whose service would otherwise
be terminated.
The decision by the conferees to direct this limited
grandfathering should not be understood as condoning unlawful
conduct by satellite carriers, but rather reflects the
concern of the conference for those subscribers who would
otherwise be punished for the actions of the satellite
carriers. Note that in the previous 18 months, court
decisions have required the termination of some distant
network signals to some subscribers. However, the Conferees
are aware that in some cases satellite carriers terminated
distant network service that was not subject to the original
lawsuit. The Conferees intend that affected subscribers
remain eligible for such service.
The words ``shall remain eligible'' in section 119(e) refer
to eligibility to receive stations affiliated with the same
network from the same satellite carrier through use of the
same transmission technology at the same location; in other
words, grandfathered status is not transferable to a
different carrier or a different type of dish or at a new
address. The provisions of new section 119(e) are
incorporated by reference in the definition of ``unserved
household'' as new section 119(d)(10)(C).
Section 1005(d) of this Act creates a new section
119(a)(11), which contains provisions governing delivery of
network stations to recreational vehicles and commercial
trucks. This provision is, in turn, incorporated in the
definition of ``unserved household'' in new section
119(d)(10)(D). The purpose of these amendments is to allow
the operators of recreational vehicles and commercial trucks
to use satellite dishes permanently attached to those
vehicles to receive, on television sets located inside those
vehicles, distant network signals pursuant to section 119. To
prevent abuse of this provision, the exception for
recreational vehicles and commercial trucks is limited to
persons who have strictly complied with the documentation
requirements set forth in section 119(a)(11). Among other
things, the exception will only become available as to a
particular recreational vehicle or commercial truck after the
satellite carrier has provided all affected networks with all
documentation set forth in section 119(a). The exception will
apply only for reception in that particular recreational
vehicle or truck, and does not authorize any delivery of
network stations to any fixed dwelling.
Section 1006. Public Broadcasting Service Satellite Feed
The conference agreement follows the Senate bill with an
amendment that applies the network copyright royalty rate to
the Public Broadcasting Service the satellite feed. The
conference agreement grants satellite carriers a section 119
compulsory license to retransmit a national satellite feed
distributed and designated by PBS. The license would apply to
educational and informational programming to which PBS
currently holds broadcast rights. The license, which would
extend to all households in the United States, would sunset
on January 1, 2002, the date when local-to-local must-carry
obligations become effective. Under the conference agreement,
PBS will designate the national satellite feed for purposes
of this section.
Section 1007. Application of Federal Communications
Commission Regulations
The section 119 license is amended to clarify that
satellite carriers must comply with all rules, regulations,
and authorizations of the Federal Communications Commission
in order to obtain the benefits of the section 119 license.
As provided in the House bill, this would include any
programming exclusivity provisions or carriage requirements
that the Commission may adopt. Violations of such rules,
regulations or authorizations would render a carrier
ineligible for the copyright statutory license with respect
to that retransmission.

[[Page S14711]]

Section 1008. Rules for Satellite Carriers Retransmitting
Television Broadcast Signals
The Senate agrees to the House bill provisions regarding
carriage of television broadcast signals, with certain
amendments, as discussed below. Section 108 creates new
sections 338 and 339 of the Communications Act of 1934.
Section 338 addresses carriage of local television signals,
while section 339 addresses distant television signals.
New section 338 requires satellite carriers, by January 1,
2002, to carry upon request all local broadcast stations'
signals in local markets in which the satellite carriers
carry at least one signal pursuant to section 122 of title
17, United States Code. The conference report added the
cross-reference to section 122 to the House provision to
indicate the relationship between the benefits of the
statutory license and the carriage requirements imposed by
this Act. Thus, the conference report provides that, as of
January 1, 2002, royalty-free copyright licenses for
satellite carriers to retransmit broadcast signals to viewers
in the broadcasters' service areas will be available only on
a market-by-market basis.
The procedural provisions applicable to section 338
(concerning costs, avoidance of duplication, channel
positioning, compensation for carriage, and complaints by
broadcast stations) are generally parallel to those
applicable to cable systems. Within one year after enactment,
the Federal Communications Commission is to issue
implementing regulations which are to impose obligations
comparable to those imposed on cable systems under paragraphs
(3) and (4) of section 614(b) and paragraphs (1) and (2) of
section 615(g), such as the requirement to carry a station's
entire signal without additions or deletions. The obligation
to carry local stations on contiguous channels is
illustrative of the general requirement to ensure that
satellite carriers position local stations in a way that is
convenient and practically accessible for consumers. By
directing the FCC to promulgate these must-carry rules, the
conferees do not take any position regarding the application
of must-carry rules to carriage of digital television signals
by either cable or satellite systems.
To make use of the local license, satellite carriers must
provide the local broadcast station signal as part of their
satellite service, in a manner consistent with paragraphs
(b), (c), (d), and (e), FCC regulations, and retransmission
consent requirements. Until January 1, 2002, satellite
carriers are granted a royalty-free copyright license to
retransmit broadcast signals on a station-by-station basis,
consistent with retransmission consent requirements. The
transition period is intended to provide the satellite
industry with a transitional period to begin providing local-
into-local satellite service to communities throughout the
country.
The conferees believe that the must-carry provisions of
this Act neither implicate nor violate the First Amendment.
Rather than requiring carriage of stations in the manner of
cable's mandated duty, this Act allows a satellite carrier to
choose whether to incur the must-carry obligation in a
particular market in exchange for the benefits of the local
statutory license. It does not deprive any programmers of
potential access to carriage by satellite carriers. Satellite
carriers remain free to carry any programming for which they
are able to acquire the property rights. The provisions of
this Act allow carriers an easier and more inexpensive way to
obtain the right to use the property of copyright holders
when they retransmit signals from all of a market's broadcast
stations to subscribers in that market. The choice whether to
retransmit those signals is made by carriers, not by the
Congress. The proposed licenses are a matter of legislative
grace, in the nature of subsidies to satellite carriers, and
reviewable under the rational basis standard.\1\
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See footnotes at end of Analysis.
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In addition, the conferees are confident that the proposed
license provisions would pass constitutional muster even if
subjected to the O'Brien standard applied to the cable must-
carry requirement.\2\ The proposed provisions are intended to
preserve free television for those not served by satellite or
cable systems and to promote widespread dissemination of
information from a multiplicity of sources. The Supreme Court
has found both to be substantial interests, unrelated to the
suppression of free expression.\3\ Providing the proposed
license on a market-by-market basis furthers both goals by
preventing satellite carriers from choosing to carry only
certain stations and effectively preventing many other local
broadcasters from reaching potential viewers in their service
areas. The Conference Committee is concerned that, absent
must-carry obligations, satellite carriers would carry the
major network affiliates and few other signals. Non-carried
stations would face the same loss of viewership Congress
previously found with respect to cable noncarriage.\4\
The proposed licenses place satellite carrier in a
comparable position to cable systems, competing for the same
customers. Applying a must-carry rule in markets which
satellite carriers choose to serve benefits consumers and
enhances competition with cable by allowing consumers the
same range of choice in local programming they receive
through cable service. The conferees expect that, by January
1, 2002, satellite carriers' market share will have increased
and that the Congress' interest in maintaining free over-the-
air television will be undermined if local broadcasters are
prevented from reaching viewers by either cable or satellite
distribution systems. The Congress' preference for must-carry
obligations has already been proven effective, as attested by
the appearance of several emerging networks, which often
serve underserved market segments. There are no narrower
alternatives that would achieve the Congress' goals. Although
the conferees expect that subscribers who receive no
broadcast signals at all from their satellite service may
install antennas or subscribe to cable service in addition to
satellite service, the Conference Committee is less sanguine
that subscribers who receive network signals and hundreds of
other programming choices from their satellite carrier will
undertake such trouble and expense to obtain over-the-air
signals from independent broadcast stations. National feeds
would also be counterproductive because they siphon potential
viewers from local over-the-air affiliates. In sum, the
Conference Committee finds that trading the benefits of the
copyright license for the must carry requirement is a fair
and reasonable way of helping viewers have access to all
local programming while benefitting satellite carriers and
their customers.
Section 338(c) contains a limited exception to the general
must-carry requirements, stating that a satellite carrier
need not carry two local affiliates of the same network that
substantially duplicate each others' programming, unless the
duplicating stations are licensed to communities in different
states. The latter provisions address unique and limited
cases, including WMUR (Manchester, New Hampshire) / WCVB
(Boston, Massachusetts) and WPTZ (Plattsburg, New York)/ WNNE
(White River Junction, Vermont), in which mandatory carriage
of both duplicating local stations upon request assures that
satellite subscribers will not be precluded from receiving
the network affiliate that is licensed to the state in which
they reside.
Because of unique technical challenges on satellite
technology and constraints on the use of satellite spectrum,
satellite carriers may initially be limited in their ability
to deliver must carry signals into multiple markets. New
compression technologies, such as video streaming, may help
overcome these barriers however, and, if deployed, could
enable satellite carriers to deliver must-carry signals into
many more markets than they could otherwise. Accordingly, the
conferees urge the FCC, pursuant to its obligations under
section 338, or in any other related proceedings, to not
prohibit satellite carriers from using reasonable
compression, reformatting, or similar technologies to meet
their carriage obligations, consistent with existing
authority.

* * * * *

New section 339 of the Communications Act contains
provisions concerning carriage of distant television stations
by satellite carriers. Section 339(a)(1) limits satellite
carriers to providing a subscriber with no more than two
stations affiliated with a given television network from
outside the local market. In addition, a satellite carrier
that provides two distant signals to eligible households may
also provide the local television signals pursuant to section
122 of title 17 if the subscriber offers local-to-local
service in the subscriber's market. This provision furthers
the congressional policy of localism and diversity of
broadcast programming, which provides locally-relevant news,
weather, and information, but also allows consumers in
unserved households to enjoy network programming obtained via
distant signals. Under new section 339(a)(2), which is based
on the Senate amendment, the knowing and willful provision of
distant television signals in violation of these restrictions
is subject to a forfeiture penalty under section 503 of the
Communications Act of $50,000 per violation or for each day
of a continuing violation.
New section 339(b)(1)(A) requires the Commission to
commence within 45 days of enactment, and complete within one
year after the date of enactment, a rulemaking to develop
regulations to apply network nonduplication, syndicated
exclusivity and sports blackout rules to the transmission of
nationally distributed superstations by satellite carriers.
New section 339(b)(1)(B) requires the Commission to
promulgate regulations on the same schedule with regard to
the application of sports blackout rules to network stations.
These regulations under subparagraph (B) are to be imposed
``to the extent technically feasible and not economically
prohibitive'' with respect to the affected parties. The
burden of showing that conforming to rules similar to cable
would be ``economically prohibitive'' is a heavy one. It
would entail a very serious economic threat to the health of
the carrier. Without that showing, the rules should be as
similar as possible to that applicable to cable services.
Section 339(c) of the Communications Act of 1934 addresses
the three distinct areas discussed by the Commission in its
Report & Order in Docket No. 98-201: (i) the definition of
``Grade B intensity,'' which is the substantive standard for
determining eligibility to receive distant network stations
by satellite, (ii) prediction of whether a signal of Grade B
intensity from a particular station is present at a
particular household, and (iii) measurement of whether a
signal of Grade B intensity from a particular station is
present

[[Page S14712]]

at a particular household. Section 339(c) addresses each of
these topics.
New section 339(c) addresses evaluation and possible
recommendations for modification by the Commission of the
definition of Grade B intensity, which is incorporated into
the definition of ``unserved household'' in section 119 of
the Copyright Act. Under section 339(c), the Commission is to
complete a rulemaking within 1 year after enactment to
evaluate, and if appropriate to recommend modifications to
the Grade B intensity standard for analog signals set forth
in 47 C.F.R. Sec. 73.683(a), for purposes of determining
eligibility for distant signal satellite service. In
addition, the Commission is to recommend a signal standard
for digital signals to prepare Congress to update the
statutory license for digital television broadcasting. The
Committee intends that this report would reflect the FCC's
best recommendations in light of all relevant considerations,
and be based on whatever factors and information the
Commission deems relevant to determining whether the signal
intensity standard should be modified and in what way. As
discussed above, the two-part process allows the Commission
to recommend modifications leaving to Congress the decision-
making power on modifications of the copyright licenses at
issue.
Section 339(c)(3) addresses requests to local television
stations by consumers for waivers of the eligibility
requirements under section 119 of title 17, United States
Code. If a satellite carrier is barred from delivering
distant network signals to a particular customer because the
ILLR model predicts the customer to be served by one or more
television stations affiliated with the relevant network, the
consumer may submit to those stations, through his or her
satellite carrier, a written request for a waiver. The
statutory phrase ``station asserting that the retransmission
is prohibited'' refers to a station that is predicted by the
ILLR model to serve the household. Each such station must
accept or reject the waiver request within 30 days after
receiving the request from the satellite carrier. If a
relevant network station grants the requested waiver, or
fails to act on the waiver within 30 days, the viewer shall
be deemed unserved with respect to the local network station
in question.
Section 339(c)(4) addresses the ILLR predictive model
developed by the Commission in Docket No. 98-201. The
provision requires the Commission to attempt to increase its
accuracy further by taking into account not only terrain, as
the ILLR model does now, but also land cover variations such
as buildings and vegetation. If the Commission discovers
other practical ways to improve the accuracy of the ILLR
model still further, it shall implement those methods as
well. The linchpin of whether particular proposed refinements
to the ILLR model result in greater accuracy is whether the
revised model's predictions are closer to the results of
actual field testing in terms of predicting whether
households are served by a local affiliate of the relevant
network.
The ILLR model of predicting subscribers' eligibility will
be of particular use in rural areas. To make the ILLR more
accurate and more useful to this group of Americans, the
Conference Committee believes the Commission should be
particularly careful to ensure that the ILLR is accurate in
areas that use star routes, postal routes, or other
addressing systems that may not indicate clearly the location
of the actual dwelling of a potential subscriber. The
Commission should to ensure the model accurately predicts the
signal strength at the viewers' actual location.
New section 339(c)(5) addresses the third area discussed in
the Commission's Report & Order in Docket No. 98-201, namely
signal intensity testing. This provision permits satellite
carriers and broadcasters to carry out signal intensity
measurements, using the procedures set forth by the
Commission in 47 C.F.R. Sec. 73.686(d), to determine whether
particular households are unserved. Unless the parties
otherwise agree, any such tests shall be conducted on a
``loser pays'' basis, with the network station bearing the
costs of tests showing the household to be unserved, and the
satellite carrier bearing the costs of tests showing the
household to be served. If the satellite carrier and station
is unable to agree on a qualified individual to perform the
test, the Commission is to designate an independent and
neutral entity by rule. The Commission is to promulgate rules
that avoid any undue burdens being imposed on any party.
Section 1009. Retransmission Consent
Section 1009 amends the provisions of section 325 of the
Communications Act governing retransmission consent. As
revised, section 325(b)(1) bars multichannel video
programming distributors from retransmitting the signals of
television broadcast stations, or any part thereof, without
the express authority of the originating station. Section
325(b)(2) contains several exceptions to this general
prohibition, including noncommercial stations, certain
superstations, and, until the end of 2004, retransmission of
not more than two distant signals by satellite carriers to
unserved households outside of the local market of the
retransmitted stations, and (E) for six months to the
retransmission of local stations pursuant to the statutory
license in section 122 of the title 17.
Section 1009 also amends section 325(b) of the
Communications Act to require the Commission to issue
regulations concerning the exercise by television broadcast
stations of the right to grant retransmission consent. The
regulations would, until January 1, 2006, prohibit a
television broadcast station from entering into an exclusive
retransmission consent agreement with a multichannel video
programming distributor or refusing to negotiate in good
faith regarding retransmission consent agreements. A
television station may generally offer different
retransmission consent terms or conditions, including price
terms, to different distributors. The FCC may determine that
such different terms represent a failure to negotiate in good
faith only if they are not based on competitive marketplace
considerations.
Section 1009 of the bill adds a new subsection (e) to
section 325 of the Communications Act. New subsection 325(e)
creates a set of expedited enforcement procedures for the
alleged retransmission of a television broadcast station in
its own local market without the station's consent. The
purpose of these expedited procedure is to ensure that delays
in obtaining relief from violations do not make the right to
retransmission consent an empty one. The new provision
requires 45-day processing of local-to-local retransmission
consent complaints at the Commission, followed by expedited
enforcement of any Commission orders in the United States
District Court for the Eastern District of Virginia. In
addition, a television broadcast station that has been
retransmitted in its local market without its consent will be
entitled to statutory damages of $25,000 per violation in an
action in federal district court. Such damages will be
awarded only if the television broadcast station agrees to
contribute any statutory damage award above $1,000 to the
United States Treasury for public purposes. The expedited
enforcement provision contains a sunset which prevents the
filing of any complaint with the Commission or any action in
federal district court to enforce any Commission order under
this section after December 31, 2001. The conferees believe
that these procedural provisions, which provide ample due
process protections while ensuring speedy enforcement, will
ensure that retransmission consent will be respected by all
parties and promote a smoothly functioning marketplace.
Section 1010. Severability
Section 1010 of the Act provides that if any provision of
section 325(b) of the Communications Act as amended by this
Act is declared unconstitutional, the remaining provisions of
that section will stand.
Section 1011. Technical Amendments
Section 1011 of this Act makes technical and conforming
amendments to sections 101, 111, 119, 501, and 510 of the
Copyright Act. Apart from these technical amendments, this
legislation makes no changes to section 111 of the Copyright
Act. In particular, nothing in this legislation makes any
changes concerning entitlement or eligibility for the
statutory licenses under sections 111 and 119, nor
specifically to the definitions of ``cable system'' under
section 111(f), and ``satellite carrier'' under section
119(d)(6). Certain technical amendments to these definitions
that were included in the Conference Report to the
Intellectual Property and Communications Omnibus Reform Act
(IPCORA) of 1999 are not included in this legislation.
Congress intends that neither the courts nor the Copyright
Office give any legal significance either to the inclusion of
the amendments in the IPCORA conference report or their
omission in this legislation. These statutory definitions are
to be interpreted in the same way after enactment of this
legislation as they were interpreted prior to enactment of
this legislation.
Section 1011(b) makes a technical and clarifying change to
the definition of a ``work made for hire'' in section 101 of
the Copyright Act. Sound recordings have been registered in
the Copyright Office as works made for hire since being
protected in their own right. This clarifying amendment shall
not be deemed to imply that any sound recording or any other
work would not otherwise qualify as a work made for hire in
the absence of the amendment made by this subsection.
Section 1012. Effective dates.
Under section 1012 of this Act, sections 1001, 1003, 1005,
and 1007 through 1011 shall be effective on the date of
enactment. The amendments made by sections 1002, 1004, and
1006 shall be effective as of July 1, 1999.

TITLE II--RURAL LOCAL TELEVISION SIGNALS

Section 2001. Short Title
This title may be referred to as the ``Rural Local
Broadcast Signal Act.''
Section 2002. Local Television Service in Unserved and
Underserved Markets
To encourage the FCC to approve needed licenses (or other
authorizations to use spectrum) to provide local TV service
in rural areas, the Commission is required to make
determinations regarding needed licenses within one year of
enactment.
However, the FCC shall ensure that no license or
authorization provided under this section will cause
``harmful interference'' to the primary users of the spectrum
or to public safety use. Subparagraph (2), states that the
Commission shall not license under subsection (a) any
facility that causes harmful interference to existing primary
users of spectrum or to public safety use. The Commission
typically categorizes a licensed service as primary or
secondary. Under Commission rules, a secondary service cannot
be authorized to operate in the same band as a

[[Page S14713]]

primary user of that band unless the proposed secondary user
conclusively demonstrates that the proposed secondary use
will not cause harmful interference to the primary service.
The Commission is to define ``harmful interference'' pursuant
to the definition at 47 C.F.R. section 2.1 and in accordance
with Commission rules and policies.
For purposes of section 2005(b)(3) the FCC may consider a
compression, reformatting or other technology to be
unreasonable if the technology is incompatible with other
applicable FCC regulation or policy under the Communications
Act of 1934, as amended.
The Commission also may not restrict any entity granted a
license or other authorization under this section, except as
otherwise specified, from using any reasonable compression,
reformatting, or other technology.

TITLE III--TRADEMARK CYBERPIRACY PREVENTION

Section 3001. Short Title; References
This section provides that the Act may be cited as the
``Anticybersquatting Consumer Protection Act'' and that any
references within the bill to the Trademark Act of 1946 shall
be a reference to the Act entitled ``An Act to provide for
the registration and protection of trademarks used in
commerce, to carry out the provisions of certain
international conventions, and for other purposes,'' approved
July 5, 1946 (15 U.S.C. 1051 et seq.), also commonly referred
to as the Lanham Act.
Sec. 3002. Cyberpiracy Prevention
Subsection (a). In General. This subsection amends the
Trademark Act to provide an explicit trademark remedy for
cybersquatting under a new section 43(d). Under paragraph
(1)(A) of the new section 43(d), actionable conduct would
include the registration, trafficking in, or use of a domain
name that is identical or confusingly similar to, or dilutive
of, the mark of another, including a personal name that is
protected as a mark under section 43 of the Lanham Act,
provided that the mark was distinctive (i.e., enjoyed
trademark status) at the time the domain name was registered,
or in the case of trademark dilution, was famous at the time
the domain name was registered. The bill is carefully and
narrowly tailored, however, to extend only to cases where the
plaintiff can demonstrate that the defendant registered,
trafficked in, or used the offending domain name with bad-
faith intent to profit from the goodwill of a mark belonging
to someone else. Thus, the bill does not extend to innocent
domain name registrations by those who are unaware of
another's use of the name, or even to someone who is aware of
the trademark status of the name but registers a domain name
containing the mark for any reason other than with bad faith
intent to profit from the goodwill associated with that mark.
The phrase ``including a personal name which is protected
as a mark under this section'' addresses situations in which
a person's name is protected under section 43 of the Lanham
Act and is used as a domain name. The Lanham Act prohibits
the use of false designations of origin and false or
misleading representations. Protection under 43 of the Lanham
Act has been applied by the courts to personal names which
function as marks, such as service marks, when such marks are
infringed. Infringement may occur when the endorsement of
products or services in interstate commerce is falsely
implied through the use of a personal name, or otherwise,
without regard to the goods or services of the parties. This
protection also applies to domain names on the Internet,
where falsely implied endorsements and other types of
infringement can cause greater harm to the owner and
confusion to a consumer in a shorter amount of time than is
the case with traditional media. The protection offered by
section 43 to a personal name which functions as a mark, as
applied to domain names, is subject to the same fair use and
first amendment protections as have been applied
traditionally under trademark law, and is not intended to
expand or limit any rights to publicity recognized by States
under State law.
Paragraph (1)(B)(i) of the new section 43(d) sets forth a
number of nonexclusive, nonexhaustive factors to assist a
court in determining whether the required bad-faith element
exists in any given case. These factors are designed to
balance the property interests of trademark owners with the
legitimate interests of Internet users and others who seek to
make lawful uses of others' marks, including for purposes
such as comparative advertising, comment, criticism, parody,
news reporting, fair use, etc. The bill suggests a total of
nine factors a court may wish to consider. The first four
suggest circumstances that may tend to indicate an absence of
bad-faith intent to profit from the goodwill of a mark, and
the next four suggest circumstances that may tend to indicate
that such bad-faith intent exits. The last factor may suggest
either bad-faith or an absence thereof depending on the
circumstances.
First, under paragraph (1)(B)(i)(I), a court may consider
whether the domain name registrant has trademark or any other
intellectual property rights in the name. This factor
recognizes, as does trademark law in general, that there may
be concurring uses of the same name that are noninfringing,
such as the use of the ``Delta'' mark for both air travel and
sink faucets. Similarly, the registration of the domain name
``deltaforce.com'' by a movie studio would not tend to
indicate a bad faith intent on the part of the registrant to
trade on Delta Airlines or Delta Faucets' trademarks.
Second, under paragraph (1)(B)(i)(II), a court may consider
the extent to which the domain name is the same as the
registrant's own legal name or a nickname by which that
person is commonly identified. This factor recognizes, again
as does the concept of fair use in trademark law, that a
person should be able to be identified by their own name,
whether in their business or on a web site. Similarly, a
person may bear a legitimate nickname that is identical or
similar to a well-known trademark, such as in the well-
publicized case of the parents who registered the domain name
``pokey.org'' for their young son who goes by that name, and
these individuals should not be deterred by this bill from
using their name online. This factor is not intended to
suggest that domain name registrants may evade the
application of this act by merely adopting Exxon, Ford, or
other well-known marks as their nicknames. It merely provides
a court with the appropriate discretion to determine whether
or not the fact that a person bears a nickname similar to a
mark at issue is an indication of an absence of bad-faith on
the part of the registrant.
Third, under paragraph (1)(B)(i)(III), a court may consider
the domain name registrant's prior use, if any, of the domain
name in connection with the bona fide offering of goods or
services. Again, this factor recognizes that the legitimate
use of the domain name in online commerce may be a good
indicator of the intent of the person registering that name.
Where the person has used the domain name in commerce without
creating a likelihood of confusion as to the source or origin
of the goods or services and has not otherwise attempted to
use the name in order to profit from the goodwill of the
trademark owner's name, a court may look to this as an
indication of the absence of bad faith on the part of the
registrant.
Fourth, under paragraph (1)(B)(i)(IV), a court may consider
the person's bona fide noncommercial or fair use of the mark
in a web site that is accessible under the domain name at
issue. This factor is intended to balance the interests of
trademark owners with the interests of those who would make
lawful noncommercial or fair uses of others' marks online,
such as in comparative advertising, comment, criticism,
parody, news reporting, etc. Under the bill, the mere fact
that the domain name is used for purposes of comparative
advertising, comment, criticism, parody, news reporting,
etc., would not alone establish a lack of bad-faith intent.
The fact that a person uses a mark in a site in such a lawful
manner may be an appropriate indication that the person's
registration or use of the domain name lacked the required
element of bad-faith. This factor is not intended to create a
loophole that otherwise might swallow the bill, however, by
allowing a domain name registrant to evade application of the
Act by merely putting up a noninfringing site under an
infringing domain name. For example, in the well know case of
Panavision Int'l v. Toeppen, 141 F.3d 1316 (9th Cir. 1998), a
well known cybersquatter had registered a host of domain
names mirroring famous trademarks, including names for
Panavision, Delta Airlines, Neiman Marcus, Eddie Bauer,
Lufthansa, and more than 100 other marks, and had attempted
to sell them to the mark owners for amounts in the range of
$10,000 to $15,000 each. His use of the ``panavision.com''
and ``panaflex.com'' domain names was seemingly more
innocuous, however, as they served as addresses for sites
that merely displayed pictures of Pana Illinois and the word
``Hello'' respectively. This bill would not allow a person to
evade the holding of that case--which found that Mr. Toeppen
had made a commercial use of the Panavision marks and that
such uses were, in fact, diluting under the Federal Trademark
Dilution Act--merely by posting noninfringing uses of the
trademark on a site accessible under the offending domain
name, as Mr. Toeppen did. Similarly, the bill does not affect
existing trademark law to the extent it has addressed the
interplay between First Amendment protections and the rights
of trademark owners. Rather, the bill gives courts the
flexibility to weigh appropriate factors in determining
whether the name was registered or used in bad faith, and it
recognizes that one such factor may be the use the domain
name registrant makes of the mark.
Fifth, under paragraph (1)(B)(i)(V), a court may consider
whether, in registering or using the domain name, the
registrant intended to divert consumers away from the
trademark owner's website to a website that could harm the
goodwill of the mark, either for purposes of commercial gain
or with the intent to tarnish or disparage the mark, by
creating a likelihood of confusion as to the source,
sponsorship, affiliation, or endorsement of the site. This
factor recognizes that one of the main reasons cybersquatters
use other people's trademarks is to divert Internet users to
their own sites by creating confusion as to the source,
sponsorship, affiliation, or endorsement of the site. This is
done for a number of reasons, including to pass off inferior
goods under the name of a well-known mark holder, to defraud
consumers into providing personally identifiable information,
such as credit card numbers, to attract ``eyeballs'' to sites
that price online advertising according to the number of
``hits'' the site receives, or even just to harm the value of
the mark. Under this provision,

[[Page S14714]]

a court may give appropriate weight to evidence that a domain
name registrant intended to confuse or deceive the public in
this manner when making a determination of bad-faith intent.
Sixth, under paragraph (1)(B)(i)(VI), a court may consider
a domain name registrant's offer to transfer, sell, or
otherwise assign the domain name to the mark owner or any
third party for financial gain, where the registrant has not
used, and did not have any intent to use, the domain name in
the bona fide offering of any goods or services. A court may
also consider a person's prior conduct indicating a pattern
of such conduct. This factor is consistent with the court
cases, like the Panavision case mentioned above, where courts
have found a defendant's offer to sell the domain name to the
legitimate mark owner as being indicative of the defendant's
intent to trade on the value of a trademark owner's marks by
engaging in the business of registering those marks and
selling them to the rightful trademark owners. It does not
suggest that a court should consider the mere offer to sell a
domain name to a mark owner or the failure to use a name in
the bona fide offering of goods or services as sufficient to
indicate bad faith. Indeed, there are cases in which a person
registers a name in anticipation of a business venture that
simply never pans out. And someone who has a legitimate
registration of a domain name that mirrors someone else's
domain name, such as a trademark owner that is a lawful
concurrent user of that name with another trademark owner,
may, in fact, wish to sell that name to the other trademark
owner. This bill does not imply that these facts are an
indication of bad-faith. It merely provides a court with the
necessary discretion to recognize the evidence of bad-faith
when it is present. In practice, the offer to sell domain
names for exorbitant amounts to the rightful mark owner has
been one of the most common threads in abusive domain name
registrations. Finally, by using the financial gain standard,
this paragraph allows a court to examine the motives of the
seller.
Seventh, under paragraph (1)(B)(i)(VII), a court may
consider the registrant's intentional provision of material
and misleading false contact information in an application
for the domain name registration, the person's intentional
failure to maintain accurate contact information, and the
person's prior conduct indicating a pattern of such conduct.
Falsification of contact information with the intent to evade
identification and service of process by trademark owners is
also a common thread in cases of cybersquatting. This factor
recognizes that fact, while still recognizing that there may
be circumstances in which the provision of false information
may be due to other factors, such as mistake or, as some have
suggested in the case of political dissidents, for purposes
of anonymity. This bill balances those factors by limiting
consideration to the person's contact information, and even
then requiring that the provision of false information be
material and misleading. As with the other factors, this
factor is nonexclusive and a court is called upon to make a
determination based on the facts presented whether or not the
provision of false information does, in fact, indicate bad-
faith.
Eight, under paragraph (1)(B)(i)(VIII), a court may
consider the domain name registrant's acquisition of multiple
domain names which the person knows are identical or
confusingly similar to, or dilutive of, others' marks. This
factor recognizes the increasingly common cybersquatting
practice known as ``warehousing'', in which a cybersquatter
registers multiple domain names--sometimes hundreds, even
thousands--that mirror the trademarks of others. By sitting
on these marks and not making the first move to offer to sell
them to the mark owner, these cybersquatters have been
largely successful in evading the case law developed under
the Federal Trademark Dilution Act. This bill does not
suggest that the mere registration of multiple domain names
is an indication of bad faith, but it allows a court to weigh
the fact that a person has registered multiple domain names
that infringe or dilute the trademarks of others as part of
its consideration of whether the requisite bad-faith intent
exists.
Lastly, under paragraph (1)(B)(i)(IX), a court may consider
the extent to which the mark incorporated in the person's
domain name registration is or is not distinctive and famous
within the meaning of subsection (c)(1) of section 43 of the
Trademark Act of 1946. The more distinctive or famous a mark
has become, the more likely the owner of that mark is
deserving of the relief available under this act. At the same
time, the fact that a mark is not well-known may also suggest
a lack of bad-faith.
Paragraph (1)(B)(ii) underscores the bad-faith requirement
by making clear that bad-faith shall not be found in any case
in which the court determines that the person believed and
had reasonable grounds to believe that the use of the domain
name was a fair use or otherwise lawful.
Paragraph (1)(C) makes clear that in any civil action
brought under the new section 43(d), a court may order the
forfeiture, cancellation, or transfer of a domain name to the
owner of the mark.
Paragraph (1)(D) clarifies that a prohibited ``use'' of a
domain name under the bill applies only to a use by the
domain name registrant or that registrant's authorized
licensee.
Paragraph (1)(E) defines what means to ``traffic in'' a
domain name. Under this Act, ``traffics in'' refers to
transactions that include, but are not limited to, sales,
purchases, loans, pledges, licenses, exchanges of currency,
and any other transfer for consideration or receipt in
exchange for consideration.
Paragraph (2)(A) provides for in rem jurisdiction, which
allows a mark owner to seek the forfeiture, cancellation, or
transfer of an infringing domain name by filing an in rem
action against the name itself, where the mark owner has
satisfied the court that it has exercised due diligence in
trying to locate the owner of the domain name but is unable
to do so, or where the mark owner is otherwise unable to
obtain in personam jurisdiction over such person. As
indicated above, a significant problem faced by trademark
owners in the fight against cybersquatting is the fact that
many cybersquatters register domain names under aliases or
otherwise provide false information in their registration
applications in order to avoid identification and service of
process by the mark owner. This bill will alleviate this
difficulty, while protecting the notions of fair play and
substantial justice, by enabling a mark owner to seek an
injunction against the infringing property in those cases
where, after due diligence, a mark owner is unable to proceed
against the domain name registrant because the registrant has
provided false contact information and is otherwise not to be
found, or where a court is unable to assert personal
jurisdiction over such person, provided the mark owner can
show that the domain name itself violates substantive federal
trademark law (i.e., that the domain name violates the rights
of the registrant of a mark registered in the Patent and
Trademark Office, or section 43(a) or (c) of the Trademark
Act). Under the bill, a mark owner will be deemed to have
exercised due diligence in trying to find a defendant if the
mark owner sends notice of the alleged violation and intent
to proceed to the domain name registrant at the postal and e-
mail address provided by the registrant to the registrar and
publishes notice of the action as the court may direct
promptly after filing the action. Such acts are deemed to
constitute service of process by paragraph (2)(B).
The concept of in rem jurisdiction has been with us since
well before the Supreme Court's landmark decision in Pennoyer
v. Neff, 95 U.S. 714 (1877). Although more recent decisions
have called into question the viability of quasi in rem
``attachment'' jurisdiction, see Shaffer v. Heitner, 433 U.S.
186 (1977), the Court has expressly acknowledged the
propriety of true in rem proceedings (or even type I quasi in
rem proceedings \5\) where ``claims to the property itself
are the source of the underlying controversy between the
plaintiff and the defendant.'' Id. at 207-08. The Act
clarifies the availability of in rem jurisdiction in
appropriate cases involving claims by trademark holders
against cyberpirates. In so doing, the Act reinforces the
view that in rem jurisdiction has continuing constitutional
vitality, see R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943,
957-58 (4th Cir. 1999) (``In rem actions only require that a
party seeking an interest in a res bring the res into the
custody of the court and provide reasonable, public notice of
its intention to enable others to appear in the action to
claim an interest in the res.''); Chapman v. Vande Bunte, 604
F. Supp. 714, 716-17 (E.D. N.C. 1985) (``In a true in rem
proceeding, in order to subject property to a judgment in
rem, due process requires only that the property itself have
certain minimum contacts with the territory of the forum.'').
By authorizing in rem jurisdiction, the Act also attempts
to respond to the problems faced by trademark holders in
attempting to effect personal service of process on
cyberpirates. In an effort to avoid being held accountable
for their infringement or dilution of famous trademarks,
cyberpirates often have registered domain names under
fictitious names and addresses or have used offshore
addresses or companies to register domain names. Even when
they actually do receive notice of a trademark holder's
claim, cyberpirates often either refuse to acknowledge
demands from a trademark holder altogether, or simply respond
to an initial demand and then ignore all further efforts by
the trademark holder to secure the cyberpirate's compliance.
The in rem provisions of the Act accordingly contemplate that
a trademark holder may initiate in rem proceedings in cases
where domain name registrants are not subject to personal
jurisdiction or cannot reasonably be found by the trademark
holder.
Paragraph (2)(C) provides that in an in rem proceeding, a
domain name shall be deemed to have its situs in the judicial
district in which (1) the domain name registrar, registry, or
other domain name authority that registered or assigned the
domain name is located, or (2) documents sufficient to
establish control and authority regarding the disposition of
the registration and use of the domain name are deposited
with the court.
Paragraph (2)(D) limits the relief available in such an in
rem action to an injunction ordering the forfeiture,
cancellation, or transfer of the domain name. Upon receipt of
a written notification of the complaint, the domain name
registrar, registry, or other authority is required to
deposit with the court documents sufficient to establish the
court's control and authority regarding the disposition of
the registration and use of the domain name to the court, and
may not transfer, suspend, or otherwise modify the domain
name during the pendency of the action, except upon order of
the court. Such domain

[[Page S14715]]

name registrar, registry, or other authority is immune from
injunctive or monetary relief in such an action, except in
the case of bad faith or reckless disregard, which would
include a willful failure to comply with any such court
order.
Paragraph (3) makes clear that the new civil action created
by this Act and the in rem action established therein, and
any remedies available under such actions, shall be in
addition to any other civil action or remedy otherwise
applicable. This paragraph thus makes clear that the creation
of a new section 43(d) in the Trademark Act does not in any
way limit the application of current provisions of trademark,
unfair competition and false advertising, or dilution law, or
other remedies under counterfeiting or other statutes, to
cybersquatting cases.
Paragraph (4) makes clear that the in rem jurisdiction
established by the bill is in addition to any other
jurisdiction that otherwise exists, whether in rem or in
personam.
Subsection (b). Cyberpiracy Protection for Individuals
Subsection (b) prohibits the registration of a domain name
that is the name of another living person, or a name that is
substantially and confusingly similar thereto, without such
person's permission, if the registrant's specific intent is
to profit from the domain name by selling it for financial
gain to such person or a third party. While the provision is
broad enough to apply to the registration of full names
(e.g., johndoe.com), appellations (e.g., doe.com), and
variations thereon (e.g. john-doe.com or jondoe.com), the
provision is still very narrow in that it requires a showing
that the registrant of the domain name registered that name
with a specific intent to profit from the name by selling it
to that person or to a third party for financial gain. This
section authorizes the court to grant injunctive relief,
including ordering the forfeiture or cancellation of the
domain name or the transfer of the domain name to the
plaintiff. Although the subsection does not authorize a court
to grant monetary damages, the court may award costs and
attorneys' fees to the prevailing party in appropriate cases.
This subsection does not prohibit the registration of a
domain name in good faith by an owner or licensee of a
copyrighted work, such as an audiovisual work, a sound
recording, a book, or other work of authorship, where the
personal name is used in, affiliated with, or related to that
work, where the person's intent in registering the domain is
not to sell the domain name other than in conjunction with
the lawful exploitation of the work, and where such
registration is not prohibited by a contract between the
domain name registered and the named person. This limited
exemption recognizes the First Amendment issues that may
arise in such cases and defers to existing bodies of law that
have developed under State and Federal law to address such
uses of personal names in conjunction with works of
expression. Such an exemption is not intended to provide a
loophole for those whose specific intent is to profit from
another's name by selling the domain name to that person or a
third party other than in conjunction with the bona fide
exploitation of a legitimate work of authorship. For example,
the registration of a domain name containing a personal name
by the author of a screenplay that bears the same name, with
the intent to sell the domain name in conjunction with the
sale or license of the screenplay to a production studio
would not be barred by this subsection, although other
provisions of State or Federal law may apply. On the other
hand, the exemption for good faith registrations of domain
names tied to legitimate works of authorship would not exempt
a person who registers a personal name as a domain name with
the intent to sell the domain name by itself, or in
conjunction with a work of authorship (e.g., a copyrighted
web page) where the real object of the sale is the domain
name, rather than the copyrighted work.
In sum, this subsection is a narrow provision intended to
curtail one form of ``cybersquatting''--the act of
registering someone else's name as a domain name for the
purpose of demanding remuneration from the person in exchange
for the domain name. Neither this section nor any other
section in this bill is intended to create a right of
publicity of any kind with respect to domain names. Nor is it
intended to create any new property rights, intellectual or
otherwise, in a domain name that is the name of a person.
This subsection applies prospectively only, affecting only
those domain names registered on or after the date of
enactment of this Act.
Sec. 3003. Damages and Remedies
This section applies traditional trademark remedies,
including injunctive relief, recovery of defendant's profits,
actual damages, and costs, to cybersquatting cases under the
new section 43(d) of the Trademark Act. The bill also amends
section 35 of the Trademark Act to provide for statutory
damages in cybersquatting cases, in an amount of not less
than $1,000 and not more than $100,000 per domain name, as
the court considers just.
Sec. 3004. Limitation on Liability
This section amends section 32(2) of the Trademark Act to
extend the Trademark Act's existing limitations on liability
to the cybersquatting context. This section also creates a
new subparagraph (D) in section 32(2) to encourage domain
name registrars and registries to work with trademark owners
to prevent cybersquatting through a limited exemption from
liability for domain name registrars and registries that
suspend, cancel, or transfer domain names pursuant to a court
order or in the implementation of a reasonable policy
prohibiting cybersquatting. Under this exemption, a
registrar, registry, or other domain name registration
authority that suspends, cancels, or transfers a domain name
pursuant to a court order or a reasonable policy prohibiting
cybersquatting will not be held liable for monetary damages,
and will be not be subject to injunctive relief provided that
the registrar, registry, or other registration authority has
deposited control of the domain name with a court in which an
action has been filed regarding the disposition of the domain
name, it has not transferred, suspended, or otherwise
modified the domain name during the pendency of the action,
other than in response to a court order, and it has not
willfully failed to comply with any such court order. Thus,
the exemption will allow a domain name registrar, registry,
or other registration authority to avoid being joined in a
civil action regarding the disposition of a domain name that
has been taken down pursuant to a dispute resolution policy,
provided the court has obtained control over the name from
the registrar, registry, or other registration authority, but
such registrar, registry, or other registration authority
would not be immune from suit for injunctive relief where no
such action has been filed or where the registrar, registry,
or other registration authority has transferred, suspended,
or otherwise modified the domain name during the pendency of
the action or wilfully failed to comply with a court order.
This section also protects the rights of domain name
registrants against overreaching trademark owners. Under a
new subparagraph (D)(iv) in section 32(2), a trademark owner
who knowingly and materially misrepresents to the domain name
registrar or registry that a domain name is infringing shall
be liable to the domain name registrant for damages resulting
from the suspension, cancellation, or transfer of the domain
name. In addition, the court may grant injunctive relief to
the domain name registrant by ordering the reactivation of
the domain name or the transfer of the domain name back to
the domain name registrant. In creating a new subparagraph
(D)(iii) of section 32(2), this section codifies current case
law limiting the secondary liability of domain name
registrars and registries for the act of registration of a
domain name, absent bad-faith on the part of the registrar
and registry.
Finally, subparagraph (D)(v) provides additional
protections for domain name holders by allowing a domain name
registrant whose name has been suspended, disabled, or
transferred to file a civil action to establish that the
registration or use of the domain name by such registrant is
not a violation of the Lanham Act. In such cases, a court may
grant injunctive relief to the domain name registrant,
including the reactivation of the domain name or transfer of
the domain name to the domain name registrant.
Sec. 3005. Definitions
This section amends the Trademark Act's definitions section
(section 45) to add definitions for key terms used in this
Act. First, the term ``Internet'' is defined consistent with
the meaning given that term in the Communications Act (47
U.S.C. 230(f)(1)). Second, this section creates a narrow
definition of ``domain name'' to target the specific bad
faith conduct sought to be addressed while excluding such
things as screen names, file names, and other identifiers not
assigned by a domain name registrar or registry.
Sec. 3006. Study on Abusive Domain Name Registrations
Involving Personal Names
This section directs the Secretary of Commerce, in
consultation with the Patent and Trademark Office and the
Federal Election Commission, to conduct a study and report to
Congress with recommendations on guidelines and procedures
for resolving disputes involving the registration or use of
domain names that include personal names of others or names
that are confusingly similar thereto. This section further
directs the Secretary of Commerce to collaborate with the
Internet Corporation for Assigned Names and Numbers (ICANN)
to develop guidelines and procedures for resolving disputes
involving the registration or use of domain names that
include personal names of others or names that are
confusingly similar thereto.
Sec. 3007. Historic Preservation
This section provides a limited immunity from suit under
trademark law for historic buildings that are on or eligible
for inclusion on the National Register of Historic Places, or
that are designated as an individual landmark or as a
contributing building in a historic district.
Sec. 3008. Savings Clause
This section provides an explicit savings clause making
clear that the bill does not affect traditional trademark
defenses, such as fair use, or a person's first amendment
rights.
Sec. 3009. Effective Date
This section provides that damages provided for under this
bill shall not apply to the registration, trafficking, or use
of a domain name that took place prior to the enactment of
this Act.

TITLE VI--INVENTOR PROTECTION

Sec. 4001. Short Title
This title may be cited as the ``American Inventors
Protection Act of 1999.''

[[Page S14716]]

Sec. 4002. Table of Contents
Section 4002 enumerates the table of contents of this
title.

Subtitle A--Inventors' Rights

Subtitle A creates a new section 297 in chapter 29 of title
35 of the United States Code, designed to curb the deceptive
practices of certain invention promotion companies. Many of
these companies advertise on television and in magazines that
inventors may call a toll-free number for assistance in
marketing their inventions. They are sent an invention
evaluation form, which they are asked to complete to allow
the promoter to provide expert analysis of the market
potential of their inventions. The inventors return the form
with descriptions of the inventions, which become the basis
for contacts by salespeople at the promotion companies. The
next step is usually a ``professional''-appearing product
research report which contains nothing more than boilerplate
information stating that the invention has outstanding market
potential and fills an important need in the field. The
promotion companies attempt to convince the inventor to buy
their marketing services, normally on a sliding scale in
which the promoter will ask for a front-end payment of up to
$10,000 and a percentage of resulting profits, or a reduced
front-end payment of $6,000 or $8,000 with commensurately
larger royalties on profits. Once paid under such a scenario,
a promoter will typically and only forward information to a
list of companies that never respond.
This subtitle addresses these problems by (1) requiring an
invention promoter to disclose certain materially relevant
information to a customer in writing prior to entering into a
contract for invention promotion services; (2) establishing a
federal cause of action for inventors who are injured by
material false of fraudulent statements or representations,
or any omission of material fact, by an invention promoter,
or by the invention promoter's failure to make the required
written disclosures; and (3) requiring the Director of the
United States Patent and Trademark Office to make publicly
available complaints received involving invention promoters,
along with the response to such complaints, if any, from the
invention promoters.
Sec. 4101. Short title
This subtitle may be cited as the ``Inventors'' Rights Act
of 1999.''
Sec. 4102. Integrity in invention promotion services
This section adds a new section 297 to in chapter 29 of
title 35, United States Code, intended to promote integrity
in invention promotion services. Legitimate invention
assistance and development organizations can be of great
assistance to novice inventors by providing information on
how to protect an invention, how to develop it, how to obtain
financing to manufacture it, or how to license or sell the
invention. While many invention developers are legitimate,
the unscrupulous ones take advantage of untutored inventors,
asking for large sums of money up front for which they
provide no real service in return. This new section provides
a much needed safeguard to assist independent inventors in
avoiding becoming victims of the predatory practices of
unscrupulous invention promoters.
New section 297(a) of title 35 requires an invention
promoter to disclose certain materially relevant information
to a customer in writing prior to entering into a contract
for invention promotion services. Such information includes:
(1) The number of inventions evaluated by the invention
promoter and stating the number of those evaluated positively
and the number negatively; (2) The number of customers who
have contracted for services with the invention promoter in
the prior five years; (3) The number of customers known by
the invention promoter to have received a net financial
profit as a direct result of the invention promoter's
services; (4) The number of customers known by the invention
promoter to have received license agreements for their
inventions as a direct result of the invention promoter's
services; and (5) the names and addresses of all previous
invention promotion companies with which the invention
promoter or its officers have collectively or individually
been affiliated in the previous 10 years to enable the
customer to evaluate the reputations of these companies.
New section 297(b) of title 35 establishes a civil cause of
action against any invention promoter who injures a customer
through any material false or fraudulent statement,
representation, or omission of material fact by the invention
promoter, or any person acting on behalf of the invention
promoter, or through failure of the invention promoter to
make all the disclosures required under subsection (a). In
such a civil action, the customer may recover, in addition to
reasonable costs and attorneys' fees, the amount of actual
damages incurred by the customer or, at the customer's
election, statutory damages up to $5,000, as the court
considers just. Subsection (b)(2) authorizes the court to
increase damages to an amount not to exceed three times the
amount awarded as statutory or actual damages in a case where
the customer demonstrates, and the court finds, that the
invention promoter intentionally misrepresented or omitted a
material fact to such customer, or failed to make the
required disclosures under subsection (a), for the purpose of
deceiving the customer. In determining the amount of
increased damages, courts may take into account whether
regulatory sanctions or other corrective action has been
taken as a result of previous complaints against the
invention promoter.
New section 297(c) defines the terms used in the section.
These definitions are carefully crafted to cover true
invention promoters without casting the net too broadly.
Paragraph (3) excepts from the definition of ``invention
promoter'' departments and agencies of the Federal, state,
and local governments; any nonprofit, charitable, scientific,
or educational organizations qualified under applicable State
laws or described under Sec. 170(b)(1)(A) of the Internal
Revenue Code of 1986; persons or entities involved in
evaluating the commercial potential of, or offering to
license or sell, a utility patent or a previously filed
nonprovisional utility patent application; any party
participating in a transaction involving the sale of the
stock or assets of a business; or any party who directly
engages in the business of retail sales or distribution of
products. Paragraph (4) defines the term ``invention
promotion services'' to mean the procurement or attempted
procurement for a customer of a firm, corporation, or other
entity to develop and market products or services that
include the customer's invention.
New section 297(d) requires the Director of the USPTO to
make publicly available all complaints submitted to the USPTO
regarding invention promoters, together with any responses by
invention promoters to those complaints. The Director is
required to notify the invention promoter of a complaint and
provide a reasonable opportunity to reply prior to making
such complaint public. Section 297(d)(2) authorizes the
Director to request from Federal and State agencies copies of
any complaints relating to invention promotion services they
have received and to include those complaints in the records
maintained by the USPTO regarding invention promotion
services. It is anticipated that the Director will use
appropriate discretion in making such complaints available to
the public for a reasonably sufficient, yet limited, length
of time, such as a period of three years from the date of
receipt, and that the Director will consult with the Federal
Trade Commission to determine whether the disclosure
requirements of the FTC and section 297(a) can be
coordinated.
Sec. 4103. Effective date
This section provides that the effective date of section
297 will be 60 days after the date of enactment of this Act.

Subtitle B--Patent and Trademark Fee Fairness

Subtitle B provides patent and trademark fee reform, by
lowering patent fees, by directing the Director of the USPTO
to study alternative fee structures to encourage full
participation in our patent system by all inventors, large
and small, and by strengthening the prohibition against the
use of trademark fees for non-trademark uses.
Sec. 4201. Short title
This subtitle may be cited as the ``Patent and Trademark
Fee Fairness Act of 1999.''
Sec. 4202. Adjustment of patent fees.
This section reduces patent filing an reissue fees by $50,
and reduces patent maintenance fees by $110. This would mark
only the second time in history that patent fees have been
reduced. Because trademark fees have not been increased since
1993 and because of the application of accounting based cost
principles and systems, patent fee income has been partially
offsetting the cost of trademark operations. This section
will restore fairness to patent and trademark fees by
reducing patent fees to better reflect the cost of services.
Sec. 4203. Adjustment of trademark fees.
This section will allow the Director of the USPTO to adjust
trademark fees in fiscal year 2000 without regard to
fluctuations in the Consumer Price Index in order to better
align those fees with the costs of services.
Sec. 4204. Study on alternative fee structures
This section directs the Director of the USPTO to conduct a
study and report to the Judiciary Committees of the House and
Senate within one year on alternative fee structures that
could be adopted by the USPTO to encourage maximum
participation in the patent system by the American inventor
community.
Sec. 4205. Patent and Trademark Office funding
Pursuant to section 42(c) of the Patent Act, fees available
to the Commissioner under section 31 of the Trademark Act of
1946 \6\ may be used only for the processing of trademark
registrations and for other trademark-related activities, and
to cover a proportionate share of the administrative costs of
the USPTO. In an effort to more tightly ``fence'' trademark
funds for trademark purposes, section 4205 amends this
language such that all (trademark) fees available to the
Commissioner shall be used for trademark registration and
other trademark-related purposes. In other words, the
Commissioner may exercise no discretion when spending funds;
they must be earmarked for trademark purposes.

Subtitle C--First Inventor Defense

Subtitle C strikes an equitable balance between the
interests of U.S. inventors who have invented and
commercialized business methods and processes, many of which
until recently were thought not to be patentable, and U.S. or
foreign inventors who later patent the methods and processes.
The subtitle creates a defense for inventors who have reduced
an invention to practice in the U.S. at

[[Page S14717]]

least one year before the patent filing date of another,
typically later, inventor and commercially used the invention
in the U.S. before the filing date. A party entitled to the
defense must not have derived the invention from the patent
owner. The bill protects the patent owner by providing that
the establishment of the defense by such an inventor or
entrepreneur does not invalidate the patent.
The subtitle clarifies the interface between two key
branches of intellectual property law--patents and trade
secrets. Patent law serves the public interest by encouraging
innovation and investment in new technology, and may be
thought of as providing a right to exclude other parties from
an invention in return for the inventor making a public
disclosure of the invention. Trade secret law, however, also
serves the public interest by protecting investments in new
technology. Trade secrets have taken on a new importance with
an increase in the ability to patent all business methods and
processes. It would be administratively and economically
impossible to expect any inventor to apply for a patent on
all methods and processes now deemed patentable. In order to
protect inventors and to encourage proper disclosure, this
subtitle focuses on methods for doing and conducting
business, including methods used in connection with internal
commercial operations as well as those used in connection
with the sale or transfer of useful end results--whether in
the form of physical products, or in the form of services, or
in the form of some other useful results; for example,
results produced through the manipulation of data or other
inputs to produce a useful result.
The earlier-inventor defense is important to many small and
large businesses, including financial services, software
companies, and manufacturing firms--any business that relies
on innovative business processes and methods. The 1998
opinion by the U.S. Court of Appeals for the Federal Circuit
in State Street Bank and Trust Co. v. Signature Financial
Group,\7\ which held that methods of doing business are
patentable, has added to the urgency of the issue. As the
Court noted, the reference to the business method exception
had been improperly applied to a wide variety of processes,
blurring the essential question of whether the invention
produced a ``useful, concrete, and tangible result.'' In the
wake of State Street, thousands of methods and processes used
internally are now being patented. In the past, many
businesses that developed and used such methods and processes
thought secrecy was the only protection available. Under
established law, any of these inventions which have been in
commercial use--public or secret--for more than one year
cannot now be the subject of a valid U.S. patent.
Sec. 4301. Short title
This subtitle may be cited as the ``First Inventor Defense
Act of 1999.''
Sec. 4302. Defense to patent infringement based on earlier
inventor
In establishing the defense, subsection (a) of section 4302
creates a new section 273 of the Patent Act, which in
subsection (a) sets forth the following definitions:
(1) ``Commercially used and commercial use'' mean use of
any method in the United States so long as the use is in
connection with an internal commercial use or an actual sale
or transfer of a useful end result;
(2) ``Commercial use as applied to a nonprofit research
laboratory and nonprofit entities such as a university,
research center, or hospital intended to benefit the public''
means that such entities may assert the defense only based on
continued use by and in the entities themselves, but that the
defense is inapplicable to subsequent commercialization or
use outside the entities;
(3) ``Method'' means any method for doing or conducting an
entity's business; and (4) ``Effective filing date'' means
the earlier of the actual filing date of the application for
the patent or the filing date of any earlier US, foreign, or
international application to which the subject matter at
issue is entitled under the Patent Act.
To be ``commercially used'' or in ``commercial use'' for
purposes of subsection (a), the use must be in connection
with either an internal commercial use or an actual arm's-
length sale or other arm's-length commercial transfer of a
useful end result. The method that is the subject matter of
the defense may be an internal method for doing business,
such as an internal human resources management process, or a
method for conducting business such as a preliminary or
intermediate manufacturing procedure, which contributes to
the effectiveness of the business by producing a useful end
result for the internal operation of the business or for
external sale. Commercial use does not require the subject
matter at issue to be accessible to or otherwise known to the
public.
Subject matter that must undergo a premarketing regulatory
review period during which safety or efficacy is established
before commercial marketing or use is considered to be
commercially used and in commercial use during the regulatory
review period.
The issue of whether an invention is a method is to be
determined based on its underlying nature and not on the
technicality of the form of the claims in the patent. For
example, a method for doing or conducting business that has
been claimed in a patent as a programmed machine, as in the
State Street case, is a method for purposes of section 273 if
the invention could have as easily been claimed as a method.
Form should not rule substance.
Subsection (b)(1) of section 273 establishes a general
defense against infringement under section 271 of the Patent
Act. Specifically, a person will not be held liable with
respect to any subject matter that would otherwise infringe
one or more claims to a method in another party's patent if
the person:
(1) Acting in good faith, actually reduced the subject
matter to practice at least one year before the effective
filing date of the patent; and
(2) Commercially used the subject matter before the
effective filing date of the patent.
The first inventor defense is not limited to methods in any
particular industry such as the financial services industry,
but applies to any industry which relies on trade secrecy for
protecting methods for doing or conducting the operations of
their business.
Subsection (b)(2) states that the sale or other lawful
disposition of a useful end result produced by a patented
method, by a person entitled to assert a section 273 defense,
exhausts the patent owner's rights with respect to that end
result to the same extent such rights would have been
exhausted had the sale or other disposition been made by the
patent owner. For example, if a purchaser would have had the
right to resell a product or other end result if bought from
the patent owner, the purchaser will have the same right if
the product is purchased from a person entitled to a section
273 defense.
Subsection (b)(3) creates limitations and qualifications on
the use of the defense. First, a person may not assert the
defense unless the invention for which the defense is
asserted is for a commercial use of a method as defined in
section 273(a)(1) and (3). Second, a person may not assert
the defense if the subject matter was derived from the patent
owner or persons in privity with the patent owner. Third,
subsection (b)(3) makes clear that the application of the
defense does not create a general license under all claims of
the patent in question--it extends only to the specific
subject matter claimed in the patent with respect to which
the person can assert the defense. At the same time, however,
the defense does extend to variations in the quantity or
volume of use of the claimed subject matter, and to
improvements that do not infringe additional, specifically-
claimed subject matter.
Subsection (b)(4) requires that the person asserting the
defense has the burden of proof in establishing it by clear
and convincing evidence. Subsection (b)(5) establishes that
the person who abandons the commercial use of subject matter
may not rely on activities performed before the date of such
abandonment in establishing the defense with respect to
actions taken after the date of abandonment. Such a person
can rely only on the date when commercial use of the subject
matter was resumed.
Subsection (b)(6) notes that the defense may only be
asserted by the person who performed the acts necessary to
establish the defense, and, except for transfer to the patent
owner, the right to assert the defense cannot be licensed,
assigned, or transferred to a third party except as an
ancillary and subordinate part of a good-faith assignment or
transfer for other reasons of the entire enterprise or line
of business to which the defense relates.
When the defense has been transferred along with the
enterprise or line of business to which it relates as
permitted by subsection (b)(6), subsection (b)(7) limits the
sites for which the defense may be asserted. Specifically,
when the enterprise or line of business to which the defense
relates has been transferred, the defense may be asserted
only for uses at those sites where the subject matter was
used before the later of the patent filing date or the date
of transfer of the enterprise or line of business.
Subsection (b)(8) states that a person who fails to
demonstrate a reasonable basis for asserting the defense may
be held liable for attorneys' fees under section 285 of the
Patent Act.
Subsection (b)(9) specifies that the successful assertion
of the defense does not mean that the affected patent is
invalid. Paragraph (9) eliminates a point of uncertainty
under current law, and strikes a balance between the rights
of an inventor who obtains a patent after another inventor
has taken the steps to qualify for a prior use defense. The
bill provides that the commercial use of a method in
operating a business before the patentee's filing date, by an
individual or entity that can establish a section 273
defense, does not invalidate the patent. For example, under
current law, although the matter has seldom been litigated, a
party who commercially used an invention in secrecy before
the patent filing date and who also invented the subject
matter before the patent owner's invention may argue that the
patent is invalid under section 102 (g) of the Patent Act.
Arguably, commercial use of an invention in secrecy is not
suppression or concealment of the invention within the
meaning of section 102(g), and therefore the party's earlier
invention could invalidate the patent.\8\
Sec. 4303. Effective date and applicability
The effective date for subtitle C is the date of enactment,
except that the title does not apply to any infringement
action pending on the date of enactment or to any subject
matter for which an adjudication of infringement, including a
consent judgment, has been made before the date of enactment.

[[Page S14718]]

Subtitle D--Patent Term Guarantee

Subtitle D amends the provisions in the Patent Act that
compensate patent applicants for certain reductions in patent
term that are not the fault of the applicant. The provisions
that were initially included in the term adjustment
provisions of patent bills in the 105th Congress only
provided adjustments for up to 10 years for secrecy orders,
interferences, and successful appeals. Not only are these
adjustments too short in some cases, but no adjustments were
provided for administrative delays caused by the USPTO that
were beyond the control of the applicant. Accordingly,
subtitle D removes the 10-year caps from the existing
provisions, adds a new provision to compensate applicants
fully for USPTO-caused administrative delays, and, for good
measure, includes a new provision guaranteeing diligent
applicants at least a 17-year term by extending the term of
any patent not granted within three years of filing. Thus, no
patent applicant diligently seeking to obtain a patent will
receive a term of less than the 17 years as provided under
the pre-GATT \9\ standard; in fact, most will receive
considerably more. Only those who purposely manipulate the
system to delay the issuance of their patents will be
penalized under subtitle D, a result that the Conferees
believe entirely appropriate.
Sec. 4401. Short title
This subtitle may be cited as the ``Patent Term Guarantee
Act of 1999.''
Sec.4402. Patent term guarantee authority
Section 4402 amends section 154(b) of the Patent Act
covering term. First, new subsection (b)(1)(A)(i)-(iv)
guarantees day-for-day restoration of term lost as a result
of delay created by the USPTO when the agency fails to:
(1) Make a notification of the rejection of any claim for a
patent or any objection or argument under Sec. 132, or give
or mail a written notice of allowance under Sec. 151, within
14 months after the date on which a non-provisional
application was actually filed in the USPTO;
(2) Respond to a reply under Sec. 132, or to an appeal
taken under Sec. 134, within four months after the date on
which the reply was filed or the appeal was taken;
(3) Act on an application within four months after the date
of a decision by the Board of Patent Appeals and
Interferences under Sec. 134 or Sec. 135 or a decision by a
Federal court under Sec. Sec. 141, 145, or 146 in a case in
which allowable claims remain in the application; or (4)
Issue a patent within four months after the date on which the
issue fee was paid under Sec. 151 and all outstanding
requirements were satisfied.
Further, subject to certain limitations, infra, section
154(b)(1)(B) guarantees a total application pendency of no
more than three years. Specifically, day-for-day restoration
of term is granted if the USPTO has not issued a patent
within three years after ``the actual date of the application
in the United States.'' This language was intentionally
selected to exclude the filing date of an application under
the Patent Cooperation Treaty (PCT).\10\ Otherwise, an
applicant could obtain up to a 30-month extension of a U.S.
patent merely by filing under PCT, rather than directly in
the USPTO, gaining an unfair advantage in contrast to
strictly domestic applicants. Any periods of time
(1) consumed in the continued examination of the
application under Sec. 132(b) of the Patent Act as added by
section 4403 of this Act;
(2) lost due to an interference under section135(a), a
secrecy order under section 181, or appellate review by the
Board of Patent Appeals and Interferences or by a Federal
court (irrespective of the outcome); and
(3) incurred at the request of an applicant in excess of
the three months to respond to a notice from the Office
permitted by section 154(b)(2)(C)(ii) unless excused by a
showing by the applicant under section 154(b)(3)(C) that in
spite of all due care the applicant could not respond within
three months

shall not be considered a delay by the USPTO and shall not be
counted for purposes of determining whether the patent issued
within three years from the actual filing date.
Day-for-day restoration is also granted under new section
154(b)(1)(C) for delays resulting from interferences,\11\
secrecy orders,\12\ and appeals by the Board of Patent
Appeals and Interferences or a Federal court in which a
patent was issued as a result of a decision reversing an
adverse determination of patentability.
Section 4402 imposes limitations on restoration of term. In
general, pursuant to new Sec. 154(b)(2)(A)-(C) of the bill,
total adjustments granted for restorations under (b)(1) are
reduced as follows:
(1) To the extent that there are multiple grounds for
extending the term of a patent that may exist simultaneously
(e.g., delay due to a secrecy order under section 181 and
administrative delay under section 154(b)(1)(A)), the term
should not be extended for each ground of delay but only for
the actual number of days that the issuance of a patent was
delayed;
(2) The term of any patent which has been disclaimed beyond
a date certain may not receive an adjustment beyond the
expiration date specified in the disclaimer; and
(3) Adjustments shall be reduced by a period equal to the
time in which the applicant failed to engage in reasonable
efforts to conclude prosecution of the application, based on
regulations developed by the Director, and an applicant shall
be deemed to have failed to engage in such reasonable efforts
for any periods of time in excess of three months that are
taken to respond to a notice from the Office making any
rejection or other request;
New section 154(b)(3) sets forth the procedures for the
adjustment of patent terms. Paragraph (3)(A) empowers the
Director to establish regulations by which term extensions
are determined and contested. Paragraph (3)(B) requires the
Director to send a notice of any determination with the
notice of allowance and to give the applicant one opportunity
to request reconsideration of the determination. Paragraph
(3)(C) requires the Director to reinstate any time the
applicant takes to respond to a notice from the Office in
excess of three months that was deducted from any patent term
extension that would otherwise have been granted if the
applicant can show that he or she was, in spite of all due
care, unable to respond within three months. In no case shall
more than an additional three months be reinstated for each
response. Paragraph (3)(D) requires the Director to grant the
patent after completion of determining any patent term
extension irrespective of whether the applicant appeals.
New section 154(b)(4) regulates appeals of term adjustment
determinations made by the Director. Paragraph (4)(A)
requires a dissatisfied applicant to seek remedy in the
District Court for the District of Columbia under the
Administrative Procedures Act \13\ within 180 days after the
grant of the patent. The Director shall alter the term of the
patent to reflect any final judgment. Paragraph (4)(B)
precludes a third party from challenging the determination of
a patent term prior to patent grant.
Section 4402(b) makes certain conforming amendments to
section 282 of the Patent Act and the appellate jurisdiction
of the U.S. Court of Appeals for the Federal Circuit.\14\
Sec. 4403. Continued examination of patent applications
Section 4403 amends section 132 of the Patent Act to permit
an applicant to request that an examiner continue the
examination of an application following a notice of ``final''
rejection by the examiner. New section 132(b) authorizes the
Director to prescribe regulations for the continued
examination of an application notwithstanding a final
rejection, at the request of the applicant. The Director may
also establish appropriate fees for continued examination
proceedings, and shall provide a 50% fee reduction for small
entities which qualify for such treatment under section
41(h)(1) of the Patent Act.
Section 4404. Technical clarification
Section 4404 of the bill coordinates technical term
adjustment provisions set forth in section 154(b) with those
in section 156(a) of the Patent Act.
Section 4405. Effective date
The effective date for the amendments in section 4402 and
4404 is six months after the date of enactment and, with the
exception of design applications (the terms of which are not
measured from filing), applies to any application filed on or
after such date. The amendments made by section 4403 take
effect six months after date of enactment to allow the USPTO
to prepare implementing regulations an apply to all national
and international (PCT) applications filed on or after June
8, 1995.

Subtitle E--Domestic Publication of Patent Applications Published
Abroad

Subtitle E provides for the publication of pending patent
applications which have a corresponding foreign counterpart.
Any pending U.S. application filed only in the United States
(e.g., one that does not have a foreign counterpart) will not
be published if the applicant so requests. Thus, an applicant
wishing to maintain her application in confidence may do so
merely by filing only in the United States and requesting
that the USPTO not publish the application. For those
applicants who do file abroad or who voluntarily publish
their applications, provisional rights will be available for
assertion against any third party who uses the claimed
invention between publication and grant provided that
substantially similar claims are contained in both the
published application and granted patent. This change will
ensure that American inventors will be able to see the
technology that our foreign competition is seeking to patent
much earlier than is possible today.
Sec. 4501. Short title
This subtitle may be cited as the ``Domestic Publication of
Foreign Filed Patent Applications Act of 1999.''
Sec. 4502. Publication
As provided in subsection (a) of section 4502, amended
section 122(a) of the Patent Act continues the general rule
that patent applications will be maintained in confidence.
Paragraph (1)(A) of new subsection (b) of section 122 creates
a new exception to this general rule by requiring publication
of certain applications promptly after the expiration of an
18-month period following the earliest claimed U.S. or
foreign filing date. The Director is authorized by
subparagraph (B) to determine what information concerning
published applications shall be made available to the public,
and, under subparagraph (C) any decision made in this regard
is final and not subject to review.
Subsection (b)(2) enumerates exceptions to the general rule
requiring publication. Subparagraph (A) precludes publication
of any

[[Page S14719]]

application that is: (1) no longer pending at the 18th month
from filing; (2) the subject of a secrecy order until the
secrecy order is rescinded; (3) a provisional
application;\15\ or (4) a design patent application.\16\
Pursuant to subparagraph (B)(i), any applicant who is not
filing overseas and does not wish her application to be
published can simply make a request and state that her
invention has not and will not be the subject of an
application filed in a foreign country that requires
publication after 18 months. Subparagraph (B)(ii) clarifies
that an applicant may rescind this request at any time.
Moreover, if an applicant has requested that her application
not be published in a foreign country with a publication
requirement, subparagraph (B)(iii) imposes a duty on the
applicant to notify the Director of this fact. An unexcused
failure to notify the Director will result in the abandonment
of the application. If an applicant either rescinds a request
that her application not be published or notifies the
Director that an application has been filed in an early
publication country or through the PCT, the U.S. application
will be published at 18 months pursuant to subsection (b)(1).
Finally, under subparagraph (B)(v), where an applicant has
filed an application in a foreign country, either directly or
through the PCT, so that the application will be published 18
months from its earliest effective filing date, the applicant
may limit the scope of the publication by the USPTO to the
total of the cumulative scope of the applications filed in
all foreign countries. Where the foreign application is
identical to the application filed in the United States or
where an application filed under the PCT is identical to the
application filed in the United States, the applicant may not
limit the extent to which the application filed in the United
States is published. However, where an applicant has limited
the description of an application filed in a foreign country,
either directly or through the PCT in comparison with the
application filed in the USPTO, the applicant may restrict
the publication by the USPTO to no more than the cumulative
details of what will be published in all of the foreign
applications and through the PCT. The applicant may restrict
the extent of publication of her U.S. application by
submitting a redacted copy of the application to the USPTO
eliminating only those details that will not be published in
any of the foreign applications. Any description contained in
at least one of the foreign national or PCT filings may not
be excluded from publication in the corresponding U.S. patent
application. To ensure that any redacted copy of the U.S.
application is published in place of the original U.S.
application, the redacted copy must be received within 16
months from the earliest effective filing date. Finally, if
the published U.S. application as redacted by the applicant
does not enable a person skilled in the art to make and use
the claimed invention, provisional rights under section
154(d) shall not be available.
Subsection (c) requires the Director to establish
procedures to ensure that no protest or other form of pre-
issuance opposition to the grant of a patent on an
application may be initiated after publication without the
express written consent of the applicant.
Subsection (d) protects our national security by providing
that no application may be published under subsection (b)(1)
where the publication or disclosure of such invention would
be detrimental to the national security. In addition, the
Director of the USPTO is required to establish appropriate
procedures to ensure that such applications are promptly
identified and the secrecy of such inventions is maintained
in accordance with chapter 17 of the Patent Act, which
governs secrecy of inventions in the interest of national
security.
Subsection (b) of section 4502 of subtitle E requires the
Government Accounting Office (GAO) to conduct a study of
applicants who file only in the United States during a three-
year period beginning on the effective date of subtitle E.
The study will focus on the percentage of U.S. applicants who
file only in the United States versus those who file outside
the United States; how many domestic-only filers request not
to be published; how many who request not to be published
later rescind that request; and whether there is any
correlation between the type of applicant (e.g., small vs.
large entity) and publication. The Comptroller General must
submit the findings of the study, once completed, to the
Committees on the Judiciary of the House and Senate.
Sec. 4503. Time for claiming benefit of earlier filing date
Section 119 of the Patent Act prescribes procedures to
implement the right to claim priority under Article 4 of the
Paris Convention for the Protection of Industrial
Property.\17\ Under that Article, an applicant seeking
protection in the United States may claim the filing date of
an application for the same invention filed in another
Convention country--provided the subsequent application is
filed in the United States within 12 months of the earlier
filing in the foreign country.
Section 4503 of subtitle V amends section 119(b) of the
Patent Act to authorize the Director to establish a cut-off
date by which the applicant must claim priority. This is to
ensure that the claim will be made early enough--generally
not later than the 16th month from the earliest effective
filing date--so as to permit an orderly publication schedule
for pending applications. As the USPTO moves to electronic
filing, it is envisioned that this date could be moved closer
to the 18th month.
The amendment to Sec. 119(b) also gives the Director the
discretion to consider the failure of the applicant to file a
timely claim for priority to be a waiver of any such priority
claim. The Director is also authorized to establish
procedures (including the payment of a surcharge) to accept
an unintentionally delayed priority claim.
Section 4503(b) of subtitle E amends section 120 of the
Patent Act in a similar way. This provision empowers the
Director to: (1) establish a time by which the priority of an
earlier filed United States application must be claimed; (2)
consider the failure to meet that time limit to be a waiver
of the right to claim such priority; and (3) accept an
unintentionally late claim of priority subject to the payment
of a surcharge.
Sec. 4504. Provisional rights
Section 4504 amends section 154 of the Patent Act by adding
a new subsection (d) to accord provisional rights to obtain a
reasonable royalty for applicants whose applications are
published under amended section 122(b) of the Patent Act,
supra, or applications designating the United States filed
under the PCT. Generally, this provision establishes the
right of an applicant to obtain a reasonable royalty from any
person who, during the period beginning on the date that his
or her application is published and ending on the date a
patent is issued--
(1) makes, uses, offers for sale, or sells the invention in
the United States, or imports such an invention into the
United States; or
(2) if the invention claimed is a process, makes, uses,
offers for sale, sells, or imports a product made by that
process in the United States; and
(3) had actual notice of the published application and, in
the case of an application filed under the PCT designating
the United States that is published in a language other than
English, a translation of the application into English.
The requirement of actual notice is critical. The mere fact
that the published application is included in a commercial
database where it might be found is insufficient. The
published applicant must give actual notice of the published
application to the accused infringer and explain what acts
are regarded as giving rise to provisional rights.
Another important limitation on the availability of
provisional royalties is that the claims in the published
application that are alleged to give rise to provisional
rights must also appear in the patent in substantially
identical form. To allow anything less than substantial
identity would impose an unacceptable burden on the public.
If provisional rights were available in the situation where
the only valid claim infringed first appeared in
substantially that form in the granted patent, the public
would have no guidance as to the specific behavior to avoid
between publication and grant. Every person or company that
might be operating within the scope of the disclosure of the
published application would have to conduct her own private
examination to determine whether a published application
contained patentable subject matter that she should avoid.
The burden should be on the applicant to initially draft a
schedule of claims that gives adequate notice to the public
of what she is seeking to patent.
Amended section 154(d)(3) imposes a six-year statute of
limitations from grant in which an action for reasonable
royalties must be brought.
Amended section 154(d)(4) sets forth some additional rules
qualifying when an international application under the PCT
will give rise to provisional rights. The date that will give
rise to provisional rights for international applications
will be the date on which the USPTO receives a copy of the
application published under the PCT in the English language;
if the application is published under the PCT in a language
other than English, then the date on which provisional rights
will arise will be the date on which the USPTO receives a
translation of the international application in the English
language. The Director is empowered to require an applicant
to provide a copy of the international application and a
translation of it.
Sec. 4505. Prior art effect of published applications
Section 4505 amends section 102(e) of the Patent Act to
treat an application published by the USPTO in the same
fashion as a patent published by the USPTO. Accordingly, a
published application is given prior art effect as of its
earliest effective U.S. filing date against any subsequently
filed U.S. applications. As with patents, any foreign filing
date to which the published application is entitled will not
be the effective filing date of the U.S. published
application for prior art purposes. An exception to this
general rule is made for international applications
designating the United States that are published under
Article 21(2)(a) of the PCT in the English language. Such
applications are given a prior art effect as of their
international filing date. The prior art effect accorded to
patents under section 4505 remains unchanged from present
section 102(e) of the Patent Act.
Sec. 4506. Cost recovery for publications
Section 4506 authorizes the Director to recover the costs
of early publication required by the amendment made by
section 4502 of this Act by charging a separate publication
fee after a notice of allowance is given pursuant to section
151 of the Patent Act.

[[Page S14720]]

Sec. 4507. Conforming amendments
Section 4507 consists of various technical and conforming
amendments to the Patent Act. These include amending section
181 of the Patent Act to clarify that publication of pending
applications does not apply to applications under secrecy
orders, and amending section 284 of the Patent Act to ensure
that increased damages authorized under section 284 shall not
apply to the reasonable royalties possible under amended
section 154(d). In addition, section 374 of the Patent Act is
amended to provide that the effect of the publication of an
international application designating the United States shall
be the same as the publication of an application published
under amended section 122(b), except as its effect as prior
art is modified by amended section 102(e) and its giving rise
to provisional rights is qualified by new section 154(d).
Sec. 4508. Effective date
Subtitle E shall take effect on the date that is one year
after the date of enactment and shall apply to all
applications filed under section 111 of the Patent Act on or
after that date; and to all applications complying with
section 371 of the Patent Act that resulted from
international applications filed on or after that date. The
provisional rights provided in amended section 154(d) and the
prior art effect provided in amended section 102(e) shall
apply to all applications pending on the date that is one
year after the date of enactment that are voluntarily
published by their applicants. Finally, section 404
(provisional rights) shall apply to international
applications designating the United States that are filed on
or after the date that is one year after the date of
enactment.

Subtitle F--Optional Inter Partes Reexamination procedure

Subtitle F is intended to reduce expensive patent
litigation in U.S. district courts by giving third-party
requesters, in addition to the existing ex parte
reexamination in Chapter 30 of title 35, the option of inter
partes reexamination proceedings in the USPTO. Congress
enacted legislation to authorize ex parte reexamination of
patents in the USPTO in 1980, but such reexamination has been
used infrequently since a third party who requests
reexamination cannot participate at all after initiating the
proceedings. Numerous witnesses have suggested that the
volume of lawsuits in district courts will be reduced if
third parties can be encouraged to use reexamination by
giving them an opportunity to argue their case for patent
invalidity in the USPTO. Subtitle F provides that opportunity
as an option to the existing ex parte reexamination
proceedings.
Subtitle F leaves existing ex parte reexamination
procedures in Chapter 30 of title 35 intact, but establishes
an inter partes reexamination procedure which third-party
requesters can use at their option. Subtitle VI allows third
parties who request inter partes reexamination to submit one
written comment each time the patent owner files a response
to the USPTO. In addition, such third-party requesters can
appeal to the USPTO Board of Patent Appeals and Interferences
from an examiner's determination that the reexamined patent
is valid, but may not appeal to the Court of Appeals for the
Federal Circuit. To prevent harassment, anyone who requests
inter partes reexamination must identify the real party in
interest and third-party requesters who participate in an
inter partes reexamination proceeding are estopped from
raising in a subsequent court action or inter partes
reexamination any issue of patent validity that they raised
or could have raised during such inter partes reexamination.
Subtitle F contains the important threshold safeguard (also
applied in ex parte reexamination) that an inter partes
reexamination cannot be commenced unless the USPTO makes a
determination that a ``substantial new question'' of
patentability is raised. Also, as under Chapter 30, this
determination cannot be appealed, and grounds for inter
partes reexamination are limited to earlier patents and
printed publications--grounds that USPTO examiners are well-
suited to consider.
Sec. 4601. Short title
This subtitle may be cited as the ``Optional Inter Partes
Reexamination Procedure Act.''
Sec. 4602. Clarification of Chapter 30
This section distinguishes Chapter 31 from existing Chapter
30 by changing the title of Chapter 30 to ``Ex Parte
Reexamination of Patents.''
Sec. 4603. Definitions
This section amends section 100 of the Patent Act by
defining ``third-party requester'' as a person who is not the
patent owner requesting ex parte reexamination under section
302 or inter partes reexamination under section 311.
Sec. 4604. Optional Inter Partes Reexamination Procedure
Section 4604 amends Part III of title 35 by inserting a new
Chapter 31 setting forth optional inter partes reexamination
procedures.
New section 311, as amended by this section, differs from
section 302 of existing law in Chapter 30 of the Patent Act
by requiring any person filing a written request for inter
partes reexamination to identify the real party in interest.
Similar to section 303 of existing law, new section 312 of
the Patent Act confers upon the Director the authority and
responsibility to determine, within three months after the
filing of a request for inter partes reexamination, whether a
substantial new question affecting patentability of any claim
of the patent is raised by the request. Also, the decision in
this regard is final and not subject to judicial review.
Proposed sections 313-14 under this subtitle are similarly
modeled after sections 304-305 of Chapter 30. Under proposed
section 313, if the Director determines that a substantial
new question of patentability affecting a claim is raised,
the determination shall include an order for inter partes
reexamination for resolution of the question. The order may
be accompanied by the initial USPTO action on the merits of
the inter partes reexamination conducted in accordance with
section 314. Generally, under proposed section 314, inter
partes reexamination shall be conducted according to the
procedures set forth in sections 132-133 of the Patent Act.
The patent owner will be permitted to propose any amendment
to the patent and a new claim or claims, with the same
exception contained in section 305: no proposed amended or
new claim enlarging the scope of the claims will be allowed.
Proposed section 314 elaborates on procedure with regard to
third-party requesters who, for the first time, are given the
option to participate in inter partes reexamination
proceedings. With the exception of the inter partes
reexamination request, any document filed by either the
patent owner or the third-party requester shall be served on
the other party. In addition, the third party-requester in an
inter partes reexamination shall receive a copy of any
communication sent by the USPTO to the patent owner. After
each response by the patent owner to an action on the merits
by the USPTO, the third-party requester shall have one
opportunity to file written comments addressing issues raised
by the USPTO or raised in the patent owner's response. Unless
ordered by the Director for good cause, the agency must act
in an inter partes reexamination matter with special
dispatch.
Proposed section 315 prescribes the procedures for appeal
of an adverse USPTO decision by the patent owner and the
third-party requester in an inter partes reexamination. Both
the patent owner and the third-party requester are entitled
to appeal to the Board of Patent Appeals and Interferences
(section 134 of the Patent Act), but only the patentee can
appeal to the U.S. Court of Appeals for the Federal Circuit
(Sec. Sec. 141-144); either may also be a party to any appeal
by the other to the Board of Patent Appeals and
Interferences. The patentee is not entitled to the
alternative of an appeal of an inter partes reexamination to
the U.S. District Court for the District of Columbia. Such
appeals are rarely taken from ex parte reexamination
proceedings under existing law and its removal should speed
up the process.
To deter unnecessary litigation, proposed section 315
imposes constraints on the third-party requester. In general,
a third-party requester who is granted an inter partes
reexamination by the USPTO may not assert at a later time in
any civil action in U.S. district court \18\ the invalidity
of any claim finally determined to be patentable on any
ground that the third-party requester raised or could have
raised during the inter partes reexamination. However, the
third-party requester may assert invalidity based on newly
discovered prior art unavailable at the time of the
reexamination. Prior art was unavailable at the time of the
inter partes reexamination if it was not known to the
individuals who were involved in the reexamination proceeding
on behalf of the third-party requester and the USPTO.
Section 316 provides for the Director to issue and publish
certificates canceling unpatentable claims, confirming
patentable claims, and incorporating any amended or new claim
determined to be patentable in an inter partes procedure.
Subtitle F creates a new section 317 which sets forth
certain conditions by which inter partes reexamination is
prohibited to guard against harassment of a patent holder. In
general, once an order for inter partes reexamination has
been issued, neither a third-party requester nor the patent
owner may file a subsequent request for inter partes
reexamination until an inter partes reexamination certificate
is issued and published, unless authorized by the Director.
Further, if a third-party requester asserts patent invalidity
in a civil action and a final decision is entered that the
party failed to prove the assertion of invalidity, or if a
final decision in an inter partes reexamination instituted by
the requester is favorable to patentability, after any
appeals, that third-party requester cannot thereafter request
inter partes reexamination on the basis of issues which were
or which could have been raised. However, the third-party
requester may assert invalidity based on newly discovered
prior art unavailable at the time of the civil action or
inter partes reexamination. Prior art was unavailable at the
time if it was not known to the individuals who were involved
in the civil action or inter partes reexamination proceeding
on behalf of the third-party requester and the USPTO.
Proposed section 318 gives a patent owner the right, once
an inter partes reexamination has been ordered, to obtain a
stay of any pending litigation involving an issue of
patentability of any claims of the patent that are the
subject of the inter partes reexamination, unless the court
determines that the stay would not serve the interests of
justice.

[[Page S14721]]

Sec. 4605. Conforming amendments
Section 4605 makes the following conforming amendments to
the Patent Act:
A patent owner must pay a fee of $1,210 for each petition
in connection with an unintentionally abandoned application,
delayed payment, or delayed response by the patent owner
during any reexamination.
A patent applicant, any of whose claims has been twice
rejected; a patent owner in a reexamination proceeding; and a
third-party requester in an inter partes reexamination
proceeding may all appeal final adverse decisions from a
primary examiner to the Board of Patent Appeals and
Interferences.
Proposed section 141 states that a patent owner in a
reexamination proceeding may appeal an adverse decision by
the Board of Patent Appeals and Interferences only to the
U.S. Court of Appeals for the Federal Circuit as earlier
noted. A third-party requester in an inter partes
reexamination proceeding may not appeal beyond the Board of
Patent Appeals and Interferences.
The Director is required pursuant to section 143
(proceedings on appeal to the Federal Circuit) to submit to
the court the grounds for the USPTO decision in any
reexamination addressing all the issues involved in the
appeal.
Sec. 4606. Report to Congress
Not later than five years after the effective date of
subtitle F, the Director must submit to Congress a report
evaluating whether the inter partes reexamination proceedings
set forth in the title are inequitable to any of the parties
in interest and, if so, the report shall contain
recommendations for change to eliminate the inequity.
Sec. 4607. Estoppel Effect of Reexamination
Section 4607 estops any party who requests inter partes
reexamination from challenging at a later time, in any civil
action, any fact determined during the process of the inter
partes reexamination, except with respect to a fact
determination later proved to be erroneous based on
information unavailable at the time of the inter partes
reexamination. The estoppel arises after a final decision in
the inter partes reexamination or a final decision in any
appeal of such reexamination. If section 4607 is held to be
unenforceable, the enforceability of the rest of subtitle F
or the Act is not affected.
Sec. 4608. Effective date
Subtitle F shall take effect on the date of the enactment
and shall apply to any patent that issues from an original
application filed in the United States on or after that date,
except that the amendments made by section 4605(a) shall take
effect one year from the date of enactment.

Subtitle G--United States Patent and Trademark Office

Subtitle G establishes the United States Patent and
Trademark Office (USPTO) as an agency of the United States
within the Department of Commerce. The Secretary of Commerce
gives policy direction to the agency, but the agency is
autonomous and responsible for the management and
administration of its operations and has independent control
of budget allocations and expenditures, personnel decisions
and processes, and procurement. The Committee intends that
the Office will conduct its patent and trademark operations
without micro-management by Department of Commerce officials,
with the exception of policy guidance of the Secretary. The
agency is headed by an Under Secretary of Commerce for
Intellectual Property and Director of the United States
Patent and Trademark Office, a Deputy, and a Commissioner of
Patents and a Commissioner of Trademarks. The agency is
exempt from government-wide personnel ceilings. A patent
public advisory committee and a trademark public advisory
committee are established to advise the Director on agency
policies, goals, performance, budget and user fees.
Sec. 4701. Short title
This subtitle may be cited as the ``Patent and Trademark
Office Efficiency Act.''

Subchapter A--United States Patent and Trademark Office

Sec. 4711. Establishment of Patent and Trademark Office
Section 4711 establishes the USPTO as an agency of the
United States within the Department of Commerce and under the
policy direction of the Secretary of Commerce. The USPTO, as
an autonomous agency, is explicitly responsible for decisions
regarding the management and administration of its operations
and has independent control of budget allocations and
expenditures, personnel decisions and processes,
procurements, and other administrative and management
functions. Patent operations and trademark operations are to
be treated as separate operating units within the Office,
each under the direction of its respective Commissioner, as
supervised by the Director.
The USPTO shall maintain its principal office in the
metropolitan Washington, D.C., area, for the service of
process and papers and for the purpose of discharging its
functions. For purposes of venue in civil actions, the agency
is deemed to be a resident of the district in which its
principal office is located, except where otherwise provided
by law. The USPTO is also permitted to establish satellite
offices in such other places in the United States as it
considers necessary and appropriate to conduct business. This
is intended to allow the USPTO, if appropriate, to serve
American applicants better.
Sec. 4712. Powers and duties
Subject to the policy direction of the Secretary of the
Commerce, in general the USPTO will be responsible for the
granting and issuing of patents, the registration of
trademarks, and the dissemination of patent and trademark
information to the public.
The USPTO will also possess specific powers, which include:
(1) a requirement to adopt and use an Office seal for
judicial notice purposes and for authenticating patents,
trademark certificates and papers issued by the Office;
(2) the authority to establish regulations, not
inconsistent with law, that
(A) govern the conduct of USPTO proceedings within the
Office,
(B) are in accordance with Sec. 553 of title 5,
(C) facilitate and expedite the processing of patent
applications, particularly those which can be processed
electronically,
(D) govern the recognition, conduct, and qualifications of
agents, attorneys, or other persons representing applicants
or others before the USPTO,
(E) recognize the public interest in ensuring that the
patent system retain a reduced fee structure for small
entities, and
(F) provide for the development of a performance-based
process for managing that includes quantitative and
qualitative measures, standards for evaluating cost-
effectiveness, and consistency with principles of
impartiality and competitiveness;
(3) the authority to acquire, construct, purchase, lease,
hold, manage, operate, improve, alter and renovate any real,
personal, or mixed property as it considers necessary to
discharge its functions;
(4) the authority to make purchases of property, contracts
for construction, maintenance, or management and operation of
facilities, as well as to contract for and purchase printing
services without regard to those federal laws which govern
such proceedings;
(5) the authority to use services, equipment, personnel,
facilities and equipment of other federal entities, with
their consent and on a reimbursable basis;
(6) the authority to use, with the consent of the United
States and the agency, government, or international
organization concerned, the services, records, facilities or
personnel of any State or local government agency or foreign
patent or trademark office or international organization to
perform functions on its behalf;
(7) the authority to retain and use all of its revenues and
receipts;
(8) a requirement to advise the President, through the
Secretary of Commerce, on national and certain international
intellectual property policy issues;
(9) a requirement to advise Federal departments and
agencies of intellectual property policy in the United States
and intellectual property protection abroad;
(10) a requirement to provide guidance regarding proposals
offered by agencies to assist foreign governments and
international intergovernmental organizations on matters of
intellectual property protection;
(11) the authority to conduct programs, studies or
exchanges regarding domestic or international intellectual
property law and the effectiveness of intellectual property
protection domestically and abroad;
(12) a requirement to advise the Secretary of Commerce on
any programs and studies relating to intellectual property
policy that the USPTO may conduct or is authorized to
conduct, cooperatively with foreign intellectual property
offices and international intergovernmental organizations;
and
(13) the authority to (A) coordinate with the Department of
State in conducting programs and studies cooperatively with
foreign intellectual property offices and international
intergovernmental organizations, and (B) transfer, with the
concurrence of the Secretary of State, up to $100,000 in any
year to the Department of State to pay an international
intergovernmental organization for studies and programs
advancing international cooperation concerning patents,
trademarks, and other matters.
The specific powers set forth in new subsection (b) are
clarified in new subsection (c). The special payments of
paragraph (14)(B) are additional to other payments or
contributions and are not subject to any limitation imposed
by law. Nothing in subsection (b) derogates from the duties
of the Secretary of State or the United States Trade
Representative as set forth in section 141 of the Trade Act
of 1974 \19\, nor derogates from the duties and functions of
the Register of Copyrights. The Director is required to
consult with the Administrator of General Services when
exercising authority under paragraphs (3) and (4)(A). Nothing
in section 4712 may be construed to nullify, void, cancel, or
interrupt any pending request-for-proposal let or contract
issued by the General Services Administration for the
specific purpose of relocating or leasing space to the USPTO.
Finally, in exercising the powers and duties under this
section, the Director shall consult with the Register of
Copyright on all Copyright and related matters.
Sec. 4713. Organization and management
Section 4713 details the organization and management of the
agency. The powers and duties of the USPTO shall be vested in
the Under Secretary and Director, who shall be appointed by
the President, by and with the consent of the Senate. The
Under Secretary and Director performs two main functions. As
Under Secretary of Commerce for Intellectual Property, she
serves as the policy advisor to the Secretary of Commerce and
the

[[Page S14722]]

President on intellectual property issues. As Director, she
is responsible for supervising the management and direction
of the USPTO. She shall consult with the Public Advisory
Committees, infra, on a regular basis regarding operations of
the agency and before submitting budgetary proposals and fee
or regulation changes. The Director shall take an oath of
office. The President may remove the Director from office,
but must provide notification to both houses of Congress.
The Secretary of Commerce, upon nomination of the Director,
shall appoint a Deputy Director to act in the capacity of the
Director if the Director is absent or incapacitated. The
Secretary of Commerce shall also appoint two Commissioners,
one for Patents, the other for Trademarks, without regard to
chapters 33, 51, or 53 of title 5 of the U.S. Code. The
Commissioners will have five-year terms and may be
reappointed to new terms by the Secretary. Each Commissioner
shall possess a demonstrated experience in patent and
trademark law, respectively; and they shall be responsible
for the management and direction of the patent and trademark
operations, respectively. In addition to receiving a basic
rate of compensation under the Senior Executive Service \20\
and a locality payment,\21\ the Commissioners may receive
bonuses of up to 50 percent of their annual basic rate of
compensation, not to exceed the salary of the Vice President,
based on a performance evaluation by the Secretary, acting
through the Director. The Secretary may remove Commissioners
for misconduct or unsatisfactory performance. It is intended
that the Commissioners will be non-political expert
appointees, independently responsible for operations, subject
to supervision by the Director.
The Director may appoint all other officers, agents, and
employees as she sees fit, and define their responsibilities
with equal discretion. The USPTO is specifically not subject
to any administratively or statutorily imposed limits (full-
time equivalents, or ``FTEs'') on positions or personnel.
The USPTO is charged with developing and submitting to
Congress a proposal for an incentive program to retain senior
(of the primary examiner grade or higher) patent and
trademark examiners eligible for retirement for the sole
purpose of training patent and trademark examiners.
The Director of the USPTO, in consultation with the
Director of the Office of Personnel Management, is required
to maintain a program for identifying national security
positions at the USPTO and for providing for appropriate
security clearances for USPTO employees in order to maintain
the secrecy of inventions as described in section 181 of the
Patent Act and to prevent disclosure of sensitive and
strategic information in the interest of national security.
The USPTO will be subject to all provisions of title 5 of
the U.S. Code governing federal employees. All relevant labor
agreements which are in effect the day before enactment of
subtitle G shall be adopted by the agency. All USPTO
employees as of the day before the effective date of subtitle
G shall remain officers and employees of the agency without a
break in service. Other personnel of the Department of
Commerce shall be transferred to the USPTO only if necessary
to carry out purposes of subtitle G of the bill and if a
major function of their work is reimbursed by the USPTO, they
spend at least half of their work time in support of the
USPTO, or a transfer to the USPTO would be in the interest of
the agency, as determined by the Secretary of Commerce in
consultation with the Director.
On or after the effective date of the Act, the President
shall appoint an individual to serve as Director until a
Director qualifies under subsection (a). The persons serving
as the Assistant Commissioner for Patents and the Assistant
Commissioner for Trademarks on the day before the effective
date of the Act may serve as the Commissioner for Patents and
the Commissioner for Trademarks, respectively, until a
respective Commissioner is appointed under subsection (b)(2).
Sec. 4714. Public Advisory Committees
Section 4714 provides a new section 5 of the Patent Act
which establishes a Patent Public Advisory Committee and a
Trademark Public Advisory Committee. Each Committee has nine
voting members with three-year terms appointed by and serving
at the pleasure of the Secretary of Commerce. Initial
appointments will be made within three months of the
effective date of the Act; and three of the initial
appointees will receive one-year terms, three will receive
two-year terms, and three will receive full terms. Vacancies
will be filled within three months. The Secretary will also
designate chairpersons for three-year terms.
The members of the Committees will be U.S. citizens and
will be chosen to represent the interests of USPTO users. The
Patent Public Advisory Committee shall have members who
represent small and large entity applicants in the United
States in proportion to the number of applications filed by
the small and large entity applicants. In no case shall the
small entity applicants be represented by less than 25
percent of the members of the Patent Public Advisory
Committee, at least one of whom shall be an independent
inventor. The members of both Committees shall include
individuals with substantial background and achievement in
finance, management, labor relations, science, technology,
and office automation. The patent and trademark examiners'
unions are entitled to have one representative on their
respective Advisory Committee in a non-voting capacity.
The Committees meet at the call of the chair to consider an
agenda established by the chair. Each Committee reviews the
policies, goals, performance, budget, and user fees that bear
on its area of concern and advises the Director on these
matters. Within 60 days of the end of a fiscal year, the
Committees prepare annual reports, transmit the reports to
the Secretary of Commerce, the President, and the Committees
on the Judiciary of the Congress, and publish the reports in
the Official Gazette of the USPTO.
Members of the Committees are compensated at a defined
daily rate for meeting and travel days. Members are provided
access to USPTO records and information other than personnel
or other privileged information including that concerning
patent applications. Members are special Government employees
within the meaning of section 202 of title 18. The Federal
Advisory Committee Act shall not apply to the Committees.
Finally, section 4714 provides that Committee meetings shall
be open to the public unless by a majority vote the Committee
meets in executive session to consider personnel or other
confidential information.
Sec. 4715. Conforming amendments
Technical conforming amendments to the Patent Act are set
forth in section 4715.
Sec. 4716. Trademark Trial and Appeal Board
Section 4716 amends section 17 of the Trademark Act of 1946
by specifying that the Director shall give notice to all
affected parties and shall direct a Trademark Trial and
Appeal Board to determine the respective rights of those
parties before it in a relevant proceeding. The section also
invests the Director with the power of appointing
administrative trademark judges to the Board. The Director,
the Commissioner for Trademarks, the Commissioner for
Patents, and the administrative trademark judges shall serve
on the Board.
Sec. 4717. Board of Patent Appeals and Interferences
Under existing section 7 of the Patent Act, the
Commissioner, Deputy Commissioner, Assistant Commissioners,
and the examiners-in-chief constitute the Board of Patent
Appeals and Interferences. Pursuant to section 4717 of
subtitle G, the Board shall be comprised of the Director, the
Commissioner for Patents, the Commissioner for Trademarks,
and the administrative patent judges. In addition, the
existing statute allows each appellant a hearing before three
members of the Board who are designated by the Director.
Section 4717 empowers the Director with this authority.
Sec. 4718. Annual report of Director
No later than 180 days after the end of each fiscal year,
the Director must provide a report to Congress detailing
funds received and expended by the USPTO, the purposes for
which the funds were spent, the quality and quantity of USPTO
work, the nature of training provided to examiners, the
evaluations of the Commissioners by the Secretary of
Commerce, the Commissioners' compensation, and other
information relating to the agency.
Sec. 4719. Suspension or exclusion from practice
Under existing section 32 of the Patent Act, the
Commissioner (the Director pursuant to this Act) has the
authority, after notice and a hearing, to suspend or exclude
from further practice before the USPTO any person who is
incompetent, disreputable, indulges in gross misconduct or
fraud, or is noncompliant with USPTO regulations. Section
4719 permits the Director to designate an attorney who is an
officer or employee of the USPTO to conduct a hearing under
section 32.
Sec. 4720. Pay of Director and Deputy Director
Section 4720 replaces the Assistant Secretary of Commerce
and Commissioner of Patents and Trademarks with the Under
Secretary of Commerce for Intellectual Property and Director
of the United States Patent and Trademark Office to receive
pay at Level III of the Executive Schedule.\22\ Section 4720
also establishes the pay of the Deputy Director at Level IV
of the Executive Schedule.\23\

Subchapter B--Effective Date; Technical Amendments

Sec. 4731. Effective date
The effective date of subtitle G is four months after the
date of enactment.
Sec. 4732. Technical and conforming amendments
Section 4732 sets forth numerous technical and conforming
amendments related to subtitle G.

Subchapter C--Miscellaneous Provisions

Sec. 4741. References
Section 4741 clarifies that any reference to the transfer
of a function from a department or office to the head of such
department or office means the head of such department or
office to which the function is transferred. In addition,
references in other federal materials to the current
Commissioner of Patents and Trademarks refer, upon enactment,
to the Under Secretary of Commerce for Intellectual Property
and Director of the United States Patent and Trademark
Office. Similarly, references to the Assistant Commissioner
for Patents are deemed to refer to the Commissioner for
Patents and references to the Assistant Commissioner for
Trademarks are deemed to refer to the Commissioner for
Trademarks.

[[Page S14723]]

Sec. 4742. Exercise of authorities
Under section 4742, except as otherwise provided by law, a
federal official to whom a function is transferred pursuant
to subtitle G may exercise all authorities under any other
provision of law that were available regarding the
performance of that function to the official empowered to
perform that function immediately before the date of the
transfer of the function.
Sec. 4743. Savings provisions
Relevant legal documents that relate to a function which is
transferred by subtitle G, and which are in effect on the
date of such transfer, shall continue in effect according to
their terms unless later modified or repealed in an
appropriate manner. Applications or proceedings concerning
any benefit, service, or license pending on the effective
date of subtitle G before an office transferred shall not be
affected, and shall continue thereafter, but may later be
modified or repealed in the appropriate manner.
Subtitle G will not affect suits commenced before the
effective date of passage. Suits or actions by or against the
Department of Commerce, its employees, or the Secretary shall
not abate by reason of enactment of subtitle G. Suits against
a relevant government officer in her official capacity shall
continue post enactment, and if a function has transferred to
another officer by virtue of enactment, that other officer
shall substitute as the defendant. Finally, administrative
and judicial review procedures that apply to a function
transferred shall apply to the head of the relevant federal
agency and other officers to which the function is
transferred.
Sec. 4744. Transfer of assets
Section 4744 states that all available personnel, property,
records, and funds related to a function transferred pursuant
to subtitle G shall be made available to the relevant
official or head of the agency to which the function
transfers at such time or times as the Director of the Office
of Management and Budget (OMB) directs.
Sec. 4745. Delegation and assignment
Section 4745 allows an official to whom a function is
transferred under subtitle G to delegate that function to
another officer or employee. The official to whom the
function was originally transferred nonetheless remains
responsible for the administration of the function.
Sec. 4746. Authority of Director of the Office of Management
and Budget with respect to functions transferred
Pursuant to section 4746, if necessary the Director of OMB
shall make any determination of the functions transferred
pursuant to subtitle G.
Sec. 4747. Certain vesting of functions considered transfers
Section 4747 states that the vesting of a function in a
department or office pursuant to reestablishment of an office
shall be considered to be the transfer of that function.
Sec. 4748. Availability of existing funds
Under section 4748, existing appropriations and funds
available for the performance of functions and other
activities terminated pursuant to subtitle G shall remain
available (for the duration of their period of availability)
for necessary expenses in connection with the termination and
resolution of such functions and activities, subject to the
submission of a plan to House and Senate appropriators in
accordance with Public Law 105-277 (Departments of Commerce,
Justice, and State, the Judiciary and Related Agencies
Appropriations Act, Fiscal Year 1999).
Sec. 4749. Definitions
``Function'' includes any duty, obligation, power,
authority, responsibility, right, privilege, activity, or
program.
``Office'' includes any office, administration, agency,
bureau, institute, council, unit, organizational entity, or
component thereof.

Subtitle H--Miscellaneous Patent Provisions

Subtitle H consists of seven largely-unrelated provisions
that make needed clarifying and technical changes to the
Patent Act . Subtitle H also authorizes a study. The
provisions in Subtitle H take effect on the date of enactment
except where stated otherwise in certain sections.
Sec. 4801. Provisional applications
Section 4801 amends section 111(b)(5) of the Patent Act by
permitting a provisional application to be converted into a
non-provisional application. The applicant must make a
request within 12 months after the filing date of the
provisional application for it to be converted into a non-
provisional application.
Section 4801 also amends section 119(e) of the Patent Act
by clarifying the treatment of a provisional application when
its last day of pendency falls on a weekend or a Federal
holiday, and by eliminating the requirement that a
provisional application must be co-pending with a non-
provisional application if the provisional application is to
be relied on in any USPTO proceeding.
Sec. 4802. International applications
Section 4802 amends section 119(a) of the Patent Act to
permit persons who filed an application for patent first in a
WTO \24\ member country to claim the right of priority in a
subsequent patent application filed in the United States,
even if such country does not yet afford similar privileges
on the basis of applications filed in the United States. This
amendment was made in conformity with the requirements of
Articles 1 and 2 of the TRIPS Agreement.\25\ These Articles
require that WTO member countries apply the substantive
provisions of the Paris Convention for the Protection of
Industrial Property to other WTO member countries. As some
WTO member countries are not yet members of the Paris
Convention, and as developing countries are generally
permitted periods of up to 5 years before complying with all
provisions of the TRIPS Agreement, they are not required to
extend the right of priority to other WTO member countries
until such time.
Section 4802 also adds subsection (f) to section 119 of the
Patent Act to provide for the right of priority in the United
States on the basis of an application for a plant breeder's
right first filed in a WTO member country or in a UPOV\26\
Contracting Party. Many foreign countries provide only a sui
generis system of protection for plant varieties. Because
section 119 presently addresses only patents and inventors'
certificates, applicants from those countries are technically
unable to base a priority claim on a foreign application for
a plant breeder's right when seeking plant patent or utility
patent protection for a plant variety in this country.
Subsection (g) is added to section 119 to define the terms
``WTO member country'' and ``UPOV Contracting Party.''
Sec. 4803. Certain limitations on remedies for patent
infringement not applicable
Section 4803 amends section 287(c)(4) of the Patent Act,
which pertains to certain limitations on remedies for patent
infringement, to make it applicable only to applications
filed on or after September 30, 1996.
Sec. 4804. Electronic filing and publications
Section 4804 amends section 22 of the Patent Act to clarify
that the USPTO may receive, disseminate, and maintain
information in electronic form. Subsection (d)(2), however,
prohibits the Director from ceasing to maintain paper or
microform collections of U.S. patents, foreign patent
documents, and U.S. trademark registrations, except pursuant
to notice and opportunity for public comment and except the
Director shall first submit a report to Congress detailing
any such plan, including a description of the mechanisms in
place to ensure the integrity of such collections and the
data contained therein, as well as to ensure prompt public
access to the most current available information, and
certifying that the implementation of such plan will not
negatively impact the public.
In addition, in the operation of its information
dissemination programs and as the sole source of patent data,
the USPTO should implement procedures that assure that bulk
patent data are provided in such a manner that subscribers
have the data in a manner that grants a sufficient amount of
time for such subscribers to make the data available through
their own systems at the same time the USPTO makes the data
publicly available through its own Internet system.
Sec. 4805. Study and report on biologic deposits in support
of biotechnology patents
Section 4805 charges the Comptroller General, in
consultation with the Director of the USPTO, with conducting
a study and submitting a report to Congress no later than six
months after the date of enactment on the potential risks to
the U.S. biotechnological industry regarding biological
deposits in support of biotechnology patents. The study shall
include: an examination of the risk of export and of
transfers to third parties of biological deposits, and the
risks posed by the 18-month publication requirement of
subtitle E; an analysis of comparative legal and regulatory
regimes; and any related recommendations. The USPTO is then
charged with considering these recommendations when drafting
regulations affecting biological deposits.
Sec. 4806. Prior invention
Section 4806 amends section 102(g) of the Patent Act to
make clear that an inventor who is involved in a USPTO
interference proceeding and establishes a date of invention
under section 104 is subject to the requirements of section
102(g), including the requirement that the invention was not
abandoned, suppressed, or concealed.
Sec. 4807. Prior art exclusion for certain commonly assigned
patents
Section 4807 amends section 103 of the Patent Act, which
sets forth patentability conditions related to the
nonobviousness of subject matter. Section 103(c) of the
current statute states that subject matter developed by
another person which qualifies as prior art only under
section 102(f) or (g) shall not preclude granting a patent on
an invention with only obvious differences where the subject
matter and claimed invention were, at the time the invention
was made, owned by the same person or subject to an
obligation of assignment to the same person. The bill amends
section 103(c) by adding a reference to section 102(e), which
currently bars the granting of a patent if the invention was
described in another patent granted on an application filed
before the applicant's date of invention. The effect of the
amendment is to allow an applicant to receive a patent when
an invention with only obvious differences from the
applicant's invention was described in a patent granted on an
application filed before the applicant's invention, provided
the inventions are commonly owned or subject to an obligation
of assignment to the same person.

[[Page S14724]]

Sec. 4808. Exchange of copies of patents with foreign
countries
Sec. 4808 amends section 12 of the Patent Act to prohibit
the Director of the USPTO from entering into an agreement to
exchange patent data with a foreign country that is not one
of our NAFTA \27\ or WTO trading partners, unless the
Secretary of Commerce explicitly authorizes such an exchange.

TITLE V--MISCELLANEOUS PROVISIONS

Section 5001. Commission on Online Child Protection.
Section 5001(a) provides that references contained in the
amendments made by this title are to section 1405 of the
Child Online Protection Act (47 U.S.C. 231 note).
Section 5001(b) amends the membership of the Commission on
Online Child Protection to remove a requirement that a
specific number of representatives come from designated
sectors of private industry, as outlined in the Act. Section
5001(b) also provides that the members appointed to the
Commission as of October 31, 1999, shall remain as members.
Section 5001(b) also prevents the members of the Commission
from being paid for their work on the Commission. This
provision, however, does not preclude members from being
reimbursed for legitimate costs associated with participating
in the Commission (such as travel expenses).
Section 5001(c) extends the due date for the report of the
Commission by one year.
Section 5001(d) establishes that the Commission's statutory
authority will expire either (1) 30 days after the submission
of the report required by the Act, or (2) November 30, 2000,
whichever is earlier.
Section 5001(e) requires the Commission to commence its
first meeting no later than March 31, 2000. Section 5001(e)
also requires that the Commission elect, by a majority vote,
a chairperson of the Commission not later than 30 days after
holding its first meeting.
Section 5001(f) establishes minimum rules for the
operations of the Commission, and also allows the Commission
to adopt other rules as it deems necessary.
Section 5002. Privacy Protection for Donors to Public
Broadcasting Entities.
This provision, which was added in Conference, protects the
privacy of donors to public broadcasting entities.
Section 5003. Completion of Biennial Regulatory Review.
Section 5003 provides that, within 180 days after the date
of enactment, the FCC will complete the biennial review
required by section 202(h) of the Telecommunications Act of
1996. The Conferees expect that if the Commission concludes
that it should retain any of the rules under the review
unchanged, the Commission shall issue a report that includes
a full justification of the basis for so finding.
Section 5004. Broadcasting Entities.
This provision, added in Conference, allows for a
remittance of copyright damages for public broadcasting
entities where they are not aware and have no reason to
believe that their activities constituted violations of
copyright law. This is currently the standard for nonprofit
libraries, archives and educational institutions.
Section 5005. Technical Amendments Relating to Vessel Hull
Design Protection.
This section makes several amendments to chapter 13 of the
Copyright Act regarding design protection for vessel hulls.
The sunset provision for chapter 13, enacted as part of the
Digital Millennium Copyright Act, is removed so that chapter
13 is now a permanent provision of the Copyright Act. The
timing and number of joint studies to be done by the
Copyright Office and the Patent and Trademark Offices of the
effectiveness of chapter 13 are also amended by reducing the
number of studies from two to one, and requiring that the one
study not be submitted until November 1, 2003. Current law
requires delivery of two studies within the first two years
of chapter 13, which is unnecessary and an insufficient
amount of time for the Copyright Office and the Patent and
Trademark Office to accurately measure and assess the
effectiveness of design protection within the marine
industry.
The definition of a ``vessel'' in chapter 13 is amended to
provide that in addition to being able to navigate on or
through water, a vessel must be self-propelled and able to
steer, and must be designed to carry at least one passenger.
This clarifies Congress's intent not to allow design
protection for such craft as barges, toy and remote
controlled boas, inner tubes and surf boards.
Section 5006. Informal Rulemaking of Copyright Determination.
The Copyright Office has requested that Congress make a
technical correction to section 1201(a)(1)(C) of title 17 by
deleting the phrase ``on the record.'' The Copyright Office
believes that this correction is necessary to avoid any
misunderstanding regarding the intent of Congress that the
rulemaking proceeding which is the be conducted by the
Copyright Office under this provision shall be an informal,
rather than a formal, rulemaking proceeding. Accordingly, the
phrase ``on the record'' is deleted as a technical correction
to clarify the intent of Congress that the Copyright Office
shall conduct the rulemaking under section 1201(a)(1)(C) as
an informal rulemaking proceeding pursuant to section 553 of
Title 5. The intent is to permit interested persons an
opportunity to participate through the submission of written
statements, oral presentations at one or more of the public
hearings, and the submission of written responses to the
submissions or presentations of others.
Section 5007. Service of Process for Surety Corporations
This section allows surety corporations, like other
corporations, to utilize approved state officials to receive
service of process in any legal proceeding as an alternative
to having a separate agent for service of process in each of
the 94 federal judicial districts.
Section 5008. Low-Power Television.
Section 5008, which can be cited as the Community
Broadcasters Protection Act of 1999, will ensure that many
communities across the nation will continue to have access to
free, over-the-air low-power television (LPTV) stations, even
as full-service television stations proceed with their
conversion to digital format. In particular, Section 5008
requires the Federal Communications Commission (FCC) to
provide certain qualifying LPTV stations with ``primary''
regulatory status, which in turn will enable these LPTV
stations to attract the financing that is necessary to
provide consumers with critical information and programming.
At the same time, recognizing the importance of, and the
engineering complexity in, the FCC's plan to convert full-
service television stations to digital format, Section 5009
protects the ability of these stations to provide both
digital and analog service throughout their existing service
areas.
The FCC began awarding licenses for low-power television
service in 1982. Low-power television service is a relatively
inexpensive and flexible means of delivering programming
tailored to the interests of viewers in small localized
areas. It also ensures that spectrum allocated for broadcast
television service is more efficiently used and promotes
opportunities for entering the television broadcast business.
The FCC estimates that there are more than 2,000 licensed
and operational LPTV stations, about 1,500 of which are
operated in the continental United States by 700 different
licensees in nearly 750 towns and cities.\28\ LPTV stations
serve rural and urban communities alike, although about two-
thirds of all LPTV stations serve rural communities. LPTV
stations in urban markets typically provide niche programming
(e.g., bilingual or non-English programming) to under-served
communities in large cities. In many rural markets, LPTV
stations are consumers' only source of local, over-the-air
programming. Owners of LPTV stations are diverse, including
high school and college student populations, churches and
religious groups, local governments, large and small
businesses, and even individual citizens.
From an engineering standpoint, the term ``low-power
television service'' means precisely what it implies, i.e.,
broadcast television service that operates at a lower level
of power than full-service stations. Specifically, LPTV
stations radiate 3 kilowatts of power for stations operating
on the VHF band (i.e., channels 2 through 13), and 150
kilowatts of power for stations operating on the UHF band
(i.e., channels 14 through 69). By comparison, full-service
stations on VHF channels radiate up to 316 kilowatts of
power, and stations on UHF channels radiate up to 5,000
kilowatts of power. The reduced power levels that govern LPTV
stations mean these stations serve a much smaller geographic
region than do full-service stations. LPTV signals typically
extend to a range of approximately 12 to 15 miles, whereas
the originating signal of full-service stations often reach
households 60 or 80 miles away.
Compared to its rules for full-service television station
licensees, the FCC's rules for obtaining and operating an
LPTV license are minimal. But in return for ease of
licensing, LPTV stations must operate not only at reduced
power levels but also as ``secondary'' licensees. This means
LPTV stations are strictly prohibited from interfering with,
and must accept signal interference from, ``primary''
licensees, such as full-service television stations.
Moreover, LPTV stations must yield at any point in time to
full-service stations that increase their power levels, as
well as to new full-service stations.
The video programming marketplace is intensely competitive.
The three largest broadcast networks that once dominated the
market now face competition from several emerging broadcast
and cable networks, cable systems, satellite television
operators, wireless cable, and even the Internet. Low-power
television plays a valuable, albeit modest, role in this
market because it is capable of providing locally-originated
programming to rural and urban communities that have either
no access to local programming, or an over-abundance of
national programming.
Low-power television's future, however, is uncertain. To
begin with, LPTV's secondary regulatory status means a
licensee can be summarily displaced by a full-service station
that seeks to expand its own service area, or by a new full-
service station seeking to enter the same market. This cloud
of regulatory uncertainty necessarily affects the ability of
LPTV stations to raise capital over the long-term,
irrespective of an LPTV station's popularity among consumers.
The FCC's plan to convert full-service stations to digital
substantially complicates LPTV stations' already uncertain
future. In its digital television (DTV) proceeding, the FCC
adopted a table of allotments for DTV service that provided a
second channel for

[[Page S14725]]

each existing full-service station to use for DTV service in
making the transition from the existing analog technology to
the new DTV technology. These second channels were provided
to broadcasters on a temporary basis. At the end of the DTV
transition, which is currently scheduled for December 31,
2006, they must relinquish one of their two channels.
In assigning DTV channels, the FCC maintained the secondary
status of LPTV stations (as well as translators). In order to
provide all full-service television stations with a second
channel, the FCC was compelled to establish DTV allotments
that will displace a number of LPTV stations, particularly in
the larger urban market areas where the available spectrum is
most congested.
The FCC's plan also provides for the recovery of a portion
of the existing broadcast television spectrum so that it can
be reallocated to new uses. Specifically, the FCC provided
for immediate recovery of broadcast channels 60 through 69,
and for recovery of broadcast channels 52 through 59 at the
end of the DTV transition. As further required by Congress
under the Balanced Budget Act of 1997,\29\ the FCC has
completed the reallocation of broadcast channels 60 through
69. Existing analog stations, including LPTV stations and a
few DTV stations, are permitted to operate on these channels
during the DTV transition. But at the end of the transition,
all analog broadcast TV stations will have to cease
operation, and the DTV stations on broadcast channels 52
through 69 will be relocated to new channels in the DTV core
spectrum. As a result, the FCC estimates that the DTV
transition will require about 35 to 45 percent of all LPTV
stations to either change their operation or cease operation.
Indeed, some full-service stations have already ``bumped''
several LPTV stations a number of times, at substantial cost
to the LPTV station, with no guarantee that the LPTV station
will be permitted to remain on its new channel in the long
term.
The conferees, therefore, seek to provide some regulatory
certainty for low-power television service. The conferees
recognize that, because of emerging DTV service, not all LPTV
stations can be guaranteed a certain future. Moreover, it is
not clear that all LPTV stations should be given such a
guarantee in light of the fact that many existing LPTV
stations provide little or no original programming service.
Instead, the conferees seek to buttress the commercial
viability of those LPTV stations which can demonstrate that
they provide valuable programming to their communities. The
House Committee on Commerce's record in considering this
legislation reflects that there are a significant number of
LPTV stations which broadcast programming--including locally
originated programming--for a substantial portion of each
day. From the consumers' perspective, these stations provide
video programming that is functionally equivalent to the
programming they view on full-service stations, as well as
national and local cable networks. Consequently, these
stations should be afforded roughly similar regulatory
status. Section 5008, the Community Broadcasters Protection
Act of 1999, will achieve that objective, and at the same
time, protect the transition to digital.
Section 5008(a) provides that the short title of this
section is the ``Community Broadcasters Protection Act of
1999.''
Section 5008(b) describes the Congress' findings on the
importance of low-power television service. The Congress
finds that LPTV stations have operated in a manner beneficial
to the public, and in many instances, provide worthwhile and
diverse services to communities that lack access to over-the-
air programming. The Congress also finds, however, that LPTV
stations' secondary regulatory status effectively blocks
access to capital.
Section 5008(c) amends section 336 of the Communications
Act of 1934 \30\ to require the FCC to create a new ``Class
A'' license for certain qualifying LPTV stations. New
paragraph (1)(A) in particular directs the FCC to prescribe
rules within 120 days of enactment for the establishment of a
new Class A television license that will be available to
qualifying LPTV stations. The FCC's rules must ensure that a
Class A licensee receives the same license terms and renewal
standards as any full-service licensee, and that each Class A
licensee is accorded primary regulatory status. Subparagraph
(B) further requires the FCC, within 30 days of enactment, to
send to each existing LPTV licensee a notice that describes
the requirements for Class A designation. Within 60 days of
enactment (or within 30 days of the FCC's notice), LPTV
stations intending to seek Class A designation must submit a
certification of eligibility to the FCC. Absent a material
deficiency in an LPTV station's certification materials, the
FCC is required under subparagraph (B) to grant a
certification of eligibility.
Subparagraph (C) permits an LPTV station, within 30 days of
the issuance of the rules required under subparagraph (A), to
submit an application for Class A designation. The FCC must
award a Class A license to a qualifying LPTV station within
30 days of receiving such application. Subparagraph (D)
mandates that the FCC must act to preserve the signal
contours of an LPTV station pending the final resolution of
its application for a Class A license. In the event technical
problems arise that require an engineering solution to a
full-service station's allotted parameters or channel
assignment in the DTV table of allotments, subparagraph (D)
requires the FCC to make the necessary modifications to
ensure that such full-service station can replicate or
maximize its service area, as provided for in the FCC's
rules.
With regard to maximization, a full-service digital
television station must file an application for maximization
or a notice of intent to seek such maximization by December
31, 1999, file a bona fide application for maximization by
May 1, 2000, and also comply with all applicable FCC rules
regarding the construction of digital television facilities.
The term ``maximization'' is defined in paragraph 31 of the
FCC's Sixth Report and Order as the process by which stations
increase their service areas by operating with additional
power or higher antennae than specified in the FCC's digital
television table of allotments. Subparagraph(E) requires that
a station must reduce the protected contour of its digital
television service area in accordance with any modifications
requested in future change applications. This provision is
intended to ensure that stations indeed utilize the full
amount of maximized spectrum for which they originally apply
by the aforementioned deadlines.
Paragraph (2) lists the criteria an LPTV station must meet
to qualify for a Class A license. Specifically, the LPTV
station must: during the 90 days preceding the date of
enactment, broadcast a minimum of 18 hours per day--including
at least 3 hours per week of locally-originated programming--
and also be in compliance with the FCC's rules on low-power
television service; and from and after the date of its
application for a Class A license, be in compliance with the
FCC's rules for full-service television stations. In the
alternative, the FCC may qualify an LPTV station as a Class A
licensee if it determines that such qualification would serve
the public interest, convenience, and necessity or for other
reasons determined by the FCC.
Paragraph (3) provides that no LPTV station authorized as
of the date of enactment may be disqualified for a Class A
license based on common ownership with any other medium of
mass communication.
Paragraph (4) makes clear that the FCC is not required to
issue Class A LPTV stations (or translators) an additional
license for advanced television services. The FCC, however,
must accept applications for such services, provided the
station will not cause interference to any other broadcast
facility applied for, protected, permitted or authorized on
the date of the filing of the application for advanced
television services. Either the new license for advanced
services or the original license must be forfeited at the end
of the DTV transition. The licensee may elect to convert to
advanced television services on its analog channel, but is
not required to convert to digital format until the end of
the DTV transition.
Paragraph (5) clarifies that nothing in new subsection
336(f) preempts, or otherwise affects, section 337 of the
Communications Act of 1934.\31\
Paragraph (6) precludes the FCC from granting Class A
licenses to LPTV stations operating between 698 megahertz
(MHz) and 806 MHz (i.e., television broadcast channels 52
through 69). However, the FCC shall provide to LPTV stations
assigned to, and temporarily operating on, those channels the
opportunity to qualify for a Class A license. If a qualifying
LPTV station is ultimately assigned a channel within the band
of frequencies that will eventually comprise the ``core
spectrum'' (i.e., television broadcast channels 2 through
51), then the FCC is required to issue a Class A license
simultaneously. However, the FCC may not grant a Class A
license to an LPTV station operating on a channel within the
core spectrum that the FCC will identify within 180 days of
enactment.
Finally, paragraph (7) provides that the FCC may not grant
a Class A license (or a modification thereto) unless the
requesting LPTV station demonstrates that it will not
interfere with one of three types of radio-based services.
First, under subparagraph (A), the LPTV station must show
that it will not interfere with: (i) the predicted Grade B
contour of any station transmitting in analog format; or (ii)
the digital television service areas provided in the DTV
table of allotments; or the digital television areas
explicitly protected (as opposed to those areas that may be
permitted) in the Commission's digital television
regulations; or the digital television service areas of
stations subsequently granted by the FCC prior to the filing
of a Class A application; or lastly, stations seeking to
maximize power under the FCC's rules (provided such stations
are in compliance with the notification requirements under
paragraph (1)).
Second, under subparagraph (B), the LPTV station must show
that it will not interfere with any licensed, authorized or
pending LPTV station or translator. And third, under
subparagraph (C), the LPTV station must show that it will not
interfere with other services (e.g., land mobile services)
that also operate on television broadcast channels 14 through
20.
Finally, paragraph (8) establishes priority for those LPTVs
that are displaced by an application filed under this
section, in that these LPTVs have priority over other LPTVs
in the assignment of available channels.

FOOTNOTES

\1\ See Rust v. Sullivan, 500 U.S. 173 (1991) (grants);
Indopco, Inc. v. Commissioner, 503 U.S. 79, 84 (1992) (tax
benefits). The First Amendment requires only

[[Page S14726]]

that Congress not aim at ``the suppression of dangerous
ideas.'' NEA v. Finley, 118 S. Ct. 2168, 2178-79 (1998).
\2\ See United States v. O'Brien, 391 U.S. 367 (1968).
\3\ See Turner Broadcasting Sys., Inc. v. FCC, 512 U.S. 622,
663 (1994).
\4\ See, e.g., H.R. Rep. No. 102-628, p. 51 (1992); S. Rep.
No. 102-92, p. 62 (1991); see also Feb. 24 Hearing (Al
DeVaney).
\5\ The Supreme Court has described the ``two types'' of
quasi in rem proceedings: a type I proceeding, in which ``the
plaintiff is seeking to secure a pre-existing claim in the
subject property and to extinguish or establish the
nonexistence of similar interests of particular persons,''
and a type II action, in which ``the plaintiff seeks to apply
what he concedes to be the property of the defendant to the
satisfaction of a claim against him.'' Hanson v. Denckla, 357
U.S. 235, 246 n.12 (1958).
\6\ 15 U.S.C. Sec. 1051, et seq.
\7\ 149 F.3d 1368 (Fed. Cir. 1998) [hereinafter State
Street].
\8\ See Dunlop Holdings v. Ram Golf Corp., 524 F.2d 33 (7th
Cir. 1975), cert. denied, 424 US 985 (1976).
\9\ General Agreement on Tariffs and Trade, Pub. L. No. 103-
465. The framework for international trade since its
inception in 1948, GATT is now administered under the
auspices of the World Trade Organization (WTO) (see note 19,
infra).
\10\ See Herbert F. Schwartz, Patent Law & Practice (2d ed.,
Federal Judicial Center, 1995), note 72 at 22. The PCT is a
multilateral treaty among more than 50 nations that is
designed to simplify the patenting process when an applicant
seeks a patent on the same invention in more than one nation.
See also 35 U.S.C.A. chs. 35-37 and PCT Applicant's Guide
(1992, rev. 1994).
\11\ 35 U.S.C. Sec. 135(a).
\12\ 35 U.S.C. Sec. 181.
\13\ 5 U.S.C. Sec. Sec. 551-559, 701-706, 1305, 3105, 3344,
5372, 7521.
\14\ 28 U.S.C. Sec. 1295.
\15\ 35 U.S.C. Sec. 111(b). Pursuant to 35 U.S.C.
Sec. 111(b)(5), all provisional applications are abandoned 12
months after the date of their filing; accordingly, they are
not subject to the 18-month publication requirement.
\16\ 35 U.S.C. Sec. 171. Since design applications do not
disclose technology, inventors do not have a particular
interest in having them published. The bill as written
therefore simplifies the proposed system of publication to
confine the requirement to those applications for which there
is a need for publication.
\17\ Mar. 20, 1883, as revised at Brussels, Dec. 14, 1900, 25
Stat. 1645, T.S. No. 579, and subsequently through 1967. The
Convention has 156 member nations, including the United
States.
\18\ See 28 U.S.C. Sec. 1338.
\19\ 19 U.S.C. Sec. 2171.
\20\ 28 U.S.C. Sec. 5382.
\21\ 5 U.S.C. Sec. 5304(h)(2)(C).
\22\ 5 U.S.C. Sec. 5314.
\23\ 5 U.S.C. Sec. 5315.
\24\ World Trade Organization. The agreement establishing the
WTO is a multilateral instrument which creates a permanent
organization to oversee the implementation of the Uruguay
Round Agreements, including the GATT 1994, to provide a forum
for multilateral trade negotiations and to administer dispute
settlements (see note 3, supra). Staff of the House Comm. on
Ways and Means, 104th Cong., 1st Sess., Overview and
Compilation of U.S. Trade Statutes 1040 (Comm. Print 1995)
[hereinafter, Overview and Compilation of U.S. Trade
Statutes].
\25\ Trade-Related Aspects of Intellectual Property Rights
Agreement; i.e., that component of GATT which addresses
intellectual property rights among the signatory members.
\26\ International Convention for the Protection of New
Varieties of Plants. UPOV is administered by the World
Intellectual Property Organization (WIPO), which is charged
with the administration of, and activities concerning
revisions to, the international intellectual property
treaties. UPOV has 40 members, and guarantees plant breeders
national treatment and right of priority in other countries
that are members of the treaty, along with certain other
benefits. See M.A. Leaffer, International Treaties on
Intellectual Property at 47 (BNA, 2d ed. 1997).
\27\ North American Free Trade Agreement, Pub. L. No. 103-
182. The cornerstone of NAFTA is the phased-out elimination
of all tariffs on trade between the U.S., Canada, and Mexico.
Overview and Compilation of U.S. Trade Statutes 1999.
\28\ LPTV stations are distinct from so called
``translators.'' Whereas LPTV stations typically offer
original programming, translators merely amplify or ``boost''
a full-service television station's signal into rural and
mountainous regions adjacent to the station's market.
\29\ See 47 U.S.C. Sec. 337.
\30\ 47 U.S.C. Sec. 336.
\31\ 47 U.S.C. Sec. 337.
______

By Mr. LEAHY:
S. 1949. A bill to promote economically sound modernization of
electric power generation capacity in the United States, to establish
requirements to improve the combustion heat rate efficiency of fossil
fuel-fired electric utility generating units, to reduce emissions of
mercury, carbon dioxide, nitrogen oxides, and sulfur dioxide, to
require that all fossil fuel-fired electric utility generating units
operating in the United States meet new review requirements, to promote
the use of clean coal technologies, and to promote alternative energy
and clean energy sources such as solar, wind, biomass, and fuel cells;
to the Committee on Finance.

clean power plant and modernization act of 1999

Mr. LEAHY. Mr. President, Vermonters have a proud tradition of
protecting our environment. We have some of the strongest environmental
laws in the country. Yet despite this proud tradition of environmental
stewardship, we have seen how pollution from outside our state has
affected our mountains, lakes and streams. Acid rain caused from sulfur
dioxide emissions outside Vermont has drifted through the atmosphere
and scarred our mountains and poisoned our streams. Mercury has quietly
made its deadly poisonous presence into the food chain of our fish to
the point where health advisories have been posted for the consumption
of several species. And, despite our own tough air laws and small
population, the EPA has considered air quality warnings in Vermont that
are comparable to emissions consistent for much larger cities. Silently
each night, pollution from outside Vermont seeps into our state, and
our exemplary and forward-looking environmental laws are powerless to
stop or even limit the encroachment.

The Clean Air Act of 1970 was a milestone law which established
national air quality standards for the first time and attempted to
provide protection for populations who are affected by emissions
outside their own local and state control. That bill did much to halt
declining air quality around the country and improve it in some areas.
It also acknowledged that fossil fuel utility plants contribute a
significant amount of air pollution not only in the area immediately
around the plant but can affect air quality hundreds of miles away.
While the bill has improved air quality, changes in the utility
market since passage of the Clean Air Act make it necessary to consider
important updates to the legislation. States throughout the country are
deregulating utilities and soon Congress may consider federal
legislation on this issue. I support these economic changes but
Congress and the Administration should keep pace with this changing
market. Breaking down the barriers of a regulated utility market can
have important economic consequences for utility customers. More
competition will drive down prices. But these lower costs will come
with a price--the cheapest power is unfortunately produced by some of
the dirtiest power plants. Most of these power plants were
grandfathered under the Clean Air Act.
So today I am introducing the ``Clean Power Plant and Modernization
Act'' to address the local, regional, and global air pollution problems
that are posed by fossil-fired power plants under a deregulated market.
In the last few weeks, the EPA and the Administration have taken some
important steps to address the power plant loophole in the Clean Air
Act that allows hundreds of old, mostly coal-fired power plants to
continue to pollute at levels much higher than new plants. Closing this
loophole is critical to protecting the health of our environment and
the health of our children.
Last week the Justice Department and the Environmental Protection
Agency filed suit against 32 coal-fired power plants who had made major
changes to their plants without also installing new equipment to
control smog, acid rain and soot. This is illegal, even under the Clean
Air Act, and it spotlights the glaring need to level the playing field
for all power plants. This is particularly as our country moves toward
a deregulated electricity industry.

Unfortunately, some of our colleagues decided that this move unfairly
targeted some of their utilities that have benefitted from this
loophole for almost thirty years. I would point out that many of us
from New England and New York believe it is unfair that our states have
been the dumping ground for the pollution coming out of these plants
for the past thirty years. My colleagues have heard me speak on the
floor about how this pollution is contaminating our fish with mercury,
damaging our lakes and forests with acid rain, and causing respiratory
problems and obscuring the view of Vermont's mountains with summertime
ozone pollution from nitrogen oxide emissions.
Now, added to these concerns is the growing body of knowledge showing
that carbon dioxide emissions are having an impact on the global
climate. More than a decade of record heat, reports from around the
globe of dying coral reefs, and melting glaciers should be warning
signals to all of us.
In Vermont, one of our warning signals is the impact to sugar maples.
Sugar maple now range naturally as far south as Tennessee and west of
the Mississippi River from Minnesota to Missouri. Given the current
predictions for climate changes, by the end of the next century the
range of sugar maples in North America will be limited the state of
Maine and portions of eastern Canada. Vermont's climate may not

[[Page S14727]]

change so much that palm trees will line the streets of Burlington and
Montpelier, but the impact on the character and economy of Vermont and
many other states will be profound.
It is hard to imagine a Vermont hillside in the fall without the
brilliant reds of the sugar maples, and it is hard to imagine a stack
of pancakes without Vermont maple syrup. And it is unlikely that sugar
maples will be the only species or crop that will be affected by
climate change, or that the effects will be limited to Vermont. Many
like to dismiss concerns about pollution from power plants as a
``Northeastern issue.'' It is not; it affects all of us, perhaps in
ways that we have not even begun to imagine.
I can show you maps that mark the deposition ``hot spots'' for these
pollutants in the Everglades, the Upper Midwest, New England, Long
Island Sound, Chesapeake Bay and the West Coast. This clearly is not a
regional issue. Collectively, fossil fuel-fired power plants constitute
the largest source of air pollution in the United States, annually
emitting more than 2 billion tons of carbon dioxide, more than 12
million tons of acid rain producing sulfur dioxide, nearly 6 million
tons of smog producing nitrogen oxides, and more than 50 tons of highly
toxic mercury.
These are staggering sums. Consider the fact that it would take
nearly 25,000 Washington Monuments, weighing 81,120 tons apiece, to add
up to 2 billion tons. And that is just one year.
Why are we continuing to allow pollutants on that enormous scale to
be dumped on some of our most fragile ecosystems, much less into our
lungs through the air we breathe? It is because Congress assumed when
it passed the 1970 Clean Air Act that these old pollution-prone plants
would be retired over time and replaced by newer, cleaner plants. It
has not worked out that way, and it is time for the Congress to rethink
our strategy.

More than 75 percent of the fossil-fuel fired plants in the United
States began operation before the 1970 Clean Air Act was passed. As a
result, they are ``grandfathered'' out from under the full force of its
regulations. Many of the environmental problems posed by this industry
are linked to the antiquated and inefficient technologies at these
plants. The average fossil-fuel fired power plant uses combustion
technology devised in the 1950's or before. Would any of us buy a car
today that was still using 1950s technology? Of course not. So why are
we still going out of our way to preserve 1950s technology for power
plants?
As long as we allow these plants to operate inefficiently they will
produce enormous amounts of air pollution. My bill takes a new approach
to reducing this pollution by retiring the inefficient
``grandfathered'' power plants and bring new, clean, and efficient
technologies for the 21st Century on line.
Obviously, major changes in this industry will not occur over night.
The ``continue-business-as-usual'' inertia is enormous. The old,
inefficient, pollution-prone power plants will operate until they fall
down because they are paid for, burn the cheapest fuel, and are subject
to much less stringent environmental requirements. ``Grandfathered''
plants have the statutory equivalent of an eternal lifetime under the
Clean Air Act loophole.
Mr. President, this article in Forbes Magazine describes how valuable
the old ``grandfathered'' power plants are. The article cites the
example of the ``grandfathered'' Homer City generating station outside
of Pittsburgh. Until last year, the utility valued this plant at $540
million. According to the Forbes article, last year the utility sold
the plant for $1.8 billion. That works out to $955 per kilowatt of
generating capacity, or about the cost of building a new plant. Why are
these old pollution-prone plants suddenly so valuable? Maybe their
``grandfathered'' status has something to do with it.
What does my bill propose to do? First, it closes the ``grandfather''
loophole. Second, it lays out an aggressive but achievable set of air
pollution and efficiency requirements for fossil-fired power plants.
Third, the emissions standards will allow clean coal technologies to
have a fair chance to compete in the future mix of electrical power
generation. Fourth, it provides industry decision-makers with a
comprehensive and predictable set of regulatory requirements and tax
code changes so they can see up-front what the playing field is going
to look like in the future. This will allow them to make informed,
comprehensive, and economically efficient business decisions. Public
health and the environment will benefit, consumers will benefit, and
the utility companies will benefit from this approach.
As U.S. power plants become more efficient and more power is produced
by renewable technologies, less fossil fuel will be consumed. This will
have an impact on the workers and communities that produce fossil
fuels. These effects are likely to be greatest for coal, even with
significant deployment of clean coal technology. The bill provides
funding for programs to help workers and communities during the period
of transition. I am eager to work with organized labor to ensure that
these provisions address the needs of workers, particularly those who
may not fully benefit from retraining programs.

The bill provides substantial additional funding for research,
development, and commercial demonstrations of renewable and clean
energy technologies such as solar, wind, biomass, and fuel cells. As
utilities retire their ``grandfathered'' plants and plan for future
generating capacity, renewable and clean technologies need to be part
of the equation. My bill also authorizes expenditures for implementing
known ways of biologically sequestering carbon dioxide from the
atmosphere such as planting trees, preserving wetlands, and soil
restoration.
How will the environment benefit from the emission and efficiency
standards in my bill? Mercury emissions will be cut from more than 50
tons per year to no more than 5 tons per year. Annual emissions of
sulfur dioxide that causes acid rain will be cut by more than 6 million
tons beyond the requirements in Phase II of the Clean Air Act of 1990.
Nitrogen oxide emissions that result in summertime ozone pollution will
be cut by more than 3 million tons per year beyond Phase II
requirements. And the bill would prevent at least 650 million tons of
carbon dioxide emissions per year.
Of course, this discussion should not just be about the impact to our
environment. This debate should equally be focused on public health.
There is mounting evidence of the health effects of these pollutants.
The Washington Post Magazine ran an alarming article that documented
the escalating number of children with asthma, jumping to 17.3 million
in 1998 from 6.8 million in 1980. Asthma may not be caused directly by
air pollution, but it certainly aggravates it and can lead to premature
deaths.
The American public still overwhelmingly supports the commitment to
the environment that we made in the early 1970s. As stewards of the
environment for our children and our grandchildren, we need to act
without delay to ensure that in the new millennium the United States
produces electricity more efficiently and with much less environmental
and public health impact. There is no reason why we should go into the
next century still using technology from the era of Ozzie and Harriet.
Mr. President, I ask unanimous consent that a section-by-section
overview of the bill, and an article entitled ``Poor Me'' from the May
31, 1999, edition of Forbes Magazine, be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

S. 1949

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Clean
Power Plant and Modernization Act of 1999''.
(b) Table of Contents.--The table of contents of this Act
is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. Combustion heat rate efficiency standards for fossil fuel-fired
generating units.
Sec. 5. Air emission standards for fossil fuel-fired generating units.
Sec. 6. Extension of renewable energy production credit.
Sec. 7. Megawatt hour generation fees.
Sec. 8. Clean Air Trust Fund.
Sec. 9. Accelerated depreciation for investor-owned generating units.

[[Page S14728]]

Sec. 10. Grants for publicly owned generating units.
Sec. 11. Recognition of permanent emission reductions in future climate
change implementation programs.
Sec. 12. Renewable and clean power generation technologies.
Sec. 13. Clean coal, advanced gas turbine, and combined heat and power
demonstration program.
Sec. 14. Evaluation of implementation of this Act and other statutes.
Sec. 15. Assistance for workers adversely affected by reduced
consumption of coal.
Sec. 16. Community economic development incentives for communities
adversely affected by reduced consumption of coal.
Sec. 17. Carbon sequestration.

SEC. 2. FINDINGS AND PURPOSES.

(a) Findings.--Congress finds that--
(1) the United States is relying increasingly on old,
needlessly inefficient, and highly polluting powerplants to
provide electricity;
(2) the pollution from those powerplants causes a wide
range of health and environmental damage, including--
(A) fine particulate matter that is associated with the
deaths of approximately 50,000 Americans annually;
(B) urban ozone, commonly known as ``smog'', that impairs
normal respiratory functions and is of special concern to
individuals afflicted with asthma, emphysema, and other
respiratory ailments;
(C) rural ozone that obscures visibility and damages
forests and wildlife;
(D) acid deposition that damages estuaries, lakes, rivers,
and streams (and the plants and animals that depend on them
for survival) and leaches heavy metals from the soil;
(E) mercury and heavy metal contamination that renders fish
unsafe to eat, with especially serious consequences for
pregnant women and their fetuses;
(F) eutrophication of estuaries, lakes, rivers, and
streams; and
(G) global climate change that may fundamentally and
irreversibly alter human, animal, and plant life;
(3) tax laws and environmental laws--
(A) provide a very strong incentive for electric utilities
to keep old, dirty, and inefficient generating units in
operation; and
(B) provide a strong disincentive to investing in new,
clean, and efficient generating technologies;
(4) fossil fuel-fired power plants, consisting of plants
fueled by coal, fuel oil, and natural gas, produce nearly
two-thirds of the electricity generated in the United States;
(5) since, according to the Department of Energy, the
average combustion heat rate efficiency of fossil fuel-fired
power plants in the United States is 33 percent, 67 percent
of the heat generated by burning the fuel is wasted;
(6) technology exists to increase the combustion heat rate
efficiency of coal combustion from 35 percent to 50 percent
above current levels, and technological advances are possible
that would boost the net combustion heat rate efficiency even
more;
(7) coal-fired power plants are the leading source of
mercury emissions in the United States, releasing an
estimated 52 tons of this potent neurotoxin each year;
(8) in 1996, fossil fuel-fired power plants in the United
States produced over 2,000,000,000 tons of carbon dioxide,
the primary greenhouse gas;
(9) on average--
(A) fossil fuel-fired power plants emit 1,999 pounds of
carbon dioxide for every megawatt hour of electricity
produced;
(B) coal-fired power plants emit 2,110 pounds of carbon
dioxide for every megawatt hour of electricity produced; and
(C) coal-fired power plants emit 205 pounds of carbon
dioxide for every million British thermal units of fuel
consumed;
(10) the average fossil fuel-fired generating unit in the
United States commenced operation in 1964, 6 years before the
Clean Air Act (42 U.S.C. 7401 et seq.) was amended to
establish requirements for stationary sources;
(11)(A) according to the Department of Energy, only 23
percent of the 1,000 largest emitting units are subject to
stringent new source performance standards under section 111
of the Clean Air Act (42 U.S.C. 7411); and
(B) the remaining 77 percent, commonly referred to as
``grandfathered'' power plants, are subject to much less
stringent requirements;
(12) on the basis of scientific and medical evidence,
exposure to mercury and mercury compounds is of concern to
human health and the environment;
(13) pregnant women and their developing fetuses, women of
childbearing age, and children are most at risk for mercury-
related health impacts such as neurotoxicity;
(14) although exposure to mercury and mercury compounds
occurs most frequently through consumption of mercury-
contaminated fish, such exposure can also occur through--
(A) ingestion of breast milk;
(B) ingestion of drinking water, and foods other than fish,
that are contaminated with methyl mercury; and
(C) dermal uptake through contact with soil and water;
(15) the report entitled ``Mercury Study Report to
Congress'' and submitted by the Environmental Protection
Agency under section 112(n)(1)(B) of the Clean Air Act (42
U.S.C. 7412(n)(1)(B)), in conjunction with other scientific
knowledge, supports a plausible link between mercury
emissions from combustion of coal and other fossil fuels and
mercury concentrations in air, soil, water, and sediments;
(16)(A) the Environmental Protection Agency report
described in paragraph (15) supports a plausible link between
mercury emissions from combustion of coal and other fossil
fuels and methyl mercury concentrations in freshwater fish;
(B) in 1997, 39 States issued health advisories that warned
the public about consuming mercury-tainted fish, as compared
to 27 States that issued such advisories in 1993; and
(C) the number of mercury advisories nationwide increased
from 899 in 1993 to 1,675 in 1996, an increase of 86 percent;
(17) pollution from powerplants can be reduced through
adoption of modern technologies and practices, including--
(A) methods of combusting coal that are intrinsically more
efficient and less polluting, such as pressurized fluidized
bed combustion and an integrated gasification combined cycle
system;
(B) methods of combusting cleaner fuels, such as gases from
fossil and biological resources and combined cycle turbines;
(C) treating flue gases through application of pollution
controls;
(D) methods of extracting energy from natural, renewable
resources of energy, such as solar and wind sources;
(E) methods of producing electricity and thermal energy
from fuels without conventional combustion, such as fuel
cells; and
(F) combined heat and power methods of extracting and using
heat that would otherwise be wasted, for the purpose of
heating or cooling office buildings, providing steam to
processing facilities, or otherwise increasing total
efficiency; and
(18) adopting the technologies and practices described in
paragraph (17) would increase competitiveness and
productivity, secure employment, save lives, and preserve the
future.
(b) Purposes.--The purposes of this Act are--
(1) to protect and preserve the environment while
safeguarding health by ensuring that each fossil fuel-fired
generating unit minimizes air pollution to levels that are
technologically feasible through modernization and
application of pollution controls;
(2) to greatly reduce the quantities of mercury, carbon
dioxide, sulfur dioxide, and nitrogen oxides entering the
environment from combustion of fossil fuels;
(3) to permanently reduce emissions of those pollutants by
increasing the combustion heat rate efficiency of fossil
fuel-fired generating units to levels achievable through--
(A) use of commercially available combustion technology,
including clean coal technologies such as pressurized
fluidized bed combustion and an integrated gasification
combined cycle system;
(B) installation of pollution controls;
(C) expanded use of renewable and clean energy sources such
as biomass, geothermal, solar, wind, and fuel cells; and
(D) promotion of application of combined heat and power
technologies;
(4)(A) to create financial and regulatory incentives to
retire thermally inefficient generating units and replace
them with new units that employ high-thermal-efficiency
combustion technology; and
(B) to increase use of renewable and clean energy sources
such as biomass, geothermal, solar, wind, and fuel cells;
(5) to establish the Clean Air Trust Fund to fund the
training, economic development, carbon sequestration, and
research, development, and demonstration programs established
under this Act;
(6) to eliminate the ``grandfather'' loophole in the Clean
Air Act relating to sources in operation before the
promulgation of standards under section 111 of that Act (42
U.S.C. 7411);
(7) to express the sense of Congress that permanent
reductions in emissions of greenhouse gases that are
accomplished through the retirement of old units and
replacement by new units that meet the combustion heat rate
efficiency and emission standards specified in this Act
should be credited to the utility sector and the owner or
operator in any climate change implementation program;
(8) to promote permanent and safe disposal of mercury
recovered through coal cleaning, flue gas control systems,
and other methods of mercury pollution control;
(9) to increase public knowledge of the sources of mercury
exposure and the threat to public health from mercury,
particularly the threat to the health of pregnant women and
their fetuses, women of childbearing age, and children;
(10) to decrease significantly the threat to human health
and the environment posed by mercury;
(11) to provide worker retraining for workers adversely
affected by reduced consumption of coal; and
(12) to provide economic development incentives for
communities adversely affected by reduced consumption of
coal.

SEC. 3. DEFINITIONS.

In this Act:

[[Page S14729]]

(1) Administrator.--The term ``Administrator'' means the
Administrator of the Environmental Protection Agency.
(2) Generating unit.--The term ``generating unit'' means an
electric utility generating unit.

SEC. 4. COMBUSTION HEAT RATE EFFICIENCY STANDARDS FOR FOSSIL
FUEL-FIRED GENERATING UNITS.

(a) Standards.--
(1) In general.--Not later than the day that is 10 years
after the date of enactment of this Act, each fossil fuel-
fired generating unit that commences operation on or before
that day shall achieve and maintain, at all operating levels,
a combustion heat rate efficiency of not less than 45 percent
(based on the higher heating value of the fuel).
(2) Future generating units.--Each fossil fuel-fired
generating unit that commences operation more than 10 years
after the date of enactment of this Act shall achieve and
maintain, at all operating levels, a combustion heat rate
efficiency of not less than 50 percent (based on the higher
heating value of the fuel), unless granted a waiver under
subsection (d).
(b) Test Methods.--Not later than 2 years after the date of
enactment of this Act, the Administrator, in consultation
with the Secretary of Energy, shall promulgate methods for
determining initial and continuing compliance with this
section.
(c) Permit Requirement.--Not later than 10 years after the
date of enactment of this Act, each generating unit shall
have a permit issued under title V of the Clean Air Act (42
U.S.C. 7661 et seq.) that requires compliance with this
section.
(d) Waiver of Combustion Heat Rate Efficiency Standard.--
(1) Application.--The owner or operator of a generating
unit that commences operation more than 10 years after the
date of enactment of this Act may apply to the Administrator
for a waiver of the combustion heat rate efficiency standard
specified in subsection (a)(2) that is applicable to that
type of generating unit.
(2) Issuance.--The Administrator may grant the waiver only
if--
(A)(i) the owner or operator of the generating unit
demonstrates that the technology to meet the combustion heat
rate efficiency standard is not commercially available; or
(ii) the owner or operator of the generating unit
demonstrates that, despite best technical efforts and
willingness to make the necessary level of financial
commitment, the combustion heat rate efficiency standard is
not achievable at the generating unit; and
(B) the owner or operator of the generating unit enters
into an agreement with the Administrator to offset by a
factor of 1.5 to 1, using a method approved by the
Administrator, the emission reductions that the generating
unit does not achieve because of the failure to achieve the
combustion heat rate efficiency standard specified in
subsection (a)(2).
(3) Effect of waiver.--If the Administrator grants a waiver
under paragraph (1), the generating unit shall be required to
achieve and maintain, at all operating levels, the combustion
heat rate efficiency standard specified in subsection (a)(1).

SEC. 5. AIR EMISSION STANDARDS FOR FOSSIL FUEL-FIRED
GENERATING UNITS.

(a) All Fossil Fuel-Fired Generating Units.--Not later than
10 years after the date of enactment of this Act, each fossil
fuel-fired generating unit, regardless of its date of
construction or commencement of operation, shall be subject
to, and operating in physical and operational compliance
with, the new source review requirements under section 111 of
the Clean Air Act (42 U.S.C. 7411).
(b) Emission Rates for Sources Required To Maintain 45
Percent Efficiency.--Not later than 10 years after the date
of enactment of this Act, each fossil fuel-fired generating
unit subject to section 4(a)(1) shall be in compliance with
the following emission limitations:
(1) Mercury.--Each coal-fired or fuel oil-fired generating
unit shall be required to remove 90 percent of the mercury
contained in the fuel, calculated in accordance with
subsection (e).
(2) Carbon dioxide.--
(A) Natural gas-fired generating units.--Each natural gas-
fired generating unit shall be required to achieve an
emission rate of not more than 0.9 pounds of carbon dioxide
per kilowatt hour of net electric power output.
(B) Fuel oil-fired generating units.--Each fuel oil-fired
generating unit shall be required to achieve an emission rate
of not more than 1.3 pounds of carbon dioxide per kilowatt
hour of net electric power output.
(C) Coal-fired generating units.--Each coal-fired
generating unit shall be required to achieve an emission rate
of not more than 1.55 pounds of carbon dioxide per kilowatt
hour of net electric power output.
(3) Sulfur dioxide.--Each fossil fuel-fired generating unit
shall be required--
(A) to remove 95 percent of the sulfur dioxide that would
otherwise be present in the flue gas; and
(B) to achieve an emission rate of not more than 0.3 pounds
of sulfur dioxide per million British thermal units of fuel
consumed.
(4) Nitrogen oxides.--Each fossil fuel-fired generating
unit shall be required--
(A) to remove 90 percent of nitrogen oxides that would
otherwise be present in the flue gas; and
(B) to achieve an emission rate of not more than 0.15
pounds of nitrogen oxides per million British thermal units
of fuel consumed.
(c) Emission Rates for Sources Required To Maintain 50
Percent Efficiency.--Each fossil fuel-fired generating unit
subject to section 4(a)(2) shall be in compliance with the
following emission limitations:
(1) Mercury.--Each coal-fired or fuel oil-fired generating
unit shall be required to remove 90 percent of the mercury
contained in the fuel, calculated in accordance with
subsection (e).
(2) Carbon dioxide.--
(A) Natural gas-fired generating units.--Each natural gas-
fired generating unit shall be required to achieve an
emission rate of not more than 0.8 pounds of carbon dioxide
per kilowatt hour of net electric power output.
(B) Fuel oil-fired generating units.--Each fuel oil-fired
generating unit shall be required to achieve an emission rate
of not more than 1.2 pounds of carbon dioxide per kilowatt
hour of net electric power output.
(C) Coal-fired generating units.--Each coal-fired
generating unit shall be required to achieve an emission rate
of not more than 1.4 pounds of carbon dioxide per kilowatt
hour of net electric power output.
(3) Sulfur dioxide.--Each fossil fuel-fired generating unit
shall be required--
(A) to remove 95 percent of the sulfur dioxide that would
otherwise be present in the flue gas; and
(B) to achieve an emission rate of not more than 0.3 pounds
of sulfur dioxide per million British thermal units of fuel
consumed.
(4) Nitrogen oxides.--Each fossil fuel-fired generating
unit shall be required--
(A) to remove 90 percent of nitrogen oxides that would
otherwise be present in the flue gas; and
(B) to achieve an emission rate of not more than 0.15
pounds of nitrogen oxides per million British thermal units
of fuel consumed.
(d) Permit Requirement.--Not later than 10 years after the
date of enactment of this Act, each generating unit shall
have a permit issued under title V of the Clean Air Act (42
U.S.C. 7661 et seq.) that requires compliance with this
section.
(e) Compliance Determination and Monitoring.--
(1) Regulations.--Not later than 2 years after the date of
enactment of this Act, the Administrator, in consultation
with the Secretary of Energy, shall promulgate methods for
determining initial and continuing compliance with this
section.
(2) Calculation of mercury emission reductions.--Not later
than 2 years after the date of enactment of this Act, the
Administrator shall promulgate fuel sampling techniques and
emission monitoring techniques for use by generating units in
calculating mercury emission reductions for the purposes of
this section.
(3) Reporting.--
(A) In general.--Not less than often than quarterly, the
owner or operator of a generating unit shall submit a
pollutant-specific emission report for each pollutant covered
by this section.
(B) Signature.--Each report required under subparagraph (A)
shall be signed by a responsible official of the generating
unit, who shall certify the accuracy of the report.
(C) Public reporting.--The Administrator shall annually
make available to the public, through 1 or more published
reports and 1 or more forms of electronic media, facility-
specific emission data for each generating unit and pollutant
covered by this section.
(D) Consumer disclosure.--Not later than 2 years after the
date of enactment of this Act, the Administrator shall
promulgate regulations requiring each owner or operator of a
generating unit to disclose to residential consumers of
electricity generated by the unit, on a regular basis (but
not less often than annually) and in a manner convenient to
the consumers, data concerning the level of emissions by the
generating unit of each pollutant covered by this section and
each air pollutant covered by section 111 of the Clean Air
Act (42 U.S.C. 7411).
(f) Disposal of Mercury Captured or Recovered Through
Emission Controls.--
(1) Captured or recovered mercury.--Not later than 2 years
after the date of enactment of this Act, the Administrator
shall promulgate regulations to ensure that mercury that is
captured or recovered through the use of an emission control,
coal cleaning, or another method is disposed of in a manner
that ensures that--
(A) the hazards from mercury are not transferred from 1
environmental medium to another; and
(B) there is no release of mercury into the environment.
(2) Mercury-containing sludges and wastes.--The regulations
promulgated by the Administrator under paragraph (1) shall
ensure that mercury-containing sludges and wastes are handled
and disposed of in accordance with all applicable Federal and
State laws (including regulations).
(g) Public Reporting of Facility-Specific Emission Data.--
(1) In general.--The Administrator shall annually make
available to the public, through 1 or more published reports
and the Internet, facility-specific emission data for each
generating unit and for each pollutant covered by this
section.
(2) Source of data.--The emission data shall be taken from
the emission reports submitted under subsection (e)(3).

SEC. 6. EXTENSION OF RENEWABLE ENERGY PRODUCTION CREDIT.

Section 45(c) of the Internal Revenue Code of 1986
(relating to definitions) is amended--

[[Page S14730]]

(1) in paragraph (1)--
(A) in subparagraph (A), by striking ``and'';
(B) in subparagraph (B), by striking the period and
inserting ``, and''; and
(C) by adding at the end the following:
``(C) solar power.'';
(2) in paragraph (3)--
(A) by inserting ``, and December 31, 1998, in the case of
a facility using solar power to produce electricity'' after
``electricity''; and
(B) by striking ``1999'' and inserting ``2010''; and
(3) by adding at the end the following:
``(4) Solar power.--The term `solar power' means solar
power harnessed through--
``(A) photovoltaic systems,
``(B) solar boilers that provide process heat, and
``(C) any other means.''.

SEC. 7. MEGAWATT HOUR GENERATION FEES.

(a) In General.--Chapter 38 of the Internal Revenue Code of
1986 (relating to miscellaneous excise taxes) is amended by
inserting after subchapter D the following:

``Subchapter E--Megawatt Hour Generation Fees

``Sec. 4691. Imposition of fees.

``SEC. 4691. IMPOSITION OF FEES.

``(a) Tax Imposed.--There is hereby imposed on each covered
fossil fuel-fired generating unit a tax equal to 30 cents per
megawatt hour of electricity produced by the covered fossil
fuel-fired generating unit.
``(b) Adjustment of Rates.--Not less often than once every
2 years beginning after 2002, the Secretary, in consultation
with the Administrator of the Environmental Protection
Agency, shall evaluate the rate of the tax imposed by
subsection (a) and increase the rate if necessary for any
succeeding calendar year to ensure that the Clean Air Trust
Fund established by section 9511 has sufficient amounts to
fully fund the activities described in section 9511(c).
``(c) Payment of Tax.--The tax imposed by this section
shall be paid quarterly by the owner or operator of each
covered fossil fuel-fired generating unit.
``(d) Covered Fossil Fuel-Fired Generating Unit.--The term
`covered fossil fuel-fired generating unit' means an electric
utility generating unit that--
``(1) is powered by fossil fuels;
``(2) has a generating capacity of 5 or more megawatts; and
``(3) because of the date on which the generating unit
commenced commercial operation, is not subject to all
regulations promulgated under section 111 of the Clean Air
Act (42 U.S.C. 7411).''.
(b) Conforming Amendment.--The table of subchapters for
such chapter 38 is amended by inserting after the item
relating to subchapter D the following:

``Subchapter E. Megawatt hour generation fees.''.
(c) Effective Date.--The amendments made by this section
shall apply to electricity produced in calendar years
beginning after December 31, 2000.

SEC. 8. CLEAN AIR TRUST FUND.

(a) In General.--Subchapter A of chapter 98 of the Internal
Revenue Code of 1986 (relating to trust fund code) is amended
by adding at the end the following:

``SEC. 9511. CLEAN AIR TRUST FUND.

``(a) Creation of Trust Fund.--There is established in the
Treasury of the United States a trust fund to be known as the
`Clean Air Trust Fund' (hereafter referred to in this section
as the `Trust Fund'), consisting of such amounts as may be
appropriated or credited to the Trust Fund as provided in
this section or section 9602(b).
``(b) Transfers to Trust Fund.--There are hereby
appropriated to the Trust Fund amounts equivalent to the
taxes received in the Treasury under section 4691.
``(c) Expenditures From Trust Fund.--Amounts in the Trust
Fund shall be available, without further Act of
appropriation, upon request by the head of the appropriate
Federal agency in such amounts as the agency head determines
are necessary--
``(1) to provide funding under section 12 of the Clean
Power Plant and Modernization Act of 1999, as in effect on
the date of enactment of this section;
``(2) to provide funding for the demonstration program
under section 13 of such Act, as so in effect;
``(3) to provide assistance under section 15 of such Act,
as so in effect;
``(4) to provide assistance under section 16 of such Act,
as so in effect; and
``(5) to provide funding under section 17 of such Act, as
so in effect.''.
(b) Conforming Amendment.--The table of sections for such
subchapter A is amended by adding at the end the following:

``Sec. 9511. Clean Air Trust Fund.''.

SEC. 9. ACCELERATED DEPRECIATION FOR INVESTOR-OWNED
GENERATING UNITS.

(a) In General.--Section 168(e)(3) of the Internal Revenue
Code of 1986 (relating to classification of certain property)
is amended--
(1) in subparagraph (E) (relating to 15-year property), by
striking ``and'' at the end of clause (ii), by striking the
period at the end of clause (iii) and inserting ``, and'',
and by adding at the end the following:
``(iv) any 45-percent efficient fossil fuel-fired
generating unit.''; and
(2) by adding at the end the following:
``(F) 12-year property.--The term `12-year property'
includes any 50-percent efficient fossil fuel-fired
generating unit.''.
(b) Definitions.--Section 168(i) of the Internal Revenue
Code of 1986 (relating to definitions and special rules) is
amended by adding at the end the following:
``(15) Fossil fuel-fired generating units.--
``(A) 50-percent efficient fossil fuel-fired generating
unit.--The term `50-percent efficient fossil fuel-fired
generating unit' means any property used in an investor-owned
fossil fuel-fired generating unit pursuant to a plan approved
by the Secretary, in consultation with the Administrator of
the Environmental Protection Agency, to place into service
such a unit that is in compliance with sections 4(a)(2) and
5(c) of the Clean Power Plant and Modernization Act of 1999,
as in effect on the date of enactment of this paragraph.
``(B) 45-percent efficient fossil fuel-fired generating
unit.--The term `45-percent efficient fossil fuel-fired
generating unit' means any property used in an investor-owned
fossil fuel-fired generating unit pursuant to a plan so
approved to place into service such a unit that is in
compliance with sections 4(a)(1) and 5(b) of such Act, as so
in effect.''.
(c) Conforming Amendment.--The table contained in section
168(c) of the Internal Revenue Code of 1986 (relating to
applicable recovery period) is amended by inserting after the
item relating to 10-year property the following:

``12-year property...................................12 years''. ....

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

SEC. 10. GRANTS FOR PUBLICLY OWNED GENERATING UNITS.

Any capital expenditure made after the date of enactment of
this Act to purchase, install, and bring into commercial
operation any new publicly owned generating unit that--
(1) is in compliance with sections 4(a)(1) and 5(b) shall,
for a 15-year period, be eligible for partial reimbursement
through annual grants made by the Secretary of the Treasury,
in consultation with the Administrator, in an amount equal to
the monetary value of the depreciation deduction that would
be realized by reason of section 168(c)(3)(E) of the Internal
Revenue Code of 1986 by a similarly-situated investor-owned
generating unit over that period; and
(2) is in compliance with sections 4(a)(2) and 5(c) shall,
over a 12-year period, be eligible for partial reimbursement
through annual grants made by the Secretary of the Treasury,
in consultation with the Administrator, in an amount equal to
the monetary value of the depreciation deduction that would
be realized by reason of section 168(c)(3)(D) of such Code by
a similarly-situated investor-owned generating unit over that
period.

SEC. 11. RECOGNITION OF PERMANENT EMISSION REDUCTIONS IN
FUTURE CLIMATE CHANGE IMPLEMENTATION PROGRAMS.

It is the sense of Congress that--
(1) permanent reductions in emissions of carbon dioxide and
nitrogen oxides that are accomplished through the retirement
of old generating units and replacement by new generating
units that meet the combustion heat rate efficiency and
emission standards specified in this Act, or through
replacement of old generating units with nonpolluting
renewable power generation technologies, should be credited
to the utility sector, and to the owner or operator that
retires or replaces the old generating unit, in any climate
change implementation program enacted by Congress;
(2) the base year for calculating reductions under a
program described in paragraph (1) should be the calendar
year preceding the calendar year in which this Act is
enacted; and
(3) a reasonable portion of any monetary value that may
accrue from the crediting described in paragraph (1) should
be passed on to utility customers.

SEC. 12. RENEWABLE AND CLEAN POWER GENERATION TECHNOLOGIES.

(a) In General.--Under the Renewable Energy and Energy
Efficiency Technology Act of 1989 (42 U.S.C. 12001 et seq.),
the Secretary of Energy shall fund research and development
programs and commercial demonstration projects and
partnerships to demonstrate the commercial viability and
environmental benefits of electric power generation from--
(1) biomass (excluding unseparated municipal solid waste),
geothermal, solar, and wind technologies; and
(2) fuel cells.
(b) Types of Projects.--Demonstration projects may include
solar power tower plants, solar dishes and engines, co-firing
of biomass with coal, biomass modular systems, next-
generation wind turbines and wind turbine verification
projects, geothermal energy conversion, and fuel cells.
(c) Authorization of Appropriations.--In addition to
amounts made available under any other law, there is
authorized to be appropriated to carry out this section
$75,000,000 for each of fiscal years 2001 through 2010.

SEC. 13. CLEAN COAL, ADVANCED GAS TURBINE, AND COMBINED HEAT
AND POWER DEMONSTRATION PROGRAM.

(a) In General.--Under subtitle B of title XXI of the
Energy Policy Act of 1992 (42 U.S.C. 13471 et seq.), the
Secretary of Energy shall establish a program to fund
projects and partnerships designed to demonstrate

[[Page S14731]]

the efficiency and environmental benefits of electric power
generation from--
(1) clean coal technologies, such as pressurized fluidized
bed combustion and an integrated gasification combined cycle
system;
(2) advanced gas turbine technologies, such as flexible
midsized gas turbines and baseload utility scale
applications; and
(3) combined heat and power technologies.
(b) Selection Criteria.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Secretary of Energy shall
promulgate criteria and procedures for selection of
demonstration projects and partnerships to be funded under
subsection (a).
(2) Required criteria.--At a minimum, the selection
criteria shall include--
(A) the potential of a proposed demonstration project or
partnership to reduce or avoid emissions of pollutants
covered by section 5 and air pollutants covered by section
111 of the Clean Air Act (42 U.S.C. 7411); and
(B) the potential commercial viability of the proposed
demonstration project or partnership.
(c) Authorization of Appropriations.--
(1) In general.--In addition to amounts made available
under any other law, there is authorized to be appropriated
to carry out this section $75,000,000 for each of fiscal
years 2001 through 2010.
(2) Distribution.--The Secretary shall make reasonable
efforts to ensure that, under the program established under
this section, the same amount of funding is provided for
demonstration projects and partnerships under each of
paragraphs (1), (2), and (3) of subsection (a).

SEC. 14. EVALUATION OF IMPLEMENTATION OF THIS ACT AND OTHER
STATUTES.

(a) In General.--Not later than 2 years after the date of
enactment of this Act, the Secretary of Energy, in
consultation with the Chairman of the Federal Energy
Regulatory Commission and the Administrator, shall submit to
Congress a report on the implementation of this Act.
(b) Identification of Conflicting Law.--The report shall
identify any provision of the Energy Policy Act of 1992
(Public Law 102-486), the Energy Supply and Environmental
Coordination Act of 1974 (15 U.S.C. 791 et seq.), the Public
Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 et
seq.), or the Powerplant and Industrial Fuel Use Act of 1978
(42 U.S.C. 8301 et seq.), or the amendments made by those
Acts, that conflicts with the intent or efficient
implementation of this Act.
(c) Recommendations.--The report shall include
recommendations from the Secretary of Energy, the Chairman of
the Federal Energy Regulatory Commission, and the
Administrator for legislative or administrative measures to
harmonize and streamline the statutes specified in subsection
(b) and the regulations implementing those statutes.

SEC. 15. ASSISTANCE FOR WORKERS ADVERSELY AFFECTED BY REDUCED
CONSUMPTION OF COAL.

In addition to amounts made available under any other law,
there is authorized to be appropriated $75,000,000 for each
of fiscal years 2001 through 2015 to provide assistance,
under the economic dislocation and worker adjustment
assistance program of the Department of Labor authorized by
title III of the Job Training Partnership Act (29 U.S.C. 1651
et seq.), to coal industry workers who are terminated from
employment as a result of reduced consumption of coal by the
electric power generation industry.

SEC. 16. COMMUNITY ECONOMIC DEVELOPMENT INCENTIVES FOR
COMMUNITIES ADVERSELY AFFECTED BY REDUCED
CONSUMPTION OF COAL.

In addition to amounts made available under any other law,
there is authorized to be appropriated $75,000,000 for each
of fiscal years 2001 through 2015 to provide assistance,
under the economic adjustment program of the Department of
Commerce authorized by the Public Works and Economic
Development Act of 1965 (42 U.S.C. 3121 et seq.), to assist
communities adversely affected by reduced consumption of coal
by the electric power generation industry.

Section-by-Section Overview of ``The Clean Power Plant and
Modernization Act of 1999''

What will the ``Clean Power Plant and Modernization Act of 1999'' do?

The ``Clean Power Plant and Modernization Act of 1999''
lays out an ambitious, achievable, and balanced set of
financial incentives and regulatory requirements designed to
increase power plant efficiency, reduce emissions, and
encourage use of renewable power generation methods. The bill
encourages innovation, entrepreneurship, and risk-taking.
The bill encourages ``retirement and replacement'' of old,
pollution-prone, and inefficient generating capacity with
new, clean, and efficient capacity. The bill does not utilize
a ``cap and trade'' approach. Many believe that the
``retirement and replacement'' approach does a superior job
at the local and regional levels of protecting public health
and the environment from mercury pollution, ozone pollution,
and acid deposition. On a global level, the ``retirement and
replacement'' also does a far superior job of permanently
reducing the volume of carbon dioxide emitted.

What will the bill do for the environment?

The bill would prevent at least 650 million tons of carbon
dioxide emissions per year. Over time, even more greenhouse
gas emissions will be avoided annually as increases in power
plant efficiencies exceed 50%, more combined heat and power
systems are installed, and use of renewable energy sources
increases. Prevention of greenhouse gas emissions of up to 1
billion tons per year may be possible. Mercury emissions will
be cut from more than 50 tons per year to no more than 5 tons
per year. Annual emissions of acid rain producing sulfur
dioxide emissions will be cut by more than 6 million tons
beyond Phase II Clean Air Act of 1990 requirements. Nitrogen
oxide emissions that result in summertime ozone pollution
will be cut by 3.2 million tons per year beyond Phase II
requirements.
Over a 50 year period, the proposal laid out in the bill
will prevent more than 30 billion tons in carbon dioxide
emissions, and maybe as high as 50 billion tons. Carbon
dioxide is further addressed in the bill by authorizing
expenditures for implementing known ways of biologically
sequestering carbon dioxide from the atmosphere such as
planting trees, preserving wetlands, and soil restoration.
Over a 50 year period, more than 2,200 tons of mercury
emissions would be avoided. While this might not sound like a
lot in relation to the other pollutants, consider that a
teaspoon of mercury is enough to contaminate several millions
of gallons of water. And over a 50 year period more than 300
million tons of sulfur dioxide and 160 million tons of
nitrogen oxides will be prevented beyond the Phase II
emission limits specified in the Clean Air Act of 1990.
Section 1. Title; table of contents
Section 2. Findings and purposes
Section 3. Definitions
Section 4. Heat rate efficiency standards for fossil fuel-
fired generating units
On average, fossil fuel-fired power plants in the United
States operate at a thermal efficiency rate of 33%,
converting just one-third of the energy in the fuel to
electricity, and wasting 67% of the heat generated by burning
the fuel. Increasing efficiency in converting the energy in
the fuel into electricity is really the only way to reduce
carbon dioxide ``greenhouse'' emissions from these
facilities. According to the Energy Information
Administration, fossil-fired power plants in the United
States emit more the 2 billion tons of carbon dioxide per
year (or the weight equivalent of nearly 25,000 Washington
Monuments every year). This is approximately 40% of annual
domestic carbon dioxide emissions.
Section 4 lays out a phased two-stage process for
increasing efficiency. In the first stage, by 10 years after
enactment, all units in operation must achieve a heat rate
efficiency (at the higher heating value) of not less than
45%. In the second stage, with expected advances in
combustion technology, units commencing operation more than
10 years after enactment must achieve a heat rate efficiency
(at the higher heating value) of not less than 50%.
If, for some unforeseen reason, technological advances do
not achieve the 50% efficiency level, Section 4 contains a
waiver provision that allows owners of new units to offset
any shortfall in carbon dioxide emissions through
implementation of carbon sequestration projects.
Section 5. Air emission standards for fossil fuel-fired
generating units
Subsection (a) eliminates the ``grandfather'' loophole in
the Clean Air Act and requires all units, regardless of when
they were constructed or began operation, to comply with
existing new source review requirements under Section 111 of
the Clean Air Act. The average ``in service'' date for
fossil-fired generating units in the United States is 1964--
six years before passage of the Clean Air Act. More than 75%
of operating fossil-fired generating units came into service
before implementation of the 1970 Clean Air Act and are
subject to much less stringent requirements than newer units.
Subsection (b) sets mercury, carbon dioxide, sulfur
dioxide, and nitrogen oxide emission standards for units that
are subject to the 45% thermal efficiency standards set forth
in Section 4. For mercury, 90% removal of mercury contained
in the fuel is required. For carbon dioxide, the emission
limits are set by fuel type (i.e., natural gas = 0.9 pounds
per kilowatt hour of output; fuel oil = 1.3 pounds per
kilowatt hour of output; coal = 1.55 pounds per kilowatt hour
of output). Ninety-five percent of sulfur dioxide emissions
(and not more than 0.3 pounds per million Btus of fuel
consumed), and 90 percent of nitrogen oxides (and not more
than 0.15 pounds per million Btus of fuel consumed) are to be
removed.
Subsection (c) contains the same emission standards for
mercury, sulfur dioxide, and nitrogen oxides as those in
Subsection (b). Increased thermal efficiency will result in
lower emissions of carbon dioxide, and the fuel specific
emission limits at the 50% efficiency level are lowered
accordingly (i.e., natural gas = 0.8 pounds per kilowatt hour
of output; fuel oil = 1.2 pounds per kilowatt hour of output;
coal = 1.4 pounds per kilowatt hour of output).
Furthering the public's right-to-know information on
emission volumes, Subsection (e) requires EPA to annually
publish pollutant-specific emissions data for each generating
unit covered by the ``Clean Power Plant and Modernization Act
of 1999.'' In addition, at least once per year residential
consumers will receive information from their electricity
supplier on the emission volumes.
Section 6. Extension of renewable energy production credit
Section 45(c) of the Internal Revenue Code of 1986 is
amended to include solar power,

[[Page S14732]]

and to extend renewable energy production credit to 2010 (it
is currently set to expire in 1999).
Section 7. Mega watt hour generation fee, and
Section 8. Clean air trust fund
The Clean Air Trust Fund is similar to the Highway Trust
Fund and the Superfund. Revenue for the Clean Air Trust Fund
will be provided through implementation of a fee on
electricity produced by fossil-fired generating units that
are ``grandfathered'' from the Clean Air Act's Section 111
new source requirements. Utilities will be assessed at the
rate of 30 cents per megawatt hour of electricity that they
produce from ``grandfathered'' units. For residential
consumers receiving power from ``grandfathered'' plants, the
cost of the fee would average 25 cents per month. Income from
the fee will be placed in the Clean Air Trust Fund to pay
for: a.) assistance to workers and communities adversely
affected by reduced consumption of coal; b.) research and
development and demonstration programs for renewable and
clean power generation technologies (e.g., wind, solar,
biomass, and fuel cells); c) demonstrations of the
efficiency, environmental benefits, and commercial viability
of electrical power generation from clean coal, advanced gas,
and combined heat and power technologies; and d.) carbon
sequestration projects.
Section 9. Accelerated depreciation for investor-owned
generating units.
Under the Internal Revenue Code of 1986, utilities can
depreciate their generating equipment over a 20-year period.
New, cleaner and efficient generating technologies will
experience shorter physical lifetimes compared to their
dirtier, less efficient, but more durable predecessors. Over
a 20-year timeframe, most components of new generating units
will need to be replaced; some components will be replaced
several times. To update the Internal Revenue Code of 1986 to
reflect this change in the expected physical lifetimes of
generating equipment, Section 9 amends Section 168 of the
Code to allow depreciation over a 15-year period for units
meeting the 45% efficiency level and the emission standards
in Section 5(b) above. Section 168 is further amended to
allow for deprecation over a 12-year period for units
meeting the 50% efficiency level and the emission
standards in Section 5(c).
Section 10. Grants for publicly-owned generating units.
No federal taxes are paid on publicly-owned generating
units. Section 10 provides for annual grants in an amount
equal to the monetary value of the depreciation deduction
that would be realized by a similarly-situated investor owned
generating unit under Section 9. Units meeting the 45%
efficiency level and the emission standards in Section 5(b)
above would receive annual grants over a 15-year period, and
units meeting the 50% efficiency level and the emission
standards in Section 5(c) would receive annual grants over a
12-year period.
Section 11. Recognition of permanent emission reductions in
future climate change implementation programs.
This section expresses the sense of Congress that permanent
reductions in emissions of carbon dioxide and nitrogen oxides
that are accomplished through the retirement of old
generating units and replacement by new generating units that
meet the efficiency and emissions standards in the bill, or
through replacement with non polluting renewable power
generation technologies, should be credited to the utility
sector and to the owner/operator in any climate change
implementation program enacted by Congress. The base year for
calculating reductions will be the year preceding enactment
of the ``Clean Power Plant and Modernization Act of 1999.''
The bill stipulates that a portion of any monetary value that
may accrue from credits under this section should be passed
on to utility customers.
Section 12. Renewable and clean power generation
technologies.
This section provides a total of $750 million over 10 years to fund
research and development programs and commercial demonstration projects
and partnerships to demonstrate the commercial viability and
environmental benefits of electric power generation from biomass,
geothermal, solar, wind, and fuel cell technologies. Types of projects
may include solar power tower plants, solar dishes and engines, co-
firing biomass with coal, biomass modular systems, next-generation wind
turbines and wind verification projects, geothermal energy conversion,
and fuel cells.
Section 13. Clean coal, advanced gas turbine, and combined
heat and power generation demonstration program.
This section provides a total of $750 million over 10 years
to fund projects and partnerships that demonstrate the
efficiency and environmental benefits and commercial
viability of electric power generation from clean coal
technologies (including, but not limited to, pressurized
fluidized bed combustion and integrated gasification combined
cycle systems), advanced gas turbine technologies (including,
but not limited to, flexible mid-sized gas turbines and
baseload utility scale applications), and combined heat and
power technologies.
Section 14. Evaluation of implementation of this act and
other statutes
Not later than 2 years after enactment, DOE, in
consultation with EPA and FERC, shall report to Congress on
the implementation of the ``Clean Power Plant and
Modernization Act of 1999.'' The report shall identify any
provision of the Energy Policy Act of 1992, the Energy Supply
and Environmental Coordination Act of 1974, the Public
Utilities Regulatory Policies Act of 1978, or the Powerplant
and Industrial Fuel Use Act of 1978 that conflicts with the
efficient implementation of the ``Clean Power Plant and
Modernization Act of 1999.'' The report shall include
recommendations for legislative or administrative measures to
harmonize and streamline these other statutes.
Section 15. Assistance for workers adversely affected by
reduced consumption of coal
With increased power plant efficiency, less fuel will need
to be burned to produce a given quantity of electricity. This
section provides a total of $1.125 billion over 15 years ($75
million per year) to provide assistance to workers who are
adversely affected as a result of reduced consumption of coal
by the electric power generation industry. The funds will be
administered under the economic dislocation and workers'
adjustment assistance program of the Department of Labor
authorized by Title III of the Job Training Partnership Act.
Section 16. Community economic development incentives for
communities adversely affected by reduced consumption of
coal
With increased power plant efficiency, less fuel will need
to be burned to produce a given quantity of electricity. This
section provides a total of $1.125 billion over 15 years ($75
million per year) to provide assistance to communities
adversely affected as a result of reduced consumption of coal
by the electric power generation industry. The funds will be
administered under the economic adjustment program of the
Department of Commerce authorized by the Public Works and
Economic Development Act of 1965.
Section 17. Carbon sequestration
This section authorizes expenditure of $345 million over 10
years for development of a long-term carbon sequestration
strategy ($45 million) for the United States, and authorizes
EPA and USDA to fund carbon sequestration projects including
soil restoration, tree planting, wetland's protection, and
other ways of biologically sequestering carbon dioxide ($300
million). Projects funded under this section may not be used
to offset emissions otherwise mandated by the ``Clean Power
Plant and Modernization Act of 1999.''
____

Poor Me

(By Christopher Palmeri)

Utilities are telling the rate regulators that their old
power plants are practically worthless. But they're selling
them for fancy prices.
The Homer City Generation Station is a 34-year-old, coal-
fired power plant near Pittsburgh. What's it worth? Until
last year it was carried on the books of two utilities for
$540 million. Then the companies sold it for $1.8 billion, or
$955 per kilowatt--about what it would cost to build a brand-
spanking-new electric plant.
Are old plants a millstone for utilities as they enter the
deregulated future? That's what the utilities are telling
rate regulators. We built all these plants over the years
because you told us to, they are saying--and now that
newcomers are about to undercut us, we need compensation for
the ``stranded costs.'' The logic of compensation for
stranded costs is unassailable. The only debate is over the
amount. Is the average power plant indeed a white elephant?
According to data collected by Cambridge Energy Research
Associates, the average nonnuclear power plant put up for
sale in the last year sold for nearly twice its book value.
Granted, the plants being sold tend to be the more desirable
ones, by dint of their location or their fuel efficiency.
Still, the pricing makes one wonder whether the power
industry should be entitled to much of anything for stranded
costs.
Some states--California, Maine, Connecticut and New York,
for example--have ordered utilities to sell all or part of
their generation capacity. That should set an arm's length
fair price. Thanks largely to the fat prices received for its
power plants, Sempra Energy, the parent of San Diego Gas &
Electric, says that its stranded-cost charges related to
generation--about 12% of a typical customer's bill--will be
paid off by July. That is two and a half years ahead of
schedule, a savings of $400 million for southern
Californians.
Not every state legislature or utility commission has the
political will to force divestiture, however. If a utility
does not want to sell, the utility and the regulators have to
estimate the fair market value for a plant and then see if
that is a lot less than book value.
This is tricky business. Last year Allegheny Energy, parent
of West Penn Power Co., estimated the value of its power
plant at $148 a kilowatt, half of their book value. An expert
hired by a number of industrial energy users suggested the
value should be $409. A hearing revealed that Allegheny had
bought back a half-interest in one of its plants two years
earlier at a price of $612 a kilowatt. Allegheny settled with
the Pennsylvania Public Utility Commission for a

[[Page S14733]]

valuation of $225 a kilowatt, half again the original
estimate. At that price, Allegheny's 700,000 customers in
western Pennsylvania are stuck paying $670 million in
stranded costs.
What happens if the utility doesn't get the compensation it
wants? Litigation. In New Hampshire the state legislature
passed a law designed to open up the power market in 1996.
New Hampshire's power companies and utility commission have
been tied up in court ever since over the issue of stranded
costs.
For this reason, legislators and regulators sometimes feel
like they need to cut some deal, any deal, just to get a
competitive market moving forward. The state of Virginia, for
example, dodged any stranded cost calculation. In a move
supported by local utilities, the legislature delayed true
competition and simply froze electric rates until 2007.
Utilities had donated more than $1 million to Virginia
politicians in the last two election cycles.
Last year Ohio legislators proposed a bill to open up the
power market. They figured stranded costs at $6 billion,
spread among Ohio's eight big utilities. Not liking that
number, the utilities came up with an $18 billion figure. The
latest compromise is $11 billion. This number represents, in
effect, the excess of the plants' book value over their
market value.
Wait a minute, says Samuel Randazzo, an attorney for some
industrial power users. That $11 billion number is more than
the book value of all the plants. Can the utilities lose more
than their investment? Negotiations are to continue.
``We are applying a political solution to an economic
problem,'' shrugs Ohio utility commissioner Craig Glazer.
``All intellectual arguments have been thrown out the window.
Now it comes down to who screams the loudest.
Expect further screaming as utilities enter the deregulated
market.
______

By Mr. ENZI (for himself and Mr. Thomas):
S. 1950. A bill to amend the Mineral Leasing Act of 1920 to ensure
the orderly development of coal, coalbed methane, natural gas, and oil
in the Powder River Basin, Wyoming and Montana, and for other purposes;
to the Committee on Energy and Natural Resources.

the powder river basin resource development act

Mr. ENZI. Mr. President, I rise today to introduce the ``Powder River
Basin Resource Development Act of 1999.'' This legislation is designed
to provide a procedure for the orderly and timely resolution of
disputes between coal producers and oil and gas operators in the Powder
River Basin in north-central Wyoming and southern Montana. This
legislation is cosponsored by my colleague from Wyoming, Senator
Thomas.
Mr. President, the Powder River Basin in Wyoming and southern Montana
is one of the richest energy resource regions in the world. This area
contains the largest coal reserves in the United States, providing
nearly thirty percent of America's total coal production. This region
also contains rich reserves of oil and gas, including coalbed methane.
Wyoming is the fifth largest producer of natural gas in the county and
the sixth largest producer of crude oil. The Powder River Basin plays
an important role in the Wyoming's oil and gas production, and this
role promises to grow as the exploration and production of coalbed
methane increases over the next several years. This region, and the
State of Wyoming as a whole, provides many of the resources that heat
our homes, fuel our cans, generate electricity for our computers,
microwaves, and televisions. In short, there is very little that any of
us do in a day that is not affected by the resources of coal, oil, and
natural gas.
The production of these natural resources is a vital part of the
economy of my home state of Wyoming. The production of coal and oil and
gas employs more than 21,000 people in Wyoming. The property taxes,
severance taxes, and state and federal royalties fund our schools, our
roads, and many of the other services that are essential for the
functioning of our state. Since Wyoming has no state income tax, our
State relies heavily on the minerals industry for our tax base.
Given the great importance both the coal and oil and gas industries
have to Wyoming's economy, the State of Wyoming and the Federal
Government have tried to encourage concurrent development in areas
where it is feasible and safe to do so. Unfortunately, this is not
always possible. This legislation is designed to provide a procedure
for the fair and expeditious resolution of conflicts between oil and
gas producers and coal producers who have interests on federal land in
the Powder River Basin in Wyoming and southern Montana.
Mr. President, this legislation sets forth a reasonable procedure to
resolve conflicts between coal producers and oil and gas producers when
their mineral rights come into conflict because of overlapping federal
leasing. First, this proposal requires that once a potential conflict
is identified, the parties must attempt to negotiate an agreement
between themselves to resolve this conflict. Second, if the parties are
unable to come to an agreement between themselves, either of the
parties may file a petition for relief in U.S. district court in the
district in which the conflict is located. Third, after such a petition
is filed, the court would determine whether an actual conflict exists.
Fourth, if the court determines that a conflict does in fact exist, the
court would determine whether the public interest, as determined by the
greater economic benefit of each mineral, is best served by suspension
of the federal coal lease or suspension or termination of all or part
of the oil and gas lease. Fifth, a panel of three experts would be
assembled to determine the value of the mineral of lesser economic
value. Each party to the action; the oil and gas interest, the coal
interest, and the federal government, would each appoint one of the
three experts. Finally, after the panel issues its final valuation
report, the court would enter an order setting the compensation that is
due the developer who had to temporarily or permanently forgo his
development rights. This compensation would be paid by the owner of the
mineral of greater economic value. A credit against federal royalties
would also be available against the compensation price in a limited
number of situations where the value of such compensation was not
foreseen in the original federal lease bid.

Mr. President, the ``Powder River Basin Resource Development Act of
1999'' has several benefits over the present system. First, it requires
parties whose mineral interests may come into conflict to attempt to
negotiate an agreement among themselves before either one of them may
avail themselves of the expedited resolution mechanism. No such
requirement exists today. Second, it directs the Secretary of the
Interior to encourage expedited development of federal minerals and
that are leased pursuant to the federal Mineral Leasing Act, that exist
in conflict areas, and which may otherwise be lossed or bypassed. As
such, this legislation encourages full and expeditious development of
federal resources in this narrow conflict area where it is economically
feasible and safe to do so. Third and finally, this bill provides an
expeditious procedure to resolve conflicts that cannot be solved by the
two parties alone, and it does so in a manner that ensures that any
mineral owner will be fairly compensated for any suspension or loss of
his mineral rights. In turn, this proposal will prevent the serious
economic hardship to hundreds of families and the State treasury that
could occur if mineral development is stalled for an indefinite amount
of time due to protracted litigation under the current system.
Mr. President, this legislation builds on legislation I introduced
last year with Senators Thomas and Bingaman, which passed Congress and
was signed into law last November. That bill, S. 2500, ensured that
existing lease and contract rights to coalbed methane would not be
terminated by a decision from the 10th Circuit Court of Appeals which
concluded that coalbed methane gas was reserved to the federal
government under earlier coal reservation Acts. As it turned out, the
Supreme Court earlier this year realized we got in right in our bill
and held that the coalbed methane was in fact a gas and not a solid,
and therefore was not reserved to the government under earlier coal
reservation Acts. As such, the protections we provided in S. 2500 were
guaranteed to future as well as past oil and gas leaseholders.
Mr. President, S. 2500 was an important step in providing certainty
and resolution to the question of mineral ownership in Wyoming, and
throughout the country. This bill, builds on last year's work by
providing a means to

[[Page S14734]]

resolve ongoing development conflicts between owners of coal and oil
and gas in the Powder River Basin. It represents the result of nearly a
year of negotiations between the coal and coalbed producers, as well as
the deep oil and gas interests, on a method to fairly reconcile mineral
development disputes when they occur because of multiple leasing by the
federal government. This bill has also incorporated recommendations
made by the Bureau of Land Management. I look forward to working with
all the affected parties during the second session of the 106th
Congress to pass legislation that will put into place a reasonable,
balanced method to ensure that we receive the best return on our
valuable natural resources in the Powder River Basin.
______

By Mr. SCHUMER (for himself and Ms. Collins):
S. 1951. A bill to provide the Secretary of Energy with authority to
draw down the Strategic Petroleum Reserve when oil and gas prices in
the United States rise sharply because of anticompetitive activity, and
to require the President, through the Secretary of Energy, to consult
with Congress regarding the sale of oil from the Strategic Petroleum
Reserve; to the Committee on Energy and Natural Resources.

oil price safeguard act

Ms. COLLINS. Mr. President, I rise this afternoon to join my
distinguished colleague, Senator Schumer, in introducing legislation
that provides an effective option to the President and the Secretary of
Energy to address the unfair, harmful manipulation in the global oil
market. The Oil Price Safeguard Act would help to moderate sharp spikes
in oil and gas prices caused by price fixing and production quotas
through the judicious use of our enormous petroleum reserves.
The global oil market is dominated by an international cartel with
the ability to dramatically affect the price of oil. The eleven member
countries of the Organization of Petroleum Exporting Countries known as
OPEC supply over 40 percent of the world's oil and possess 78 percent
of the world's total proven crude oil reserves. Their control of the
world's oil supply allows these countries to collude to drive up the
price of oil. OPEC has power to dominate the market and when it wields
this power, consumers lose. Mr. President, if OPEC operated in the
United States, the Department of Justice would undoubtedly prosecute
the cartel for violation of U.S. anti-trust laws, but the cartel is
beyond the reach of our antitrust enforcement.
To appreciate how much economic power OPEC wields, it is helpful to
review the historical relationship between world oil prices and the
U.S. Gross Domestic Product. When OPEC cuts production to increase
profits, the American consumer suffers, as does our economy. Rising oil
prices increase transportation and manufacturing costs, dampening
economic growth.
The chart behind me entitled, ``Oil is a Vital Resource for the U.S.
Economy,'' was prepared by the Energy Information Administration of the
Department of Energy. On this chart, world oil prices are represented
by the blue line, and U.S. Gross Domestic Product is represented by the
red line. It is easy to see the inverse relationship between the two.
When world oil prices are high, U.S. Gross Domestic Product drops. For
example, in the late 1970s and early 1980s, as the price of oil
climbed, the U.S. economy slumped into a deep recession. Conversely,
the strength currently enjoyed by the U.S. economy was until recently
accompanied by low oil prices.
If these historical trends hold, the current rise in crude oil prices
is a serious threat to our economic prosperity. This second chart
entitled ``EIA Crude Oil Price Outlook,'' shows that crude oil prices
have risen since January 1999 and are expected to continue rising this
winter. To a large extent, this chart demonstrates the ability of OPEC
to drive the price of oil up. It is chilling, that the Federal agency
responsible for projecting energy prices for the government is
predicting that the price of oil will be above $25 a barrel into
January of next year. This prediction underscores the need for the
legislation Senator Schumer and I introduce today.
The bottom line is that consumers, as well as businesses, are hurt by
expensive petroleum products. A rise in crude oil prices increases the
price of home heating oil and gasoline. Northern states like Maine are
particularly hard hit by increased oil prices because of the need to
heat homes through long cold winters. Since about 6 out of 10 Maine
homes burn oil and the average household uses 800 gallons annually
increases in oil prices have a dramatic impact on the state's
population and particularly on low-income families and seniors.
A rural state like Maine is also hard hit by increased gasoline
prices at the pump since rural residents often travel further distances
than those living in urban or suburban areas. For example, my
constituents in Aroostook County are currently paying close to $1.50 a
gallon for regular octane gasoline. At the same time, higher petroleum
prices increase the cost of transporting oil and gasoline to rural
areas, like Northern Maine.
At a recent OPEC meeting, the member nations reasserted their resolve
to maintain high crude oil prices through production quotas. This is
particularly troubling considering that the Energy Information
Administration has projected that if New England experiences a
particularly cold winter, the price of home heating oil could reach as
high as $1.20 per gallon. This is 50 percent higher than what New
Englanders paid for oil last year. Even if this winter has normal
weather, the Energy Information Administration predicts significantly
increased oil prices due in large measure to the OPEC production
reductions. This chart, ``Crude and Distillate Price Outlook Higher
than Last Winter'' shows projections for steeply increased prices in
crude oil and, consequently, home heating oil. As you can see, prices
have risen already and are expected to reach levels higher than those
experienced during the winter of 1996-97.
Even if our diplomatic efforts fail to break OPEC's choke-hold on the
world oil supply, we need not sit idly as oil and gas prices rise well-
beyond where they would be in a normally-functioning market.
The United States has a tool available to ease the sting of this
unfair market manipulation. The United States owns the largest
strategic reserve of crude oil in the world. The Strategic Petroleum
Reserve (SPR) consists of roughly 571 million barrels of crude oil held
in salt caverns in Texas and Louisiana. The Energy Policy and
Conservation Act allows the Secretary of Energy to sell oil from the
reserve if the President makes certain findings set forth in the law.
In order to tap into the Reserve, the President must determine that an
emergency situation exists causing significant and lasting reductions
in the supply of oil and severe price increases likely to cause a major
adverse impact on the national economy. In the history of the Reserve,
the President has only made this declaration once, during the Gulf War.
The legislation I am proud to sponsor with Senator Schumer today, who
has been a leader on this issue, will give the President more
flexibility in using the Strategic Petroleum Reserve to protect
American consumers. Specifically, this measure will amend the Energy
Policy and Conservation Act to authorize a draw down of the reserve
when the President finds that a significant reduction in the supply of
oil has been caused by anti-competitive conduct. While many, myself
included, believe that the President currently should consider ordering
a draw down to counteract OPEC's latest market-distorting production
quotas, this legislation will make it clear that he has the power to do
so. It will also ensure that the proceeds from a draw-down of the
Reserve are used to replenish its oil. The bill does by mandating that
the proceeds are deposited in a special account designed for that
purpose. We want to give the President the authority to use the SPR to
restore market discipline, but not to permanently deplete the reserve
in the process.
To further encourage the use of the SPR to offset harmful and
uncompetitive activities of foreign pricing cartels, the Oil Price
Safeguard Act will require the Secretary of Energy to consult with
Congress regarding the sale of oil from the Reserve. If the price of a
barrel of crude exceeds 25 dollars for a period greater than 14 days,
the

[[Page S14735]]

President, through the Secretary of Energy, will be required to submit
to Congress a report within thirty days. This report will have four
parts. First, it will detail the causes and potential consequences of
the price increase. Second, it will provide an estimate of the likely
duration of the price increase, based on analyses and forecasts of the
Energy Information Administration. Third, it will provide an analysis
of the effects of the price increase on the cost of home heating oil.
And fourth, the report will provide a specific rationale for why the
President does or does not support a draw down and distribution of oil
from the SPR to counteract anti-competitive behavior in the oil market.
The bill we are introducing today will grant important new authority
to the President to protect consumers from the market-distorting
behavior of foreign cartels. It will require the President to explain
to Congress and the American people why actions available to the
President have not been exercised to protect consumers. I urge my
colleagues to join Senator Schumer and me in working for expeditious
passage of this important measure.
I yield to my colleague, the distinguished Senator from New York, so
he may provide further explanation of our legislation. I commend him
for his leadership on this issue.
Mr. SCHUMER. I thank Senator Collins from Maine for her leadership on
this issue. She has well represented her constituents on an issue of
great concern. Like Maine, northern New York--much of New York--is very
concerned with the prices of oil; not only gasoline but some heating
oil, which--just as it is in Maine--is going through the roof in New
York as we come into this winter season, which, thus far anyway, has
been colder than people have predicted. I thank the Senator for
garnering time to talk about our legislation, and I look forward to
working with her on this issue.
Two months ago, I wrote President Clinton and Energy Secretary
Richardson requesting that they look into the possibility of releasing
a modest amount of oil from our Nation's well-stocked Strategic
Petroleum Reserve. I made this request not because the price of crude
oil was rising, but rather because global oil prices had recently more
than doubled, primarily due to the new-found unity between OPEC members
and allies to uphold rigid supply quotas--not free market but rigid
supply quotas.
OPEC's decision in September to maintain the supply quotas meant the
daily global oil supply would remain millions of barrels below last
year's levels--and millions of barrels per day below global demand. The
effects this decision would have on oil prices were clear. Yesterday,
my colleagues--listen to this--oil closed at nearly $26 a barrel, and
many industry experts now believe it will go to $30 or even $35 a
barrel this winter.
Most industry and financial experts believe oil prices above $25 per
barrel for an extended period will adversely affect economic growth,
even if you come from Arizona; not only will it raise your gasoline
prices--you don't have to worry about home heating oil, but $35 per
barrel is clearly recessionary.
The effects will be felt most among the poor and elderly, both at the
gas pump and in a sharp increase in the cost of home heating oil. It
will effect our manufacturing, transportation, as well as other
businesses that rely on oil.
I don't believe in interfering with free markets. But these OPEC
decisions are not examples of fair economic play. In fact, OPEC
recently announced that it would not even revisit the supply until
March of 2000. With American and global oil demand increasing, and a
cold winter forecast for North America, OPEC's continued supply quota
could have a severely detrimental effect on the U.S. economy over the
coming months, and may very well throw sand in the gears of the global
economy.
Unfortunately, OPEC, with more than 40 percent market share in the
global oil market, can have inordinate power over the global economy.
So the question is, Should we rely on the judgment of OPEC ministers
to make the right decision when it comes to the American and the world
economy? The answer is clearly no.
The next question is, What can we do about it?
My colleague from Maine, Senator Collins, and I have worked together
to formulate what we believe is a reasonable response policy by the
U.S. Government to instances when foreign oil producers collude to
manipulate oil prices to a level that will likely cause a significant
adverse impact on our economy, not to mention gasoline, which could go
to a $1.60, $1.70, or even higher a gallon, and home heating oil that
could go, in my part of the country, from $1 to $1.25 a gallon.

Here is how our legislation works. It works within the parameters of
the 1975 Energy Policy and Conservation Act, which set up the U.S.
Strategic Petroleum Reserve and the Energy Policy Act of 1992, which
described oil supply reductions leading to severe price increases as a
potential national emergency.
We simply add a provision that allows the Energy Secretary to order a
drawdown of the SPR when oil and gas prices in the U.S. rise sharply
because of anticompetitive conduct of foreign oil producers.
Oil supply can fall short for many natural, market-based reasons. But
when the shortfall is due to opportunistic manipulations by foreign
producers, especially to the degree that it will harm our economic
well-being, we have the right to act in our own defense.
That is why our bill also requires the administration to report to
Congress within 30 days after the price of oil sustains a price higher
than $25 for more than 2 weeks. This reporting requirement--which will
get Congress more involved in SPR policies--simply calls for a
comprehensive review of the causes and likely consequences of the price
increase. It also requires the President to explain why the
administration does or does not --we don't force his hand--support the
drawdown and distribution of oil from the SPR.
Before concluding, I want to make a few things clear about this
legislation. First, it doesn't attempt in any way to bring oil prices
down to what some would call unreasonable levels. Most of us believe
oil prices were unrealistically low last winter, and that OPEC's
initial supply cuts were an understandable strategy to achieve a better
balance between global supply and demand.
But to maintain the cuts despite the price recovery and the projected
growth in demand amounts to nothing less than price gouging.
OPEC is currently enjoying unity as a cartel not seen since the early
1980s.
The bill also protects our national security by requiring that
proceeds from the sale of oil from the SPR be used only to resupply the
SPR, with profits from sales remaining in the SPR account. Therefore,
in the long run, we are not going to deplete the oil reserve. We are
just going to use it to try to bring oil prices to a reasonable level.
And with the SPR currently stocked at 570 million barrels, we have
more than enough oil to release several hundred thousand barrels a day
in the event of a supply crisis without undercutting our stockpile.
This should be more than sufficient to pressure oil producers to
increase their supply to more realistically meet demand.
The bottom line is this legislation would show foreign producers the
U.S. can and may well intervene when unfair markets threaten our
domestic economy. We will say loud and clear our national economic
health is a national security issue. That knowledge may be sufficient
to prevent OPEC from extensive oil market manipulations in the first
place.
A signal to OPEC that we are willing to use some of our strategic
reserves to stabilize oil prices is consistent with the prudent long-
term approach toward maintaining a stable economy.
Mr. President, this legislation is a measured, bipartisan response to
a vital economic issue. I look forward to debating and passing this
legislation next year.
With that, I yield back my time to the good Senator from Maine and
thank her for her leadership.
Ms. COLLINS. Mr. President, it has been a pleasure to work with the
Senator from New York on this issue.
______

By Mr. BINGAMAN (for himself, Mr. Thompson, and Mr. Kennedy):
S. 1954. A bill to establish a compensation program for employees of
the

[[Page S14736]]

Department of Energy, its contractors, subcontractors, and beryllium
vendors, who sustained beryllium-related illness due to the performance
of their duty; to establish a compensation program for certain workers
at the Paducah, Kentucky, gaseous diffusion plant; to establish a pilot
program for examining the possible relationship between workplace
exposure to radiation and hazardous materials and illnesses or health
conditions; and for other purposes; to the Committee on Health,
Education, Labor, and Pensions.

energy employees' compensation act

Mr. BINGAMAN. Mr. President, I am pleased to introduce today, along
with my colleagues, Senators Thompson and Kennedy, a bill to establish
compensation programs for workers at Department of Energy sites,
contractors, and vendors who are ill because they were exposed to
severe chemical and radioactive hazards while on the job. This bill,
the Energy Employees' Compensation Act, will recognize three of the
more egregious workplace hazards that were allowed to exist over the
years at DOE facilities.
The first of these situations was the exposure of workers at DOE
sites and vendors to beryllium, a metal that has been used for the past
50 years in the production of nuclear weapons. Even very small amounts
of exposure to beryllium can result in the onset of Chronic Beryllium
Disease (CBD), an allergic lung reaction resulting in lung scarring and
loss of lung function. The only treatment is the use of steroids to
control the inflammation. There is no cure. Once a person has been
exposed to beryllium, he or she has a lifelong risk of developing CBD.
While only 1 to 6 percent of exposed people will generally develop CBD,
some work tasks are associated with disease rates as high as 16
percent. Beryllium was used at 20 DOE sites, including sites in my
state of New Mexico. An estimated 20,000 workers may have been exposed,
including 1,000-1,500 in New Mexico. To date, DOE screening programs
have identified 146 cases of CBD among current and former workers,
although the number can be expected to grow. The people who are
affected by this disease were typically blue-collar workers at these
facilities. They are not covered by the federal workers' compensation
system, and the various state workers' compensation programs are not
well geared to deal with chronic occupational illnesses like CBD. I
believe that, since these workers became exposed to beryllium while
working in the defense of their country, the country owes them
something in return, should they come down with Chronic Beryllium
Disease. That is why I will fight to help the workers and their
families in New Mexico and elsewhere through this part of the bill.
The second situation which this bill seeks to remedy occurred at the
DOE Paducah Gaseous Diffusion Plant in Kentucky. Here, workers were
unknowingly exposed to plutonium and other highly radioactive materials
that were present in recycled uranium sent to the plant by the former
Atomic Energy Commission. The AEC and the managers of the plant knew
about this hazard in the 1950s, but enhanced protection for workers at
Paducah was not implemented until 1992. This is an unbelievable and
outrageous error. These workers deserve full compensation for the
health effects of exposures that they were subject to without their
knowledge.
The third situation that this bill addresses occurred to 55 workers
at the DOE's East Tennessee Technology Park, who also suffered
exposures to radiation and hazardous materials that have resulted in
occupational illness. Through this provision, DOE can make a grant of
$100,000 to each worker, if medical experts find that it is
appropriate.
The Department of Energy, under Secretary Richardson's leadership, is
facing up to some of its past failures to properly oversee worker
health and safety at its facilities. It is a tragedy that we have to
introduce and pass bills like this one, particularly in cases where it
seems so clear that the problems could have been prevented. But this
bill is the right thing to do for workers who served their country and
expected that they would be kept safe from occupational injury. As the
Congress considers this bill, I hope that we also remain vigilant to
the ongoing challenges to worker safety and health at DOE facilities,
particularly in the parts of the Department that are being reorganized
as a result of legislation we passed earlier this year.
I ask unanimous consent that a section-by-section analysis be printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Section-by-Section Analysis

TITLE I--ENERGY EMPLOYEES' BERYLLIUM COMPENSATION ACT

SECTION 101. SHORT TITLE

This section designates this title as the ``Energy
Employees' Beryllium Compensation Act.''

SECTION 102. FINDINGS

Employees of the Department of Energy, and employees of the
Department's contractors and vendors, have been, and
currently may be, exposed to harmful substances, including
dust particles or vapor of beryllium, while performing duties
uniquely related to the Department of Energy's nuclear
weapons production program. Exposure to dust particles or
vapor of beryllium in this situation may cause beryllium
sensitivity and chronic beryllium disease, and those who
suffer beryllium-related health conditions should have
uniform and adequate compensation.

SECTION 103. DEFINITIONS

This section provides the definitions of a number of terms
necessary to implement this legislation. It also incorporates
the definitions of multiple terms from the Federal Employees'
Compensation Act, section 8101 of title, United States Code.
A beryllium vendor is defined as those vendors known to
have produced or provided beryllium for the Department of
Energy. The definition allows the Secretary of Energy to add
other vendors by regulation.
A covered employee is defined as an employee of entities
that contracted with the Department of Energy to perform
certain services at a Department of Energy facility and an
employee of a subcontractor. The definition also includes an
employee of a beryllium vendor during a time when beryllium
was being processed and sold to the Department of Energy. An
employee of the federal government is also a covered employee
if the employee may have been exposed to beryllium at a
Department of Energy facility or that of a beryllium vendor.
Covered illness is defined as Beryllium Sensitivity and
Chronic Beryllium Disease. The statute sets forth criteria by
which the existence of these conditions may be established.
Consequential injuries arising from these conditions are also
covered illnesses.

SECTION 104. REGULATORY AUTHORITY TO REVISE DEFINITIONS

This section provides specific authority for the Secretary
of Energy to designate by regulation additional entities as
beryllium vendors for the purposes of this title. This
section also authorizes the Secretary of Energy to provide by
regulation additional criteria through which a claimant may
establish the existence of a covered illness.
With regard to proposed subsection (a), it is possible that
new vendors of beryllium or beryllium-related products will
develop contractual relationships with the Department of
Energy in the future; as these contractual relationships
develop, it will become necessary to designate these vendors
as ``beryllium vendors'' for the purposes of this title.
With respect to subsection (b), advances in medical science
and testing, and in the medical field's understanding of the
harmful effects of exposure to beryllium, are expected to
occur. The definition of ``covered illness'' in section
103(4) of this title represents the understanding of the
Department of Energy of the current state of medical
knowledge on the demonstrated methods of establishing
beryllium sensitivity or chronic beryllium disease. This
subsection would allow the Secretary of Energy to specify
additional criteria by which a claimant may establish
existence of a covered illness.

section 105. administration

This section provides that the Secretary of Energy may
administer the program or may enter into an agreement with
another agency of the United States, such as the Department
of Labor, to administer the program. The Department of Energy
would reimburse the other agency for its administrative
services.

section 106. exposure to beryllium in the performance of duty

In order to receive compensation under the Energy
Employees' Beryllium Compensation Act (EEBCA) for any
condition related to exposure to beryllium, a covered
employee must be determined to have been exposed to beryllium
in the performance of duty.
Subsection (a) of this section provides a rebuttable
presumption that employees of DOE contractors (section
103(3)(A)) and federal employees (section 103(3)(C)) who were
employed at a DOE facility, or whose employment caused them
to be present at a DOE or a beryllium vendor's facility, when
beryllium was present, were exposed to beryllium in the
performance of duty. To rebut the presumptions, substantial
evidence would have to be introduced into the record
establishing that the covered employee was not exposed to
beryllium or beryllium dust during the employee's presence at
the facility.
With respect to employees of beryllium vendors (section
103(3)(B)), subsection (b) of

[[Page S14737]]

this section provides that these employees have the burden of
establishing by substantial evidence exposure to beryllium
that was intended for sale to, or to be used by, the DOE.
Thus, to the extent that employees of beryllium vendors
adduce evidence of exposure to beryllium or beryllium dust
solely in circumstances where the eventual product was not
intended for sale to, or use by, the DOE, this evidence would
not support a finding that the employees were exposed to
beryllium in the performance of duty.

section 107. compensation for disability or death, medical services,
and vocational rehabilitation

This section incorporates into this statute the relevant
provisions of the FECA regarding payment of compensation and
other benefits for covered illnesses. Provisions incorporated
by reference include FECA sections regarding medical services
and benefits (5 U.S.C. Sec. 8103); vocational rehabilitation
(Sec. Sec. 8104 and 8111(b)); total (Sec. 8105) and partial
(Sec. 8106) disability; schedule awards for permanent
impairment (Sec. Sec. 8107-8109); augmented compensation for
dependents (Sec. 8110); additional compensation for services
of attendants (Sec. 8111(a)); maximum and minimum monthly
payments (Sec. 8112); increase or decrease of basic
compensation (Sec. 8113); wage-earning capacity (Sec. 8115);
three-day waiting period (Sec. 8117); compensation in case of
death (Sec. 8133); funeral expenses (Sec. 8134); lump-sum
payment (Sec. 8135); and cost-of-living adjustment
(Sec. 8146a (a) and (b)).
Subsection (b) of this section provides that all of the
compensation under this title will come out of the Energy
Employees' Beryllium Compensation Fund established pursuant
to section 120 of this title and is limited to amounts
available in that fund.
Subsection (c) of this section prohibits any payment of
compensation for any period prior to the effective date of
the title, except for the retroactive lump-sum compensation
payment specified in section 111 of this title.

section 108. computation of pay

This section incorporates 5 U.S.C. Sec. 8114 regarding
computation of pay into this title. Subsection (b) of this
section contains slight wording changes from 5 U.S.C.
Sec. 8114(d)(3) necessitated by the fact that not all covered
employees under this title are federal employees within the
meaning of the FECA.

section 109. limitations on receiving compensation

This section parallels, with some modifications, the
restrictions on receipt of compensation simultaneously with
receipt of other benefits for the same covered illness set
forth in 5 U.S.C. Sec. 8116. Subsections (a) and (b) of
section 109 contain the same prohibitions against dual
benefits sete forth in 5 U.S.C. Sec. 8116(a) and (b), and
apply to federal employees and beneficiaries whose benefit
derives from federal employees. Thus, individuals who are
eligible to receive benefits under this title may not
simultaneously receive those benefits and an annuity from the
Office of Personnel Management, whether such annuity is based
on length of service or disability. The election required by
subsection (b) is not subject to the provisions of section
110 regarding coordination of benefits.
Subsection (c) applies only to federal employees awarded
benefits under this title and under FECA for the same covered
illness or death, and requires an election between the two
systems.
Once an informed election has been made, the election is
irrevocable.
Subsections (d) and (e) require an individual eligible to
receive benefits under this title, and also eligible to
receive benefits under a state worker's compensation system
based on the same covered illness or death, to elect either
benefits under this title (subject to the reduction in
benefits set forth in section 110) or under the applicable
state workers' compensation system, unless the state workers'
compensation coverage was secured by an insurance policy or
contract, and the Secretary of Energy specifically waives the
requirement to make an election. An informed election under
these two subsections, once made, is irrevocable.
Subsection (f) requires a widow or widower who would
theoretically be eligible for benefits derived from more than
one husband or wife to make an election of one benefit. The
provision prevents a potential duplication of compensation
benefits in unusual, but predictable, circumstances. An
informed election under this subsection, once made, is
irrevocable.

section 110. coordination of benefits

This section provides for reduction of benefits under this
title if the claimant is awarded benefits under any state or
federal workers' compensation system for the same covered
illness or death. This section is intended to prevent a
double recovery by individuals who have already received
compensation for illnesses covered by this title. Subsection
(a) of this section provides for a dollar-for-dollar
reduction of benefits under this title by the amount of
benefits received under this state or federal workers'
compensation system, less than reasonable costs of obtaining
such benefits. The determination of the reasonable costs
obtaining such benefits is a matter reserved to the Secretary
of Energy.
Subsection (b) of this section provides that, if the
Secretary of Energy has granted a waiver of the election
requirement under section 109(d)(2) of this title, the amount
of compensation benefits is reduced by eighty percent of the
net amount of any state workers' compensation benefits
actually received or entitled to be received in the future,
after deducting the claimant's reasonable costs (as
determined by the Secretary of Energy) of obtaining such
benefits. Permitting an employee whose state workers'
compensation remedy is secured by insurance to retain an
additional twenty percent of state benefits provides an
incentive for the employee to seek such benefits in
situations where the Secretary of Energy has determined that
it is appropriate to waive the election requirement. In these
circumstances; value may be obtained for insurance policies
purchased prior to the enactment of this title.

section 111. retroactive compensation

This section allows an eligible covered employee to elect
to receive retroactive compensation of $100,000, in lieu of
any other compensation under this title, if the employee was
diagnosed, prior to October 1, 1999, as having a beryllium-
related pulmonary condition consistent with Chronic Beryllium
Disease and if the employee demonstrates the existence of
such diagnosis and condition by medical documentation created
during the employee's lifetime, at the time of death, or
autopsy.
When an employee who would have been eligible to elect to
receive retroatice compensation dies prior to making the
election, of any cause, the employee's survivors may make the
election. The right to make an election shall be afforded to
survivors in the order of precedence set forth in section
8109 of title 5, United States Code, which is based, in
essence, on proximity of family relationship to the covered
employee.
The employee or survivor must make the election within 30
days after the date the Secretary of Energy determined to
award compensation for total or partial disability or within
30 days after the date that the Secretary informs the
employee or the employee's survivor of the right to make the
election, whichever is later, unless the Secretary extends
the time. Informed elections are irrevocable and binding on
all survivors.
When an employee or a survivor has made an election, no
other payment of compensation may be made on account of any
other beryllium-releated illness.
A determination that the covered employee had ``beryllium-
related pulmonary condition'' does not constitute a
determination that he or she had a covered illness.
Retroactive compensation is not subject to a cost of living
adjustment.

SECTION 112. EXCLUSIVITY OF REMEDY AGAINST THE UNITED STATES,
CONTRACTORS, AND SUBCONTRACTORS

This section provides that the benefits authorized under
this title are an exclusive remedy for individuals against
the United States, DOE, and DOE contractors and
subcontractors, except for proceedings under a state or
federal workers compensation statute, subject to sections 109
and 110 of this title.

SECTION 113. ELECTION OF REMEDY AGAINST BERYLLIUM VENDORS

This section provides that if an individual elects to
accept payment under this title, acceptance also will be an
exclusive remedy against beryllium vendors who have supplied
DOE with beryllium products, except for proceedings under a
state or federal workers compensation statute, subject to
sections 109 and 110.

SECTION 114. CLAIM

This section adopts the requirements of a claim in section
8121, title 5, United States Code, which requires a claim to
be in writing and delivered or properly mailed to the
Secretary of Energy. The claim must be on an approved form,
contain all required information, sworn, and accompanied by
a physician's certificate stating the nature of the injury
and the nature and probable extent of the disability,
although the Secretary may waive these latter four
requirements for reasonable cause.

section 115. time limitation on filing a claim

This section limits the time for fling a claim under this
title.

section 116. review of award

This section provides that the decisions of the Secretary
of Energy in allowing or denying any payment under this title
are final, and are not subject to judicial review or review
by another official of the United States. For purposes of
this section, decisions issued by the Beryllium Compensation
Appeals Panel (to be established under regulations authorized
by section 122 of this title) are decisions of the designee
of the Secretary of Energy, in the same way that the
decisions of the Employees' Compensation Appeals Board
established under 5 U.S.C. Sec. 8149 are decisions of the
designee of the Secretary of Labor.

section 117. assignment of claim

This section is identical to 5 U.S.C. Sec. 8130.

section 118. adjudication

Subsection (a) provides that, if the Secretary of Energy
establishes new criteria for establishing coverage of a
covered illness by specifically promulgating a regulation
pursuant to the authority granted by section 104(b) of this
title, a claimant has the right to request reconsideration of
a decision awarding or denying coverage. This provision is
intended to permit a claimant whose claim was properly denied
under the criteria in effect at the time of the initial
denial to seek and obtain reconsideration based on the new
criteria, notwithstanding the fact that,

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under the administrative appeal rights contained in this
title, the claimant would not be entitled to reconsideration.
Subsection (b) incorporates into this title FECA provisions
regarding physical examinations (Sec. 123); findings and
awards (Sec. 8124); misbehavior at proceedings (Sec. 8125);
subpoenas, oaths, and examination of witnesses (Sec. 8126);
representation and attorney's fees (Sec. 8127);
reconsideration (Sec. 8128); and recovery of overpayments
(Sec. 8129).

section 119. subrogation of the united states

This section incorporates the provisions of 5 U.S.C.
Sec. Sec. 8131 and 8132 into this title. Based on these
provisions, the United States has the same statutory right of
reimbursement of the compensation payable under this title
against the proceeds of any recovery from a responsible third
party tortfeasor as that set forth in the FECA.
Subsection (c) notes that, for purposes of this title, the
last sentence of 5 U.S.C. Sec. 8131(a) that an ``employee
required to appear as a party or witness in the prosecution
of such an action [against a third party] is in an active
duty status while so engaged'' applies only to federal
employees covered under this title, as defined in section
103(3)(C).

SECTION 120. ENERGY EMPLOYEES BERYLLIUM COMPENSATION FUND

This section creates in the U.S. Treasury the Energy
Employees' Beryllium Compensation Fund, which consists of
amounts appropriated to it or transferred to it from other
DOE accounts and amounts that otherwise accrue to it under
this title. Amounts in the Fund may be used for the payment
of compensation and other benefits and expenses authorized by
this title and for payment of administrative expenses.

SECTION 121. FORFEITURE OF BENEFITS BY CONVICTED FELONS

Any individual convicted of violating section 1920 of title
18, United States Code, which prohibits false statements to
obtain federal employees' compensation, or any other federal
or state criminal statute relating to fraud in the
application or receipt of any benefits under the title, or
any other workers' compensation Act, shall forfeit (as of the
date of conviction) any benefits for any injury occurring on
or before the date of the conviction. This forfeiture is in
addition to any action of the Secretary of Energy under two
other provisions of the FECA that have been incorporated into
this title. Section 8106 of title 5, United States Code,
provides that an employee who fails to make a required report
or knowingly understates earnings forfeits compensation for
any period for which the report was required. Section 8129
provides for the recovery of overpayments made to an
individual due to a mistake in fact or law by decreasing
later payments.
Except for payments to dependents as calculated under
section 8133 of title 5, United States Code, an individual
confined for the commission of a felony may not receive
benefits during the period of incarceration or retroactively
after release.
State and federal governments must make available to the
Secretary of Energy, upon written request, the names and
social security numbers of individuals who are incarcerated
for felony offenses.

SECTION 122. REGULATIONS--BERYLLIUM COMPENSATION APPEALS PANEL

This section, modeled after 5 U.S.C. Sec. 8149, authorizes
the Secretary of Energy to provide by regulation for the
creation of the Beryllium Compensation Appeals Panel. This
panel is intended to have the same adjudicatory authority
over appeals from adverse determinations of claims under this
title that the Employees' Compensation Appeals Board
exercises over appeals from adverse determinations of claims
under the FECA.

SECTION 123. CIVIL SERVICE RETENTION RIGHTS

This section provides that a federal employee who meets the
definition of a covered employee within the meaning of
section 103(3)(C) of this title has the same civil service
retention rights as are applicable to federal employees by
virtue of the provisions of 5 U.S.C. Sec. 8151. Civil Service
retention rights are administered by the Office of Personnel
Management; as with 5 U.S.C. Sec. 8151, see Charles J.
McQuistion, 37 ECAB 193 (1985), this section is intended to
be administered, enforced, and interpreted by OPM.

SECTION 124. ANNUAL REPORT

This section provides that the Secretary of Energy will
prepare a report with respect to the administration of this
title on a fiscal year basis, and will submit this report to
Congress.

SECTION 125. AUTHORIZATION OF APPROPRIATIONS

This section authorizes appropriations and authorizes
transfers from other DOE accounts, to the extent provided in
advance in appropriations Acts, to carry out the purposes of
this title. This section also provides that the Secretary
limit the amount for the payment of compensation and other
benefits to an amount not in excess of the sum of the
appropriations to the Fund and amounts made available by
transfer to the Fund.

SECTION 126. CONSTRUCTION

This section provides that any amendments to provisions of
the Federal Employees' Compensation Act, 5 U.S.C.
Sec. Sec. 8101-8151, which have been incorporated by
reference into this title, will also be effective to
proceedings under this title.

SECTION 127. CONFORMING AMENDMENTS

This section makes conforming amendments to criminal
provisions of the United States Code (18 U.S.C.
Sec. Sec. 1920, 1921, and 1922).

SECTION 128. EFFECTIVE DATE

This section provides that the title is effective upon
enactment, and applies to all claims, civil actions, and
proceedings ``pending on, or filed on or after, the date of
the enactment'' of this title. Because compensation under
this title constitutes a covered employee's exclusive remedy
against the United States, and DOE's contractors and
subcontractors, any claim against the United States (under
the Federal Tort Claims Act) or against any of the other
above-referenced entities that has not been reduced to a
final judgment before the date is barred by this title.

TITLE II--ENERGY EMPLOYEES PILOT PROJECT ACT

section 201. short title

This section designates this Act as the ``Energy Employees
Pilot Project Act.''

section 202. pilot project

This section directs the Secretary of Energy to conduct a
pilot program to examine the possible relationship between
workplace exposures to radiation, hazardous materials, or
both and occupational illness or other adverse health
conditions.

section 203. physicians panel

This section requires a panel of physicians who specialize
in health conditions related to occupational exposure to
radiation and hazardous materials to issue a report which
examines whether 55 current and former employees of the
Department of Energy's East Tennessee Technology Park may
have sustained any illness or health condition as a result of
their employment.

section 204. secretary of energy finding

The contractor is required by this section to provide the
report of the panel to the Secretary of Energy, who will
determine whether any of the employees who are covered by the
report may have sustained an adverse health condition from
their employment.

section 205. award

If the Secretary of Energy makes a positive finding under
section 204 concerning an employee, the employee may receive
an award of $100,000. If the employee is eligible for an
award under title I, the employee may elect to receive
payment under this title in place of compensation under title
I.

section 206. election

This section provides that the employee is to make the
election under section 205 within a certain period of time.
Informed elections are irrevocable and binding on all
survivors.

section 207. survivor's election

If an individual dies before making the election, the
employee's survivor may make the election. The right to make
an election shall be afforded to survivors in the order of
precedence set forth in section 8109 of title 5, United
States Code, which is based, in essence, on proximity of
family relationship to the covered employee.

section 208. status of award

An award is not income under the Internal Revenue Code.

section 209. payment in full settlement of claims against the united
states, contractors, and subcontractors

This section provides that employees at the facility
eligible for benefits under this title can elect which remedy
to pursue. If they elect to proceed under this title, then
acceptance of payment under this title will be in full
settlement of all claims against the United States, DOE, a
DOE contractor, a DOE subcontractor, or an employee, agent,
or assign of one of them arising out of the condition for
which the payment was made, except that the employee would
retain the right to proceed under a state workers
compensation statute, subject to the reduction-of-benefits
provision of subsection (c). Under that subsection, the
benefits awarded to a claimant under this title would be
reduced by the amount of any other payments received by that
claimant because of the same illness or adverse health
condition, excluding payments for medical expenses under a
workers' compensation system.

section 210. subrogation

This section sets out the conditions under which the United
States is subrogated to a claim.

section 211. authorization of appropriation

This section authorizes appropriations for the program and
provides that authority under this title to make payments is
effective in any fiscal year only to the extent, or in the
amounts, provided in advance in an appropriation Act

TITLE III--PADUCAH EMPLOYEES' EXPOSURE COMPENSATION ACT

section 301. short title

This section designates this Act as the ``Paducah
Employees' Exposure Compensation Act.''

section 302. definitions

This section defines a number of terms necessary to
implement this legislation, including ``Paducah employee''
and ``specified disease''

section 303. paducah employees' exposure compensation fund

This section establishes in the Treasury of the United
States the Paducah Employee's

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Exposure Compensation Fund. The amounts in the fund are
available for expenditure by the Attorney General under
section 305, and the Fund terminates 22 years after the date
of enactment of this title. This section also authorizes
appropriations to the Fund in the sums necessary to carry out
the purposes of the title and provides that authority under
this Act to enter into contracts or to make payments is not
effective in any fiscal year except to the extent, or in the
amounts, provided in advance in appropriations Acts.

section 304. eligible employees

This section sets forth who is eligible to receive
compensation under this title and provides that an eligible
employee who files a claim that the Attorney General
determines meets the requirements of this title, receives
$100,000 as compensation.
A person eligible for compensation is a Paducah employee
(as defined under section 302(2)) who was employed at the
Paducah, Kentucky, gaseous diffusion plant for at least one
year during the period beginning on January 1, 1953, and
ending on February 1, 1992, who during that period was
monitored through the use of dosimetry badges for exposure at
the plant to radiation from gamma rays or who worked in a job
that, as determined by regulation, led to exposure at the
plant to radioactive contaminants, including plutonium
contaminants; and who submits written medical documentation
as to having contracted a specified disease after beginning
employment at the plant during the indicated period and after
being monitored or beginning work at a job that could have
led to exposure as specified.

section 305. determination and payment of claims

Generally, this section sets forth the procedures for
filing claims, authority for the Attorney General to consider
claims and make compensation payments, consequences of
payment of a claim, cost of administering the program, and
appeals procedures.
Subsection (a) provides that the Attorney General establish
procedures whereby individuals may submit claims for payment
under this title.
Subsection (b) provides that the Attorney General determine
whether a claim filed under this title meets the requirements
of the title. It also provides for consultation with the
Surgeon General and the Secretary of Energy in certain
instances.
Subsection (c) provides that the Attorney General pay, from
amounts available in the Fund, claims filed under this title
that the Attorney General determines meet the requirements of
this title. This subsection also sets out the conditions
under which payments are offset and the United States
is subrogated to a claim. It also provides for payment to
the survivor of a Paducah employee who is deceased at the
time of payment under this section.
Subsection (d) provides that the Attorney General complete
the determination on each claim not later than twelve months
after the claim is so filed. The Attorney General may request
from any claimant, or from any individual or entity on behalf
of any claimant, additional information or documentation
necessary to complete the determination.
Subsection (e) provides that employees at the Paducah
facility eligible for benefits under this title can elect
which remedy to pursue. If they elect to proceed under this
title, then acceptance of payment under this title will be in
full settlement of all claims against the United States, DOE,
a DOE contractor, a DOE subcontractor, or an employee, agent,
or assign of one of them arising out of the illness for which
the payment was made, except for claims in an administrative
or judicial proceeding under a state workers' compensation
statute, subject to the reduction-of-benefits provision of
subparagraph (3). Under that subparagraph, the benefits
awarded to a claimant under this title would be reduced by
the amount of any other payments received by that claimant
because of the same specified illness, excluding payments for
medical expenses under a workers' compensation system.
Subsection (f) sets forth how costs of administering the
title are paid.
Subsection (g) provides that the duties of the Attorney
General under this section cease when the Fund terminates.
Subsection (h) provides that amounts paid to an individual
under this section are not subject to federal income tax
under the internal revenue laws of the United States; are not
included as income or resources for purposes of determining
eligibility to receive benefits described in section
3803(c)(2)(C) of title 31, United States Code or the amount
of these benefits; and are not subject to offset under
section 3701 et seq. of title 31, United States Code.
Subsection (i) provides that the Attorney General may issue
the regulations necessary to carry out this title.
Subsection (j) provides that regulations, guidelines, and
procedures to carry out this title shall be issued not later
than 270 days after the date of enactment of this title.
Subsection (k) sets forth administrative appeals procedures
and procedures for judicial review.

SECTION 306. CLAIMS NOT ASSIGNABLE OR TRANSFERABLE

This section provides that a claim cognizable under this
title is not assignable or transferable.

SECTION 307. LIMITATIONS ON CLAIMS

This section provides that claim to which this title
applies shall be barred unless the claim is filed within 20
years after the date of the enactment of this title.

SECTION 308. ATTORNEY FEES

This section limits the amount of attorney fees for
services rendered in connection with a claim under this title
to no more than 10 percent of a payment made on the claim. An
attorney who violates this section shall be fined not more
than $5,000.

SECTION 309. CERTAIN CLAIMS NOT AFFECTED BY AWARDS OF DAMAGES

This section provides that a payment made under this title
shall not be considered as any form of compensation or
reimbursement for a loss for purposes of imposing liability
on the individual receiving the payment, on the basis of this
receipt; to repay any insurance carrier for insurance
payments. A payment under this title does not affect any
claim against an insurance carrier with respect to insurance.

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