[Congressional Record Volume 146, Number 100 (Thursday, July 27, 2000)]
[Senate]
[Pages S7841-S7908]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BREAUX:
  S. 2944. A bill to clarify that certain penalties provided for in the 
Oil Pollution Act of 1990 are the exclusive criminal penalties for any 
action or activity that may arise or occur in connection with certain 
discharges of oil or a hazardous substance; to the Committee on 
Environment and Public Works.


        Strict Criminal Liability Reform for Oil Spill Incidents

  Mr. BREAUX. Mr. President, I am pleased to introduce legislation to 
address a long-standing problem which adversely affects the safe and 
reliable maritime transport of oil products. The legislation I am 
introducing today will eliminate the application and use of strict 
criminal liability statutes, statutes that do not require a showing of 
criminal intent or even the slightest degree of negligence, for 
maritime transportation-related oil spill incidents.
  Through comprehensive Congressional action that led to the enactment 
and implementation of the Oil Pollution Act of 1990, commonly referred 
to as ``OPA90'', the United States has successfully reduced the number 
of oil spills in the maritime environment and has established a 
cooperative public/private partnership to respond effectively in the 
diminishing number of situations when an oil spill occurs. Nonetheless, 
over the past decade, the use of the unrelated strict criminal 
liability statutes that I referred to above has undermined the spill 
prevention and response objectives of OPA90, the very objectives that 
were established by the Congress to preserve the environment, safeguard 
the public welfare, and promote the safe transportation of oil. The 
legislation I am introducing today will restore the delicate balance of 
interests reached in OPA90, and will reaffirm OPA90's preeminent role 
as the statute providing the exclusive criminal penalties for oil spill 
incidents.
  As stated in the Coast Guard's own environmental enforcement 
directive, a company, its officers, employees, and mariners, in the 
event of an oil spill ``could be convicted and sentenced to a criminal 
fine even where [they] took all reasonable precautions to avoid the 
discharge''. Accordingly, responsible operators in my home state of 
Louisiana and elsewhere in the United States who transport oil are 
unavoidably exposed to potentially immeasurable criminal fines and, in 
the worst case scenario, jail time. Not only is this situation unfairly 
targeting an industry that plays an extremely important role in our 
national economy, but it also works contrary to the public welfare.
  Most liquid cargo transportation companies on the coastal and inland 
waterway system of the United States have embraced safe operation and 
risk management as two of their most important and fundamental values. 
For example, members of the American Waterways Operators (AWO) from 
Louisiana and other states have implemented stronger safety programs 
that have significantly reduced personal injuries to mariners. Tank 
barge fleets have been upgraded through construction of new state-of-
the-art double hulled tank barges while obsolete single skin barges are 
being retired far in advance of the OPA90 timetable. Additionally, AWO 
members have dedicated significant time and financial resources to 
provide continuous and comprehensive education and training for vessel 
captains, crews and shoreside staff, not only in the operation of 
vessels but also in preparation for all contingencies that could occur 
in the transportation of oil products. This commitment to marine safety 
and environmental protection by responsible members of the oil 
transportation industry is real. The industry continues to work closely 
with the Coast Guard to upgrade regulatory standards in such key areas 
as towing vessel operator qualifications and navigation equipment on 
towing vessels.
  Through the efforts of AWO and other organizations, the maritime 
transportation industry has achieved an outstanding compliance record 
with the numerous laws and regulations enforced by the Coast Guard. Let 
me be clear: responsible carriers, and frankly their customers, have a 
``zero tolerance'' policy for oil spills. Additionally, the industry is 
taking spill response preparedness seriously. Industry representatives 
and operators routinely participate in Coast Guard oil spill crisis 
management courses, PREP Drills, and regional spill response drills. 
Yet despite all of the modernization, safety, and training efforts of 
the marine transportation industry, their mariners and shoreside 
employees cannot escape the threat of criminal liability in the event 
of an oil spill, even where it is shown that they ``took all reasonable 
precautions to avoid [a] discharge''.
  As you know, in response to the tragic Exxon Valdez spill, Congress 
enacted OPA90. OPA90 mandated new, comprehensive, and complex 
regulatory and enforcement requirements for the transportation of oil 
products and for oil spill response. Both the federal government and 
maritime industry have worked hard to accomplish the legislation's 
primary objective--to provide greater environmental safeguards in oil 
transportation by creating a comprehensive prevention, response, 
liability, and compensation regime to deal with vessel and facility oil 
pollution. And OPA90 is working in a truly meaningful sense. To prevent 
oil spill incidents from occurring in the first place, OPA90 provides 
an enormously powerful deterrent, through both its criminal and civil 
liability provisions. Moreover, OPA90 mandates prompt reporting of 
spills, contingency planning, and both cooperation and coordination 
with federal, state, and local authorities in connection with managing 
the spill response. Failure to report and cooperate as required by 
OPA90 may impose automatic civil penalties, criminal liability and 
unlimited civil liability. As a result, the number of domestic oil 
spills has been dramatically reduced over the past decade since OPA90 
was enacted. In those limited situations in which oil spills 
unfortunately occurred, intensive efforts commenced immediately with 
federal, state and local officials working in a joint, unified manner 
with the industry, as contemplated by OPA90, to clean up and report 
spills as quickly as possible and to mitigate to the greatest extent 
any impact on the environment. OPA90 has provided a comprehensive and 
cohesive ``blueprint'' for proper planning, training, and resource 
identification to respond to an oil spill incident, and to ensure that 
such a response is properly and cooperatively managed.
  OPA90 also provides a complete statutory framework for proceeding 
against individuals for civil and/or criminal penalties arising out of 
oil spills in the marine environment. When Congress crafted this Act, 
it carefully balanced the imposition of stronger criminal and civil 
penalties with the need to promote enhanced cooperation among all of 
the parties involved in the spill prevention and response effort. In so 
doing, the Congress clearly enumerated the circumstances in which 
criminal penalties could be imposed for actions related to maritime oil 
spills, and added and/or substantially increased criminal penalties 
under the related laws which comprehensively govern the maritime 
transportation of oil and other petroleum products.

  The legislation we are introducing today will not change in any way 
the tough criminal sanctions that were imposed in OPA90. However, 
responsible, law-abiding members of the maritime industry in Louisiana 
and elsewhere are concerned by the willingness of the Department of 
Justice and other federal agencies in the post-OPA90 environment to use 
strict criminal liability statutes in oil spill incidents. As you know, 
strict liability imposes criminal sanctions without requiring a showing 
of criminal knowledge, intent or even negligence. These federal actions 
imposing strict liability have created an atmosphere of extreme 
uncertainty for the maritime transportation industry about how to 
respond to and cooperate with the Coast Guard and other federal

[[Page S7842]]

agencies in cleaning up an oil spill. Criminal culpability in this 
country, both historically and as reflected in the comprehensive OPA90 
legislation itself, typically requires wrongful actions or omissions by 
individuals through some degree of criminal intent or through the 
failure to use the required standard of care. However, Federal 
prosecutors have been employing other antiquated, seemingly unrelated 
``strict liability'' statutes that do not require a showing of 
``knowledge'' or ``intent'' as a basis for criminal prosecution for oil 
spill incidents. Such strict criminal liability statutes as the 
Migratory Bird Treaty Act and the Refuse Act, statutes that were 
enacted at the turn of the century to serve other purposes, have been 
used to harass and intimidate the maritime industry, and, in effect, 
have turned every oil spill into a potential crime scene without regard 
to the fault or intent of companies, corporate officers and employees, 
and mariners.
  The Migratory Bird Treaty Act (MBTA) (16 U.S.C. 703 et seq.) provides 
that ``it shall be unlawful at any time, by any means or in any manner, 
to pursue, hunt, take, capture, kill, attempt to take, capture, or 
kill, . . . any migratory bird . . .'', a violation of which is 
punishable by imprisonment and/or fines. Prior to the Exxon Valdez oil 
spill in 1989, the MBTA was primarily used to prosecute the illegal 
activities of hunters and capturers of migratory birds, as the Congress 
originally intended when it enacted the MBTA in 1918. In the Exxon 
Valdez case itself, and prior to the enactment of OPA90, the MBTA was 
first used to support a criminal prosecution against a vessel owner in 
relation to a maritime oil spill, and this ``hunting statute'' has been 
used ever since against the maritime industry. The ``Refuse Act'' (33 
U.S.C. 407, 411) was enacted over 100 years ago at a time well before 
subsequent federal legislation essentially replaced it with 
comprehensive requirements and regulations specifically directed to the 
maritime transportation of oil and other petroleum products. Such 
strict liability statutes are unrelated to the regulation and 
enforcement of oil transportation activities, and in fact were not 
included within the comprehensive OPA90 legislation as statutes in 
which criminal liability could be found. With the prosecutorial use of 
strict liability statutes, owners and mariners engaged in the 
transportation of oil cannot avoid exposure to criminal liability, 
regardless of how diligently they adhere to prudent practice and safe 
environmental standards. Although conscientious safety and training 
programs, state-of-the-art equipment, proper operational procedures, 
preventative maintenance programs, and the employment of qualified and 
experienced personnel will collectively prevent most oil spills from 
occurring, unfortunately spills will still occur on occasion.
  To illustrate this point, please permit me to present a scenario that 
highlights the dilemma faced by the maritime oil transportation 
industry in Louisiana. Imagine, if you will, that a company is 
operating a towing vessel in compliance with Coast Guard regulations on 
the Mississippi River on a calm, clear day with several fully laden 
tank barges in tow. Suddenly, in what was charted and previously 
identified to be a clear portion of the waterway, one of the tank 
barges strikes an unknown submerged object which shears through its 
hull and causes a significant oil spill in the river. Unfortunately, in 
addition to any other environmental damage that may occur, the oil 
spill kills one or more migratory birds. As you know, under OPA90 the 
operator must immediately undertake coordinated spill response actions 
with the Coast Guard and other federal, state, and local agencies to 
safeguard the vessel and its crew, clean up the oil spill, and 
otherwise mitigate any damage to the surrounding environment. The 
overriding objectives at this critical moment are to assure personnel 
and public safety and to clean up the oil spill as quickly as possible 
without constraint. However, in the current atmosphere the operator 
must take into consideration the threat of strict criminal liability 
under the Migratory Bird Treaty Act and the Refuse Act, together with 
their attendant imprisonment and fines, despite the reasonable care and 
precautions taken in the operation and navigation of the tow and in the 
spill response effort. Indeed, in the Coast Guard's own environmental 
enforcement directive, the statement is made that ``[t]he decision to 
commit the necessary Coast Guard resources to obtain the evidence that 
will support a criminal prosecution must often be made in the very 
early stages of a pollution incident.'' Any prudent operator will 
quickly recognize the dilemma in complying with the mandate to act 
cooperatively with all appropriate public agencies in cleaning up the 
oil spill, while at the same time those very agencies may be conducting 
a criminal investigation of that operator. Vessel owners and their 
employees who have complied with federal laws and regulations and have 
exercised all reasonable care should not continue to face a substantial 
risk of imprisonment and criminal fines under such strict liability 
statutes. Criminal liability, when appropriately imposed under OPA90, 
should be employed only where a discharge is caused by conduct which is 
truly ``criminal'' in nature, i.e., where a discharge is caused by 
reckless, intentional or other conduct deemed criminal by OPA90.
  As this scenario demonstrates, the unjustified use of strict 
liability statutes is plainly undermining the very objectives which 
OPA90 sought to achieve, namely to enhance the prevention of and 
response to oil spills in Louisiana and elsewhere in the United States. 
As we are well aware, tremendous time, effort, and resources have been 
expended by both the federal government and the maritime industry to 
eliminate oil spills to the maximum extent possible, and to plan for 
and undertake an immediate and effective response to mitigate any 
environmental damage from spills that do occur. Clearly unwarranted and 
improper prosecutorial use of strict liability statutes is having a 
``chilling'' effect on these cooperative spill prevention and response 
efforts. Indeed, even if we were to believe that criminal prosecution 
only follows intentional criminal conduct, the mere fact that strict 
criminal liability statutes are available at the prosecutor's 
discretion will intimidate even the most innocent and careful operator. 
With strict liability criminal enforcement, responsible members of the 
maritime transportation industry are faced with an extreme dilemma in 
the event of an oil spill--provide less than full cooperation and 
response as criminal defense attorneys will certainly direct, or 
cooperate fully despite the risk of criminal prosecution that could 
result from any additional actions or statements made during the course 
of the spill response. Consequently, increased criminalization of oil 
spill incidents introduces uncertainty into the response effort by 
discouraging full and open communication and cooperation, and leaves 
vessel owners and operators criminally vulnerable for response actions 
taken in an effort to ``do the right thing''.

  In the maritime industry's continuing effort to improve its risk 
management process, it seeks to identify and address all foreseeable 
risks associated with the operation of its business. Through fleet 
modernization, personnel training, and all other reasonable steps to 
address identified risks in its business, the industry still cannot 
manage or avoid the increased risks of strict criminal liability 
(again, a liability that has no regard to fault or intent). The only 
method available to companies and their officers to avoid the risk of 
criminal liability completely is to divest themselves from the maritime 
business of transporting oil and other petroleum products, in effect to 
get out of the business altogether. Furthermore, strict liability 
criminal laws provide a strong disincentive for trained, highly 
experienced mariners to continue the operation of tank vessels, and for 
talented and capable individuals from even entering into that maritime 
trade. An earlier editorial highlighted the fact that tugboat captains 
``are reporting feelings of intense relief and lightening of their 
spirits when they are ordered to push a cargo of grain or other dry 
cargo, as compared to the apprehension they feel when they are staring 
out of their wheelhouses at tank barges'', and ``that the reason for 
this is very obvious in the way that they find themselves instantly 
facing criminal charges . . . in the event of a collision or grounding 
and oil or chemicals end up in the water''. Certainly, the federal 
government does not want to create a situation where the least 
experienced

[[Page S7843]]

mariners are the only available crew to handle the most hazardous 
cargoes, or the least responsible operators are the only available 
carriers. Thus, the unavoidable risk of such criminal liability 
directly and adversely affects the safe transportation of oil products, 
an activity essential for the public, the economy, and the nation.
  Therefore, despite the commitment and effort to provide trained and 
experienced vessel operators and employees, to comply with all safety 
and operational mandates of Coast Guard laws and regulations, and to 
provide for the safe transportation of oil as required by OPA90, 
maritime transportation companies in Louisiana, and elsewhere still 
cannot avoid criminal liability in the event of an oil spill. 
Responsible, law-abiding companies have unfortunately been forced to 
undertake the only prudent action that they could under the 
circumstances, namely the development of criminal liability action 
plans and retention of criminal counsel in an attempt to prepare for 
the unavoidable risks of such liability.
  These are only preliminary steps and do not begin to address the many 
implications of the increasing criminalization of oil spills. The 
industry is now asking what responsibility does it have to educate its 
mariners and shoreside staff about the potential personal exposure they 
may face and wonder how to do this without creating many undesirable 
consequences? How should the industry organize spill management teams 
and educate them on how to cooperate openly and avoid unwitting 
exposure to criminal liability? Mr. President, I have thought about 
these issues a great deal and simply do not know how to resolve these 
dilemmas under current, strict liability law. In the event of an oil 
spill, a responsible party not only must manage the cleanup of the oil 
and the civil liability resulting from the spill itself, but also must 
protect itself from the criminal liability that now exists due to the 
available and willing use of strict liability criminal laws by the 
federal government. Managing the pervasive threat of strict criminal 
liability, by its very nature, prevents a responsible party from 
cooperating fully and completely in response to an oil spill situation. 
The OPA90 ``blueprint'' is no longer clear. Is this serving the 
objectives of OPA90? Does this really serve the public welfare of our 
nation? Is this what Congress had in mind when it mandated its spill 
response regime? Is this in the interest of the most immediate, most 
effective oil spill cleanup in the unfortunate event of a spill? We 
think not.
  To restore the delicate balance of interests reached in the enactment 
of OPA90 a decade ago, we intend to work with the Congress to reaffirm 
the OPA90 framework for criminal prosecutions in oil spill incidents. 
The enactment of the legislation we are introducing today will ensure 
increased cooperation and responsiveness desired by all those 
interested in oil spill response issues without diluting the deterrent 
effect and stringent criminal penalties imposed by OPA90 itself.
  I look forward to continuing the effort to upgrade the safety of 
marine operations in the navigable waterways of the United States, and 
I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2944

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

     SECTION 1. AFFIRMATION OF PENALTIES UNDER OIL POLLUTION ACT 
                   OF 1990.

       (a) In General.--Notwithstanding any other provision or 
     rule of law, section 4301(c) and 4302 of the Oil Pollution 
     Act of 1990 (Public Law 101-380; 104 Stat. 537) and the 
     amendments made by those sections provide the exclusive 
     criminal penalties for any action or activity that may arise 
     or occur in connection with a discharge of oil or a hazardous 
     substance referred to in section 311(b)(3) of the Federal 
     Water Pollution Control Act (33 U.S.C. 1321(b)(3)).
       (b) Rule of Construction.--Nothing in this section shall be 
     construed to limit, or otherwise exempt any person from, 
     liability for conspiracy to commit any offense against the 
     United States, for fraud and false statements, or for the 
     obstruction of justice.
                                 ______
                                 
      By Mr. KENNEDY (for himself, Mr. Torricelli and Mr. Harkin):
  S. 2946. A bill to amend title I of the Employee Retirement Income 
Security Act of 1974 to ensure that employees are not improperly 
disqualified from benefits under pension plans and welfare plans based 
on a miscategorization of their employee status; to the Committee on 
Health, Education, Labor, and Pensions.


           employee benefits eligibility fairness act of 2000

  Mr. KENNEDY. Mr. President, contingent workers in our society face 
significant problems, and they deserve our help in meeting them. These 
men and women--temporary and part-time workers, contract workers, and 
independent contractors--continue to suffer unfairly, even in our 
prosperous economy. A new report from the General Accounting Office 
emphasizes that contingent workers often lack income security and 
retirement security.
  We know that for most workers today, a single lifetime job is a relic 
of the past. The world is long gone in which workers stay with their 
employer for many years, and then retire on a company pension. Since 
1982 the number of temporary help jobs has grown 577 percent.
  The GAO report shows that 30 percent of the workforce--39 million 
working Americans--now get their paychecks from contingent jobs.
  Contingent workers have lower incomes than traditional, full-time 
workers and many are living in poverty. For example, 30 percent of 
agency temporary workers have family incomes below $15,000. By 
comparison, only 8 percent of standard full-time workers have family 
incomes below $15,000.
  Contingent workers are less likely to be covered by employer health 
and retirement benefits than are standard, full-time workers. Even when 
employers do sponsor a plan, contingent workers are less likely to 
participate in the plan, either because they are excluded or because 
the plan is too expensive. Only 21 percent of part-time workers are 
included in an employer-sponsored pension plan. By comparison, 64 
percent of standard full-time workers are included in their employer's 
pension plan.
  Non-standard or alternative work arrangements can meet the needs of 
working families and employers alike, but these arrangements should not 
be used to divide the workforce into ``haves'' and ``have-nots.'' 
Flexible work arrangements, for example, can give working parents more 
time to care for their children, but many workers are not in their 
contingent jobs by choice. More than half of temporary workers would 
prefer a permanent job instead of their contingent job, but temporary 
work is all they can find.
  As the GAO report makes clear, employers have economic incentives to 
cut costs by miscategorizing their workers as temporary or contract 
workers. Too often, contingent arrangements are set-up by employers for 
the purpose of excluding workers from their employee benefit programs 
and evading their responsibilities to their workers. Millions of 
employees have been miscategorized by their employers, and as a result 
they have been denied the benefits and protections that they rightly 
deserve and worked hard to earn.
  All workers deserve a secure retirement at the end of their working 
years. Social Security has been and will continue to be the best 
foundation for that security. But the foundation is just that--the 
beginning of our responsibility, not the end of it. We cannot expect 
Americans to work hard all their lives, only to face poverty and hard 
times when they retire.
  That is why I am introducing, with Senators Torricelli and Harkin, 
the Employee Benefits Eligibility Fairness Act of 2000 to help 
contingent workers obtain the retirement benefits they deserve. This 
legislation clarifies employers' responsibilities under the law so that 
they cannot exclude contingent workers from employee benefit plans 
based on artificial labels or payroll practices.
  This is an issue of basic fairness for working men and women. It is 
unfair for individuals who work full-time, on an indefinite long-term 
basis for an employer to be excluded from the employer's pension plan, 
merely because the employer classifies the workers as ``temporary'' 
when in fact they are not. The employer-employee relationship should be 
determined on the facts of

[[Page S7844]]

the working arrangement, not on artificial labels, not on artificial 
accounting practices, not artificial payroll practices.
  It is long past time for Congress to recognize the plight of 
contingent workers and see that they get the employee benefits they 
deserve. These important changes are critical to improving the security 
of working families, and I look forward to their enactment.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2946

       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 ``Employee Benefits 
     Eligibility Fairness Act of 2000''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress makes the following findings:
       (1) The intent of the Employee Retirement Income Security 
     Act of 1974 to protect the pension and welfare benefits of 
     workers is frustrated by the practice of mislabeling 
     employees to improperly exclude them from employee benefit 
     plans. Employees are wrongly denied benefits when they are 
     mislabeled as temporary employees, part-time employees, 
     leased employees, agency employees, staffing firm employees, 
     and contractors. If their true employment status were 
     recognized, mislabeled employees would be eligible to 
     participate in employee benefit plans because such plans are 
     offered to other employees performing the same or 
     substantially the same work and working for the same 
     employer.
       (2) Mislabeled employees are often paid through staffing, 
     temporary, employee leasing, or other similar firms to give 
     the appearance that the employees do not work for their 
     worksite employer. Employment contracts and reports to 
     government agencies also are used to give the erroneous 
     impression that mislabeled employees work for staffing, 
     temporary, employee leasing, or other similar firms, when the 
     facts of the work arrangement do not meet the common law 
     standard for determining the employment relationship. 
     Employees are also mislabeled as contractors and paid from 
     non-payroll accounts to give the appearance that they are not 
     employees of their worksite employer. These practices violate 
     the Employee Retirement Income Security Act of 1974.
       (3) Employers are amending their benefit plans to add 
     provisions that exclude mislabeled employees from 
     participation in the plan even in the event that such 
     employees are determined to be common law employees and 
     otherwise eligible to participate in the plan. These plan 
     provisions violate the Employee Retirement Income Security 
     Act of 1974.
       (4) As a condition of employment or continued employment, 
     mislabeled employees are often required to sign documents 
     that purport to waive their right to participate in employee 
     benefit plans. Such documents inaccurately claim to limit the 
     authority of the courts and applicable Federal agencies to 
     correct the mislabeling of employees and to enforce the terms 
     of plans providing for their participation. This practice 
     violates the Employee Retirement Income Security Act of 1974.
       (b) Purpose.--The purpose of this Act is to clarify 
     applicable provisions of the Employee Retirement Income 
     Security Act of 1974 to ensure that employees are not 
     improperly excluded from participation in employee benefit 
     plans as a result of mislabeling of their employment status.

     SEC. 3. ADDITIONAL STANDARDS RELATING TO MINIMUM 
                   PARTICIPATION REQUIREMENTS.

       (a) Required Inclusion of Service.--Section 202(a)(3) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1052(a)(3)) is amended by adding at the end the 
     following new subparagraph:
       ``(E) For purposes of this section, in determining `years 
     of service' and `hours of service', service shall include all 
     service for the employer as an employee under the common law, 
     irrespective of whether the worker--
       ``(i) is paid through a staffing firm, temporary help firm, 
     payroll agency, employment agency, or other such similar 
     arrangement,
       ``(ii) is paid directly by the employer under an 
     arrangement purporting to characterize an employee under the 
     common law as other than an employee, or
       ``(iii) is paid from an account not designated as a payroll 
     account.''
       (b) Exclusion Precluded When Related to Certain Purported 
     Categorizations.--Section 202 of such Act (29 U.S.C. 1052) is 
     amended further by adding at the end the following new 
     subsection:
       ``(c)(1) Subject to paragraph (2), a pension plan shall be 
     treated as failing to meet the requirements of this section 
     if any individual who--
       ``(A) is an employee under the common law, and
       ``(B) performs the same work (or substantially the same 
     work) for the employer as other employees who generally are 
     not excluded from participation in the plan,

     is excluded from participation in the plan, irrespective of 
     the placement of such employee in any category of workers 
     (such as temporary employees, part-time employees, leased 
     employees, agency employees, staffing firm employees, 
     contractors, or any similar category) which may be specified 
     under the plan as ineligible for participation.
       ``(2) Nothing in paragraph (1) shall be construed to 
     preclude the exclusion from participation in a pension plan 
     of individuals who in fact do not meet a minimum service 
     period or minimum age which is required under the terms of 
     the plan and which is otherwise in conformity with the 
     requirements of this section.''

     SEC. 4. WAIVERS OF PARTICIPATION INEFFECTIVE IF RELATED TO 
                   MISCATEGORIZATION OF EMPLOYEE.

       Section 202 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1052) (as amended by section 3) is amended 
     further by adding at the end the following new subsection:
       ``(d) Any waiver or purported waiver by an employee of 
     participation in a pension plan or welfare plan shall be 
     ineffective if related, in whole or in part, to the a 
     miscategorization of the employee in 1 or more ineligible 
     plan categories.''

     SEC. 5. OBJECTIVE ELIGIBILITY CRITERIA IN PLAN INSTRUMENTS.

       Section 402 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1102) is amended by adding at the end the 
     following new subsection:
       ``(c)(1) The written instrument pursuant to which an 
     employee benefit plan is maintained shall set forth 
     eligibility criteria which--
       ``(A) include and exclude employees on a uniform basis;
       ``(B) are based on reasonable job classifications; and
       ``(C) are based on objective criteria stated in the 
     instrument itself for the inclusion or exclusion (other than 
     the mere listing of an employee as included or excluded).
       ``(2) No plan instrument may permit an employer or plan 
     sponsor to exclude an employee under the common law from 
     participation irrespective of the placement of such employee 
     in any category of workers (such as temporary employees, 
     leased employees, agency employees, staffing firm employees, 
     contractors, or any similar category) if the employee--
       ``(A) is an employee of the employer under the common law,
       ``(B) performs the same work (or substantially the same 
     work) for the employer as other employees who generally are 
     not excluded from participation in the plan, and
       ``(C) meets a minimum service period or minimum age which 
     is required under the terms of the plan.''

     SEC. 6. ENFORCEMENT.

       Section 502(a)(3)(B) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1132(a)(3)(B)) is amended--
       (1) by striking ``or'' in clause (i) and inserting a comma,
       (2) by striking the semicolon at the end of clause (ii) and 
     inserting ``, or'', and
       (3) by adding at the end the following: ``(iii) to provide 
     relief to employees who have been miscategorized in violation 
     of sections 202 and 402;''.

     SEC. 7. EFFECTIVE DATE.

       The amendments made by this Act shall apply with respect to 
     plan years beginning on or after the date of the enactment of 
     this Act.
                                 ______
                                 
      By Mr. CAMPBELL:
  S. 2950. A bill to authorize the Secretary of the Interior to 
establish the Sand Creek Massacre Historic Site in the State of 
Colorado; to the Committee on Energy and Natural Resources.


introduction of legislation to create the sand creek national historic 
                                  site

  Mr. CAMPBELL. Mr. President, today I introduce the Sand Creek 
Massacre National Historic Site Establishment Act of 2000, legislation 
which will finally recognize and memorialize the hallowed ground on 
which hundreds of peaceful Cheyenne and Arapaho Indians were massacred 
by members of the Colorado Militia.
  The legislation I introduce today follows The Sand Creek Massacre 
Historic Site Study Act of 1998, legislation I introduced and Congress 
approved to study the suitability of creating an enduring memorial to 
the slain innocents who were camped peacefully near Sand Creek, in 
Kiowa County, in Colorado on November 28, 1868.
  Much has been written about the horrors visited upon the plains 
Indians in the territories of the Western United States in the latter 
half of the 19th century. However, what has been lost for more than a 
century is a comprehensive understanding of the events of that day in a 
grove of cottonwood trees along Sand Creek now SE Colorado. In some 
cases denial of the events of the day or a sense that ``the Indians had 
it coming'' has prevailed.
  This legislation finally recognizes a shameful event in our country's 
history based on scientific studies, and

[[Page S7845]]

makes it clear America has the strength and resolve to face its past 
and learn the painful lessons that come with intolerance.
  The indisputable facts are these: 700 members of the Colorado 
Militia, commanded by Colonel John Chivington struck at dawn that 
November day, attacking a camp of Cheyenne and Arapaho Indians settled 
under the U.S. Flag and a white flag which the Indian Chiefs Black 
Kettle and White Antelope were told by the U.S. would protect them from 
military attack.
  By day's end, almost 150 Indians, many of them women, children and 
the elderly, lay dead. Chivington's men reportedly desecrated the 
bodies of the dead after the massacre, and newspaper reports from 
Denver at the time told of the troops displaying Indian body parts in a 
gruesome display as they rode through the streets of Colorado's largest 
city following the attack.

  The perpetrators of this horrible attack which left Indian women and 
even babies dead, were never brought to justice even after a 
congressional investigation concerning this brutality.
  The legislation I introduce today authorizes the National Park 
Service to enter into negotiations with willing sellers only, in an 
attempt to secure property inside a boundary which encompasses 
approximately 12,470 acres as identified by the National Park Service, 
for a lasting memorial to events of that fateful day.
  This legislation has been developed over the course of the last 18 
months. It represents a remarkable effort which brought divergent 
points of view together to define the events of that day and to plan 
for the future protection of this site. The National Park Service, with 
the cooperation of the Kiowa County Commissioners, the Cheyenne and 
Arapaho Tribes of Oklahoma, the Northern Cheyenne Tribe and the 
Northern Arapaho Tribe, the State of Colorado and many local landowners 
and volunteers have completed extensive cultural, geomorphological and 
physical studies of the area where the massacre occurred.
  All of those involved in this project agree, not acting now is not a 
option. This legislation does not compel any private property owner to 
sell his or her property to the federal government. It allows the 
National Park Service to negotiate with willing sellers to secure 
property at fair market value, for a national memorial. This process 
could take years. However, several willing sellers have come forward 
and are willing to negotiate with the NPS. The property they own has 
been identified by the NPS as suitable for a memorial. Additional 
acquisitions of property from willing sellers could come in the future. 
However, the Sand Creek National Historic Site could never extend 
beyond the 12,470 acres identified by the site resource study already 
completed.
  This legislation has come to being because all of those involved have 
exhibited an extraordinary ability to put aside their differences, look 
with equal measure at the scientific evidence and the oral traditions 
of the Tribes, and come up with a plan that equally honors the memory 
of those killed and the rights of the private property owners who have 
been faithful and responsible stewards of this site. We have a window 
of opportunity here that will not always be available. I encourage my 
colleagues to respect the memory of those so brutally killed and 
support the creation of a National Historic Site on this hallowed 
ground in Kiowa County, in Colorado.
  I ask unanimous consent that the bill and other research material 
associated with the studies of the Sand Creek site be printed in the 
Record for my colleagues or the public to review.
                                 ______
                                 
      By Mr. TORRICELLI:
  S. 2953. A bill to amend title 38, United States Code, to improve 
outreach programs carried out by the Department of Veterans Affairs to 
provide for more fully informing veterans of benefits available to them 
under laws administered by the Secretary of Veterans Affairs; to the 
Committee on Veterans' Affairs.


                    The Veterans' Right to Know Act

  Mr. TORRICELLI: Mr. President, I rise today to introduce the 
Veterans' Right to Know Act which will assist millions of brave 
Americans who have served this nation in times of war. This legislation 
would ensure that all veterans are fully informed of the various 
benefits that they have earned through their brave and dedicated 
service to their country.
  Throughout the history of the United States, the interests of our 
nation have been championed by ordinary citizens who willingly defend 
our nation when called upon. During the times of crisis which 
threatened the very existence of our Republic, we persevered because 
young men and women from all walks of life took up arms to defend the 
ideals by which this nation was founded. Whether it was winning our 
freedom from an oppressive empire, preserving our Union, defeating 
fascism or battling the spread of communism, the American people have 
time and time again answered the call to defend liberty, justice and 
democracy at home and throughout the world.
  Our government owes a debt of gratitude to each and every one of our 
veterans, and we must make a concerted effort to show our appreciation 
for their valiant service. The Department of Veterans Affairs (VA) 
provides the necessary health care services and benefits to our war 
heroes; however, over half of the veterans in the United States are not 
fully aware of the benefits or pensions to which they are entitled.
  The bill I introduced today is straightforward and it does not call 
for the creation of new benefits. Rather, it seeks to ensure that our 
veterans are well informed of the benefits they are entitled to as a 
result of their service or injuries sustained during their service to 
their country.
  This legislation would require the VA to inform veterans about their 
eligibility for benefits and health care services whenever they first 
apply for any benefit with the VA. Furthermore, many times, widows and 
surviving family members of veterans are not aware of the special 
benefits available to them when their family member passes. My bill 
would help these individuals in their time of loss by instructing the 
VA to inform them of the benefits for which they are eligible on the 
passing of their loved one.
  My legislation also seeks to reach out to those veterans who are not 
currently enrolled in the VA system by calling upon the Secretary of 
Veterans Affairs to prepare an annual outreach plan that will encourage 
eligible veterans to register with the VA as well as keeping current 
enrollees aware of any changes to benefits or eligibility requirements.
  This bill will help ensure that our government and its services for 
veterans are there for the men and women who have served this nation in 
the armed forces. I am hopeful that my colleagues in the Senate will 
recognize the tremendous service that our veterans have given and 
support this reasonable measure to ensure that our veterans receive the 
benefits they deserve.
                                 ______
                                 
      By Mr. HOLLINGS (for himself, Ms. Snowe, Mr. Kerrey, Mr. Stevens, 
        Mr. Breaux, and Mr. Cleland):
  S. 2954. A bill to establish the Dr. Nancy Foster Marine Biology 
Scholarship Program; to the Committee on Commerce, Science, and 
Transportation.


                    The Nancy Foster Scholarship Act

  Mr. HOLLINGS. Mr. President, I rise today to introduce the Nancy 
Foster Scholarship Act, legislation to create a scholarship program in 
marine biology or oceanography in honor of Dr. Nancy Foster, head of 
the National Ocean Service at the National Oceanic and Atmospheric 
Administration (NOAA) until her passing on Tuesday, June 27, 2000. I am 
proud to introduce legislation to commemorate the life and work of such 
a wonderful leader, mentor, and coastal advocate. I thank my colleagues 
Senators Snowe, Kerry, Stevens, Breaux, and Cleland for joining me in 
recognizing Dr. Foster's strong commitment to improving the 
conservation and scientific understanding of our precious coastal 
resources.
  My legislation would create a Nancy Foster Marine Biology Scholarship 
Program within the Department of Commerce. This Program would provide 
scholarship funds to outstanding women and minority graduate students 
to support and encourage independent graduate level research in marine 
biology. It is my hope that this scholarship program will promote the 
development of future leaders of Dr. Foster's caliber.

[[Page S7846]]

  Dr. Foster was the first woman to direct a NOAA line office, and 
during her 23 years at NOAA rose to one of the most senior levels a 
career professional can achieve. She directed the complete 
modernization of NOAA's essential nautical mapping and charting 
programs, and created a ground-breaking partnership with the National 
Geographic Society to launch a 5-year undersea exploration program 
called the Sustainable Seas Expedition. Dr. Foster was a strong and 
enthusiastic mentor to young people and a staunch ally to her 
colleagues, and for this reason, I believe the legislation I am 
introducing today to be the most appropriate way for us all to ensure 
that her deep commitment to marine science continues on in others.
  Mr. President, we will all feel Dr. Foster's loss deeply for years to 
come. The creation of a scholarship program in her honor is one small 
way we can thank a person who did so much for us all.
                                 ______
                                 

 By Mr. DeWINE (for himself, Mr. Hatch, Mr. Voinovich, and Mr. Leahy);

  S. 2955. A bill to amend the Internal Revenue Code of 1986 to provide 
relief for the payment of asbestos-related claims; to the Committee on 
Finance.


               asbestos-related claims relief legislation

  Mr. HATCH. Mr. President, I rise today as an original cosponsor of 
the bill introduced today by my friend and colleague from Ohio, Senator 
DeWine, that would provide relief for payment of asbestos-related 
claims.
  I urge my colleagues on the Finance Committee to take a close look at 
the serious problem this bill addresses. Certain manufacturers who were 
required by government specification to use asbestos in their products 
are facing a severe financial crisis arising from claims made by 
individuals who are suffering health problems from asbestos-related 
diseases. These claims have put several of these companies into 
bankruptcy, and several more appear to be on the brink of insolvency. 
Thousands of jobs may be at stake, as may be the proper compensation of 
the victims of the illnesses.
  A major part of the underlying justification for this measure is that 
the federal government shares some culpability in the harm caused by 
the asbestos-related products manufactured by these companies. For 
example, from World War II through the Vietnam War, the government 
required that private contractors and shipyard workers use asbestos to 
insulate navy ships from so-called ``secondary fires.'' Because of 
sovereign immunity, however, the government has not had to share in 
paying the damages, leaving American companies to bear the full and 
ongoing financial load of compensation.
  The legislation we are introducing today is a step toward recognizing 
that the federal government is partially responsible for payment of 
these claims. It does so through two income tax provisions, both of 
which directly benefit the victims of the illnesses.
  The first provision exempts from income tax the income earned by a 
designated or qualified settlement fund established for the principal 
purpose of resolving and satisfying present and future claims relating 
to asbestos illnesses. The effect of this provision, Mr. President, is 
to increase the amount of money available for the payment of these 
claims.
  The second provision allows taxpayers with specified liability losses 
attributable to asbestos to carry back those losses to the tax year in 
which the taxpayer, or its predecessor company, was first involved in 
producing or distributing products containing asbestos.
  This provision is a matter of fairness, Mr. President. Because of the 
long latency period related to asbestos-related diseases, which can be 
as long as 40 years, many of these claims are just now arising. Current 
law provides for the carryback of this kind of liability losses, but 
only for a ten-year period.
  Many of the companies involved earned profits and paid taxes on those 
profits in the years the asbestos-related products were made or 
distributed. However, it is now clear, many years after the taxes were 
paid, that there were no profits earned at all, since millions of 
dollars of health claims relating to those products must now be paid.
  It is only fair, and it is sound tax policy, to allow relief for 
situations like these. Again, it should be emphasized that the primary 
beneficiaries of this tax change will not be the corporations, but the 
victims of the illnesses, because the taxpayer would be required to 
devote the entire amount of the tax reduction to paying the claims.
  This is not the only time the federal government has been at least 
partially responsible for health problems of citizens that arose many 
years after the event that initially triggered the problem. During the 
Cold War, America conducted above ground atomic tests during which the 
wind blew the fallout into communities and ranches of Utah, New Mexico 
and Arizona. The government also demanded quantities of uranium, which 
is harmful to those who mined and milled it. The incidence of cancers 
and other debilitating diseases caused by this activity among the 
``downwinders,'' miners and millers has been acknowledged by the 
federal government.
  The least we can do for those manufacturers forced to use asbestos 
instead of other materials is provide some tax relief for their 
compensation funds.
  This legislation has substantial bipartisan backing. It is sponsored 
in the House by both the Chairman and Ranking Minority Member of the 
Judiciary Committee. It is backed by the by the U.S. Chamber of 
Commerce and by at least one related labor union. This bill addresses a 
very serious problem and is the right thing to do. I hope we can pass 
it expeditiously.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2955

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

     SECTION 1. EXEMPTION FOR ASBESTOS-RELATED SETTLEMENT FUNDS.

       (a) Exemption for Asbestos-Related Settlement Funds.--
     Subsection (b) of section 468B of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     paragraph:
       ``(6) Exemption from tax for asbestos-related designated 
     settlement funds.--Notwithstanding paragraph (1), no tax 
     shall be imposed under this section or any other provision of 
     this subtitle on any designated settlement fund established 
     for the principal purpose of resolving and satisfying present 
     and future claims relating to asbestos.''
       (b) Conforming Amendments.--
       (1) Paragraph (1) of section 468B(b) of the Internal 
     Revenue Code of 1986 is amended by striking ``There'' and 
     inserting ``Except as provided in paragraph (6), there''.
       (2) Subsection (g) of section 468B of such Code is amended 
     by inserting ``(other than subsection (b)(6))'' after 
     ``Nothing in any provision of law''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of 
     enactment of this Act.

     SEC. 2. MODIFY TREATMENT OF ASBESTOS-RELATED NET OPERATING 
                   LOSSES.

       (a) Asbestos-Related Net Operating Losses.--Subsection (f) 
     of section 172 of the Internal Revenue Code of 1986 is 
     amended by redesignating paragraphs (4), (5), and (6) as 
     paragraphs (5), (6), and (7), respectively, and by inserting 
     after paragraph (3) the following new paragraph:
       ``(4) Special rules for asbestos liability losses.--
       ``(A) In general.--At the election of the taxpayer, the 
     portion of any specified liability loss that is attributable 
     to asbestos may, for purposes of subsection (b)(1)(C), be 
     carried back to the taxable year in which the taxpayer, 
     including any predecessor corporation, was first involved in 
     the production or distribution of products containing 
     asbestos and each subsequent taxable year.
       ``(B) Coordination with credits.--If a deduction is 
     allowable for any taxable year by reason of a carryback 
     described in subparagraph (A)--
       ``(i) the credits allowable under part IV (other than 
     subpart C) of subchapter A shall be determined without regard 
     to such deduction, and
       ``(ii) the amount of taxable income taken into account with 
     respect to the carryback under subsection (b)(2) for such 
     taxable year shall be reduced by an amount equal to--

       ``(I) the increase in the amount of such credits allowable 
     for such taxable year solely by reason of clause (i), divided 
     by
       ``(II) the maximum rate of tax under section 1 or 11 
     (whichever is applicable) for such taxable year.

       ``(C) Carryforwards taken into account before asbestos-
     related deductions.--For purposes of this section--
       ``(i) in determining whether a net operating loss 
     carryforward may be carried under subsection (b)(2) to a 
     taxable year, taxable income for such year shall be 
     determined

[[Page S7847]]

     without regard to the deductions referred to in paragraph 
     (1)(A) with respect to asbestos, and
       ``(ii) if there is a net operating loss for such year after 
     taking into account such carryforwards and deductions, the 
     portion of such loss attributable to such deductions shall be 
     treated as a specified liability loss that is attributable to 
     asbestos.
       ``(D) Limitation.--The amount of reduction in income tax 
     liability arising from the election described in subparagraph 
     (A) that exceeds the amount of reduction in income tax 
     liability that would have resulted if the taxpayer utilized 
     the 10-year carryback period under subsection (b)(1)(C) shall 
     be devoted by the taxpayer solely to asbestos claimant 
     compensation and related costs, through a designated 
     settlement fund or otherwise.
       ``(E) Consolidated groups.--For purposes of this paragraph, 
     all members of an affiliated group of corporations that join 
     in the filing of a consolidated return pursuant to section 
     1501 (or a predecessor section) shall be treated as 1 
     corporation.
       ``(F) Predecessor corporation.--For purposes of this 
     paragraph, a predecessor corporation shall include a 
     corporation that transferred or distributed assets to the 
     taxpayer in a transaction to which section 381(a) applies or 
     that distributed the stock of the taxpayer in a transaction 
     to which section 355 applies.''
       (b) Conforming Amendment.--Paragraph (7) of section 172(f) 
     of the Internal Revenue Code of 1986, as redesignated by this 
     section, is amended by striking ``10-year''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of 
     enactment of this Act.
                                 ______
                                 
      By Mr. CAMPBELL:
  S. 2956. A bill to establish the Colorado Canyons National 
Conservation Area and the Black Ridge Canyons Wilderness, and for other 
purposes; to the Committee on Energy and Natural Resources.


               colorado canyons preservation act of 2000

  Mr. CAMPBELL. Mr. President, today I introduce legislation which 
would preserve over 130,000 acres of land in Western Colorado. This 
legislation is supported locally by property owners, county 
commissioners, environmentalists, and recreational groups. My bill is a 
Senate companion to H.R. 4275 which was introduced by my colleague and 
fellow Coloradan Representative Scott McInnis.
  The areas proposed for Wildernesss Protection are the Black Ridge and 
Ruby Canyons of the Grand Valley and Rabbit Valley near Grand Junction, 
Colorado. They contain unique and valuable scenic, recreational, 
multiple use, paleontological, natural, and wildlife components. This 
historic rural western setting provides extensive opportunities for 
recreational activities, and are publicly used for hiking, camping, and 
grazing. This area is truly worthy of additional protection as a 
national conservation area.
  This legislation has the support of the administration and should 
easily be signed into law. The only issue confronting us is the limited 
amount of time left in the 106th Congress. I hope we will be able to 
move this legislation quickly through the process and that it will not 
get bogged down in partisan politics. It simply is the right thing to 
do.
  I ask unanimous consent that the bill be printed in the Record 
following my remarks.
  Thank you, Mr. President. I yield the floor.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2956

       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 ``Colorado Canyons National 
     Conservation Area and Black Ridge Canyons Wilderness Act of 
     2000''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds that certain areas located in 
     the Grand Valley in Mesa County, Colorado, and Grand County, 
     Utah, should be protected and enhanced for the benefit and 
     enjoyment of present and future generations. These areas 
     include the following:
       (1) The areas making up the Black Ridge and Ruby Canyons of 
     the Grand Valley and Rabbit Valley, which contain unique and 
     valuable scenic, recreational, multiple use opportunities 
     (including grazing), paleontological, natural, and wildlife 
     components enhanced by the rural western setting of the area, 
     provide extensive opportunities for recreational activities, 
     and are publicly used for hiking, camping, and grazing, and 
     are worthy of additional protection as a national 
     conservation area.
       (2) The Black Ridge Canyons Wilderness Study Area has 
     wilderness value and offers unique geological, 
     paleontological, scientific, and recreational resources.
       (b) Purpose.--The purpose of this Act is to conserve, 
     protect, and enhance for the benefit and enjoyment of present 
     and future generations the unique and nationally important 
     values of the public lands described in section 4(b), 
     including geological, cultural, paleontological, natural, 
     scientific, recreational, environmental, biological, 
     wilderness, wildlife education, and scenic resources of such 
     public lands, by establishing the Colorado Canyons National 
     Conservation Area and the Black Ridge Canyons Wilderness in 
     the State of Colorado and the State of Utah.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Conservation area.--The term ``Conservation Area'' 
     means the Colorado Canyons National Conservation Area 
     established by section 4(a).
       (2) Council.--The term ``Council'' means the Colorado 
     Canyons National Conservation Area Advisory Council 
     established under section 8.
       (3) Management plan.--The term ``management plan'' means 
     the management plan developed for the Conservation Area under 
     section 6(h).
       (4) Map.--The term ``Map'' means the map entitled 
     ``Proposed Colorado Canyons National Conservation Area and 
     Black Ridge Canyons Wilderness Area'' and dated July 18, 
     2000.
       (5) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior, acting through the Director of the Bureau of 
     Land Management.
       (6) Wilderness.--The term ``Wilderness'' means the Black 
     Ridge Canyons Wilderness so designated in section 5.

     SEC. 4. COLORADO CANYONS NATIONAL CONSERVATION AREA.

       (a) In General.--There is established the Colorado Canyons 
     National Conservation Area in the State of Colorado and the 
     State of Utah.
       (b) Areas Included.--The Conservation Area shall consist of 
     approximately 122,300 acres of public land as generally 
     depicted on the Map.

     SEC. 5. BLACK RIDGE CANYONS WILDERNESS DESIGNATION.

       Certain lands in Mesa County, Colorado, and Grand County, 
     Utah, which comprise approximately 75,550 acres as generally 
     depicted on the Map, are hereby designated as wilderness and 
     therefore as a component of the National Wilderness 
     Preservation System. Such component shall be known as the 
     Black Ridge Canyons Wilderness.

     SEC. 6. MANAGEMENT.

       (a) Conservation Area.--The Secretary shall manage the 
     Conservation Area in a manner that--
       (1) conserves, protects, and enhances the resources of the 
     Conservation Area specified in section 2(b); and
       (2) is in accordance with--
       (A) the Federal Land Policy and Management Act of 1976 (43 
     U.S.C. 1701 et seq.); and
       (B) other applicable law, including this Act.
       (b) Uses.--The Secretary shall allow only such uses of the 
     Conservation Area as the Secretary determines will further 
     the purposes for which the Conservation Area is established.
       (c) Withdrawals.--Subject to valid existing rights, all 
     Federal land within the Conservation Area and the Wilderness 
     and all land and interests in land acquired for the 
     Conservation Area or the Wilderness by the United States are 
     withdrawn from--
       (1) all forms of entry, appropriation, or disposal under 
     the public land laws;
       (2) location, entry, and patent under the mining laws; and
       (3) the operation of the mineral leasing, mineral 
     materials, and geothermal leasing laws, and all amendments 
     thereto.
     Nothing in this subsection shall be construed to affect 
     discretionary authority of the Secretary under other Federal 
     laws to grant, issue, or renew rights-of-way or other land 
     use authorizations consistent with the other provisions of 
     this Act.
       (d) Off-Highway Vehicle Use.--
       (1) In general.--Except as provided in paragraph (2), use 
     of motorized vehicles in the Conservation Area--
       (A) before the effective date of a management plan under 
     subsection (h), shall be allowed only on roads and trails 
     designated for use of motor vehicles in the management plan 
     that applies on the date of the enactment of this Act to the 
     public lands in the Conservation Area; and
       (B) after the effective date of a management plan under 
     subsection (h), shall be allowed only on roads and trails 
     designated for use of motor vehicles in that management plan.
       (2) Administrative and emergency response use.--Paragraph 
     (1) shall not limit the use of motor vehicles in the 
     Conservation Area as needed for administrative purposes or to 
     respond to an emergency.
       (e) Wilderness.--Subject to valid existing rights, lands 
     designated as wilderness by this Act shall be managed by the 
     Secretary, as appropriate, in accordance with the Wilderness 
     Act (16 U.S.C. 1131 et seq.) and this Act, except that, with 
     respect to any wilderness areas designated by this Act, any 
     reference in the Wilderness Act to the effective date of the 
     Wilderness Act shall be deemed to be a reference to the date 
     of the enactment of this Act.
       (f) Hunting, Trapping, and Fishing.--
       (1) In general.--Hunting, trapping, and fishing shall be 
     allowed within the Conservation Area and the Wilderness in 
     accordance

[[Page S7848]]

     with applicable laws and regulations of the United States and 
     the States of Colorado and Utah.
       (2) Area and time closures.--The head of the Colorado 
     Division of Wildlife (in reference to land within the State 
     of Colorado), the head of the Utah Division of Wildlife (in 
     reference to land within the State of Utah), or the Secretary 
     after consultation with the Colorado Division of Wildlife (in 
     reference to land within the State of Colorado) or the head 
     of the Utah Division of Wildlife (in reference to land within 
     the State of Utah), may issue regulations designating zones 
     where, and establishing limited periods when, hunting, 
     trapping, or fishing shall be prohibited in the Conservation 
     Area or the Wilderness for reasons of public safety, 
     administration, or public use and enjoyment.
       (g) Grazing.--
       (1) In general.--Except as provided by paragraph (2), the 
     Secretary shall issue and administer any grazing leases or 
     permits in the Conservation Area and the Wilderness in 
     accordance with the same laws (including regulations) and 
     Executive orders followed by the Secretary in issuing and 
     administering grazing leases and permits on other land under 
     the jurisdiction of the Bureau of Land Management.
       (2) Grazing in wilderness.--Grazing of livestock in the 
     Wilderness shall be administered in accordance with the 
     provisions of section 4(d)(4) of the Wilderness Act (16 
     U.S.C. 1133(d)(4)), in accordance with the guidelines set 
     forth in Appendix A of House Report 101-405 of the 101st 
     Congress.
       (h) Management Plan.--
       (1) In general.--Not later than 3 years after the date of 
     the enactment of this Act, the Secretary shall develop a 
     comprehensive management plan for the long-range protection 
     and management of the Conservation Area and the Wilderness 
     and the lands described in paragraph (2)(E).
       (2) Purposes.--The management plan shall--
       (A) describe the appropriate uses and management of the 
     Conservation Area and the Wilderness;
       (B) take into consideration any information developed in 
     studies of the land within the Conservation Area or the 
     Wilderness;
       (C) provide for the continued management of the utility 
     corridor, Black Ridge Communications Site, and the Federal 
     Aviation Administration site as such for the land designated 
     on the Map as utility corridor, Black Ridge Communications 
     Site, and the Federal Aviation Administration site;
       (D) take into consideration the historical involvement of 
     the local community in the interpretation and protection of 
     the resources of the Conservation Area and the Wilderness, as 
     well as the Ruby Canyon/Black Ridge Integrated Resource 
     Management Plan, dated March 1998, which was the result of 
     collaborative efforts on the part of the Bureau of Land 
     Management and the local community; and
       (E) include all public lands between the boundary of the 
     Conservation Area and the edge of the Colorado River and, on 
     such lands, the Secretary shall allow only such recreational 
     or other uses as are consistent with this Act.
       (i) No Buffer Zones.--The Congress does not intend for the 
     establishment of the Conservation Area or the Wilderness to 
     lead to the creation of protective perimeters or buffer zones 
     around the Conservation Area or the Wilderness. The fact that 
     there may be activities or uses on lands outside the 
     Conservation Area or the Wilderness that would not be allowed 
     in the Conservation Area or the Wilderness shall not preclude 
     such activities or uses on such lands up to the boundary of 
     the Conservation Area or the Wilderness consistent with other 
     applicable laws.
       (j) Acquisition of Land.--
       (1) In general.--The Secretary may acquire non-federally 
     owned land within the exterior boundaries of the Conservation 
     Area or the Wilderness only through purchase from a willing 
     seller, exchange, or donation.
       (2) Management.--Land acquired under paragraph (1) shall be 
     managed as part of the Conservation Area or the Wilderness, 
     as the case may be, in accordance with this Act.
       (k) Interpretive Facilities or Sites.--The Secretary may 
     establish minimal interpretive facilities or sites in 
     cooperation with other public or private entities as the 
     Secretary considers appropriate. Any facilities or sites 
     shall be designed to protect the resources referred to in 
     section 2(b).
       (l) Water Rights.--
       (1) Findings.--Congress finds that--
       (A) the lands designated as wilderness by this Act are 
     located at the headwaters of the streams and rivers on those 
     lands, with few, if any, actual or proposed water resource 
     facilities located upstream from such lands and few, if any, 
     opportunities for diversion, storage, or other uses of water 
     occurring outside such lands that would adversely affect the 
     wilderness or other values of such lands;
       (B) the lands designated as wilderness by this Act 
     generally are not suitable for use for development of new 
     water resource facilities, or for the expansion of existing 
     facilities;
       (C) it is possible to provide for proper management and 
     protection of the wilderness and other values of such lands 
     in ways different from those utilized in other legislation 
     designating as wilderness lands not sharing the attributes of 
     the lands designated as wilderness by this Act.
       (2) Statutory construction.--
       (A) Nothing in this Act shall constitute or be construed to 
     constitute either an express or implied reservation of any 
     water or water rights with respect to the lands designated as 
     a national conservation area or as wilderness by this Act.
       (B) Nothing in this Act shall affect any conditional or 
     absolute water rights in the State of Colorado existing on 
     the date of the enactment of this Act.
       (C) Nothing in this subsection shall be construed as 
     establishing a precedent with regard to any future national 
     conservation area or wilderness designations.
       (D) Nothing in this Act shall be construed as limiting, 
     altering, modifying, or amending any of the interstate 
     compacts or equitable apportionment decrees that apportion 
     water among and between the State of Colorado and other 
     States.
       (3) Colorado water law.--The Secretary shall follow the 
     procedural and substantive requirements of the law of the 
     State of Colorado in order to obtain and hold any new water 
     rights with respect to the Conservation Area and the 
     Wilderness.
       (4) New projects.--
       (A) As used in this paragraph, the term ``water resource 
     facility'' means irrigation and pumping facilities, 
     reservoirs, water conservation works, aqueducts, canals, 
     ditches, pipelines, wells, hydropower projects, and 
     transmission and other ancillary facilities, and other water 
     diversion, storage, and carriage structures. Such term does 
     not include any such facilities related to or used for the 
     purpose of livestock grazing.
       (B) Except as otherwise provided by section 6(g) or other 
     provisions of this Act, on and after the date of the 
     enactment of this Act, neither the President nor any other 
     officer, employee, or agent of the United States shall fund, 
     assist, authorize, or issue a license or permit for the 
     development of any new water resource facility within the 
     wilderness area designated by this Act.
       (C) Except as provided in this paragraph, nothing in this 
     Act shall be construed to affect or limit the use, operation, 
     maintenance, repair, modification, or replacement of water 
     resource facilities in existence on the date of the enactment 
     of this Act within the boundaries of the Wilderness.
       (5) Boundaries along colorado river.--(A) Neither the 
     Conservation Area nor the Wilderness shall include any part 
     of the Colorado River to the 100-year high water mark.
       (B) Nothing in this Act shall affect the authority that the 
     Secretary may or may not have to manage recreational uses on 
     the Colorado River, except as such authority may be affected 
     by compliance with paragraph (3). Nothing in this Act shall 
     be construed to affect the authority of the Secretary to 
     manage the public lands between the boundary of the 
     Conservation Area and the edge of the Colorado River.
       (C) Subject to valid existing rights, all lands owned by 
     the Federal Government between the 100-year high water mark 
     on each shore of the Colorado River, as designated on the Map 
     from the line labeled ``Line A'' on the east to the boundary 
     between the States of Colorado and Utah on the west, are 
     hereby withdrawn from--
       (i) all forms of entry, appropriation, or disposal under 
     the public land laws;
       (ii) location, entry, and patent under the mining laws; and
       (iii) the operation of the mineral leasing, mineral 
     materials, and geothermal leasing laws.

     SEC. 7. MAPS AND LEGAL DESCRIPTIONS.

       (a) In General.--As soon as practicable after the date of 
     the enactment of this Act, the Secretary shall submit to 
     Congress a copy of the Map and a legal description of the 
     Conservation Area and of the Wilderness.
       (b) Force and Effect.--The Map and legal descriptions shall 
     have the same force and effect as if included in this Act, 
     except that the Secretary may correct clerical and 
     typographical errors in the Map and the legal descriptions.
       (c) Public Availability.--Copies of the Map and the legal 
     descriptions shall be on file and available for public 
     inspection in--
       (1) the Office of the Director of the Bureau of Land 
     Management;
       (2) the Grand Junction District Office of the Bureau of 
     Land Management in Colorado;
       (3) the appropriate office of the Bureau of Land Management 
     in Colorado, if the Grand Junction District Office is not 
     deemed the appropriate office; and
       (4) the appropriate office of the Bureau of Land Management 
     in Utah.
       (d) Map Controlling.--Subject to section 6(l)(3), in the 
     case of a discrepancy between the Map and the descriptions, 
     the Map shall control.

     SEC. 8. ADVISORY COUNCIL.

       (a) Establishment.--Not later than 6 months after the date 
     of the enactment of this Act, the Secretary shall establish 
     an advisory council to be known as the ``Colorado Canyons 
     National Conservation Area Advisory Council''.
       (b) Duty.--The Council shall advise the Secretary with 
     respect to preparation and implementation of the management 
     plan, including budgetary matters, for the Conservation Area 
     and the Wilderness.
       (c) Applicable Law.--The Council shall be subject to--
       (1) the Federal Advisory Committee Act (5 U.S.C. App.); and
       (2) the Federal Land Policy and Management Act of 1976 (43 
     U.S.C. 1701 et seq.).

[[Page S7849]]

       (d) Members.--The Council shall consist of 10 members to be 
     appointed by the Secretary including, to the extent 
     practicable:
       (1) A member of or nominated by the Mesa County Commission.
       (2) A member nominated by the permittees holding grazing 
     allotments within the Conservation Area or the Wilderness.
       (3) A member of or nominated by the Northwest Resource 
     Advisory Council.
       (4) Seven members residing in, or within reasonable 
     proximity to, Mesa County, Colorado, with recognized 
     backgrounds reflecting--
       (A) the purposes for which the Conservation Area or 
     Wilderness was established; and
       (B) the interests of the stakeholders that are affected by 
     the planning and management of the Conservation Area and the 
     Wilderness.

     SEC. 9. PUBLIC ACCESS.

       (a) In General.--The Secretary shall continue to allow 
     private landowners reasonable access to inholdings in the 
     Conservation Area and Wilderness.
       (b) Glade Park.--The Secretary shall continue to allow 
     public right of access, including commercial vehicles, to 
     Glade Park, Colorado, in accordance with the decision in 
     Board of County Commissioners of Mesa County v. Watt (634 F. 
     Supp. 1265 (D.Colo.; May 2, 1986)).
                                 ______
                                 
      By Mr. ROTH:
  S. 2957. A bill to amend title XVIII of the Social Security Act to 
preserve coverage of drugs and biologicals under part B of the medicare 
program; to the Committee on Finance.


               medicare self-administered medications act

  Mr. ROTH. Mr. President, today I am introducing a bill to address a 
serious problem regarding Medicare's treatment of self-injectable 
drugs. Section 1862(s) of the Social Security Act defines covered 
``medical and other health services'' for purposes of coverage under 
Medicare Part B. Included in the definition are:

       (2)(A) services and supplies (including drugs and 
     biologicals which cannot, as determined in accordance with 
     regulations, be self-administered) furnished as incident to a 
     physician's professional service, of kinds which are commonly 
     furnished in physicians' offices and are commonly either 
     rendered without charge or included in the physicians' bills 
     . . .

  Regulations at 42 C.F.R. 410.29 provide further limitations on drugs 
and biologicals, but they do not define the phrase ``cannot be self-
administered.'' Individual Medicare carriers have reportedly applied 
different policies when considering whether a drug or biological can or 
cannot be self-administered. Some carriers have based the determination 
on the typical means of administration while others have assessed the 
individual patient's ability to administer the drug.
  On August 13, 1997, HCFA issued a memorandum to Medicare carriers 
which was intended to clarify program policy. The memorandum stated 
that the inability to self-administer is to be based on the typical 
means of administration of the drug, not on the individual patient's 
ability to administer the drug. The memorandum stated that: ``The 
individual patient's mental or physical ability to administer any drug 
is not a consideration for this purpose.''
  As a result of this memorandum, certain patients, for example 
patients with multiple sclerosis or some forms of cancer, no longer had 
Medicare coverage for certain drugs. However, implementation of this 
policy directive has been halted for FY2000. On November 29, 1999, the 
President signed into law the Consolidated Appropriations Act for 2000. 
Section 219 of General Provisions in Title II, Department of Health and 
Human Services contains a provision relating to the memorandum. The 
provision prohibits the use of any funds to carry out the August 13, 
1997, transmittal or to promulgate any regulation or other transmittal 
or policy directive that has the effect of imposing (or clarifying the 
imposition of ) a restriction on the coverage of injectable drugs 
beyond those applied on the day before issuance of the transmittal.
  The definition of covered services continues to be of concern to 
policymakers. On March 23, 2000, the House Commerce Committee, 
Subcommittee on Health & Environment held a hearing on this issue. I 
understand that there was a very productive discussion of other policy 
options during the question and answer period. One witness, Dr. Earl 
Steinberg of Johns Hopkins University, suggested having the 
beneficiary's physician determine whether a medication can or cannot be 
self-injected. The bill I am introducing today follows that expert 
advice and introduces the judgment of the physician into the decision 
process.
  On May 17, 2000 I sent a letter to HCFA Administrator DeParle, 
requesting her serious attention to this problem. I went further to ask 
her to propose an administrative remedy for the inequity that existed. 
In her reply, she stated that she was ``very troubled by the 
predicament of beneficiaries whose drugs are not covered under the 
law.'' But it is clear from Administrator DeParle's letter, that 
without legislative authority there is only a limited amount HCFA will 
do to address this problem.
  The bill I am introducing today allows a Medicare beneficiary's own 
physician to make the determination of whether the beneficiary can or 
cannot administer their medication. I would ask for my colleagues' 
support in this legislation. This issue is of vital importance to some 
of our most gravely ill Medicare beneficiaries. These beneficiaries, 
many with advanced cases of multiple sclerosis or cancer, deserve our 
help and they deserve it today. I ask consent that the full text be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2957

       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 ``Medicare Self-Administered 
     Medications Act of 2000''.

     SEC. 2. PRESERVATION OF COVERAGE OF DRUGS AND BIOLOGICALS 
                   UNDER PART B OF THE MEDICARE PROGRAM.

       (a) In General.--Section 1861(s)(2) of the Social Security 
     Act (42 U.S.C. 1395x(s)(2)) is amended, in each of 
     subparagraphs (A) and (B), by striking ``(including drugs and 
     biologicals which cannot, as determined in accordance with 
     regulations, be self-administered)'' and inserting 
     ``(including drugs and biologicals for which the usual method 
     of administration of the form of drug or biological is not 
     patient self-administration or, in the case of injectable 
     drugs and biologicals, for which the physician determines 
     that self-administration is not medically appropriate)''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to drugs and biologicals administered on or after 
     October 1, 2000.
                                 ______
                                 
      By Mr. SANTORUM:
  S. 2958. A bill to establish a national clearinghouse for youth 
entrepreneurship education, and for other purposes; to the Committee on 
Health, Education, Labor, and Pensions.


    youth entrepreneurship clearinghouse and curriculum-based youth 
                            entrepreneurship

  Mr. SANTORUM. Mr. President, today I am introducing legislation to 
empower at-risk youths and their communities. My legislation would 
establish a national youth entrepreneurship clearinghouse and permit 
curriculum-based youth entrepreneurship education as an allowable use 
of funds. Only curriculum-based youth entrepreneurship programs that 
demonstrate success in equipping disadvantaged youth with applied math 
and other analytical skills would be eligible for assistance under this 
measure. Students who participate in these programs learn basic 
entrepreneurial skills and gain a better understanding of the 
relationship between the subjects they learn in their classrooms and 
the business world. By teaching students practical skills needed to 
establish and maintain thriving entrepreneurial projects, the programs 
empower students and prepare them for future endeavors as contributing 
members of their communities. My legislation will instill pride in at-
risk youths by providing them with the opportunity to improve their 
surroundings, while they explore and learn about the many career 
choices available to them in the business world.
  I am pleased that this measure was included in the Elementary and 
Secondary Education Reauthorization bill passed by the House of 
Representatives, and it is my hope that we can facilitate its passage 
in the Senate and move closer to providing significant and meaningful 
initiatives for our children in need.
                                 ______
                                 
      By Mr. WYDEN:
  S. 2960. A bill to provide for qualified withdrawals from the Capital 
Construction Fund (CCF) for fishermen leaving the industry and for the 
rollover of Capital Construction Funds to

[[Page S7850]]

individual retirement plans; to the Committee on Finance.


                the capital construction fund reform act

  Mr. WYDEN. Mr. President, I am pleased today to introduce the Capital 
Construction Fund Reform Act of 2000.
  The Capital Construction Fund (CCF) was originally created by the 
Merchant Marine Act as a way to encourage the construction and use of 
American-owned vessels in U.S. waters. For fishermen, the Capital 
Construction Fund authorizes the accumulation of funds, free from 
taxes, for the purpose of buying or refitting commercial fishing 
vessels. The program has been a success in promoting the domestic 
fishing industry. However, the usefulness of the CCF has not kept up 
with the times. Today it is actually exacerbating the problems facing 
U.S. fisheries by forcing fishermen to keep their money in fishing 
vessels, rather than allowing them to retire from fishing and pursue 
other interests.
  Our nation's fisheries are collapsing. Over the past year, fisheries 
in New England, Alaska and the West Coast have been officially declared 
disasters by the Secretary of Commerce. Plainly speaking, there are too 
many boats and not enough fish. Along the West Coast, a mere 200 of the 
1400 boats currently fishing could catch the entire allowable harvest 
of groundfish. That means we could buyout 85 percent of the boats and 
still not reduce capacity in our fisheries. Since 1995, Congress has 
appropriated $140 million to buy fishing vessels and permits back from 
fishermen. Clearly, more needs to be done. This legislation empowers 
the fisherman to make his own choices to stay or leave the fishery with 
his own money.
  In these times when we ought to be reducing the number of boats in 
our fisheries, it does not make sense for federal policy to encourage 
fishermen to build more of them. Yet current law prohibits fishermen 
from getting their own money out of CCF accounts for any purpose other 
than building boats. If they do, they lose up to 70 percent of their 
money in taxes and penalties. When fishermen have already been hit with 
increasingly severe harvest restrictions over the past few years, it is 
just not fair to hold their own money hostage.
  That is why I'm introducing a bill that makes it easier for fishermen 
to withdraw their funds from the Capital Construction Fund if they 
retire from the fishery. My bill would allow fund holders to roll their 
funds over into an Individual Retirement Account (IRA) or other 
retirement fund. It would also allow them to use their own money to 
participate in buyback programs. This bill also eliminates the tax-
penalty for withdrawals for those folks wishing to leave the industry.
  Mr. President, this bill enjoys wide support from a variety of 
organizations with an interest in our nation's fisheries. Environmental 
groups, trawlers, small boat operators and processors alike have 
expressed their enthusiasm for this legislation. I urge my colleagues 
to support the swift adoption of this bill so that our fisherman can 
start making their own choices about their businesses and lives.
  I ask unanimous consent that my statement and the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2960

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

     SECTION 1. SHORT TITLE

       The Act may be cited as ``The Capital Construction Fund 
     (CCF) Qualified Withdrawal Act of 2000''.

     SECTION 2. EXPANSION OF PURPOSES OF THE CAPITAL CONSTRUCTION 
                   FUND BY AMENDING THE MERCHANT MARINE ACT OF 
                   1936

       Section 607(a) of the Merchant Marine Act, 1936 (46 U.S.C. 
     App. 1177(a)) is amended by striking ``of this section.'' and 
     inserting ``of this section. Any agreement entered into under 
     this section may be modified for the purpose of encouraging 
     the sustainability of the fisheries of the United States by 
     making the termination and withdrawal of a capital 
     construction fund account a qualified withdrawal if done in 
     exchange for the retirement of the related commercial fishing 
     vessels and related commercial fishing permits.''

     SECTION 3. NEW QUALIFIED WITHDRAWALS

       (a) Amendments to Merchant Marine Act of 1936.--Section 
     607(f)(1) of the Merchant Marine Act of 1936 (46 U.S.C. App. 
     1177(f)(1)) is amended:
       (1) in subparagraph (B) by striking ``vessel, or'' and 
     inserting ``vessel,''
       (2) in subparagraph (C) by striking ``vessel.'' and 
     inserting ``vessel,''
       (3) by inserting after subparagraph (C) the following new 
     subparagraphs:
       ``(D) the payment of an industry fee authorized by the 
     fishing capacity reduction program, 16 U.S.C. 1861,
       ``(E) in the case of any such person or shareholder for 
     whose benefit such fund was established, a rollover 
     contribution (within the meaning of section 408(d)(3) of the 
     Internal Revenue Code of 1986) to such person's individual 
     retirement plan (as defined in section 7701(a)(37) of such 
     Code), or
       ``(F) (i) for the payment to a corporation or person 
     terminating a capital construction fund and retiring related 
     commercial fishing vessels and permits.
       (ii) The Secretary by regulation shall establish procedures 
     to ensure that any person making a qualified withdrawal 
     authorized by (F)(i) retires the related commercial use of 
     fishing vessels and commercial fishery permits.''
       (b) Amendments to Internal Revenue Code of 1986.--Section 
     7518(e)(1) of the Internal Revenue Code of 1986 (relating to 
     purposes of qualified withdrawals) is amended by inserting 
     after subparagraph (C) the following new subparagraphs:
       ``(D) the payment of an industry fee authorized by the 
     fishing capacity reduction program, 16 U.S.C. 1861.
       ``(E) in the case of any such person or shareholder for 
     whose benefit such fund was established, a rollover 
     contribution (within the meaning of section 408(d)(3) of the 
     Internal Revenue Code of 1986) to such person's individual 
     retirement plan (as defined in section 7701(a)(37) of such 
     Code), or
       ``(F)(i) for the payment to a corporation or person 
     terminating a capital construction fund and retiring related 
     commercial fishing vessels and permits.
       (ii) The Secretary by regulation shall establish procedures 
     to ensure that any person making a qualified withdrawal 
     authorized by (F)(i) retires the related commercial use of 
     fishing vessels and commercial fishery permits.''
                                 ______
                                 
      By Mr. SMITH of New Hampshire:
  S. 2962. A bill to amend the Clean Air Act to address problems 
concerning methyl tertiary butyl ether, and for other purposes; to the 
Committee on Environment and Public Works.


               THE FEDERAL REFORMULATED FUELS ACT OF 2000

  Mr. SMITH of New Hampshire. Mr. President, today I have introduced 
legislation, S. 2962, which I believe will deal once and for all with 
the MTBE problem that is facing us all across America, specifically New 
England. In the Northeast, as well as California and other areas of the 
country, we are beginning to see evidence of MTBE in ground water. This 
is a serious environmental problem that must be addressed. It is 
certainly a problem in New Hampshire.
  I rise today to speak for my constituents in New Hampshire who are 
now having their wells, several a week by the way, being contaminated 
by MTBE. This is my home State. This is a serious problem there. I am 
here to offer this legislation to help my constituents in New Hampshire 
get relief from MTBE, which is a pollutant in their wells. But I am 
also here to speak for all Americans across the country who have MTBE 
in their wells, whether they be in California or New Hampshire.
  MTBE has done more damage to our drinking water than we would care to 
know. MTBE has been a component of our fuel supply for over two 
decades. In 1990, we amended the Clean Air Act to include a clean 
gasoline program. Unfortunately, we did not look at the science that 
was probably more evident than not. Because we did not look at that 
science, we have now created another environmental problem of a huge 
magnitude, which is probably going to cost billions of dollars to clean 
up. If there is a moral here, or lesson, it should be: Use good 
science. Look carefully before you leap into some of these 
environmental dilemmas.
  That program in the 1990 Clean Air Act amendment mandated use of 2 
percent oxygen in the gas, by weight. In other words, 2 percent of the 
weight of a gallon of gasoline should be oxygen. That was put in the 
fuel.
  MTBE was one of two options that could be used. The problem with MTBE 
is that it has this ability to migrate through the ground very quickly 
and then into the water table. What is MTBE? It is an ether, and in the 
event of a leak or gas spill, the MTBE will separate from the gas and 
migrate through the ground very quickly. The real problem starts when 
MTBE finds its way into the ground water, which it frequently does.

[[Page S7851]]

  Several States have had gasoline leaks, or spills, that led to the 
closure of wells because of MTBE. It smells. It tastes horrible. It is 
not the kind of thing you want to see come out of your shower or your 
faucet when you are ready to use your water. This is a serious problem. 
Some have made light of it, frankly, in this body, in the sense that 
maybe it is not such a serious problem and maybe we should look at some 
other alternatives other than banning it. But we need to ban MTBE. The 
legislation I am introducing today will do that. It does it in a 
responsible manner, which I will explain.
  Several States have had these leaks or spills, as I said. So this 
bill will address the problems associated with MTBE, but--and this is a 
very important point--will not reduce any of the environmental benefits 
of the clean air program. That cannot be said with every option that 
has been presented on this issue. Again, we can ban MTBE, but we will 
not reduce any environmental benefit that the MTBE has brought to clean 
the air and that is important.
  Briefly, this bill will allow the Governor of any State to waive the 
gasoline oxygen requirement of the Clean Air Act--waive it. But it will 
preserve the environmental benefits. It will also grant the State and 
the Federal Government authority to ban MTBE. It authorizes an 
additional $200 million out of the Leaking Underground Storage Tank 
Fund to clean up MTBE where these wells have been contaminated because 
of these leaking tanks. In other words, if we could repair those 
leaking tanks, we are going to cut back on the amount of problems we 
are going to have in the future. So it is important we have this as 
part of the legislation to get the money there to fix these tanks, to 
cut back on the amount of MTBE that gets into the ground water. If it 
does not leak out of the tank, the gasoline tank, it will not get into 
the ground water. But it is leaking out of tanks and we have to fix it.

  The bill also authorizes an extensive study of numerous environmental 
consequences of our current fuel use. It was my hope to have marked up 
and sent to the floor from the Environment and Public Works Committee, 
which I chair, a bill this past week. In fact, it was our goal to do it 
yesterday, but we could not get the parties together who I needed to 
make this bill a reality, in the sense that it would pass. We could 
have introduced a bill, could have marked a bill, perhaps, but it would 
not have passed because we would not have the support. This problem is 
too serious to play politics.
  MTBE is a pollutant in our wells. We need to get it out. We have to 
have legislation to do it and it has to pass. There is no point 
introducing a bill that will not pass. There are people who are dug in 
on all sides of this issue for various reasons. But the point is, we 
need to compromise. We all cannot get what we want, but the end result 
must be that we get MTBE out of our ground water. That is the bottom 
line.
  So I agreed, reluctantly, but I agreed, in the interests of working 
together with my colleagues, to hold off until September in order to 
resolve the few remaining issues, but I intend to hold that markup in 
September. In fact, the specific date is September 7. In that 
legislation that we mark up, we will ban MTBE.
  The issues that are in this legislation include the treatment of 
ethanol. I am pleased with the recent progress we have made on this. 
But there is a serious problem that we have to deal with, those who 
advocate more ethanol in fuel. I expect these issues to be resolved. We 
are working behind the scenes very hard to resolve these issues before 
the September 7 markup. It will give the staff something to do during 
the August recess. I know they will work out the details. But I thank 
the many Senators on both sides of the aisle I have been working with 
very closely to resolve these issues. This is a tough, tough issue, and 
it is hard to get agreement. Everybody is not going to get what they 
want, but the bottom line is, we have to get MTBE out of the water.
  Let me address the ethanol issue for a moment. Some weeks ago I 
circulated a draft that included a clean alternative fuels program. 
This is a very complex issue. What are alternative fuels? It could be 
premium gasoline. It could be natural gas. It could be electricity. It 
could be fuel cells. It could be ethanol. But if you say ``renewable 
fuels,'' then you are talking for the most part only ethanol. So when 
we are talking alternative fuels, what alternatives do we have to MTBE 
that would help us meet these requirements in the Clean Air Act? This 
has proven to be a good step toward addressing the ethanol question.
  The program will also enhance the development of cleaner and more 
efficient cars which will help with the Clean Air Act issues as well. 
There has been growing support for this alternative fuels approach 
since the time we first brought this up. We do not want to create more 
MTBE problems. We do not want to create dirtier air by eliminating MTBE 
because we created dirty water by putting MTBEs in gasoline.

  So last week in an effort, again, to reach out, I received a letter 
supporting that approach from 32 States represented by air quality 
planners in the northeastern States and the Governors' Ethanol 
Coalition. So for the first time we now have ethanol, and the 
Northeast, you have specific problems here with the MTBE issue, 
talking, working together, and, as we said, from this letter of support 
from 32 States, they support this approach.
  We have not dotted every ``i'' and crossed every ``t'' yet, but in 
concept they support the approach.
  The bill I am offering today, while that bill does not include the 
exact language they are talking about in that letter--and I want to 
make that clear--it is a bridge. It is a bridge from where my 
legislation is to where they are. Actually, simultaneously to the bill 
I have introduced, I have also offered an amendment No. 4026, which 
crosses that bridge. I have introduced what I would like to have, what 
I believe is the most cost-effective method to deal with this problem, 
but I recognize that even though it is the least costly, it does not 
have the amount of support I need to pass it. So I have offered another 
amendment to my own bill, which is my way of saying: OK, you offered me 
the bridge. I am willing to walk across it and meet you at least 
halfway.
  I will describe this bill in a little more detail first. This is a 
complex issue. The Environmental and Public Works Committee has been 
struggling with this, certainly in the last 7 or 8 months I have been 
chairman of the committee, and I am sure they were struggling with it 
many months before that. I have tried to craft a solution that is 
direct and balanced. I believe I have accomplished that. That is my 
goal. It is not to ramrod anything through to make anybody angry. It is 
a legitimate attempt to get a consensus to deal with a serious 
environmental problem, not to deal with everybody's own opinions.
  If anybody comes to the table and says: If I do not get this, I will 
leave the table--I tell the people who say that: Don't bother coming to 
the table; you are wasting my time and yours. If you want to, talk, 
compromise, and reach a rational conclusion. I am willing to talk, and 
Senators on all sides of this have done just that. We have talked to 
many industry folks and environmental people as well on this very 
issue.
  The bill waives the oxygen mandate. The Reformulated Gasoline 
Program, or RFG, requires at least 2 percent of gasoline by weight to 
be oxygen. MTBE and ethanol are the principal additives that help 
satisfy this mandate. It is ethanol or MTBE. They will bring us to that 
2 percent oxygenate requirement. Because MTBE is rarely used outside 
the Reformulated Gas Program, a sensible starting point was to allow 
each State, if they wish, to waive the oxygen requirement.

  What about the so-called environmental backsliding; in other words, 
slipping back and allowing more dirty air? There is concern that if the 
Governors waive this mandate that this will affect the environmental 
benefit--clean air--of the Reformulated Gas Program.
  Let me be very clear: My bill ensures there will be no environmental 
backsliding. We are not walking away from the requirements of the Clean 
Air Act. If this bill is adopted, the environment--at least the air--
will not know the difference. There will be no negative impact on the 
air, and the water will be cleaner.
  Phaseout of MTBE: Eliminating the 2 percent oxygen mandate alone does 
not

[[Page S7852]]

mean the elimination of MTBE. MTBE is an effective octane booster, and 
refiners still may want to use it. Since only a very small amount of 
MTBE will cause a tremendous amount of damage, it is important to 
consider the fate of MTBE.
  This bill will give the EPA Administrator the authority to ban it 
immediately. If EPA does not do so in 4 years, then this bill will, by 
law, ban MTBE. The EPA has 4 years to ban it. If they do not, the bill 
will.
  EPA could, however, overturn the ban if it deemed it was not 
necessary to protect air quality, water quality, or human health. If it 
gets to the point that it is not a problem, then EPA does not have to 
ban it. Notwithstanding EPA's decision, the bill gives the States the 
authority to ban the additive.
  Since there is already massive contamination caused by MTBE, this 
bill will authorize, as I said, $200 million to be given to the States 
from the Leaking Underground Storage Tank Program for the purpose of 
cleaning up MTBE-caused contamination.
  Since a Federal mandate caused this pollution--remember that a 
Federal mandate caused this pollution. This is not the fault of the oil 
companies. It is not the fault of the MTBE producers. They did what 
they were asked to do. They produced this additive to clean up the air. 
Since a Federal mandate caused the pollution, it would be irresponsible 
for the Federal Government not to bear some of the financial burden 
associated with the cleanup. Unfortunately, that is the case.
  I do not like to spend taxpayers' dollars, but this was a mandate, 
and because of that mandate, we have a problem.
  It is also important to point out that although it is not part of my 
legislation, it is reasonable to think of some way of perhaps trying to 
work with the MTBE producers to help them through this transition if, 
in fact, MTBE is banned. I certainly am willing to work with them to 
come up with some solution, some help in terms of their movement from 
one industry to another, or whatever the case may be.
  Finally, the bill authorizes a comprehensive study of the 
environmental consequences of our current fuel supply. In order to be 
better informed to make future environmental decisions regarding fuel 
policy, the bill directs EPA to undertake a study of our motor fuel.
  I will talk a little bit about the cost, a very important point.
  Lately, we have heard a great deal about gasoline prices, certainly 
fuel oil prices, as well, in New England. These concerns underscore the 
question of the costs associated with limiting MTBE use.
  MTBE, like it or not, is clean, it is cheap, and it helps to clean up 
our air. Placing it in our fuel supply and keeping the fuel supply 
clean will have a cost. We have to replace it. We cannot backslide. We 
do not want to dirty the air while we take MTBE out.
  It is my belief the Senate is not prepared to reduce our clean air 
standards or allow for the continued contamination of our drinking 
water.
  We have two issues: Contaminated drinking water and do we backslide 
off the clean air provision. I believe my colleagues in the Senate are 
willing to work with me to clean up the water to get the MTBE out of 
our wells and to preserve the integrity of the Clean Air Act and not 
backslide or move back from the cleaner air we have accomplished by 
using MTBE.
  The question, though, becomes: What is the most effective and cost 
friendly option for achieving this goal? I have a chart which will help 
illustrate the options. Each one of these options--the red line, yellow 
line, green line, and the blue line--bans MTBE, but it is a little more 
complicated than that.
  One option is simply the elimination of MTBE with no other changes in 
the law. That is the red line. These show costs. This is the highest 
cost option because it is about an 8-cent increase in gas prices per 
gallon. This is a ban of MTBE, and it replaces it with ethanol in the 
Reformulated Gas Program. One might think: That is fine, it is ethanol, 
produced by corn, a nice natural product; what is wrong with that? 
Let's do it.
  The problem is, in areas in the Northeast, such as New Hampshire, and 
in other States such as Texas, these States would have to use ethanol 
to meet that oxygenate requirement because there is no other option. In 
order to meet the 2-percent oxygenate requirement if MTBE is removed, 
they have to use ethanol.
  One may say: What is wrong with that? Ethanol makes gas evaporate 
more quickly and those fumes would add to smog and haze in New England 
and it would be serious. Obviously, California would have the same 
problem.
  Refiners would have to make gas less evaporative and thereby 
increasing the cost. In other words, they would have to do something to 
deal with that rapid evaporation and it would cost more to do that. 
This is not an option for New England nor California nor any other 
State that has this particular problem.
  If we are going to be responsible, then we should work with our 
colleagues who have these problems. I happen to have that problem 
because I am from New Hampshire, and as the chairman of the committee, 
I need to work with all regions of the country to get a compromise that 
is acceptable to everybody so that we do not have more environmental 
problems in New England or California or some other place by simply 
banning MTBE and letting ethanol take over. Some want that.
  Obviously, the ethanol producers would love it, but that does not 
help us. We do not want to create more problems. That is not a 
responsible approach, I say with all due respect.
  The next line is the orange line in terms of cost.
  That is the Clinton administration's position. That represents the 
cost of eliminating the oxygen mandate, but replacing it with a 
national ethanol mandate. You have no other alternative other than 
ethanol.
  The cost of mandating a threefold increase in ethanol sales is very 
expensive. So the options represented by the orange line shown on the 
chart cost less than what is shown with the red line because it does 
not mandate that the reformulated gas contain ethanol. It does not 
mandate it, but that is what is going to happen. But, shown with this 
orange line on the chart, it simply mandates the total ethanol market. 
So you are mandating the market here, and that is no good. That does 
not work. Unlike what is shown with the red line, there would be no 
regional constraint. It would not be acceptable.
  Now, what is shown on the chart with the blue line is legislation 
that I am introducing today, without the amendment initially. In my 
view, that is the cheapest and most responsible way to deal with this 
problem. However, for reasons which I respect--I might not agree with 
them, but I respect them--it does not have enough support, either, to 
pass the Senate. I recognize that, but I want everybody to know where I 
am coming from.
  I believe we should use the cheapest alternative that gets the job 
done. That is my view. But I understand, as I said before, I am willing 
to build that bridge to go from what is shown with the blue line to 
what is shown with the green line. I will not go to what is shown with 
the orange or red lines, but I am willing to go from what is shown with 
the blue line to what is shown with the green line.
  As I have said, what is shown with the blue line is the bill I have 
introduced. That bill will cost more to make clean gas without MTBE, 
but because we place the fewest requirements on the refiners on how to 
achieve that clean gas, this bill would cost the economy less than all 
other options. It is very important for me to repeat that. We place the 
fewest requirements on the refiners on how to achieve the clean gas. We 
want clean gas achieved. That is the goal. This bill would cost the 
economy less than all of those other options.
  While my bill addresses all of the concerns with MTBE, I am also 
sensitive to the concerns of the Senators who understand that this bill 
might have an impact on ethanol. So in order to address these concerns, 
I have prepared an amendment to my own legislation, amendment No. 4026, 
which I have already sent to the desk.
  This amendment seeks to address the concerns over ethanol that 
Members have. I am hoping that over the course of the next 30 days we 
will be able to build this bridge from what is shown by the blue line 
to what is shown by the

[[Page S7853]]

green line, to get to what I think is an acceptable and responsible 
approach.
  I indicated earlier there is a lot of interest. Thirty-two States 
have expressed interest in this, in my letter. This amendment seeks to 
address the concerns of the ethanol industry by establishing a segment 
of the fuel market that must be comprised of either ethanol or fuel 
used to power superclean vehicles.
  About 10 days ago, I had the opportunity to ride in a fuel-celled 
bus. It had hydrogen cells. I had never experienced anything like it: 
No fumes, no smell, very little sound, and no pollutants whatsoever. I 
road several miles in it.

  The current occupant of the Chair, the Senator from Utah, Senator 
Bennett, drives a hybrid car which is part electric, part gas. You see, 
we are moving in the right direction. Hybrid cars, fuel cells--they are 
the future. The more we do that, the less we need of any type of 
gasoline, whether it is ethanol or just oil based. It does not matter.
  The point is, we are moving in the right direction. That is what we 
want to encourage. This bill will establish a segment of the fuel 
market that must be comprised of either ethanol or fuel used to power 
those clean vehicles. We do not want to stop them from having that 
option.
  If we just go with the renewables that the administration wants, all 
they can use is ethanol. What we want them to do is use ethanol, if 
they wish, but to use hybrid cars if they wish. Encourage that, 
encourage fuel cells, whatever, or premium gas, but let the market deal 
with it.
  So there are a lot of exciting things happening. This amendment is 
going to create competition. There is nothing wrong with competition, 
good old competition. You pick winners and losers--no guarantees--with 
competition between the ethanol industry and the clean vehicle market. 
So why mandate ethanol and exclude clean vehicles? It does not make any 
sense.
  So the estimated cost of this approach is represented by the green 
line on the chart. This is a very good approach that I believe is a 
compromise that gets us there. It costs us a little more, but it gets 
us there. Because we can't get there with what is represented by the 
blue line, I am willing to go here, with what is represented by the 
green line.
  Mr. President, I know my time is pretty close to expiring, I am sure.
  To those who will ask, why does this have to be so complicated, I did 
not create the issue. I have spent the last 6 months trying to 
understand it and learn about it. I think I am getting there, with a 
lot of help. It is a complex issue, with many competing interests. That 
is the thing. But a simple ban of MTBE does not get everybody there--
all the regions of the country. It does not get it done.
  So a simple ban of MTBE makes gas more expensive and air more dirty. 
It is not acceptable. We cannot do that. A stand-alone mandate of 
ethanol does not get you there, either. Smog concerns, cost concerns--
particularly in New Hampshire, and other areas of the Northeast, as 
well as California--that does not get you there.
  Simply eliminating the reformulated gas mandate does not work, 
either. That is another option. MTBE would continue to be used and the 
potential adverse impact on ethanol would be there.
  I am committed, I say to my colleagues, to a solution that, one, 
cleans up our Nation's drinking water, and, two, preserves the 
environmental benefits of the reformulated gasoline program, which is 
the most cost-effective option for the whole Nation. And that is shown 
right there with the green line. That is the one we can get it done 
with. I wish it were here with what is depicted with the blue line, but 
this will get us there with what is depicted with the green line; and 
we will do it.
  So I am convinced this is the right approach. I look forward to 
working with my colleagues. This is an honest attempt to sit down with 
everybody and get to a resolution, because to continue to argue about 
this and debate this, while more and more wells every day get polluted 
with MTBE, is irresponsible. It is totally irresponsible.

  We should not be talking about somebody's profit at the expense of 
somebody's well being polluted. Let's compromise. We will work with 
you. You can make some profit, but you are not going to make so much 
profit that we have to stand around and have our wells polluted. That 
is simply wrong. It is unacceptable. It is irresponsible. I am not 
going to stand for it. I don't think anybody would who had these kinds 
of problems. It is irresponsible. So we are going to work together.
  I am very encouraged by the folks, especially the ethanol Senators, 
who I have talked with, and their staffs. We have talked to folks in 
the oil industry. They are not real thrilled about some of this, but, 
again, this is a solution that we must find. We cannot continue to say 
we will talk about it next week or we will deal with it in conference 
or we will deal with it next year. We need to deal with it now. This is 
a responsible effort to do that.
  So, again, I look forward to working with my colleagues, and I look 
forward to that markup on September 7. I intend to be ready for it, and 
to send that bill out of the EPW Committee and on to the calendar in 
the Senate.
  Mr. President, I ask unanimous consent that the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2962

       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 ``Federal Reformulated Fuels 
     Act of 2000''.

     SEC. 2. WAIVER OF OXYGEN CONTENT REQUIREMENT FOR REFORMULATED 
                   GASOLINE.

       Section 211(k)(1) of the Clean Air Act (42 U.S.C. 
     7545(k)(1)) is amended--
       (1) by striking ``Within 1 year after the enactment of the 
     Clean Air Act Amendments of 1990,'' and inserting the 
     following:
       ``(A) In general.--Not later than November 15, 1991,''; and
       (2) by adding at the end the following:
       ``(B) Waiver of oxygen content requirement.--
       ``(i) Authority of the governor.--

       ``(I) In general.--Notwithstanding any other provision of 
     this subsection, a Governor of a State, upon notification by 
     the Governor to the Administrator during the 90-day period 
     beginning on the date of enactment of this subparagraph, may 
     waive the application of paragraphs (2)(B) and (3)(A)(v) to 
     gasoline sold or dispensed in the State.
       ``(II) Opt-in areas.--A Governor of a State that submits an 
     application under paragraph (6) may, as part of that 
     application, waive the application of paragraphs (2)(B) and 
     (3)(A)(v) to gasoline sold or dispensed in the State.

       ``(ii) Treatment as reformulated gasoline.--In the case of 
     a State for which the Governor invokes the waiver described 
     in clause (i), gasoline that complies with all provisions of 
     this subsection other than paragraphs (2)(B) and (3)(A)(v) 
     shall be considered to be reformulated gasoline for the 
     purposes of this subsection.
       ``(iii) Effective date of waiver.--A waiver under clause 
     (i) shall take effect on the earlier of--

       ``(I) the date on which the performance standard under 
     subparagraph (C) takes effect; or
       ``(II) the date that is 270 days after the date of 
     enactment of this subparagraph.

       ``(C) Maintenance of toxic air pollutant emission 
     reductions.--
       ``(i) In general.--As soon as practicable after the date of 
     enactment of this subparagraph, the Administrator shall--

       ``(I) promulgate regulations consistent with subparagraph 
     (A) and paragraph (3)(B)(ii) to ensure that reductions of 
     toxic air pollutant emissions achieved under the reformulated 
     gasoline program under this section before the date of 
     enactment of this subparagraph are maintained in States for 
     which the Governor waives the oxygenate requirement under 
     subparagraph (B)(i); or
       ``(II) determine that the requirement described in clause 
     (iv)--

       ``(aa) is consistent with the bases for a performance 
     standard described in clause (ii); and
       ``(bb) shall be deemed to be the performance standard under 
     clause (ii) and shall be applied in accordance with clause 
     (iii).
       ``(ii) Performance standard.--The Administrator, in 
     regulations promulgated under clause (i)(I), shall establish 
     an annual average performance standard based on--

       ``(I) compliance survey data;
       ``(II) the annual aggregate reductions in emissions of 
     toxic air pollutants achieved under the reformulated gasoline 
     program during calendar years 1998 and 1999, determined on 
     the basis of the volume of reformulated gasoline containing 
     methyl tertiary butyl ether that is sold throughout the 
     United States; and
       ``(III) such other information as the Administrator 
     determines to be appropriate.

       ``(iii) Applicability.--

       ``(I) In general.--The performance standard under clause 
     (ii) shall be applied on an annual average refinery-by-
     refinery basis to all reformulated gasoline that is sold or 
     introduced into commerce by the refinery in a

[[Page S7854]]

     State for which the Governor waives the oxygenate requirement 
     under subparagraph (B)(i).
       ``(II) More stringent requirements.--The performance 
     standard under clause (ii) shall not apply to the extent that 
     any requirement under section 202(l) is more stringent than 
     the performance standard.
       ``(III) State standards.--The performance standard under 
     clause (ii) shall not apply in any State that has received a 
     waiver under section 209(b).
       ``(IV) Credit program.--The Administrator shall provide for 
     the granting of credits for exceeding the performance 
     standard under clause (ii) in the same manner as provided in 
     paragraph (7).

       ``(iv) Statutory performance standard.--

       ``(I) In general.--Subject to subclause (III), if the 
     regulations under clause (i)(I) have not been promulgated by 
     the date that is 270 days after the date of enactment of this 
     subparagraph, the requirement described in subclause (II) 
     shall be deemed to be the performance standard under clause 
     (ii) and shall be applied in accordance with clause (iii).
       ``(II) Toxic air pollutant emissions.--The aggregate 
     emissions of toxic air pollutants from baseline vehicles when 
     using reformulated gasoline shall be 27.5 percent below the 
     aggregate emissions of toxic air pollutants from baseline 
     vehicles when using baseline gasoline.
       ``(III) Subsequent regulations.--The Administrator may 
     modify the performance standard established under subclause 
     (I) through promulgation of regulations under clause 
     (i)(I).''.

     SEC. 3. SALE OF GASOLINE CONTAINING MTBE.

       Section 211(c) of the Clean Air Act (42 U.S.C. 7545(c)) is 
     amended--
       (1) in paragraph (1)(A)--
       (A) by inserting ``fuel or fuel additive or'' after 
     ``Administrator any''; and
       (B) by striking ``air pollution which'' and inserting ``air 
     pollution, or water pollution, that'';
       (2) in paragraph (4)(B), by inserting ``or water quality 
     protection,'' after ``emission control,''; and
       (3) by adding at the end the following:
       ``(5) Determination by the administrator whether to ban use 
     of mtbe.--
       ``(A) In general.--Not later than 4 years after the date of 
     enactment of this paragraph, the Administrator shall ban use 
     of methyl tertiary butyl ether in gasoline unless the 
     Administrator determines that the use of methyl tertiary 
     butyl ether in accordance with paragraph (6) poses no 
     substantial risk to water quality, air quality, or human 
     health.
       ``(B) Regulations concerning phase-out.--The Administrator 
     may establish by regulation a schedule to phase out the use 
     of methyl tertiary butyl ether in gasoline during the period 
     preceding the effective date of the ban under subparagraph 
     (A).
       ``(6) Limitations on sale of gasoline containing mtbe.--
       ``(A) In general.--Subject to subparagraph (B), if the 
     Administrator makes the determination described in paragraph 
     (5), for the fourth full calendar year that begins after the 
     date of enactment of this paragraph and each calendar year 
     thereafter--
       ``(i) the quantity of gasoline sold or introduced into 
     commerce during the calendar year by a refiner, blender, or 
     importer of gasoline shall contain on average not more than 1 
     percent by volume methyl tertiary butyl ether; and
       ``(ii) no person shall sell or introduce into commerce any 
     gasoline that contains more than a specified percentage by 
     volume methyl tertiary butyl ether, as determined by the 
     Administrator by regulation.
       ``(B) Regulations concerning trading.--
       ``(i) In general.--The Administrator may promulgate 
     regulations that provide for the granting of an appropriate 
     amount of credits to a person that refines, blends, or 
     imports, and certifies to the Administrator, gasoline or a 
     slate of gasoline that has a methyl tertiary butyl ether 
     content that is less than the maximum methyl tertiary butyl 
     ether content specified in subparagraph (A)(i).
       ``(ii) Use of credits.--The regulations promulgated under 
     clause (i) shall provide that a person that is granted 
     credits may use the credits, or transfer all or a portion of 
     the credits to another person, for the purpose of complying 
     with the maximum methyl tertiary butyl ether content 
     requirement specified in subparagraph (A)(i).
       ``(iii) Maximum annual limitation.--The regulations 
     promulgated under clause (i) shall ensure that the total 
     quantity of gasoline sold or introduced into commerce during 
     any calendar year by all refiners, blenders, or importers 
     contains on average not more than 1 percent by volume methyl 
     tertiary butyl ether.
       ``(C) Temporary waiver of limitations.--
       ``(i) In general.--If the Administrator, in consultation 
     with the Secretary of Energy, finds, on the Administrator's 
     own motion or on petition of any person, that there is an 
     insufficient domestic capacity to produce or import gasoline, 
     the Administrator may, in accordance with section 307, 
     temporarily waive the limitations imposed under subparagraph 
     (A).
       ``(ii) Duration of reduction.--

       ``(I) In general.--A waiver under clause (i) shall remain 
     in effect for a period of 15 days unless the Administrator, 
     in consultation with the Secretary of Energy, finds, before 
     the end of that period, that there is sufficient domestic 
     capacity to produce or import gasoline.
       ``(II) Extension.--Upon the expiration of the 15-day period 
     under subclause (I), the waiver may be extended for an 
     additional 15-day period in accordance with clause (i).

       ``(iii) Deadline for action on petitions.--The 
     Administrator shall act on any petition submitted under 
     clause (i) within 7 days after the date of receipt of the 
     petition.
       ``(iv) Inapplicability of certain requirements.--Section 
     307(d) of this Act and sections 553 through 557 of title 5, 
     United States Code, shall not apply to any action on a 
     petition submitted under clause (i).
       ``(v) State authority.--At the option of a State, a waiver 
     under clause (i) shall not apply to any area with respect to 
     which the State has exercised authority under any other 
     provision of law (including subparagraph (D)) to limit the 
     sale or use of methyl tertiary butyl ether.
       ``(D) State petitions to eliminate use of mtbe.--
       ``(i) In general.--A State may submit to the Administrator 
     a petition requesting authority to eliminate the use of 
     methyl tertiary butyl ether in gasoline sold or introduced 
     into commerce in the State in order to protect air quality, 
     water quality, or human health.
       ``(ii) Deadline for action on petitions.--The Administrator 
     shall grant or deny any petition submitted under clause (i) 
     within 180 days after the date of receipt of the petition.''.

     SEC. 4. CONVENTIONAL GASOLINE.

       (a) In General.--Section 211(k)(1) of the Clean Air Act (42 
     U.S.C. 7545(k)(1)) (as amended by section 2) is amended by 
     adding at the end the following:
       ``(D) Conventional gasoline.--
       ``(i) In general.--Not later than October 1, 2007--

       ``(I) the Administrator shall determine whether the use of 
     conventional gasoline during the period of calendar years 
     2005 and 2006 resulted in a greater volume of emissions of 
     criteria air pollutants listed under section 108, and 
     precursors of those pollutants, determined on the basis of a 
     weighted average of those pollutants and precursors, than the 
     volume of such emissions during the period of calendar years 
     1998 and 1999; and
       ``(II) if the Administrator determines that a significant 
     increase in emissions occurred, the Administrator shall 
     promulgate such regulations concerning the use of 
     conventional gasoline as are appropriate to eliminate that 
     increase.

       ``(ii) Applicability to certain states.--The Administrator 
     shall make the determination under clause (i)(I) without 
     regard to, and the regulations promulgated under clause 
     (i)(II) shall not apply to, any State that has received a 
     waiver under section 209(b).''.
       (b) Elimination of Ethanol Waiver.--Section 211(h) of the 
     Clean Air Act (42 U.S.C. 7545(h)) is amended--
       (1) by striking paragraph (4); and
       (2) by redesignating paragraph (5) as paragraph (4).

     SEC. 5. PUBLIC HEALTH AND ENVIRONMENTAL IMPACTS OF FUELS AND 
                   FUEL ADDITIVES.

       Section 211(b)(2) of the Clean Air Act (42 U.S.C. 
     7545(b)(2)) is amended--
       (1) by striking ``may also'' and inserting ``shall, on a 
     regular basis,''; and
       (2) by striking subparagraph (A) and inserting the 
     following:
       ``(A) to conduct tests to determine potential public health 
     and environmental effects of the fuel or additive (including 
     carcinogenic, teratogenic, or mutagenic effects); and''.

     SEC. 6. COMPREHENSIVE FUEL STUDY.

       Section 211 of the Clean Air Act (42 U.S.C. 7545) is 
     amended--
       (1) by redesignating subsection (o) as subsection (p); and
       (2) by inserting after subsection (n) the following:
       ``(o) Comprehensive Fuel Study.--
       ``(1) In general.--Not later than 5 years after the date of 
     enactment of this paragraph and every 5 years thereafter, the 
     Administrator shall submit to Congress a report--
       ``(A) describing reductions in emissions of criteria air 
     pollutants listed under section 108, or precursors of those 
     pollutants, that result from implementation of this section;
       ``(B) describing reductions in emissions of toxic air 
     pollutants that result from implementation of this section;
       ``(C) in consultation with the Secretary of Energy, 
     describing reductions in greenhouse gas emissions that result 
     from implementation of this section; and
       ``(D)(i) describing regulatory options to achieve 
     reductions in the risk to public health and the environment 
     posed by fuels and fuel additives--
       ``(I) taking into account the production, handling, and 
     consumption of the fuels and fuel additives; and
       ``(II) focusing on options that reduce the use of compounds 
     or associated emission products that pose the greatest risk; 
     and
       ``(ii) making recommendations concerning any statutory 
     changes necessary to implement the regulatory options 
     described under clause (i).
       ``(2) Life cycle emissions analysis.--In determining 
     criteria air pollutant and greenhouse gas emission reductions 
     under paragraph (1), the Administrator shall take into 
     account the emissions resulting from the various fuels and 
     fuel additives used in the

[[Page S7855]]

     implementation of this section over the entire life cycle of 
     the fuels and fuel additives.''.

     SEC. 7. ADDITIONAL OPT-IN AREAS UNDER REFORMULATED GASOLINE 
                   PROGRAM.

       Section 211(k)(6) of the Clean Air Act (42 U.S.C. 
     7545(k)(6)) is amended--
       (1) by striking ``(6) Opt-in areas.--(A) Upon'' and 
     inserting the following:
       ``(6) Opt-in areas.--
       ``(A) Classified areas.--
       ``(i) In general.--Upon'';
       (2) in subparagraph (B), by striking ``(B) If'' and 
     inserting the following:
       ``(ii) Effect of insufficient domestic capacity to produce 
     reformulated gasoline.--If'';
       (3) in subparagraph (A)(ii) (as so redesignated)--
       (A) in the first sentence, by striking ``subparagraph (A)'' 
     and inserting ``clause (i)''; and
       (B) in the second sentence, by striking ``this paragraph'' 
     and inserting ``this subparagraph''; and
       (4) by adding at the end the following:
       ``(B) Nonclassified areas.--
       ``(i) In general.--In accordance with section 110, a State 
     may submit to the Administrator, and the Administrator may 
     approve, a State implementation plan revision that provides 
     for application of the prohibition specified in paragraph (5) 
     in any portion of the State that is not a covered area or an 
     area referred to in subparagraph (A)(i).
       ``(ii) Period of effectiveness.--Under clause (i), the 
     State implementation plan shall establish a period of 
     effectiveness for applying the prohibition specified in 
     paragraph (5) to a portion of a State that--

       ``(I) commences not later than 1 year after the date of 
     approval by the Administrator of the State implementation 
     plan; and
       ``(II) ends not earlier than 4 years after the date of 
     commencement under subclause (I).''.

     SEC. 8. LEAKING UNDERGROUND STORAGE TANKS.

       (a) Use of LUST Funds for Remediation of MTBE 
     Contamination.--Section 9003(h) of the Solid Waste Disposal 
     Act (42 U.S.C. 6991b(h)) is amended--
       (1) in paragraph (7)(A), by striking ``paragraphs (1) and 
     (2) of this subsection,'' and inserting ``paragraphs (1), 
     (2), and (12),''; and
       (2) by adding at the end the following:
       ``(12) Remediation of mtbe contamination.--
       ``(A) In general.--The Administrator and the States may use 
     funds made available under subparagraph (B) to carry out 
     corrective actions with respect to a release of methyl 
     tertiary butyl ether that presents a risk to human health, 
     welfare, or the environment.
       ``(B) Applicable authority.--Subparagraph (A) shall be 
     carried out--
       ``(i) in accordance with paragraph (2); and
       ``(ii) in the case of a State, in a manner consistent with 
     a cooperative agreement entered into by the Administrator and 
     the State under paragraph (7).
       ``(C) Authorization of appropriations.--There is authorized 
     to be appropriated from the Leaking Underground Storage Tank 
     Trust Fund to carry out subparagraph (A) $200,000,000 for 
     fiscal year 2001, to remain available until expended.''.
       (b) Release Prevention.--Subtitle I of the Solid Waste 
     Disposal Act (42 U.S.C. 6991 et seq.) is amended--
       (1) by redesignating section 9010 as section 9011; and
       (2) by inserting after section 9009 the following:

     ``SEC. 9010. RELEASE PREVENTION.

       ``(a) Implementation of Preventative Measures.--The 
     Administrator (or a State pursuant to section 9003(h)(7)) may 
     use funds appropriated from the Leaking Underground Storage 
     Tank Trust Fund for--
       ``(1) necessary expenses directly related to the 
     implementation of section 9003(h);
       ``(2) enforcement of--
       ``(A) this subtitle;
       ``(B) a State program approved under section 9004; or
       ``(C) State requirements regulating underground storage 
     tanks that are similar or identical to this subtitle; and
       ``(3) inspection of underground storage tanks.
       ``(b) Authorization of Appropriations.--There are 
     authorized to be appropriated from the Leaking Underground 
     Storage Tank Trust Fund to carry out subsection (a)--
       ``(1) $50,000,000 for fiscal year 2001; and
       ``(2) $30,000,000 for each of fiscal years 2002 through 
     2005.''.
       (c) Technical Amendments.--
       (1) Section 1001 of the Solid Waste Disposal Act (42 U.S.C. 
     prec. 6901) is amended by striking the item relating to 
     section 9010 and inserting the following:

``Sec. 9010. Release prevention.
``Sec. 9011. Authorization of appropriations.''.

       (2) Section 9001(3)(A) of the Solid Waste Disposal Act (42 
     U.S.C. 6991(3)(A)) is amended by striking ``sustances'' and 
     inserting ``substances''.
       (3) Section 9003(f)(1) of the Solid Waste Disposal Act (42 
     U.S.C. 6991b(f)(1)) is amended by striking ``subsection (c) 
     and (d) of this section'' and inserting ``subsections (c) and 
     (d)''.
       (4) Section 9004(a) of the Solid Waste Disposal Act (42 
     U.S.C. 6991c(a)) is amended in the first sentence by striking 
     ``referred to'' and all that follows and inserting ``referred 
     to in subparagraph (A) or (B), or both, of section 
     9001(2).''.
       (5) Section 9005 of the Solid Waste Disposal Act (42 U.S.C. 
     6991d) is amended--
       (A) in subsection (a), by striking ``study taking'' and 
     inserting ``study, taking'';
       (B) in subsection (b)(1), by striking ``relevent'' and 
     inserting ``relevant''; and
       (C) in subsection (b)(4), by striking ``Evironmental'' and 
     inserting ``Environmental''.
                                 ______
                                 
      By Mr. BRYAN (for himself, Mr. Graham, and Mr. Gorton):
  S. 2963. A bill to amend title XIX of the Social Security Act to 
require the Secretary of Health and Human Services to make publicly 
available medicaid drug pricing information; to the Committee on 
Finance.


       consumer awareness of market-based drug prices act of 2000

  Mr. BRYAN. Mr. President, in a very few hours we will, each of us, be 
returning to our respective States for the summer recess. Most of us 
will have town hall meetings or other fora in which we will have a 
chance to interact with our constituents.
  Much that occurs on this floor, although very important, does not 
connect with the American people. Some of it seems pretty esoteric, 
pretty dry stuff. I am going to be discussing this afternoon an issue 
that does connect with the American people. Whether you live in Maine 
or California or Washington State or Florida or, as I do, the great 
State of Nevada--and which I am privileged to represent--people are 
talking about the price of prescription drugs.
  The reason for that is that the marvels of modern medicine have made 
it possible, through prescription drugs, to address a number of the 
maladies that affect all of us as part of humankind. The cost of those 
prescription drugs are literally going through the ceiling. I will 
comment more specifically upon that in a moment.
  For literally millions of people in this country, the cost of 
prescription drugs has been so prohibitive that medications that would 
address a medical problem that those individuals face are simply beyond 
the pale. So for many, it is fair to say, the choice is a Hobson's 
choice.
  Do they eat in the evening, or do they take the prescription 
medication that has been prescribed by their physician? It would be my 
fondest hope and expectation, before this Congress adjourns sine die--
that is, at the end of this legislative year--that we could enact 
prescription drug legislation. That would be my No. 1 priority. But I 
think all of us recognize there are some things we can do as part of 
whatever plan we might subscribe to, and Senator Graham and I this 
afternoon are offering a piece of legislation entitled the Consumer 
Awareness of Market-Based Drug Prices Act of 2000.
  This is a piece of legislation that deals with the price of drugs. We 
know what the cost is, but we are talking about the price. We have a 
lot of information on the cost. We know, for example, that we are 
spending on drugs in this country, prescription medications--in the 
last available year, 1999--almost $122 billion. We also know quite a 
bit about how much we in the Federal Government are spending for 
prescription drugs.
  For example, the States and the Federal Government spent $17 billion 
in fiscal year 1999 for drugs, just under the Medicaid program alone. 
Those costs are going to escalate rather dramatically. What is missing, 
however, is some critically important information--information that 
would be important to consumers and those who negotiate on behalf of 
consumers, because what we don't know, what we don't have much 
information about is drug prices. The reason for that is some statutory 
prohibitions I am going to talk about and which this legislation 
specifically addresses.
  So the questions are: What do consumers know about drug prices today? 
What do employers who purchase prescription drugs on behalf of their 
employees know about prices? What do health plans negotiating on behalf 
of their enrollees know about prices? What do physicians who prescribe 
drugs for their patients know about prices?
  The answer is simply, very, very little; almost nothing. What little 
is known is essentially worthless information. We have the average 
wholesale price, but this is a truly meaningless figure.

[[Page S7856]]

  During the course of my discussion this afternoon on the floor of the 
Senate, we are going to be talking about three kinds of prices: The 
average wholesale price, average manufacturer price, and the best 
price.
  Just talking about the average wholesale price, that is a public list 
price set by manufacturers, the pharmaceutical industry; that is 
neither average nor wholesale and is a price set by the pharmaceutical 
companies. The best analogy I can give you is that it would be 
analogous to the price that appears as the sticker price on the window 
of a new car. Nobody pays that price. It really is not very helpful in 
terms of what you need to know when negotiating to purchase a car. And 
now there are a number of web sites and publications and manuals--a 
whole host of things that tell consumers this is what the manufacturer 
paid, these are the hold-backs by the dealers, these are the discounts 
and the commissions; here is the price on which you want to focus your 
attention. You can get that information if you are purchasing an 
automobile, and you can get that information when you purchase a whole 
host of other things. But that information is not available if you are 
talking about finding out the price of prescription drugs, and that is 
because of some statutory limitations.

  It is somewhat analogous to the statement Sir Winston Churchill made 
in 1939 in describing the Soviet Union. He went on to say: ``A riddle, 
wrapped up in a mystery, inside an enigma.'' That is a pretty fair 
characterization of what we know about the prices of prescription 
medications as sold by the manufacturer.
  There are many different approaches as we deal with this prescription 
drug issue and want to extend it as either part of Medicare or some 
alternative approach. I have been privileged to serve on the Finance 
Committee, which has been the vortex for this debate and discussion. I 
listened closely to my colleagues wax eloquently on the subject of 
prescription drugs, and, whether you are to the left or to the right of 
the political spectrum, or whether you consider yourself in the 
mainstream, a moderate, all of us worship at the shrine of competition. 
Everybody says what we need to do is to inject more competition into 
the system. I happen to subscribe to that because I do believe that by 
allowing the synergy of the free marketplace to work, it will be the 
most efficient and the most cost-effective way to deliver services. But 
there is an impediment to the operation of the free marketplace.
  What does the free marketplace need to work? How do we ensure 
competition? Well, some of you may recall that course from school, 
Econ. 201; that is what it was called at the University of Nevada where 
I was enrolled. Basic economic theory dictates that the availability of 
real market-based information is critical to a free market and that 
price transparency is necessary. That is precisely what we do not have 
in this system we have created today.
  The market today lacks market-based price information. A market 
simply cannot work without the availability of that price information. 
I emphasize the availability of that information. The information that 
is available to the public verges on the absurd. There is a complete 
void of useful information about prices. So, in effect, the employers 
and health plans negotiating on behalf of consumers are negotiating in 
the dark. They are at a serious disadvantage. It is as if they are 
blindfolded going into that negotiating arena. They don't know where 
the end of the tunnel is. They do not know what the real prices are. So 
one can fairly ask, how can even the most conscientious, effective 
employer or health plan operator negotiate good prices on behalf of 
consumers if they don't have the most basic information about market 
prices? They undoubtedly pay higher prices than they otherwise would, 
and ultimately these higher prices are translated into higher prices to 
the consumers; they are passed on. That is the nature of the system.
  So what type of price information would be available, or should be 
available, that would be useful and helpful information? The average 
manufacturer price for a drug would be a useful thing for purchasers to 
know; that is, the average price at which a manufacturer sold a 
particular drug. That is what is actually paid for retail drugs. By 
law, by act of Congress, that is kept confidential, and that is one of 
the changes this legislation seeks to accomplish. That is confidential. 
You can't get that information.
  The average price actually paid to a manufacturer by a wholesaler is 
supposed to be similar to the average manufacturer's price, but, in 
point of fact, it diverges widely. The average wholesale price, to 
refresh your memory, is a list price that is meaningless, a price 
assigned by the pharmaceutical industry. In theory, these prices should 
be tracking; in point of fact, they widely diverge. So it is the 
average manufactured price, the price that is actually paid, that is 
what we really want to know, and that is what we don't know.
  The other price we don't know, and also by law is kept confidential, 
is the best price. That is the lowest price available to the private 
sector for a particular medication--whether it be Mevacor, Claritin, or 
any one of the other medications so many of us use today. That 
information is not available. So the average wholesale price--an 
utterly meaningless number, a fiction, if you will--is available. The 
average manufacturer price is not; nor is the best price.
  Knowledge about the average manufacturer price and the best price 
would certainly enable us to have lower prices for health plans, lower 
prices for employers, and lower prices for the consumers. But the 
public is denied this information.
  Let me emphasize--because a number of you might be thinking: There we 
go again with a vast new bureaucracy to collect this data with all of 
the burdens that are imposed upon the free market and the limitations 
that would be generated.
  My friends, that is not the case because under the law, the Secretary 
of Health and Human Services currently collects the average 
manufacturer price and the best price.
  In other words, we have this information. It is not something we 
don't know about, or we have to create some new mechanism to gather. We 
have that information. It is there. But we are precluded by law from 
sharing that information with those who negotiate with the 
pharmaceutical industry to negotiate the best possible price for 
employees, members of health plans, or other organizations that provide 
prescription drugs to their clients, patient customer base--however you 
characterize it. There is good information. All purchasers could use it 
to benefit those for whom they negotiate.
  It is clear that we need to increase the level of knowledge consumers 
have about drug prices in today's marketplace. Transparency--that is 
the ability to see what these prices are and promote the fair market--
will lower prices.
  That is why my colleague, Senator Graham, and I are introducing this 
legislation. We are not talking about mandating negotiated prices. We 
are simply talking about making the data that is collected available to 
those who are negotiating for prescription drugs. It would simply 
require the Secretary, who already collects this information, to 
provide the average manufacturer price of drugs and the best price 
available in the market.
  These prices are collected to implement the Medicare prescription 
drug rebate system. The rebates are based on those prices. But because 
Medicaid is prohibited by law from disclosing the average manufacturer 
price, or the best price, the market doesn't get the advantage of this 
information, and we are prohibited from knowing the price that Medicaid 
pays for each drug.
  Let me say say parenthetically that it is generally agreed that the 
price Medicaid pays is in point of fact the best price. So this would 
be a very relevant piece of information. We can't say for sure even 
with respect to a federally funded program what we are spending on a 
particular drug. We don't know what Medicaid pays for Claritin, 
Mevacor, or Prilosec. We just do not know that. We know the total price 
we are paying for drugs generally, and what we are spending for drugs. 
But we do not know what we are paying for them separately. This 
information needs to be made available because making price information 
available will help purchasers and consumers alike.
  Today, anyone can get on the Internet to find the lowest price 
available

[[Page S7857]]

for a given airline flight. I think the question needs to be asked: Why 
shouldn't the public have access to price information on something that 
is so critical and that may be necessary to save one's life, or to 
prevent the onset of some debilitating disease, or to ameliorate its 
impact, the information with respect to the average manufacturer price 
and the best price?
  The bottom line is today there are no sources of good price 
information for consumers and purchasers, thus keeping prices 
artificially higher than they would otherwise be.
  The legislation which we introduce today would be extremely helpful 
in correcting this. The market-based price information this bill would 
provide would help all purchasers, employers, and pharmacy benefit 
managers who are at a disadvantage without true price information.
  Employers are struggling with increasing premiums. In large part, 
premiums are increasing because of rising drug expenditures. And, yet, 
employers don't have the information they need to assess whether the 
premium increases are appropriate. The answer to that is because 
without knowing the prices and the rebates that the pharmacy benefit 
managers are negotiating, they are not able to determine if the 
pharmacy benefit managers are passing along the rebates to them in the 
form of lower costs and lower premiums.
  Further, neither the PBMs nor the employers know if the drug 
companies are being candid with them. When they try to negotiate lower 
prices with the manufacturer, they are told, no, we can't give you that 
price because it is lower than the best price. The employers and the 
PBMs have no way of knowing in point of fact whether it is true. The 
battleground is really a negotiation of what these prices are. That is 
the information we don't know. In effect, those who negotiate with the 
pharmaceutical industry go into that combat with one arm tied behind 
their backs and blindfolded as to what the average manufacturer price 
and the best price is.
  Let me say that this piece of legislation is going to provoke an 
outcry. You don't have to have a degree from Oxford. You don't have to 
have a Ph.D. from some of our most distinguished institutions in 
America. Who would one think would dislike this information? My 
friends, the pharmaceutical industry doesn't want you to know.
  Undoubtedly, the provision that is in the law today was crafted for 
their benefit. It certainly was not crafted for the benefit of employer 
groups, or health care providers who negotiate pharmaceutical benefits. 
It certainly was not put in to protect consumers. It is not in their 
best interests.
  I am sure we are going to have a predictable outcry that some 
horrendous draconian thing will occur if we make these prices 
available.
  My view is that transparency is essential. Make the prices available, 
and let this free marketplace that we all talk about that has produced 
such an extraordinary standard of living for us be the envy of the 
world. Nobody is suggesting that the free market could not, nor would, 
in my judgment, provide some of the dynamics that would help to keep 
the costs down. Let an honest negotiating process occur.
  The lack of market-based information has an effect on the Federal 
budget--not only for consumers in terms of the medications they pay for 
but all taxpayers.
  Whether in Congress--and I profoundly hope we will in fact--makes 
that prescription drug benefit a part of Medicare, or a subsequent 
Congress, this is an idea whose time has come. It will occur. It may 
not occur in my time. I leave at the end of this year. But it is going 
to occur. There are dramatic cost implications. Without the benefit of 
this information, it will be very difficult indeed.
  Let's just talk for a moment in terms of prices, information that is 
made available, and the generic formulas that we use for reimbursement.

  Although the average wholesale price is not a true market measure 
price--this is set by the industry--it is used to determine Medicare 
reimbursement for the few drugs that are currently covered by Medicare.
  The prescription Medicare benefit is very limited. I would like to 
see the Medicare prescription benefit extended through Medicare as an 
option, as we have a voluntary option under Part B. I don't want 
anybody to be confused, but there are some drugs that are covered in 
concert with the physician's prescriptions.
  The average wholesale price minus 5 percent--what is wrong with that? 
What is wrong with that is this average wholesale price is a fix. It 
means nothing. It is the price that the drug companies get together and 
tell us is the average wholesale price. Yet that is the reimbursement 
mechanism that is used for Medicare.
  Medicaid, which is a program, as we all know, that involves 
participation by the Federal and the State governments and made 
available to the poorest of our citizens, represents a rather 
substantial cost to the taxpayer. My recollection is that cost is in 
the neighborhood of about $17 billion a year.

  Here is how that formula worked. This is the Medicaid benefit: The 
average wholesale price minus 10 percent. Remember, this is a price set 
by the pharmaceutical industry; it is not a market-driven price. 
Multiply that times the units--whatever the number of prescriptions, 
say an allergy drug or a drug for elevated cholesterol level--times 
15.1 percent of the average manufacturer price. This is the one we are 
precluded from knowing. Or take the average manufacturer price, minus 
the best price. This information we don't know, and we should be able 
to get this information.
  What can happen with respect to the Medicare reimbursements--because 
the physicians who prescribe this medication get the average wholesale 
price minus 5 percent, we do not know what the physicians are actually 
paying the pharmaceutical industry for the drugs. According to the 
Justice Department, the Health and Human Services Office of the 
Inspector General, and our colleague in the other body who chairs the 
Commerce Committee, the average wholesale price has been manipulated in 
order to reap greater Medicare reimbursements.
  The way that works, the doctor prescribes something covered by 
Medicare and reimburses the average wholesale price minus 5 percent. In 
point of fact, your physician may be paying much, much less to the 
pharmaceutical industry. So the spread is the physician's profit, and 
there is potential for abuse.
  I am not suggesting in any way that a physician should not be 
compensated for his care. I am proud to say my son is a physician, a 
cardiologist. But you ought not to be able to manipulate the wholesale 
price--which is this fiction we have talked about--and then allow the 
physician to seek payment from the pharmaceutical industry at a price 
that is substantially less than what Medicare is paying. That gouges 
the American taxpayer. That is the issue that concerns us.
  As I have indicated, drug companies have artificially inflated this 
average wholesale price, which results in these inflated Medicare 
reimbursements to physicians, and the manufacturer then in turn 
provides the discounts, and the physicians can keep the difference. If 
the average wholesale price of the drug is $100, minus 5 percent would 
be $95, and if the physician actually only pays $50, the physician is 
getting $45 as part of that spread. That is much less than he is 
actually paying. Medicare, conversely, is reimbursing the physician at 
a far greater price than the physician is actually paying for that 
medication.
  The need for better information has never been greater. Medicare drug 
benefit is critical and should be enacted this year. I truly hope it 
will be. Accurate market-based price information will ensure the best 
use of the taxpayer dollars financing this benefit and the lowest 
possible beneficiary coinsurance; that is, the amount, the coinsurance, 
the beneficiary has to pay.
  This should be an easy call. Transparency promotes a fair market. We 
are all for that, I believe. Price information leads to price 
competition. I think we are all for that. That competition leads to 
lower prices for employers, for health plans, and for consumers. I 
think we are all for that.

  So at a time when drug prices are increasing at two to three times 
the rate of the overall rate of inflation, referred to as the Consumer 
Price Index, at a time when the same drugs prescribed by veterinarians, 
for use by pets--the identical medication--are priced lower than the 
same drug prescribed by prescriptions for doctors' use for people,

[[Page S7858]]

at a time when the primary information consumers have about 
prescription drugs is through the $2 billion annually spent by the 
industry on direct-to-consumer advertising, and those ads never mention 
price --these are the things we are bombarded with on television; we 
see full pages in the leading newspapers in the country--at a time when 
Americans are traveling to foreign countries--to Canada and Mexico, in 
particular--to obtain lower prices, why shouldn't we be doing whatever 
we can to encourage competition in the United States and to lower the 
price of drugs sold in this country?
  I think it is a no-brainer. I think we should set the market forces 
in action. We simply need to allow the public to have access to readily 
available market-based information. This is commonsense, easy-to-
understand, easy-to-implement legislation. We should pass it this year. 
There is no new bureaucracy created. We can have the information at 
HHS. All this legislation would do is require it be made available. The 
potential benefits are enormous.
  It will be interesting to see how this debate unfolds on this 
legislation because my colleagues have not heard the last of me on this 
issue. This makes a lot of sense, whether we do or do not succeed this 
year in extending a prescription benefit as part of Medicare. We ought 
to do it. We can do it. We should do it. I hope my colleagues will join 
me in a bipartisan effort to do so.
  I yield the floor.
                                 ______
                                 
      By Ms. COLLINS (for herself and Ms. Landrieu):
  S. 2964. A bill to amend the Internal Revenue Code of 1986 to provide 
new tax incentives to make health insurance more affordable for small 
businesses, and for other purposes; to the Committee on Finance.


                  access to affordable health care act

  Ms. COLLINS. Mr. President, today I am introducing legislation, the 
Access to Affordable Health Care Act, that is designed to make health 
insurance more affordable both for individuals and for small businesses 
that provide health care coverage for their employees.
  In the past few years, Congress has taken some major steps to expand 
access to affordable health coverage for all Americans. In 1996, the 
Health Insurance Portability and Accountability Act--also known as 
Kassebaum-Kennedy--was signed into law which assures that American 
workers and their families will not lose their health care coverage if 
they change jobs, lose their jobs, or become ill.
  One of the first bills I sponsored on coming to the Senate was 
legislation to establish the State Children's Health Insurance Program, 
which was enacted as part of the Balanced Budget Act. States have 
enthusiastically responded to this program, which now provides 
affordable health insurance coverage to over two million children 
nationwide, including 9,365 in Maine's expanded Medicaid and CubCare 
programs.
  Despite these efforts, the number of uninsured Americans continues to 
rise. At a time when unemployment is low and our nation's economy is 
thriving, more than 44 million Americans--including 200,000 Mainers--do 
not have health insurance. Clearly, we must make health insurance more 
available and more affordable.
  Most Americans under the age of 65 get their health coverage through 
the workplace. It is therefore a common assumption that people without 
health insurance are unemployed. The fact is, however, that most 
uninsured Americans are members of families with at least one full-time 
worker. According to the Health Insurance Association of America, 
almost seven out of ten uninsured Americans live in a family whose head 
of household works full-time.
  In my state of Maine, small business is not just a segment of the 
economy--it is the economy. I am, therefore, particularly concerned 
that uninsured, working Americans are most often employees of small 
businesses. Nearly half of the uninsured workers nationwide are in 
businesses with fewer than 25 employees.
  According to a recent National Federation of Independent Businesses 
survey of over 4,000 of its members, the cost of health insurance is 
the number one problem facing small businesses. And it has been since 
1986. It is time for us to listen and to lend a hand to these small 
businesses.
  Small employers generally face higher costs for health insurance than 
larger firms, which makes them less likely to offer coverage. Premiums 
are generally higher for small businesses because they do not have as 
much purchasing power as large companies, which limits their ability to 
bargain for lower rates. They also have higher administrative costs 
because they have fewer employees among whom to spread the fixed costs 
of a health benefits plan. Moreover, they are not as able to spread 
risks of medical claims over as many employees as can large firms.
  As a consequence, according to the Congressional Budget Office (CBO), 
only 42 percent of small businesses with fewer than 50 employees offer 
health insurance to their employees. By way of contrast, more than 95 
percent of businesses with 100 or more employees offer insurance.

  Moreover, the smaller the business, the less likely it is to offer 
health insurance to its employees. According to the Employee Benefit 
Research Institute (EBRI), only 27 percent of workers in firms with 
fewer than 10 employees received health insurance from their employers 
in their own name, compared with 66 percent of workers in firms with 
1,000 or more employees. Small businesses want to provide health 
insurance for their employees, but the cost is often prohibitive.
  Simply put, the biggest obstacle to health care coverage in the 
United States today is cost. While American employers everywhere--from 
giant multinational corporations to the small corner store--are facing 
huge hikes in their health insurance costs, these rising costs are 
particularly problematic for small businesses and their employees. Many 
small employers are facing premium increases of 20 percent or more, 
causing them either to drop their health benefits or pass the 
additional costs on to their employees through increased deductibles, 
higher copays or premium hikes. This, too, is troubling and will likely 
add to the ranks of the uninsured since it will cause some employees--
particularly lower-wage workers who are disproportionately affected by 
increased costs--to drop or turn down coverage when it is offered to 
them.
  The legislation I am introducing today, the Access to Affordable 
Health Care Act, would help small employers cope with these rising 
costs. My bill would provide new tax credits for small businesses to 
help make health insurance more affordable. It would encourage those 
small businesses that do not currently offer health insurance to do so 
and would help businesses that do offer insurance to continue coverage 
even in the face of rising costs.
  Under my proposal, employers with fewer than ten employees would 
receive a tax credit of 50 percent of the employer contribution to the 
cost of employee health insurance. Employers with ten to 25 employees 
would receive a 30 percent credit. Under my bill, the credit would be 
based on an employer's yearly qualified health insurance expenses of up 
to $2,000 for individual coverage and $4,000 for family coverage.
  The legislation I am introducing today would also make health 
insurance more affordable for individuals and families who must 
purchase health insurance on their own. The Access to Affordable Health 
Care Act would provide an above-the-line tax deduction for individuals 
who pay at least 50 percent of the cost of their health and long-term 
care insurance. Regardless of whether an individual takes the standard 
deduction or itemizes, he or she would be provided relief by the new 
above-the-line deduction.
  My bill also would allow self-employed Americans to deduct the full 
amount of their health care premiums. Some 25 million Americans are in 
families headed by a self-employed individual--of these, five million 
are uninsured. Establishing parity in the tax treatment of health 
insurance costs between the self-employed and those working for large 
businesses is not just a matter of equity. It will also help to reduce 
the number of uninsured, but working Americans. My bill will make 
health insurance more affordable for the 82,000 people in Maine who are 
self-employed. They include our lobstermen, our hairdressers, our 
electricians, our plumbers, and the many owners of mom-and-pop stores 
that dot communities throughout the state.

[[Page S7859]]

  Mr. President, the Access to Affordable Health Care Act would help 
small businesses afford health insurance for their employees, and it 
would also make coverage more affordable for working Americans who must 
purchase it on their own. I urge my colleagues to join me as cosponsors 
of this important legislation.
                                 ______
                                 
      By Mr. HOLLINGS (for himself, Mr. Graham, Mr. Breaux, and Mr. 
        Cleland):
  S. 2965. A bill to amend the Merchant Marine Act, 1936, to establish 
a program to ensure greater security for United States seaports, and 
for other purposes; to the Committee on Commerce, Science, and 
Transportation.


               the port and maritime security act of 2000

  Mr. HOLLINGS. Mr. President, I rise today, to introduce the Port and 
Maritime Security Act of 2000. This legislation is long overdue. It is 
needed to facilitate future technological and advances and increases in 
international trade, and ensure that we have the sort of security 
control necessary to ensure that our borders are protected from drug 
smuggling, illegal aliens, trade fraud, threats of terrorism as well as 
potential threats to our ability to mobilize U.S. military force.
  The Department of Transportation recently commenced an evaluation of 
our marine transportation needs for the 21st Century. In September 
1999, Transportation Secretary Slater issued a preliminary report of 
the Marine Transportation System (MTS) Task Force--An Assessment of the 
U.S. Marine Transportation System. The report reflected a highly 
collaborative effort among public sector agencies, private sector 
organizations and other stakeholders in the MTS.
  The report indicates that the United States has more than 1,000 
harbor channels and 25,000 miles of inland, intracoastal, and coastal 
waterways in the United States which serve over 300 ports, with more 
than 3,700 terminals that handle passenger and cargo movements. These 
waterways and ports link to 152,000 miles of railways, 460,000 miles of 
underground pipelines and 45,000 miles of interstate highways. 
Annually, the U.S. marine transportation system moves more than 2 
billion tons of domestic and international freight, imports 3.3 billion 
tons of domestic oil, transports 134 million passengers by ferry, 
serves 78 million Americans engaged in recreational boating, and hosts 
more than 5 million cruise ship passengers.
  The MTS provides economic value, as waterborne cargo contributes more 
than $742 billion to U.S. gross domestic product and creates employment 
for more than 13 million citizens. While these figures reveal the 
magnitude of our waterborne commerce, they don't reveal the spectacular 
growth of waterborne commerce, or the potential problems in coping with 
this growth. It is estimated that the total volume of domestic and 
international trade is expected to double over the next twenty years. 
The doubling of trade also brings up the troubling issue of how the 
U.S. is going to protect our maritime borders from crime, threats of 
terrorism, or even our ability to mobilize U.S. armed forces.
  Security at our maritime borders is given substantially less federal 
consideration than airports or land borders. In the aviation industry, 
the Federal Aviation Administration (FAA) is intimately involved in 
ensuring that security measures are developed, implemented, and funded. 
The FAA works with various Federal officials to assess threats directed 
toward commercial aviation and to target various types of security 
measures as potential threats change. For example, during the Gulf War, 
airports were directed to ensure that no vehicles were parked within a 
set distance of the entrance to a terminal.
  Currently, each air carrier, whether a U.S. carrier or foreign air 
carrier, is required to submit a proposal on how it plans to meet its 
security needs. Air carriers also are responsible for screening 
passengers and baggage in compliance with FAA regulations. The types of 
machines used in airports are all approved, and in many instances paid 
for by the FAA. The FAA uses its laboratories to check the machinery to 
determine if the equipment can detect explosives that are capable of 
destroying commercial aircrafts. Clearly, we learned from the Pan Am 
103 disaster over Lockerbie, Scotland in 1988. Congress passed 
legislation in 1990 ``the Aviation Security Improvement Act,'' which 
was carefully considered by the Commerce Committee, to develop the 
types of measures I noted above. We also made sure that airports, the 
FAA, air carriers and law enforcement worked together to protect the 
flying public.
  Following the crash of TWA flight 800 in 1996, we also leaped to 
spend money, when it was first thought to have been caused by a 
terrorist act. The FAA spent about $150 million on additional screening 
equipment, and we continue today to fund research and development for 
better, and more effective equipment. Finally, the FAA is responsible 
for ensuring that background checks (employment records/criminal 
records) of security screeners and those with access to secured 
airports are carried out in an effective and thorough manner. The FAA, 
at the direction of Congress, is responsible for certifying screening 
companies, and has developed ways to better test screeners. This is all 
done in the name of protecting the public. Seaports deserve no less 
consideration.
  At land borders, there is a similar investment in security by the 
federal government. In TEA-21, approved $140 million a year for five 
years for the National Corridor Planning and Development and 
Coordinated Border Infrastructure Program. Eligible activities under 
this program include improvements to existing transportation and 
supporting infrastructure that facilitate cross-border vehicles and 
cargo movements; construction of highways and related safety 
enforcement facilities that facilitate movements related to 
international trade; operational improvements, including improvements 
relating to electronic data interchange and use of telecommunications, 
to expedite cross border vehicle and cargo movements; and planning, 
coordination, design and location studies. By way of contrast, at U.S. 
seaports, the federal government invests nothing in infrastructure, 
other than the human presence of the U.S. Coast Guard, U.S. Customs 
Service, and the Immigration and Naturalization Service, and whatever 
equipment those agencies have to accomplish their mandates. Physical 
infrastructure is provided by state-controlled port authorities, or by 
private sector marine terminal operators. There are no controls, or 
requirements in place, except for certain standards promulgated by the 
Coast Guard for the protection of cruise ship passenger terminals. 
Essentially, where sea ports are concerned we have abrogated the 
federal responsibility of border control to the state and private 
sector.

  I think that the U.S. Coast Guard and Customs Agency are doing an 
outstanding job, but they are outgunned. There is simply too much money 
in the illegal activities they are seeking to curtail or eradicate, and 
there is too much traffic coming into, and out of the United States. 
For instance, in the latest data available, 1999, we had more than 10 
million TEU's imported into the United States. For the uninitiated, a 
TEU refers to a twenty-foot equivalent unit shipping container. By way 
of comparison, a regular truck measures 48-feet in length. So in 
translation, we imported close to 5 million truckloads of cargo. 
According to the Customs Service, seaports are able to inspect between 
1 percent and 2 percent of the containers, so in other words, a drug 
smuggler has a 98 percent chance of gaining illegal entry.
  It is amazing to think, that when you or I walk through an 
international airport we will walk through a metal detector, and our 
bags will be x-rayed, and Customs will interview us, and may check our 
bags. However, at a U.S. seaport you could import a 48 foot truck load 
of cargo, and have at least a 98 percent chance of not even being 
inspected. It just doesn't seem right.
  For instance, in my own state, the Port of Charleston which is the 
fourth largest container port in the United States, Customs officials 
have no equipment even capable of x-raying intermodal shipping 
containers. Customs, which is understaffed to start with, must 
physically open containers, and request the use of a canine unit from 
local law enforcement to help with drug or illegal contraband 
detection. This is simply not sufficient.
  The need for the evaluation of higher scrutiny of our system of 
seaport security came at the request of Senator

[[Page S7860]]

Graham, and I would like to at this time commend him for his persistent 
efforts to address this issue. Senator Graham has had problems with 
security at some of the Florida seaports, and although the state has 
taken some steps to address the issue, there is a great need for 
considerable improvement. Senator Graham laudably convinced the 
President to appoint a Commission, designed similarly to the Aviation 
Security Commission, to review security at U.S. seaports.
  The Commission visited twelve major U.S. seaports, as well as two 
foreign ports. It compiled a record of countless hours of testimony and 
heard from, and reviewed the security practices of the shipping 
industry. It also met with local law enforcement officials to discuss 
the issues and their experiences as a result of seaport related crime. 
Unfortunately, the report will not be publicly available until sometime 
in the fall; however, Senator Graham's staff and my staff have worked 
closely with the Commission, to develop legislation--the bill that we 
are introducing--to address the Commission's concerns.
  For instance, the Commission found that twelve U.S. seaports 
accounted for 56 percent of the number of cocaine seizures, 32 percent 
of the marijuana seizures, and 65 percent of heroin seizures in 
commercial cargo shipments and vessels at all ports of entry 
nationwide. Yet, we have done relatively little, other than send in an 
undermanned contingency of Coast Guards and Customs officials to do 
whatever they can.
  Drugs are not the only criminal problem confronting U.S. seaports. 
For example, alien smuggling has become increasingly lucrative 
enterprise. To illustrate, in August of 1999, I.N.S. officials found 
132 Chinese men hiding aboard a container ship docked in Savannah, 
Georgia. The INS district director was quoted as saying; ``This was a 
very sophisticated ring, and never in my 23 years with the INS have I 
seen anything as large or sophisticated''. According to a recent GAO 
report on INS efforts on alien smuggling (RPT-Number: B-283952), 
smugglers collectively may earn as much as several billion dollars per 
year bringing in illegal aliens.
  Another problem facing seaports is cargo theft. Cargo theft does not 
always occur at seaports, but in many instances the theft has occurred 
because of knowledge of cargo contents. International shipping provides 
access to a lot of information and a lot of cargo to many different 
people along the course of its journey. We need to take steps to ensure 
that we do not facilitate theft. Losses as a result of cargo theft have 
been estimated as high as $12 billion annually, and it has been 
reported to have increased by as much as 20 percent recently. The FBI 
has become so concerned that it recently established a multi-district 
task force, Operation Sudden Stop, to crack down on cargo crime.
  The other issues facing seaport security may be less evident, but 
potentially of greater threat. As a nation in general, we have been 
relatively lucky to have been free of some of the terrorist threats 
that have plagued other nations. However, we must not become 
complacent. U.S. seaports are extremely exposed. On a daily basis many 
seaports have cargo that could cause serious illness and death to 
potentially large populations of civilians living near seaports if 
targeted by terrorism.

  The sheer magnitude of most seaports, their historical proximity to 
established population bases, the open nature of the facility, and the 
massive quantities of hazardous cargoes being shipped through a port 
could be extremely threatening to the large populations that live in 
areas surrounding our seaports. The same conditions in U.S. seaports, 
that could expose us to threats from terrorism, could also be used to 
disrupt our abilities to mobilize militarily. During the Persian Gulf 
War, 95 percent of our military cargo was carried by sea. Disruption of 
sea service, could have resulted in a vastly different course of 
history. We need to ensure that it does not happen to any future 
military contingencies.
  As I mentioned before, our seaports are international borders, and 
consequently we should treat them as such. However, I am realistic 
about the possibilities for increasing seaport security, the realities 
of international trade, and the many functional differences inherent in 
the different seaport localities. Seaports by their very nature, are 
open and exposed to surrounding areas, and as such it will be 
impossible to control all aspects of security, however, sensitive or 
critical safety areas should be protected. I also understand that U.S. 
seaports have different security needs in form and scope. For instance, 
a seaport in Alaska, that has very little international cargo does not 
need the same degree of attention that a seaport in a major 
metropolitan center, which imports and exports thousands of 
international shipments. However, the legislation we are introducing 
today will allow for public input and will consider local issues in the 
implementation of new guidelines on port security, so as to address 
such details.
  Substantively, the Port and Maritime Security Act establishes a 
multi-pronged effort to address security needs at U.S. Seaports, and in 
some cases formalizes existing practices that have proven effective. 
The bill authorizes the Coast Guard to establish a task force on port 
security in consultation with U.S. Customs and the Maritime 
Administration.
  The purpose of the task force is to implement the provisions of the 
act; to coordinate programs to enhance the security and safety of U.S. 
seaports; to provide long-term solutions for seaport safety issues; to 
coordinate with local port security committees established by the Coast 
Guard to implement the provisions of the bill; and to ensure that the 
public and local port security committees are kept informed about 
seaport security enhancement developments.
  The bill requires the U.S. Coast Guard to establish local port 
security committees at each U.S. seaport. The membership of these 
committees is to include representatives of the port authority, labor 
organizations, the private sector, and federal, state, and local 
government officials. These committees will be chaired by the U.S. 
Coast Guard's Captain-of-the-Port, and will implement the provisions 
and requirements of the bill locally, to ensure that local 
considerations are considered in the establishment of security 
guidelines.
  The bill requires the task force, in consultation with the U.S. 
Customs Service and MarAd, to develop a system of providing port 
security threat assessments for U.S. seaports, and to revise this 
assessment at least triennially. The threat assessment shall be 
performed with the assistance of local officials, through local port 
security committees, and ensure the port is made aware of and 
participates in the analysis of security concerns.
  The bill also requires the task force to develop voluntary minimum 
security guidelines that are linked to the U.S. Coast Guard Captain-of-
the-Port controls, to include a model port concept, and to include 
recommended ``best practices'' guidelines for use of maritime terminal 
operators. Local port security committees are to participate in the 
formulation of security guidelines, and the Coast Guard is required to 
pursue the international adoption of similar security guidelines. 
Additionally, the Maritime Administration (MarAd) is required to pursue 
the adoption of proper private sector accreditation of ports that 
adhere to guidelines (similar to a underwriters lab approval, or ISO 
9000 accreditations).
  The bill authorizes MarAd to provide Title XI loan guarantees to 
cover the costs of port security infrastructure improvements, such as 
cameras and other monitoring equipment, fencing systems and other types 
of physical enhancements. The bill authorizes $10 million, annually for 
four years, to cover costs, as defined by the Credit Reform Act, which 
could guarantee up to $400 million in loans for security enhancements. 
The bill also establishes a matching grant program to develop and 
transfer technology to enhance security at U.S. seaports. The U.S. 
Customs Service may award up to $12 million annually for four years for 
this technology program, which is required to be awarded on a 
competitive basis. Long-term technology development is needed to ensure 
that we can develop non-intrusive technology that will allow trade to 
expand, but also allow us greater ability to detect criminal threat.

  The bill also authorizes additional funding for the U.S. Customs 
Service to carry out the requirements of the

[[Page S7861]]

bill, and more generally, to enhance seaport security. The bill 
requires a report to be attached on security and a revision of 1997 
document entitled ``Port Security: A National Planning Guide.'' The 
report and revised guide are to be submitted to Congress and are to 
include a description of activities undertaken under the Port and 
Maritime Security Act of 2000, in addition to analysis of the effect of 
those activities on port security and preventing acts of terrorism and 
crime.
  The bill requires the Attorney General, to the extent feasible, to 
coordinate reporting of seaport related crimes and to work with state 
law enforcement officials to harmonize the reporting of data on cargo 
theft. Better data will be crucial in identifying the extent and 
location of criminal threats and will facilitate law enforcement 
efforts combating crime. The bill also requires the Secretaries of 
Agriculture, Treasury, and Transportation, as well as the Attorney 
General to work together to establish shared dockside inspection 
facilities at seaports for federal and state agencies, and authorizes 
$3 million, annually for four years, to carry out this section. The 
bill also requires the Customs Service to improve reporting of imports 
at seaports, and to eliminate user fees for domestic U.S.- flag 
carriers carrying in-bond domestic cargo.
  Finally, the bill reauthorizes an extension of tonnage duties through 
2006, and makes available $40,000,000 from the collections of these 
duties to carry out the Port and Maritime Security Act. These fees 
currently are set at certain levels, and are scheduled to be reduced in 
2002. The legislation reauthorizes and extends the current fee level 
for an additional four years, but dedicates its use to enhancing our 
efforts to fight crime at U.S. seaports and to facilitating improved 
protection of our borders, as well as to enhance our efforts to ward 
off potential threats of terrorism.
  Mr. GRAHAM. Mr. President, I rise today, joined by Senators Hollings, 
Breaux, and Cleland, to introduce the Port and Maritime Security Act of 
2000, a bill that would significantly improve the overall security and 
cargo processing operations at U.S. seaports.
  For some time, I have very been concerned that seaports--unlike our 
airports, lack the advanced security procedures and equipment that are 
necessary to prevent acts of terrorism, cargo theft and drug 
trafficking. In addition, although seaports conduct the vast majority 
of our international trade, the activities of law enforcement and trade 
processing agencies--such as the Coast Guard, Customs, the Department 
of Agriculture, the FBI, and state and local agencies--are often 
uncoordinated and fragmented. Taken together, the lack of security and 
interagency coordination at U.S. seaports present an extremely 
attractive target for criminals and a variety of criminal activities.
  Before discussing the specifics of this legislation, it is important 
to describe the circumstances that have caused the security crisis at 
our seaports. Today, U.S. seaports conduct 95 percent of the Nation's 
international trade. Over the next twenty years, the total volume of 
imported and exported goods at seaports is expected to increase three-
fold.
  In addition, the variety of trade and commerce that are carried out 
at seaports has greatly expanded. Bulk cargo, containerized cargo, 
passenger cargo and tourism, intermodal transportation systems, and 
complex domestic and international trade relationships have 
significantly changed the nature and conduct of seaport commerce. This 
continuing expansion of activity at seaports has increased the 
opportunities for a variety of illegal activities, including drug 
trafficking, cargo theft, auto theft, illegal immigration, and the 
diversion of cargo, such as food, to avoid safety inspections.
  In the face of these new challenges, it appears that the U.S. port 
management system has fallen behind the rest of the world. We lack a 
comprehensive, nationwide strategy to address the security issues that 
face our seaport system.
  Therefore, in 1998, I asked the President to establish a Federal 
commission to evaluate both the nature and extent of crime and the 
overall state of security in seaports and to develop recommendations 
for improving the response of Federal, State and local agencies to all 
types of seaport crime. In response to my request, President Clinton 
established the Interagency Commission on Crime and Security in U.S. 
Seaports on April 27, 1999.
  Over the past year, the Commission has conducted on-site surveys of 
twelve (12) U.S. seaports, including the Florida ports of Miami and 
Port Everglades. At each location, interviews and focus group sessions 
were held with representatives of Government agencies and the trade 
community. The focus group meetings with Federal agencies, State and 
local government officials, and the trade community were designed to 
solicit their input regarding issues involving crime, security, 
cooperation, and the appropriate government response to these issues. 
The Commission also visited two large foreign ports--Rotterdam and 
Felixstowe--in order to assess their security procedures and use their 
standards and procedures as a ``benchmark'' for operations at U.S. 
ports.

  In February of this year, the Commission issued preliminary findings 
which outlined many of the common security problems that were 
discovered in U.S. seaports. Among other conclusions, the Commission 
found that: (1) intelligence and information sharing among law 
enforcement agencies needs to be improved at many ports; (2) many ports 
do not have any idea about the threats they face, because vulnerability 
assessments are not performed locally; (3) a lack of minimum security 
standards at ports and at terminals, warehouses, and trucking firms, 
leaves many ports and port users vulnerable to theft, pilferage, and 
unauthorized access by criminals; and (4) advanced equipment, such as 
small boats, cameras, vessel tracking devices, and large scale x-rays, 
are lacking at many high-risk ports. Although the Commission's final 
report will not be released until later this summer, I have worked 
closely with them to draft this legislation.
  The legislation Senator Hollings and I are introducing today will 
begin to address the problems of our seaports by directing the 
Commandant of the Coast Guard, in consultation with the Customs Service 
and the Maritime Administration, to establish a Task Force on Port 
Security. The new Task Force on Port Security will be responsible for 
implementing all of the provisions of our legislation. It will have a 
balanced representation, including Federal, State, local, and private 
sector representatives familiar with port operations, including port 
labor.
  To ensure full implementation of this legislation, the bill requires 
the U.S. Coast Guard to establish local port security committees at 
each U.S. seaport. Membership of these committees will include 
representatives of the local port authority, labor organizations, the 
private sector, and Federal, State, and local government officials. The 
committees will be chaired by the local U.S. Coast Guard Captain-of-
the-Port.
  In addition, our bill requires the Task Force on Port Security to 
develop a system of providing port security threat assessments for U.S. 
seaports, and to revise these assessments at least every three years. 
The local port security committees will participate in the analysis of 
threat and security concerns.
  Perhaps most important, the bill requires the Task Force to develop 
voluntary minimum security guidelines for seaports, develop a ``model 
port'' concept for all seaports, and include recommended ``best 
practices'' guidelines for use by maritime terminal operators. Again, 
local port security committees are to participate in the formulation of 
these security guidelines, and the Coast Guard is required to pursue 
the international adoption--through the International Maritime 
Organization and other organizations--of similar security guidelines.
  Some States and localities have already conducted seaport security 
reviews, and have implemented strategies to correct the security 
shortfalls that they have discovered. In 1999, Florida initiated 
comprehensive security review of seaports within the state. Led by 
James McDonough, Director of the governor's Office of Drug Control, the 
review found that 150 to 200 metric tons of cocaine--or fifty percent 
of the U.S. total-flow into Florida annually through ports throughout 
the state.

[[Page S7862]]

  Both the Florida Legislature and the Florida National Guard 
recognized the need to address this growing problem and acted 
decisively. Legislation was introduced in the Florida Senate that 
called for the development and implementation of statewide port 
security plans, including requirements for minimum security standards 
and compliance inspections. In fiscal year 2001, the Florida National 
Guard will commit $1 million to provide counter-narcotics support at 
selected ports-of-entry to both strengthen U.S. Customs Service 
interdiction efforts and enhance overall security at these ports.
  In a July 21, 2000, editorial in the Tallahassee Democrat, Mr. 
McDonough identifies the evaluation of Florida's seaports and the 
implementation of security standards as a priority initiative in 
stemming the flow of drugs into Florida.
  We realize that U.S. seaports are a joint federal, state, and local 
responsibility, and we seek to support comprehensive port security 
efforts such as the one in Florida. Therefore, our bill provides 
significant incentives for both port infrastructure improvements and 
research and development on new port security equipment.
  The bill authorizes the Maritime Administration to provide title XI 
loan guarantees to cover the costs of port security infrastructure 
improvements, such as cameras and other monitoring equipment, fencing 
systems, as well as other physical security enhancements. The 
authorization level of $10 million annually, for four years, could 
guarantee up to $400 million in loans for seaport security 
enhancements.
  In addition, the legislation will also establish a matching grant 
program to develop and transfer technology to enhance security at U.S. 
seaports. The U.S. Customs Service may award up to $12 million 
annually, for four years, for this competitive grant program.
  We also must improve the reporting on, and response to, seaport 
crimes as they take place. Therefore, the bill requires the Attorney 
General to coordinate reports of seaport related crimes and to work 
with State law enforcement officials to harmonize the reporting of data 
of cargo theft. To facilitate this coordination, the bill authorizes $2 
million annually, for four years, to modify the Justice Department's 
National Incident-Based Reporting System. It also authorizes grants to 
states to help them modify their reporting systems to capture crime 
data more accurately.
  In order to pay for all of these important initiatives, the bill 
would reauthorize an extension of tonnage duties through 2006. It would 
also make available $40,000,000 from the collection of these duties to 
carry out all of the provisions of the Port and Maritime Security Act. 
Currently, the collection of tonnage duties is not directed towards a 
specific program. Implementing the provisions of the Port and Maritime 
Security Act of 2000 will produce concrete improvements in the 
efficiency, safety, and security of our nation's seaports, and will 
result in a demonstrable benefit for those who currently pay tonnage 
duties.
  Seaports play one of the most critical roles in expanding our 
international trade and protecting our borders from international 
threats. The ``Port and Maritime Security Act'' recognizes these 
important responsibilities of our seaports, and devotes the necessary 
resources to move ports into the 21st century. I urge my colleagues to 
look towards the future by supporting this critical legislation--and by 
taking action to protect one of our most valuable tools in promoting 
economic growth.
  Mr. President, I ask unanimous consent to print the July 21, 2000 
editorial from The Tallahasee Democrat in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

             [From the Tallahassee Democrat, July 21, 2000]

              Florida's Drug War: Looking Back--And Ahead

                        (By James R. McDonough)

       The recent signing of anti-drug legislation by Gov. Jeb 
     Bush should come as welcome news to Debbie Alumbaugh and 
     parents like her.
       In 1998, Michael Tiedemann, the Fort Pierce woman's 15-
     year-old son, choked to death on his vomit after getting sick 
     from ingesting GHB and another drug. GHB is one of several 
     ``club'' or ``designer'' drugs that are a growing problem in 
     Tallahassee, as pointed out recently in a letter to the 
     Democrat by Rosalind Tompkins, director of the newly created 
     Anti-Drug Anti-Violence Alliance. The new law won't bring 
     Michael back, but it lessens the chance that GHB and other 
     dangerous substances will fall into other young hands. Gov. 
     Bush, who has made reducing drug abuse one of his top 
     priorities, approved the following anti-drug measures passed 
     during the 2000 session:
       A controlled substance act, which is aimed at GHB, ecstasy 
     and other club drugs, and more established drugs such as 
     methamphetamine. The new law addresses the trafficking, sale, 
     purchase, manufacture and possession of these drugs.
       A nitrous oxide criminalization act that addresses the 
     illegal possession, sale, purchase or distribution of this 
     substance.
       A money-laundering bill designed to tighten security at 
     Florida's seaports. The measure also creates a contraband 
     interdiction team that will search vehicles for illegal 
     drugs.
       A bill that applies the penalties under Florida's ``10/20/
     Life'' law to juveniles who carry a gun while trafficking in 
     illegal drugs.
       Gov. Bush also approved a budget that includes an estimated 
     $270 million for drug abuse prevention and treatment. This is 
     a big step in the right direction, as these services, 
     especially drug prevention programs aimed at children, are 
     critical.
       Considering the above legislation--along with the 
     publication of the Florida Drug Control Strategy, a statewide 
     crackdown on rave clubs, a survey that shows significant 
     reductions in youth use of marijuana, cocaine and inhalants, 
     and a decline in heroin and cocaine overdose deaths--the past 
     year has shown some progress toward reducing drug abuse.
       Even with additional dollars for drug abuse treatment, the 
     number of treatment beds still falls far short of demand. The 
     wait time to enter a treatment program is measured in weeks. 
     This is unacceptable when you consider the damage done to the 
     individual and to society as an addict awaits treatment. We 
     must continue to narrow the treatment gap until those who 
     need this vital help can get it in a timely manner.
       Our efforts cannot be solely focused on the demand for 
     drugs. A sound drug control strategy must also address 
     supply. The Office of Drug Control has several initiatives to 
     stem the flow of drugs into Florida.
       An intelligence effort to determine the types of drugs 
     entering our state, the way in which they enter, who brings 
     them in and the amounts. This includes the expansion of a 
     drug supply database, all of which go to better inform 
     counter-drug operations.
       An evaluation of Florida's seaports and the implementation 
     of standards for security against drug smuggling and money 
     laundering.
       The addition of a third High Intensity Drug Trafficking 
     Area--a formal designation that creates a multi-agency anti-
     drug task force--covering Northeast Florida.
       A systematic counter-drug effort aimed at interdicting and 
     deterring drug trafficking on Florida's roads and highways.
       Development of intelligence-driven multi-jurisdictional 
     counter-drug operations that combine the efforts of law 
     enforcement agencies at the federal, state and local levels.
       Our efforts will continue. As history has taught us, the 
     struggle against drugs is one that never ends. The minute we 
     believe we have put the matter to rest and relax our guard, 
     drug use immediately begins to resurge. Conversely, if we 
     address the problem in a rational, balanced way, drug abuse 
     abates. The fact is that government can only do so much in 
     countering illegal drugs. Because substance abuse has such as 
     pervasive impact on the family and on society, addressing the 
     problem falls to the entire community: government, educators, 
     community and business leaders, clergy, coaches and, most 
     importantly, parents.
                                 ______
                                 
      By Mr. JEFFORDS (for himself, Mr. Baucus, Mr. Edwards, and Mr. 
        Roth):
  S. 2966. A bill to amend the Fair Labor Standards Act of 1938 to 
prohibit retaliation and confidentiality policies relating to 
disclosure of employee wages, and for other purposes; to the Committee 
on Health, Education, Labor, and Pensions.


                   the wage awareness protection act

  Mr. JEFFORDS. Mr. President, it is with great pride that I introduce 
the Wage Awareness Protection Act.
  We have made great strides in the fight against workplace 
discrimination. The enactment of the Civil Rights Act more than 30 
years ago served to codify this Nation's commitment to the basic 
principles of equal opportunity and fairness in the workplace. At the 
time, we enacted not one, but two laws, aimed at ensuring that women 
receive equal pay for equal work: the Equal Pay Act (``EPA'') of 1963, 
and to Title VII of the 1964 Civil Rights Act. More recently, Congress 
reaffirmed this commitment by passing the Civil Rights Act of 1991, 
which expanded the 1964 Civil Rights Act and gave victims of 
intentional discrimination the ability to recover compensatory and 
punitive damages.

[[Page S7863]]

  Certainly a lot has changed since we first enacted these laws. It 
should come as no surprise that more women are participating in the 
labor force than ever before, with women now making up an estimated 46 
percent of the workforce. Women are also spending more time in school 
and are now earning over half of all bachelor's and master's degrees. 
In addition, women are breaking down longstanding barriers in certain 
industries and occupations.
  Despite these advances, the unfortunate reality is that pay 
discrimination has continued to persist in some workplaces. In a recent 
hearing before the Committee on Health, Education, Labor and Pensions, 
we heard testimony that a principal reason why gender-based wage 
discrimination has continued is that many female employees are simply 
unaware that they are being paid less than their male counterparts. 
These unwitting victims of wage discrimination are often kept in the 
dark by employer policies that prohibit employees from sharing salary 
information. Employees are warned that they will be reprimanded or 
terminated if they discuss salary information with their co-workers.
  I believe that a fundamental barrier to uncovering and resolving 
gender-based pay discrimination is fear of employer retaliation. 
Employees who suspect wage discrimination should be able to share their 
salary information with co-workers. I am not alone in my belief. 
According to a recent Business and Professional Women/USA survey, 
Americans overwhelmingly support anti-retaliation legislation. And, 65 
percent of those polled, said they believe legislation should protect 
those who suspect wage discrimination from employer retaliation for 
discussing salary information with co-workers.
  The Worker Awareness Protection Act will prohibit employers from 
having blanket wage confidentiality policies preventing employees from 
sharing their salary information. In addition, this new legislation 
will bolster the Equal Pay Act's retaliation provisions including 
providing workers with protection from employer retaliation for 
voluntarily discussing their own salary information with coworkers. I 
am excited about this legislation. It is my hope that it will help 
point the way to elimination of any pernicious discriminatory pay 
practices.
  I urge all my colleagues to join me in supporting this bill.
  I ask unanimous consent that a copy of this bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2966

       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 ``Wage Awareness Protection 
     Act''.

     SEC. 2. PROHIBITED ACTS.

       (a) Prohibition on Retaliation and Confidentiality 
     Policies.--Section 6(d) of the Fair Labor Standards Act of 
     1938 (29 U.S.C. 206(d)) is amended--
       (1) by redesignating paragraph (4) as paragraph (6); and
       (2) by inserting after paragraph (3) the following:
       ``(4) It shall be unlawful for any person--
       ``(A) to discharge or in any other manner discriminate 
     against any employee because such employee--
       ``(i) has made a charge, assisted, or participated in any 
     manner in an investigation, hearing, or other proceeding 
     under this subsection; or
       ``(ii) has inquired about, discussed, or otherwise 
     disclosed the wages of the employee, or another employee who 
     is not covered by a confidentiality policy that is lawful 
     under subparagraph (B); or
       ``(B) to make or enforce a written or oral confidentiality 
     policy that prohibits an employee from inquiring about, 
     discussing, or otherwise disclosing the wages of the employee 
     or another employee, except that nothing in this subparagraph 
     shall be construed--
       ``(i) to prohibit an employer from making or enforcing such 
     a confidentiality policy, for an employee who regularly, in 
     the course of carrying out the employer's business, obtains 
     information about the wages of other employees, that 
     prohibits the employee from inquiring about, discussing, or 
     otherwise disclosing the wages of another employee, except 
     that an employee may discuss or otherwise disclose the 
     employee's own wages; and
       ``(ii) to require the employer to disclose an employee's 
     wages.
       ``(5) For purposes of sections 16 and 17, a violation of 
     paragraph (4) shall be treated as a violation of section 
     15(a)(3), rather than as a violation of this section.''.
       (b) Conforming Amendment.--Section 6(d)(3) of the Fair 
     Labor Standands Act of 1938 (29 U.S.C. 206(d)(3) is amended 
     by inserting ``(other than paragraph (4))'' after ``this 
     subsection''.
                                 ______
                                 
      By Mr. MURKOWSKI (for himself, Mr. Gorton, Mr. Kerrey, and Mr. 
        Jeffords):
  S. 2967. A bill to amend the Internal Revenue Code of 1986 to 
facilitate competition in the electric power industry; to the Committee 
on Finance.


           the electric power industry tax modernization act

  Mr. MURKOWSKI. Mr. President, today I am joined by Senators, Gorton, 
Kerrey and Jeffords in introducing the Electric Power Industry Tax 
Modernization Act, legislation that will facilitate the opening up of 
the nation's energy grid to electricity competition. This landmark 
legislation demonstrates the good faith of the most important players 
in the industry--the investor owned utilities (IOUs) and the municipal 
utilities.
  In the Energy Committee, which I currently Chair, we have held more 
than 18 days of hearings and heard testimony from more than 160 
witnesses on electricity restructuring. Although those 160 witnesses 
had many differing views, every witness agreed that the tax laws must 
be rewritten to reflect the new reality of a competitive electricity 
market.
  Already, 24 states have implemented laws deregulating their 
electricity markets. And the other 36 states are all considering 
deregulation schemes. Faced with that reality, the federal tax laws 
must be updated to ensure that tax laws which made sense when 
electricity was a regulated monopoly are not allowed to interfere with 
opening up the nation's electrical infrastructure to competition.
  Last October I held a hearing in the Finance Committee Subcommittee 
on Long Term Growth to examine all of the tax issues that confront the 
industry. At the end of the hearing I urged all parties to sit down at 
the negotiating table and hammer out a consensus that will resolve the 
tax issues.
  The bill we are introducing today reflects the compromise that has 
been reached between the IOUs and the municipal utilities.
  One of the major problems that the current tax rules create is to 
undermine the efficiency of the entire electric system in a deregulated 
environment because these rules effectively preclude public power 
entities from participating in State open access restructuring plans, 
without jeopardizing the exempt status of their bonds.
  No one wants to see bonds issued to finance public power become 
retroactively taxable because a municipality chooses to participate in 
a state open access plan. That would cause havoc in the financial 
markets and could undermine the financial stability of many 
municipalities.
  The bill we are introducing overcomes this problem by allowing 
municipal systems to elect to terminate the issuance of new tax-exempt 
bonds for generation facilities in return for grandfathering existing 
bonds. In addition, the bill allows tax-exempt bonds to be issued to 
finance some new transmission facilities.
  I recognize that in making these two changes in the tax law, the 
municipal utilities have given up a substantial financing tool that has 
been at the heart of the controversy between the municipal utilities 
and the IOUs.
  At the same time, the bill updates the tax code to reflect the fact 
that the regulated monopoly model no longer exists. For example, the 
bill modifies the current rules regarding the treatment of nuclear 
decommissioning costs to make certain that utilities will have the 
resources to meet those future costs and clarifies the tax treatment of 
these funds if a nuclear facility is sold.
  The bill also provides tax relief for utilities that spin off or sell 
transmission facilities to independent participants in FERC approved 
regional transmission organizations.
  Another section of the bill changes the tax rules regarding 
contributions in aid of construction for electric transmission and 
distribution facilities. This is an especially important provision; 
however when this bill is considered in the Finance Committee, I intend 
to modify this proposal so that it is expanded to all contributions in 
aid of construction, not just for electric transmission and 
distribution.
  The IOUs and the Municipal utilities are to be commended for coming 
up

[[Page S7864]]

with this agreement. However, there is one other element of the tax 
code that needs to be addressed if we are going to open the entire grid 
to competition. And that sector is the cooperative sector.
  Currently, coops may not participate in wheeling power through their 
lines because of concern that they will violate the so-called 85-15 
test. I urge the coops to sit down with the other utilities and reach 
an accord so that when we consider this legislation, the coops' will be 
included in a tax bill.
  Mr. GORTON. Mr. President, today I am extremely pleased to co-sponsor 
the Electric Power Industry Tax Modernization Act. This legislation, 
when enacted, will contribute to a more reliable and efficient electric 
power industry that will provide benefits for all Americans connected 
to the interstate power grid.
  I have been working for three years to resolve the tax problems for 
consumer-owned municipal utilities, those that are often referred to as 
Public Power. Nearly half the citizens of my state are served by Public 
Power.
  These problems are due to outdated tax statutes that were written in 
a different era-an era where the emerging competition in the wholesale 
electricity market was not envisioned. The negative effects of these 
outdated tax provisions have impacted not only consumers of Public 
Power, but also tens of millions of other customers. Public Power is 
often prevented from sharing the use of their transmission systems 
solely due to these tax provisions. These outdated tax provisions are 
negatively impacting the reliability of entire regions of our nation, 
adding stress to an already stressed system.
  In addition to Public Power, other types of utilities are prevented 
from adapting to this new era of emerging competition by other 
constraints in this outdated area of the tax law. All of these 
uncertainties have led to a condition where investment has slowed in 
this critical area of the economy, just as we need more investment to 
assure sufficient power plants and transmission lines to feed a growing 
economy that is increasingly dependent on reliable and affordable 
electricity.
  This compromise bill includes the essence of my legislation, S. 386, 
The Bond Fairness and Protection Act that I introduced last year with 
Senator Kerrey from Nebraska, a bill that includes an additional 32 co-
sponsors in the Senate. This legislative language will allow Public 
Power to move into the future with certainty, and protects the millions 
of American citizens who hold current investments in Public Power debt.
  The bill also includes legislative language that resolves conflicts 
for investor-owned utilities. These changes are also needed to solve 
problems in other parts of the outdated tax code as it pertains to 
electricity. The new provisions will also help contribute to a more 
reliable and orderly electricity system in our nation.
  I look forward to gaining additional support for this bill among the 
other members of the Senate, and I look forward to the Finance 
Committee's consideration of this legislation in September. As soon as 
this legislation can be enacted, American electricity consumers will 
begin to enjoy a more certain and reliable future regarding their 
electricity needs.
  Mr. KERREY. Mr. President, today I wish to join my colleagues, 
Senator Murkowski, Gorton, and Jeffords in introducing legislation that 
will help ensure that customers receive reliable and affordable 
electricity. The Electric Power Industry Tax Modernization Act is the 
culmination of months-long discussions between shareholder-owned 
utilities and publicly-owned utilities. Without the diligence and 
patience exhibited by these groups, it is doubtful that Congress could 
be in the position to act on this issue. Additionally, I would like to 
recognize the efforts of Senator Murkowski and Senator Gorton, whose 
efforts at getting these groups to sit down and discuss these issues 
was invaluable to the final agreement.
  Mr. President, this legislation will ensure that Nebraskans continue 
to benefit from the publicly-owned power they currently receive. 
Nebraska has 154 not-for-profit community-based public power systems. 
It is the only state which relies entirely on public power for 
electricity. This system has served my state well as Nebraskans enjoy 
some of the lowest electricity rates in the nation.
  In closing, I would urge my colleagues to join this bipartisan effort 
to address the changes steaming from electrical restructuring.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2967

       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 ``Electric Power Industry Tax 
     Modernization Act''.

     SEC. 2. TAX-EXEMPT BOND FINANCING OF CERTAIN ELECTRIC 
                   FACILITIES.

       (a) Rules Applicable to Electric Output Facilities.--
     Subpart A of part IV of subchapter B of chapter 1 of the 
     Internal Revenue Code of 1986 (relating to tax exemption 
     requirements for State and local bonds) is amended by 
     inserting after section 141 the following new section:

     ``SEC. 141A. ELECTRIC OUTPUT FACILITIES.

       ``(a) Election To Terminate Tax-Exempt Bond Financing for 
     Certain Electric Output Facilities.--
       ``(1) In general.--A governmental unit may make an 
     irrevocable election under this paragraph to terminate 
     certain tax-exempt financing for electric output facilities. 
     If the governmental unit makes such election, then--
       ``(A) except as provided in paragraph (2), on or after the 
     date of such election the governmental unit may not issue 
     with respect to an electric output facility any bond the 
     interest on which is exempt from tax under section 103, and
       ``(B) notwithstanding paragraph (1) or (2) of section 
     141(a) or paragraph (4) or (5) of section 141(b), no bond 
     which was issued by such unit with respect to an electric 
     output facility before the date of enactment of this 
     subsection (or which is described in paragraph (2)(B), (D), 
     (E) or (F)) the interest on which was exempt from tax on such 
     date, shall be treated as a private activity bond.
       ``(2) Exceptions.--An election under paragraph (1) does not 
     apply to any of the following bonds:
       ``(A) Any qualified bond (as defined in section 141(e)).
       ``(B) Any eligible refunding bond (as defined in subsection 
     (d)(6)).
       ``(C) Any bond issued to finance a qualifying transmission 
     facility or a qualifying distribution facility.
       ``(D) Any bond issued to finance equipment or facilities 
     necessary to meet Federal or State environmental requirements 
     applicable to an existing generation facility.
       ``(E) Any bond issued to finance repair of any existing 
     generation facility. Repairs of facilities may not increase 
     the generation capacity of the facility by more than 3 
     percent above the greater of its nameplate or rated capacity 
     as of the date of enactment of this section.
       ``(F) Any bond issued to acquire or construct (i) a 
     qualified facility, as defined in section 45(c)(3), if such 
     facility is placed in service during a period in which a 
     qualified facility may be placed in service under such 
     section, or (ii) any energy property, as defined in section 
     48(a)(3).
       ``(3) Form and effect of election.--
       ``(A) In general.--An election under paragraph (1) shall be 
     made in such a manner as the Secretary prescribes and shall 
     be binding on any successor in interest to, or any related 
     party with respect to, the electing governmental unit. For 
     purposes of this paragraph, a governmental unit shall be 
     treated as related to another governmental unit if it is a 
     member of the same controlled group.
       ``(B) Treatment of electing governmental unit.--A 
     governmental unit which makes an election under paragraph (1) 
     shall be treated for purposes of section 141 as a person 
     which is not a governmental unit and which is engaged in a 
     trade or business, with respect to its purchase of 
     electricity generated by an electric output facility placed 
     in service after such election, if such purchase is under a 
     contract executed after such election.
       ``(4) Definitions.--For purposes of this subsection:
       ``(A) Existing generation facility.--The term `existing 
     generation facility' means an electric generation facility in 
     service on the date of the enactment of this subsection or 
     the construction of which commenced before June 1, 2000.
       ``(B) Qualifying distribution facility.--The term 
     `qualifying distribution facility' means a distribution 
     facility over which open access distribution services 
     described in subsection (b)(2)(C) are provided.
       ``(C) Qualifying transmission facility.--The term 
     `qualifying transmission facility' means a local transmission 
     facility (as defined in subsection (c)(3)(A)) over which open 
     access transmission services described in subparagraph (A), 
     (B), or (E) of subsection (b)(2) are provided.
       ``(b) Permitted Open Access Activities and Sales 
     Transactions Not a Private Business Use for Bonds Which 
     Remain Subject to Private Use Rules.--
       ``(1) General rule.--For purposes of this section and 
     section 141, the term `private business use' shall not 
     include a permitted

[[Page S7865]]

     open access activity or a permitted sales transaction.
       ``(2) Permitted open access activities.--For purposes of 
     this section, the term `permitted open access activity' means 
     any of the following transactions or activities with respect 
     to an electric output facility owned by a governmental unit:
       ``(A) Providing nondiscriminatory open access transmission 
     service and ancillary services--
       ``(i) pursuant to an open access transmission tariff filed 
     with and approved by FERC, but, in the case of a voluntarily 
     filed tariff, only if the governmental unit voluntarily files 
     a report described in paragraph (c) or (h) of section 35.34 
     of title 18 of the Code of Federal Regulations or successor 
     provision (relating to whether or not the issuer will join a 
     regional transmission organization) not later than the later 
     of the applicable date prescribed in such paragraphs or 60 
     days after the date of the enactment of this section,
       ``(ii) under an independent system operator agreement, 
     regional transmission organization agreement, or regional 
     transmission group agreement approved by FERC, or
       ``(iii) in the case of an ERCOT utility (as defined in 
     section 212(k)(2)(B) of the Federal Power Act (16 U.S.C. 
     824k(k)(2)(B)), pursuant to a tariff approved by the Public 
     Utility Commission of Texas.
       ``(B) Participation in--
       ``(i) an independent system operator agreement,
       ``(ii) a regional transmission organization agreement, or
       ``(iii) a regional transmission group,
     which has been approved by FERC, or by the Public Utility 
     Commission of Texas in the case of an ERCOT utility (as so 
     defined). Such participation may include transfer of control 
     of transmission facilities to an organization described in 
     clause (i), (ii), or (iii).
       ``(C) Delivery on a nondiscriminatory open access basis of 
     electric energy sold to end-users served by distribution 
     facilities owned by such governmental unit.
       ``(D) Delivery on a nondiscriminatory open access basis of 
     electric energy generated by generation facilities connected 
     to distribution facilities owned by such governmental unit.
       ``(E) Other transactions providing nondiscriminatory open 
     access transmission or distribution services under Federal, 
     State, or local open access, retail competition, or similar 
     programs, to the extent provided in regulations prescribed by 
     the Secretary.
       ``(3) Permitted sales transaction.--For purposes of this 
     subsection, the term `permitted sales transaction' means any 
     of the following sales of electric energy from existing 
     generation facilities (as defined in subsection (a)(4)(A)):
       ``(A) The sale of electricity to an on-system purchaser, if 
     the seller provides open access distribution service under 
     paragraph (2)(C) and, in the case of a seller which owns or 
     operates transmission facilities, if such seller provides 
     open access transmission under subparagraph (A), (B), or (E) 
     of paragraph (2).
       ``(B) The sale of electricity to a wholesale native load 
     purchaser or in a wholesale stranded cost mitigation sale--
       ``(i) if the seller provides open access transmission 
     service described in subparagraph (A), (B), or (E) of 
     paragraph (2), or
       ``(ii) if the seller owns or operates no transmission 
     facilities and transmission providers to the seller's 
     wholesale native load purchasers provide open access 
     transmission service described in subparagraph (A), (B), or 
     (E) of paragraph (2).
       ``(4) Definitions and special rules.--For purposes of this 
     subsection:
       ``(A) On-system purchaser.--The term `on-system purchaser' 
     means a person whose electric facilities or equipment are 
     directly connected with transmission or distribution 
     facilities which are owned by a governmental unit, and such 
     person--
       ``(i) purchases electric energy from such governmental unit 
     at retail and either was within such unit's distribution area 
     in the base year or is a person as to whom the governmental 
     unit has a service obligation, or
       ``(ii) is a wholesale native load purchaser from such 
     governmental unit.
       ``(B) Wholesale native load purchaser.--The term `wholesale 
     native load purchaser' means a wholesale purchaser as to whom 
     the governmental unit had--
       ``(i) a service obligation at wholesale in the base year, 
     or
       ``(ii) an obligation in the base year under a requirements 
     contract, or under a firm sales contract which has been in 
     effect for (or has an initial term of) at least 10 years,
     but only to the extent that in either case such purchaser 
     resells the electricity at retail to persons within the 
     purchaser's distribution area.
       ``(C) Wholesale stranded cost mitigation sale.--The term 
     `wholesale stranded cost mitigation sale' means 1 or more 
     wholesale sales made in accordance with the following 
     requirements:
       ``(i) A governmental unit's allowable sales under this 
     subparagraph during the recovery period may not exceed the 
     sum of its annual load losses for each year of the recovery 
     period.
       ``(ii) The governmental unit's annual load loss for each 
     year of the recovery period is the amount (if any) by which--

       ``(I) sales in the base year to wholesale native load 
     purchasers which do not constitute a private business use, 
     exceed
       ``(II) sales during that year of the recovery period to 
     wholesale native load purchasers which do not constitute a 
     private business use.

       ``(iii) If actual sales under this subparagraph during the 
     recovery period are less than allowable sales under clause 
     (i), the amount not sold (but not more than 10 percent of the 
     aggregate allowable sales under clause (i)) may be carried 
     over and sold as wholesale stranded cost mitigation sales in 
     the calendar year following the recovery period.
       ``(D) Recovery period.--The recovery period is the 7-year 
     period beginning with the start-up year.
       ``(E) Start-up year.--The start-up year is whichever of the 
     following calendar years the governmental unit elects:
       ``(i) The year the governmental unit first offers open 
     transmission access.
       ``(ii) The first year in which at least 10 percent of the 
     governmental unit's wholesale customers' aggregate retail 
     native load is open to retail competition.
       ``(iii) The calendar year which includes the date of the 
     enactment of this section, if later than the year described 
     in clause (i) or (ii).
       ``(F) Permitted sales transactions under existing 
     contracts.--A sale to a wholesale native load purchaser 
     (other than a person to whom the governmental unit had a 
     service obligation) under a contract which resulted in 
     private business use in the base year shall be treated as a 
     permitted sales transaction only to the extent that sales 
     under the contract exceed the lesser of--
       ``(i) in any year, the private business use which resulted 
     during the base year, or
       ``(ii) the maximum amount of private business use which 
     could occur (absent the enactment of this section) without 
     causing the bonds to be private activity bonds.
     This subparagraph shall only apply to the extent that the 
     sale is allocable to bonds issued before the date of the 
     enactment of this section (or bonds issued to refund such 
     bonds).
       ``(G) Joint action agencies.--A joint action agency, or a 
     member of (or a wholesale native load purchaser from) a joint 
     action agency, which is entitled to make a sale described in 
     subparagraph (A) or (B) in a year, may transfer the 
     entitlement to make that sale to the member (or purchaser), 
     or the joint action agency, respectively.
       ``(c) Certain Bonds for Transmission and Distribution 
     Facilities Not Tax Exempt.--
       ``(1) General rule.--For purposes of this title, no bond 
     the interest on which is exempt from taxation under section 
     103 may be issued on or after the date of the enactment of 
     this subsection if any of the proceeds of such issue are used 
     to finance--
       ``(A) any transmission facility which is not a local 
     transmission facility, or
       ``(B) a start-up utility distribution facility.
       ``(2) Exceptions.--Paragraph (1) shall not apply to--
       ``(A) any qualified bond (as defined in section 141(e)),
       ``(B) any eligible refunding bond (as defined in subsection 
     (d)(6)), or
       ``(C) any bond issued to finance--
       ``(i) any repair of a transmission facility in service on 
     the date of the enactment of this section, so long as the 
     repair does not increase the voltage level over its level in 
     the base year or increase the thermal load limit of the 
     transmission facility by more than 3 percent over such limit 
     in the base year,
       ``(ii) any qualifying upgrade of a transmission facility in 
     service on the date of the enactment of this section, or
       ``(iii) a transmission facility necessary to comply with an 
     obligation under a shared or reciprocal transmission 
     agreement in effect on the date of the enactment of this 
     section.
       ``(3) Local transmission facility definitions and special 
     rules.--For purposes of this subsection--
       ``(A) Local transmission facility.--The term `local 
     transmission facility' means a transmission facility which is 
     located within the governmental unit's distribution area or 
     which is, or will be, necessary to supply electricity to 
     serve retail native load or wholesale native load of 1 or 
     more governmental units. For purposes of this subparagraph, 
     the distribution area of a public power authority which was 
     created in 1931 by a State statute and which, as of January 
     1, 1999, owned at least one-third of the transmission circuit 
     miles rated at 230kV or greater in the State, shall be 
     determined under regulations of the Secretary.
       ``(B) Retail native load.--The term `retail native load' is 
     the electric load of end-users served by distribution 
     facilities owned by a governmental unit.
       ``(C) Wholesale native load.--The term `wholesale native 
     load' is--
       ``(i) the retail native load of a governmental unit's 
     wholesale native load purchasers, and
       ``(ii) the electric load of purchasers (not described in 
     clause (i)) under wholesale requirements contracts which--

       ``(I) do not constitute private business use under the 
     rules in effect absent this subsection, and
       ``(II) were in effect in the base year.

       ``(D) Necessary to serve load.--For purposes of determining 
     whether a transmission or distribution facility is, or will 
     be, necessary to supply electricity to retail native load or 
     wholesale native load--
       ``(i) electric reliability standards or requirements of 
     national or regional reliability organizations, regional 
     transmission organizations, and the Electric Reliability 
     Council of Texas shall be taken into account, and

[[Page S7866]]

       ``(ii) transmission, siting, and construction decisions of 
     regional transmission organizations or independent system 
     operators and State and Federal agencies shall be presumptive 
     evidence regarding whether transmission facilities are 
     necessary to serve native load.
       ``(E) Qualifying upgrade.--The term `qualifying upgrade' 
     means an improvement or addition to transmission facilities 
     in service on the date of the enactment of this section which 
     is ordered or approved by a regional transmission 
     organization, by an independent system operator, or by a 
     State regulatory or siting agency.
       ``(4) Start-up utility distribution facility defined.--For 
     purposes of this subsection, the term `start-up utility 
     distribution facility' means any distribution facility to 
     provide electric service to the public that is placed in 
     service--
       ``(A) by a governmental unit which did not operate an 
     electric utility on the date of the enactment of this 
     section, and
       ``(B) before the date on which such governmental unit 
     operates in a qualified service area (as such term is defined 
     in section 141(d)(3)(B)).

     A governmental unit is deemed to have operated an electric 
     utility on the date of the enactment of this section if it 
     operates electric output facilities which were operated by 
     another governmental unit to provide electric service to the 
     public on such date.
       ``(d) Definitions; Special Rules.--For purposes of this 
     section--
       ``(1) Base year.--The term `base year' means the calendar 
     year which includes the date of the enactment of this section 
     or, at the election of the governmental unit, either of the 2 
     immediately preceding calendar years.
       ``(2) Distribution area.--The term `distribution area' 
     means the area in which a governmental unit owns distribution 
     facilities.
       ``(3) Electric output facility.--The term `electric output 
     facility' means an output facility that is an electric 
     generation, transmission, or distribution facility.
       ``(4) Distribution facility.--The term `distribution 
     facility' means an electric output facility that is not a 
     generation or transmission facility.
       ``(5) Transmission facility.--The term `transmission 
     facility' means an electric output facility (other than a 
     generation facility) that operates at an electric voltage of 
     69kV or greater, except that the owner of the facility may 
     elect to treat any output facility that is a transmission 
     facility for purposes of the Federal Power Act as a 
     transmission facility for purposes of this section.
       ``(6) Eligible refunding bond.--The term `eligible 
     refunding bond' means any State or local bond issued after an 
     election described in subsection (a) that directly or 
     indirectly refunds any tax-exempt bond (other than a 
     qualified bond) issued before such election, if the weighted 
     average maturity of the issue of which the refunding bond is 
     a part does not exceed the remaining weighted average 
     maturity of the bonds issued before the election. In applying 
     such term for purposes of subsection (c)(2)(B), the date of 
     election shall be deemed to be the date of the enactment of 
     this section.
       ``(7) FERC.--The term `FERC' means the Federal Energy 
     Regulatory Commission.
       ``(8) Government-owned facility.--An electric output 
     facility shall be treated as owned by a governmental unit if 
     it is an electric output facility that either is--
       ``(A) owned or leased by such governmental unit, or
       ``(B) a transmission facility in which the governmental 
     unit acquired before the base year long-term firm capacity 
     for the purposes of serving customers to which the unit had 
     at that time either--
       ``(i) a service obligation, or
       ``(ii) an obligation under a requirements contract.
       ``(9) Repair.--The term `repair' shall include replacement 
     of components of an electric output facility, but shall not 
     include replacement of the facility.
       ``(10) Service obligation.--The term `service obligation' 
     means an obligation under State or Federal law (exclusive of 
     an obligation arising solely from a contract entered into 
     with a person) to provide electric distribution services or 
     electric sales service, as provided in such law.
       ``(e) Savings Clause.--Subsection (b) shall not affect the 
     applicability of section 141 to (or the Secretary's authority 
     to prescribe, amend, or rescind regulations respecting) any 
     transaction which is not a permitted open access transaction 
     or permitted sales transaction.''.
       (b) Repeal of Exception for Certain Nongovernmental 
     Electric Output Facilities.--Section 141(d)(5) of the 
     Internal Revenue Code of 1986 is amended by inserting 
     ``(except in the case of an electric output facility which is 
     a distribution facility),'' after ``this subsection''.
       (c) Conforming Amendment.--The table of sections for 
     subpart A of part IV of subchapter B of chapter 1 of the 
     Internal Revenue Code of 1986 is amended by inserting after 
     the item relating to section 141 the following new item:

Sec. 141A. Electric output facilities.

       (d) Effective Date; Applicability.--
       (1) Effective date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act, 
     except that a governmental unit may elect to apply paragraphs 
     (1) and (2) of section 141A(b), as added by subsection (a), 
     with respect to permitted open access activities entered into 
     on or after April 14, 1996.
       (2) Certain existing agreements.--The amendment made by 
     subsection (b) (relating to repeal of the exception for 
     certain nongovernmental output facilities) does not apply to 
     any acquisition of facilities made pursuant to an agreement 
     that was entered into before the date of the enactment of 
     this Act.
       (3) Applicability.--References in this Act to sections of 
     the Internal Revenue Code of 1986, shall be deemed to include 
     references to comparable sections of the Internal Revenue 
     Code of 1954.

     SEC. 3. INDEPENDENT TRANSMISSION COMPANIES.

       (a) Sales or Dispositions To Implement Federal Energy 
     Regulatory Commission or State Electric Restructuring 
     Policy.--
       (1) In general.--Section 1033 of the Internal Revenue Code 
     of 1986 (relating to involuntary conversions) is amended by 
     redesignating subsection (k) as subsection (l) and by 
     inserting after subsection (j) the following new subsection:
       ``(k) Sales or Dispositions To Implement Federal Energy 
     Regulatory Commission or State Electric Restructuring 
     Policy.--
       ``(1) In general.--For purposes of this subtitle, if a 
     taxpayer elects the application of this subsection to a 
     qualifying electric transmission transaction and the proceeds 
     received from such transaction are invested in exempt utility 
     property, such transaction shall be treated as an involuntary 
     conversion to which this section applies.
       ``(2) Extension of replacement period.--In the case of any 
     involuntary conversion described in paragraph (1), subsection 
     (a)(2)(B) shall be applied by substituting `4 years' for `2 
     years' in clause (i) thereof.
       ``(3) Qualifying electric transmission transaction.--For 
     purposes of this subsection, the term `qualifying electric 
     transmission transaction' means any sale or other disposition 
     of property used in the trade or business of electric 
     transmission, or an ownership interest in a person whose 
     primary trade or business consists of providing electric 
     transmission services, to another person that is an 
     independent transmission company.
       ``(4) Independent transmission company.--For purposes of 
     this subsection, the term `independent transmission company' 
     means--
       ``(A) a regional transmission organization approved by the 
     Federal Energy Regulatory Commission,
       ``(B) a person--
       ``(i) who the Federal Energy Regulatory Commission 
     determines in its authorization of the transaction under 
     section 203 of the Federal Power Act (16 U.S.C. 823b) is not 
     a market participant within the meaning of such Commission's 
     rules applicable to regional transmission organizations, and
       ``(ii) whose transmission facilities to which the election 
     under this subsection applies are placed under the 
     operational control of a Federal Energy Regulatory 
     Commission-approved regional transmission organization within 
     the period specified in such order, but not later than the 
     close of the replacement period, or
       ``(C) in the case of facilities subject to the exclusive 
     jurisdiction of the Public Utility Commission of Texas, a 
     person which is approved by that Commission as consistent 
     with Texas State law regarding an independent transmission 
     organization.
       ``(5) Exempt utility property.--For purposes of this 
     subsection, the term `exempt utility property' means--
       ``(A) property used in the trade or business of generating, 
     transmitting, distributing, or selling electricity or 
     producing, transmitting, distributing, or selling natural 
     gas, or
       ``(B) stock in a person whose primary trade or business 
     consists of generating, transmitting, distributing, or 
     selling electricity or producing, transmitting, distributing, 
     or selling natural gas.
       ``(6) Special rules for consolidated groups.--
       ``(A) Investment by qualifying group members.--
       ``(i) In general.--This subsection shall apply to a 
     qualifying electric transmission transaction engaged in by a 
     taxpayer if the proceeds are invested in exempt utility 
     property by a qualifying group member.
       ``(ii) Qualifying group member.--For purposes of this 
     subparagraph, the term `qualifying group member' means any 
     member of a consolidated group within the meaning of section 
     1502 and the regulations promulgated thereunder of which the 
     taxpayer is also a member.
       ``(B) Coordination with consolidated return provisions.--A 
     sale or other disposition of electric transmission property 
     or an ownership interest in a qualifying electric 
     transmission transaction, where an election is made under 
     this subsection, shall not result in the recognition of 
     income or gain under the consolidated return provisions of 
     subchapter A of chapter 6. The Secretary shall prescribe such 
     regulations as may be necessary to provide for the treatment 
     of any exempt utility property received in a qualifying 
     electric transmission transaction as successor assets subject 
     to the application of such consolidated return provisions.
       ``(7) Election.--Any election made by a taxpayer under this 
     subsection shall be made by a statement to that effect in the 
     return for the taxable year in which the qualifying electric 
     transmission transaction takes

[[Page S7867]]

     place in such form and manner as the Secretary shall 
     prescribe, and such election shall be binding for that 
     taxable year and all subsequent taxable years.''.
       (2) Savings clause.--Nothing in section 1033(k) of the 
     Internal Revenue Code of 1986, as added by subsection (a), 
     shall affect Federal or State regulatory policy respecting 
     the extent to which any acquisition premium paid in 
     connection with the purchase of an asset in a qualifying 
     electric transmission transaction can be recovered in rates.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to transactions occurring after the date of the 
     enactment of this Act.
       (b) Distributions of Stock To Implement Federal Energy 
     Regulatory Commission or State Electric Restructuring Policy.
       (1) In general.--Section 355(e)(4) of the Internal Revenue 
     Code of 1986 is amended by redesignating subparagraphs (C), 
     (D), and (E) as subparagraphs (D), (E), and (F), 
     respectively, and by inserting after subparagraph (B) the 
     following new subparagraph:
       ``(C) Distributions of stock to implement federal energy 
     regulatory commission or state electric restructuring 
     policy.--
       ``(i) In general.--Paragraph (1) shall not apply to any 
     distribution that is a qualifying electric transmission 
     transaction. For purposes of this subparagraph, a `qualifying 
     electric transmission transaction' means any distribution of 
     stock in a corporation whose primary trade or business 
     consists of providing electric transmission services, where 
     such stock is later acquired (or where the assets of such 
     corporation are later acquired) by another person that is an 
     independent transmission company.
       ``(ii) Independent transmission company.--For purposes of 
     this subsection, the term `independent transmission company' 
     means--

       ``(I) a regional transmission organization approved by the 
     Federal Energy Regulatory Commission,
       ``(II) a person who the Federal Energy Regulatory 
     Commission determines in its authorization of the transaction 
     under section 203 of the Federal Power Act (16 U.S.C. 824b) 
     is not a market participant within the meaning of such 
     Commission's rules applicable to regional transmission 
     organizations, and whose transmission facilities transferred 
     as a part of such qualifying electric transmission 
     transaction are placed under the operational control of a 
     Federal Energy Regulatory Commission-approved regional 
     transmission organization within the period specified in such 
     order, but not later than the close of the replacement period 
     (as defined in section 1033(k)(2)), or
       ``(III) in the case of facilities subject to the exclusive 
     jurisdiction of the Public Utility Commission of Texas, a 
     person that is approved by that Commission as consistent with 
     Texas State law regarding an independent transmission 
     organization.''.

       (2) Effective date.--The amendments made by this subsection 
     shall apply to distributions occurring after the date of the 
     enactment of this Act.

     SEC. 4. CERTAIN AMOUNTS RECEIVED BY ELECTRIC UTILITIES 
                   EXCLUDED FROM GROSS INCOME AS CONTRIBUTIONS TO 
                   CAPITAL.

       (a) In General.--Subsection (c) of section 118 of the 
     Internal Revenue Code of 1986 (relating to contributions to 
     the capital of a corporation) is amended--
       (1) by striking ``Water and Sewage Disposal'' in the 
     heading and inserting ``Certain'',
       (2) by striking ``water or,'' in the matter preceding 
     subparagraph (A) of paragraph (1) and inserting ``electric 
     energy, water, or'',
       (3) by striking ``water or'' in paragraph (1)(B) and 
     inserting ``electric energy (but not including assets used in 
     the generation of electricity), water, or'',
       (4) by striking ``water or'' in paragraph (2)(A)(ii) and 
     inserting ``electric energy (but not including assets used in 
     the generation of electricity), water, or'',
       (5) by inserting ``such term shall include amounts paid as 
     customer connection fees (including amounts paid to connect 
     the customer's line to an electric line or a main water or 
     sewer line) and'' after ``except that'' in paragraph (3)(A), 
     and
       (6) by striking ``water or'' in paragraph (3)(C) and 
     inserting ``electric energy, water, or''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to amounts received after the date of the 
     enactment of this Act.

     SEC. 5. TAX TREATMENT OF NUCLEAR DECOMMISSIONING FUNDS.

       (a) Increase in Amount Permitted To Be Paid Into Nuclear 
     Decommissioning Reserve Fund.--Subsection (b) of section 468A 
     of the Internal Revenue Code of 1986 (relating to special 
     rules for nuclear decommissioning costs) is amended to read 
     as follows:
       ``(b) Limitation on Amounts Paid Into Fund.--
       ``(1) In general.--The amount which a taxpayer may pay into 
     the Fund for any taxable year during the funding period shall 
     not exceed the level funding amount determined pursuant to 
     subsection (d), except--
       ``(A) where the taxpayer is permitted by Federal or State 
     law or regulation (including authorization by a public 
     service commission) to charge customers a greater amount for 
     nuclear decommissioning costs, in which case the taxpayer may 
     pay into the Fund such greater amount, or
       ``(B) in connection with the transfer of a nuclear 
     powerplant, where the transferor or transferee (or both) is 
     required pursuant to the terms of the transfer to contribute 
     a greater amount for nuclear decommissioning costs, in which 
     case the transferor or transferee (or both) may pay into the 
     Fund such greater amount.
       ``(2) Contributions after funding period.--Notwithstanding 
     any other provision of this section, a taxpayer may make 
     deductible payments to the Fund in any taxable year between 
     the end of the funding period and the termination of the 
     license issued by the Nuclear Regulatory Commission for the 
     nuclear powerplant to which the Fund relates provided such 
     payments do not cause the assets of the Fund to exceed the 
     nuclear decommissioning costs allocable to the taxpayer's 
     current or former interest in the nuclear powerplant to which 
     the Fund relates. The foregoing limitation shall be applied 
     by taking into account a reasonable rate of inflation for the 
     nuclear decommissioning costs and a reasonable after-tax rate 
     of return on the assets of the Fund until such assets are 
     anticipated to be expended.''.
       (b) Deduction for Nuclear Decommissioning Costs When 
     Paid.-- Paragraph (2) of section 468A(c) of the Internal 
     Revenue Code of 1986 (relating to income and deductions of 
     the taxpayer) is amended to read as follows:
       ``(2) Deduction of nuclear decommissioning costs.--In 
     addition to any deduction under subsection (a), nuclear 
     decommissioning costs paid or incurred by the taxpayer during 
     any taxable year shall constitute ordinary and necessary 
     expenses in carrying on a trade or business under section 
     162.''.
       (c) Level Funding Amounts.--Subsection (d) of section 468A 
     of the Internal Revenue Code of 1986 is amended to read as 
     follows:
       ``(d) Level Funding Amounts.--
       ``(1) Annual amounts.--For purposes of this section, the 
     level funding amount for any taxable year shall equal the 
     annual amount required to be contributed to the Fund in each 
     year remaining in the funding period in order for the Fund to 
     accumulate the nuclear decommissioning costs allocable to the 
     taxpayer's current or former interest in the nuclear 
     powerplant to which the Fund relates. The annual amount 
     described in the preceding sentence shall be calculated by 
     taking into account a reasonable rate of inflation for the 
     nuclear decommissioning costs and a reasonable after-tax rate 
     of return on the assets of the Fund until such assets are 
     anticipated to be expended.
       ``(2) Funding period.--The funding period for a Fund shall 
     end on the last day of the last taxable year of the expected 
     operating life of the nuclear powerplant.
       ``(3) Nuclear decommissioning costs.--For purposes of this 
     section--
       ``(A) In general.--The term `nuclear decommissioning costs' 
     means all costs to be incurred in connection with entombing, 
     decontaminating, dismantling, removing, and disposing of a 
     nuclear powerplant, and shall include all associated 
     preparation, security, fuel storage, and radiation monitoring 
     costs. Such term shall include all such costs which, outside 
     of the decommissioning context, might otherwise be capital 
     expenditures.
       ``(B) Identification of costs.--The taxpayer may identify 
     nuclear decommissioning costs by reference either to a site-
     specific engineering study or to the financial assurance 
     amount calculated pursuant to section 50.75 of title 10 of 
     the Code of Federal Regulations.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to amounts paid after June 30, 2000, in taxable 
     years ending after such date.
                                 ______
                                 
      By Mr. ALLARD:
  S. 2968. A bill to empower communities and individuals by 
consolidating and reforming the programs of the Department of Housing 
and Urban Development; to the Committee on Banking, Housing, and Urban 
Affairs.


                    local housing opportunities act

  Mr. ALLARD. Mr. President, today I am introducing the ``Local Housing 
Opportunities Act'', legislation to empower communities and individuals 
by consolidating and reforming HUD programs. I ask unanimous consent 
that the following section-by-section description of the bill be 
printed in the Record and that the text of the bill be printed in the 
Record following the description.
  In 1994, there were 240 separate programs at the Department of 
Housing and Urban Development (HUD). By 1997, the number of programs 
had grown to 328. Many of these programs have never been authorized by 
Congress, and operate under questionable legal authority. While the 
number of HUD programs has grown, HUD's workforce has declined from 
12,000 employees in 1995 to 9,000 employees today. As a result, scarce 
resources are diverted away from core housing and enforcement programs, 
dramatically increasing the risks of mismanagement and fraud. HUD 
remains the only Cabinet level agency designated by the General 
Accounting Office (GAO) as ``High Risk''. In order to promote the 
interests of taxpayers and improve the delivery of services to 
beneficiaries, Congress should transfer more programs to

[[Page S7868]]

the States and localities and enact legislation to consolidate, 
terminate, and streamline HUD programs.

                     Section-by-Section Description

       I. Prohibition of Unauthorized Programs at the Department 
     of Housing and Urban Development--Prohibits HUD from carrying 
     out any program that is not explicitly authorized in statute 
     by the Congress. This provision takes effect one year after 
     the effective date to give the Congress sufficient time to 
     authorize those programs that it wishes to maintain. Within 
     60 days of the date of enactment the Department of Housing 
     and Urban Development shall provide a report detailing every 
     HUD program along with the statutory authorization for that 
     program. This report shall be provided annually to the Senate 
     Committee on Banking, Housing and Urban Affairs, the Senate 
     Subcommittee on Housing and Transportation, the House 
     Committee on Banking and Financial Services, and the House 
     Subcommittee on Housing and Community Opportunity.
       II. Elimination of Certain HUD Programs--Terminates certain 
     programs as recommended by the HUD Secretary in the ``HUD 
     2020 Program Repeal and Streamlining Act''. The Department 
     has determined that these programs are unnecessary, outdated, 
     or inactive.
       Community Investment Corporation Demonstration--never 
     funded, superseded by the Community Development Financial 
     Institutions program administered by the Department of the 
     Treasury.
       New Towns Demonstration Program for Emergency Relief of Los 
     Angeles--not funded since FY 1993.
       Solar Assistance Financing Entity--not funded in recent 
     years.
       Urban Development Action Grants--discontinued program, not 
     funded in recent years.
       Certain Special Purpose Grants--not funded since FY 1993 
     and FY 1995.
       Moderate Rehabilitation Assistance in Disasters--no 
     additional assistance for the Moderate Rehabilitation program 
     has been provided (other than for the homeless under the 
     McKinney Act) since FY 1989.
       Rent Supplement Program--not funded for many years.
       National Home Ownership Trust Demonstration--authority 
     expired at the end of FY 1994.
       Repeal of HOPE I, II, and III--all HOPE funds have been 
     awarded, no additional funding has been requested since FY 
     1995, and no future funding is anticipated.
       Energy Efficiency Demonstration Program, section 961 of 
     NAHA--never funded.
       Technical Assistance and Training for IHAs--no funds have 
     been provided for this program since FY 1994.
       Termination of the investor mortgages portion of the 
     Section 203(k) rehabilitation mortgage insurance program as 
     recommended by the HUD IG. Investor rehabilitation mortgages 
     constitute approximately 20% of the loans insured under this 
     program, and recent IG audits have found this portion of the 
     program to be particularly vulnerable to fraud and abuse by 
     investor-owners. The larger portion of the program for owner/
     occupants is retained.
       Certificate and Voucher Assistance for Rental 
     Rehabilitation Projects--rental rehabilitation program has 
     been repealed, section 289 of NAHA.
       Single Family Loan Insurance for Home Improvement Loans in 
     Urban Renewal Areas--unnecessary.
       Single Family and Multifamily Mortgage Insurance for 
     Miscellaneous Special Situations, section 223 (a)(1)-(6) and 
     (8)--obsolete.
       Single Family Mortgage Insurance for so-called ``Modified'' 
     Graduated Payment Mortgages, section 245 (b)--insurance 
     authority terminated in 1987 but provision never repealed.
       War Housing Insurance--authority for new insurance 
     terminated in 1954, but provision never repealed.
       Insurance for Investments (Yield Insurance)--program never 
     implemented, but authority and provision never repealed.
       National Defense Housing--authority for new insurance 
     terminated in 1954, but provision never repealed.
       Rural Homeless Housing Assistance--not funded since FY 
     1994, all HUD homeless assistance will be part of the 
     McKinney Homeless Assistance Performance Fund created under 
     this legislation.
       Innovative Homeless Initiatives Demonstration--not funded 
     since FY 1995, all HUD homeless assistance will be part of 
     the McKinney Homeless Assistance Performance Fund created 
     under this legislation.
       During the remainder of 2000, the Senate Housing and 
     Transportation Subcommittee will hold hearings on this 
     discussion draft. At that time the Subcommittee will solicit 
     the recommendations of the Department, the IG, the GAO, and 
     other organizations for other HUD programs that can be 
     streamlined or eliminated. This legislation also provides for 
     the creation of a ``HUD Consolidation Task Force'' which will 
     report to the Congress with recommendations on how to reduce 
     the number of programs at HUD through consolidation, 
     termination, or transfer to other levels of government.
       III. HUD Consolidation Task Force--Mandates the creation of 
     a task force that will focus exclusively on legislative and 
     regulatory options to reduce the number of HUD programs. The 
     task force will consist of three individuals: the Comptroller 
     General of the United States, the HUD Secretary, and the HUD 
     Inspector General. Within six months of the enactment of this 
     legislation, the task force will produce a report outlining 
     options to reduce the number of HUD programs through 
     consolidation, elimination, and transfer to other levels of 
     government. The report will be provided to the Senate and 
     House Housing Subcommittees as well as the Senate and House 
     Banking Committees.
       I. Community Development Block Grant Authorization (CDBG) 
     and Prohibition of Set-Asides and Earmarks--Restores local 
     control over the CDBG program by prohibiting Congressional 
     set-asides and earmarks not specifically authorized in 
     statute. The original intent of CDBG was that program dollars 
     would be allocated directly to cities and states according to 
     formula. In FY 1999 over 10 percent of the funds were 
     earmarked for specific projects (the earmarks have increased 
     steadily in recent years). CDBG was last authorized in 1994, 
     this legislation would authorize the program through FY 2005, 
     with an initial authorization of $4,850,000,000 in FY 2001.
       II. Community Notification of Opt-Outs--Requires that when 
     HUD receives notice of a Section 8 opt-out that it forward 
     that notice within 10 days to the top elected official for 
     the unit of local government where the property is located. 
     This supplements the requirement in Section 8 (c)(8)(A) of 
     the Housing Act of 1937 that HUD and tenants be notified one 
     year in advance if a Section 8 opt-out is anticipated.
       III. Urban Homestead Requirement--Directs that HUD-held 
     properties that have not been disposed of within six months 
     following acquisition by HUD or a determination that they are 
     substandard or unoccupied, shall be made available upon 
     written request for sale or donation to local governments or 
     Community Development Corporations (CDCs).
       IV. Permanent ``Moving To Work'' Authorization--Continues 
     the deregulation of Public Housing Authorities (PHAs) by 
     opening the ``Moving To Work'' program to all PHAs. This 
     program was authorized as a demonstration in the 1996 VA/HUD 
     Appropriation bill and granted up to 30 PHAs the option to 
     receive HUD funds as a block grant. The program provides 
     autonomy from HUD micro-management and the freedom to 
     innovate with reforms such as work requirements, time limits, 
     job training, and Home ownership assistance. The Secretary 
     shall approve an application under this program for all but 
     the lowest performing PHAs unless the Secretary makes a 
     written determination, within 60 days after receiving the 
     application, that the application fails to comply with the 
     statutory provisions authorizing the ``Moving to Work'' 
     program.
       Consolidate HUD Homeless Assistance Funds into the 
     ``McKinney Homeless Assistance Performance Fund''--Combines 
     HUD's McKinney programs (Supportive Housing Program, Shelter 
     Plus Care, Section 8 Moderate Rehabilitation for Single Room 
     Occupancy Dwellings, Safe Havens, Rural Homeless Housing 
     Assistance, and the Emergency Shelter Grants), into a single 
     McKinney Homeless Assistance Performance Fund ( and 
     authorizes funding through FY 2003, at an initial level of 
     $1,050,000,000 in FY 2001). Distributes funds according to 
     the CDBG block grant formula with 70 percent to units of 
     local government and 30 percent to states.
       Eligible units of local government include metropolitan 
     cities, urban counties, and consortia. The formula is to be 
     reviewed after one year with a statutory requirement that HUD 
     provide alternative formulas for the Congress to consider. 
     State funds are available for use in areas throughout the 
     entire state. Codifies and requires a Continuum of Care 
     system by grant recipients. The Continuum of Care submission 
     is linked with the Consolidated Plan. Every three dollars of 
     federal block grant money is to be matched with one dollar of 
     state or local money. Funds qualifying for the match are the 
     same as those currently permitted under the Emergency Shelter 
     Grants program, and would include salaries paid to staff, 
     volunteer labor, and the value of a lease on a building. 
     There is a five year transition period--state and local 
     governments would receive no less than 90 percent of prior 
     award amounts (average for FY 96-99) in the first year after 
     enactment, 85 percent in the second year after enactment, 80 
     percent in the third and fourth year after enactment, and 75 
     percent in the fifth year after enactment. Eligible projects 
     and activities include emergency assistance, safe haven 
     housing, transitional housing, permanent housing, supportive 
     services for persons with disabilities, single room occupancy 
     housing, prevention, outreach and assessment, acquisition and 
     rehabilitation of property, new construction, operating 
     costs, leasing, tenant assistance, supportive services, 
     administrative (generally limited to 10 percent of funds), 
     capacity building, targeting to subpopulations of persons 
     with disabilities. Performance measures and benchmarks are 
     included, along with periodic performance reports, reviews, 
     and audits.
       I. Mutual and Self-Help Housing Technical Assistance and 
     Training Grants Program--Reauthorizes technical assistance 
     grants to facilitate the construction of self-help housing in 
     rural areas. Program beneficiaries are required to contribute 
     a significant amount of sweat equity to the construction of 
     the homes that they will own. Authorizes funding of $40 
     million for FY 2001 and 2002, and $45 million for FY 2003-
     2005.
       II. Improve the Rural Housing Repair Loan Program for the 
     Elderly--Increases the amount for which a promissory note is 
     considered a sufficient security for housing repairs from 
     $2,500 to $7,500.

[[Page S7869]]

       III. Enhance Efficiency of Rural Housing Preservation 
     Grants--Eliminates the existing statutory requirement that 
     prohibits a State from obligating more than 50 percent of its 
     Housing Preservation Grants allocation to any one grantee. 
     Many states receive only a small amount from this formula 
     program. In many cases the money can only be most effectively 
     invested in one project.
       IV. Project Accounting Records and Practices--Requires 
     section 515 rural housing borrowers to maintain records in 
     accordance with GAAP (Generally Accepted Accounting 
     Principles).
       V. Operating Assistance for Migrant Farmworker Projects 
     Authority--Permits rural housing operating assistance 
     payments in migrant and seasonal farm labor housing 
     complexes.
       I. Authorization of Appropriations for Rental Vouchers for 
     Relocation of Witnesses and Victims of Crime--Authorizes 
     specific funding for vouchers for victims and witnesses of 
     crime. These vouchers were authorized in the Quality Housing 
     and Work Responsibility Act of 1998 (QHWRA). No funds have 
     yet been appropriated and HUD has yet to write regulations. 
     The current authorization directs the Secretary to make 
     available such sums as may be necessary for the relocation of 
     families residing in public housing who are victims of a 
     crime of violence reported to an appropriate law enforcement 
     authority, and requires that PHAs notify tenants of the 
     availability of such funds. This legislation would authorize 
     a funding level in each of FY 2001-2005 of $25,000,000.
       II. Revise the HUD Lease Addendum--Prohibits the HUD lease 
     addendum from overriding local law. Participating housing 
     providers and residents sign a three-party lease along with 
     the public housing authority. The law requires the attachment 
     of a HUD Lease Addendum (HUD Form 52647.3) which overrides 
     some local market provisions and practices, holding the 
     voucher resident to a non-standard lease contract. The use of 
     federally promulgated forms that counter local practice 
     incurs additional training, legal and management costs. The 
     voucher lease addendum shall be nullified to the extent that 
     it conflicts with State or local law.
       III. Reduce the Burden of Housing Quality Standard 
     Inspections--Provides the option that Housing Quality 
     Standard inspections be conducted on a property basis rather 
     than a unit basis. Currently each individual unit that is 
     rented under the program must be inspected for compliance 
     with HUD's Housing Quality Standards. Individual inspections 
     are a time-consuming administrative headache for PHAs and 
     Section 8 landlords, result in slow unit turnover, and 
     significant lost revenue. This legislation provides the 
     Section 8 landlord with the option to have annual inspections 
     conducted on a property or building basis, rather than a unit 
     basis.
       IV. HUD Report to the Congress on Ways to Improve the 
     Voucher Program--Requires that the HUD Secretary solicit 
     comments and recommendations for improvement in the voucher 
     program through notice in the Federal Register. Six months 
     after enactment, the Secretary shall submit to the House and 
     Senate Housing Subcommittees and the House and Senate Banking 
     Committees a summary of the recommendations received by the 
     Secretary regarding suggestions for improvement in the 
     voucher program.
       I. Reauthorize the Self-Help Homeownership Opportunity 
     Program (SHOP)--Reauthorizes the SHOP program which provides 
     funding for land and infrastructure purchases to facilitate 
     self-help housing. Utilized by Habitat for Humanity and the 
     Housing Assistance Council. Reauthorize through FY 2005, 
     beginning with $25 million in FY 2001. Adds new language 
     allowing an additional year to use funds for local groups 
     building five or more homes (increase from two years to three 
     years), and also making it possible for local and national 
     non-profit organizations using SHOP funds to advance their 
     own money to purchase property, pending the environmental 
     review approvals, to be repaid from federal funds after the 
     environmental reviews have been approved.
       II. Capacity Building for Community Development and 
     Affordable Housing Program--Reauthorizes and increases grants 
     to non-profits to expand affordable housing capacity. 
     Presently authorized for The Enterprise Foundation, Local 
     Initiatives Support Corporation, Habitat for Humanity, 
     Youthbuild USA, and the National Community Development 
     Initiative. Expands access to this program to include the 
     ``National Association of Housing Partnerships'' and 
     authorizes a funding level of $40 million for each of FY 
     2001-2003. Amounts must be matched three to one from other 
     sources.
       III. Work Requirement for Public Housing Residents: 
     Coordinate Federal Housing Assistance with State Welfare 
     Reform Work Programs--Requires that able-bodied and non-
     elderly public housing residents be in compliance with the 
     work requirements of welfare reform in their state. Those 
     unable to comply would be provided the opportunity to engage 
     in community service or participate in an economic self-
     sufficiency program. There is substantial overlap in families 
     receiving welfare and those benefitting from assisted 
     housing. Among families with children, it is estimated that 
     72 percent of those who live in public housing receive some 
     type of welfare. These families are currently subject to 
     Welfare Reform work requirements and this provision simply 
     applies the requirement to the remaining able-bodied 
     recipients of federal housing assistance. Public housing was 
     originally conceived as temporary assistance for working low-
     income families to help them during times of financial 
     distress. Recent housing legislation has recognized this fact 
     by placing increasing emphasis on self-sufficiency. These 
     efforts should be coordinated with the self sufficiency 
     efforts of Welfare Reform. PHAs shall monitor compliance with 
     the state work requirement. There shall be an exception for 
     the elderly and disabled, and as with Welfare Reform, there 
     will be a broad definition of work including; employment, 
     community service, vocational and job training, work 
     associated with self help housing construction, refurbishing 
     publicly assisted housing, the provision of certain child 
     care services, and participation in education programs or 
     economic self-sufficiency programs. This work requirement 
     will replace the 8 hour per month ``Community Service'' 
     Requirement that exists in current law for residents of 
     public housing. Public Housing Authorities shall not be 
     prohibited by this legislation from implementing more 
     stringent work requirements and States electing the housing 
     assistance block grant would be excluded from this 
     requirement and be free to design their own self-sufficiency 
     requirements.
       IV. Flexible Use of CDBG Funds to Maintain Properties--
     Amends Section 105(a)(23) of the Housing and Community 
     Development Act, which currently authorizes use of CDBG 
     funding for activities necessary to make essential repairs 
     and payment of operating expenses needed to maintain the 
     habitability of housing units acquired through tax 
     foreclosure proceedings in order to prevent abandonment and 
     deterioration of such housing in primarily low- and moderate-
     income neighborhoods. This language is amended to permit the 
     use of CDBG funds for property upkeep in instances in which a 
     court has wrested effective control of a distressed 
     residential property from the owner and appointed a 
     responsible third party (often a non-profit organization or 
     other owner/manager of properties in the area) to operate the 
     property on an interim basis as administrator, although legal 
     title remains with the original owner.
       IV. Allows Vouchers in Grandfamily Housing Assisted with 
     HOME Dollars--Permits flexible use of Section 8 vouchers in 
     Grandfamily Housing assisted with HOME dollars. Current law 
     restricts the level of Section 8 assistance that may be used 
     in projects assisted with HOME funds. This legislation 
     creates an exception to the general rule for projects 
     designed to benefit Grandfamilies, by permitting the use of 
     Section 8 vouchers at the Fair Market Rent (FMR) level by 
     Grandparents choosing to live in low income housing projects 
     assisted with HOME dollars. This change is designed to assist 
     low-income, elderly residents and their grandchildren for 
     whom they provide full-time care and custody.
       V. Simplified FHA Downpayment Calculation.--Makes permanent 
     the temporary simplified FHA downpayment calculation provided 
     in section 203(b) of the National Housing Act. The current 
     downpayment calculation on FHA loans is needlessly complex. 
     Recent appropriations bills have included a simplified pilot 
     program that replaces the current multi-part formula with a 
     single calculation based solely on the appraised value of the 
     property. The simplified formula yields substantially the 
     same downpayment result as the multi-part formula.
       VI. Authorize the Use of Section 8 Funds for Downpayment 
     Assistance--Permits tenants to receive up to one year's worth 
     of Section 8 assistance in a lump sum to be used toward the 
     down payment on a home. This compliments innovative programs 
     that allow the use of Section 8 assistance for mortgage 
     payments.
       VII. Reauthorize the Neighborhood Reinvestment Corporation 
     through 2003--Reauthorizes the Neighborhood Reinvestment 
     Corporation, a congressionally chartered, public non-profit 
     corporation established in 1978 to revitalize declining 
     lower-income communities and provide affordable housing. 
     Funding is authorized at $90 million in FY 2001, and $95 
     million in each of FY 2002 and 2003.
       Provides States the option to receive certain federal 
     assisted housing funds (tenant assistance programs) in the 
     form of a block grant. Modeled on Welfare Reform, this would 
     give States the freedom to innovate absent HUD micro-
     management. States accepted into the program would sign a 
     five year performance agreement with the federal 
     government that details how the State intends to combine 
     and use housing assistance funds from programs included in 
     the performance agreement to advance low income housing 
     priorities, improve the quality of low income housing, 
     reduce homelessness, and encourage economic opportunity 
     and self-sufficiency. States electing the block grant 
     would determine how funds are distributed to state 
     agencies, Public Housing Authorities, project owners, and 
     tenants. During the first year of the performance 
     agreement States would receive the highest of the prior 
     three years funding for each program included in the 
     performance agreement. There would then be an annual 
     inflation adjustment in each future year until Congress 
     (following consultation with HUD) enacts a formula that 
     reflects the relative low-income/affordable housing needs 
     of each State. A performance agreement submitted to the 
     Secretary would have to be approved by the Secretary 
     unless the Secretary makes a written determination, within 
     60 days after

[[Page S7870]]

     receiving the performance agreement, that the performance 
     agreement fails to comply with provisions of the Act. 
     Eligible programs for inclusion in the block grant shall 
     include: the voucher program for rental assistance under 
     section 8(o) of the United States Housing Act of 1937; the 
     programs for project-based assistance under section 8 of 
     the United States Housing Act of 1937; the program for 
     housing for the elderly under section 202 of the Housing 
     Act of 1959; the program for housing for persons with 
     disabilities under section 811 of the Cranston-Gonzales 
     National Affordable Housing Act. The distribution of block 
     granted funds within the State from programs included in 
     the performance agreement shall be determined by the 
     Legislature and the Governor of the State. In a State in 
     which the constitution or state law designates another 
     individual, entity, or agency to be responsible for 
     housing, such other individual, entity, or agency shall 
     work in consultation with the Governor and Legislature to 
     determine the local distribution of funds. Existing 
     contracts involving federal housing dollars shall be 
     honored by the States until their expiration. States shall 
     at such point handle the renewal of all contracts. A State 
     may not use more than 3 percent of the total amount of 
     funds allocated to such State under the programs included 
     in the performance agreement for administrative purposes. 
     Performance criteria shall include at a minimum a measure 
     of; the improvement in housing conditions, the number of 
     units that pass housing quality inspections, the number of 
     residents that find employment and move to self-
     sufficiency, the level of crime against residents, the 
     level of homelessness, the level of poverty, the cost of 
     assisted housing units provided, the level of assistance 
     provided to people with disabilities and to the elderly, 
     success in maintaining the stock of affordable housing, 
     and increasing homeownership. If at the end of the 5-year 
     term of the performance agreement a State has failed to 
     meet at least 80 percent of the performance goals 
     submitted in the performance agreement, the Secretary 
     shall terminate the performance agreement and the State or 
     community shall be required to comply with the program 
     requirement, in effect at the time of termination, of each 
     program included in the performance agreement. To reward 
     States that make significant progress in meeting 
     performance goals, the HUD Secretary shall annually set 
     aside sufficient funds to grant a reward of up to 5 
     percent of the funds allocated to participating States.

            Sense of the Congress Supporting Tax Incentives


  Sense of the Congress That the Low Income Housing Tax Credit State 
    Ceilings and the Private Activity Bond Caps Should Be Increased

       It is the sense of the Congress that the Low Income Housing 
     Tax Credit and Private Activity Bonds have been valuable 
     resources in the effort to increase affordable housing.
       It is the sense of the Congress that the Low Income Housing 
     Tax Credit and Private Activity Bonds effectively utilize the 
     ability of the states to deliver resources to the areas of 
     greatest need within their jurisdictions.
       It is the sense of the Congress that the value of the Low 
     Income Housing Tax Credit and the Private Activity Bonds have 
     been eroded by inflation.
       Therefore, be it resolved, That the Low Income Housing Tax 
     Credit State Ceilings should be increased by forty percent in 
     the year 2000, and that the level of the state ceilings 
     should be adjusted annually to account for increases in the 
     cost-of-living, and
       That the Private Activity Bond Caps should be increased by 
     fifty percent in the year 2000, and that the value of the 
     caps should be adjusted annually to account for increases in 
     the cost-of-living.
       I. Tighten Language on Lobbying Restrictions on HUD 
     employees--Prohibits employees at HUD from lobbying, or 
     attempting to influence legislation before the Congress. This 
     language is based on current restrictions on Department of 
     Interior employees. No federally appropriated funds may be 
     used for any activity that in any way tends to promote public 
     support or opposition to legislation, a nomination, or a 
     treaty. The President, the Vice President and Senate 
     confirmed agency officials are exempt from these provisions. 
     However, these individuals may not delegate their authority 
     to any other employees of the Department. Provides civil 
     money penalties against non-exempt employees who 
     independently violate the statute, and against exempt 
     employees who have delegated their lobbying authority.
       II. The Department of Housing and Urban Development shall 
     promulgate regulations under the provisions of this Act 
     within 6 months of the enactment of this Act.
                                  ____


                                S. 2968

       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 ``Local 
     Housing Opportunities Act''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Effective date.

                     TITLE I--PROGRAM CONSOLIDATION

Sec. 101. Prohibition of unauthorized programs at the Department.
Sec. 102. Elimination and consolidation of HUD programs.
Sec. 103. HUD consolidation task force.

                    TITLE II--COMMUNITY EMPOWERMENT

Sec. 201. Reauthorization of community development block grants and 
              prohibition of set-asides.
Sec. 202. Community notification of opt-outs.
Sec. 203. Urban homestead requirement.
Sec. 204. Authorization of Moving to Work program.

                 TITLE III--HOMELESS ASSISTANCE REFORM

Sec. 301. Consolidation of HUD homeless assistance funds.
Sec. 302. Establishment of the McKinney Homeless Assistance Performance 
              Fund.
Sec. 303. Repeal and savings provisions.
Sec. 304. Implementation.

                        TITLE IV--RURAL HOUSING

Sec. 401. Mutual and self-help housing technical assistance and 
              training grants authorization.
Sec. 402. Enhancement of the Rural Housing Repair loan program for the 
              elderly.
Sec. 403. Enhancement of efficiency of rural housing preservation 
              grants.
Sec. 404. Project accounting records and practices.
Sec. 405. Operating assistance for migrant farm worker projects.

                        TITLE V--VOUCHER REFORM

Sec. 501. Authorization of appropriations for rental vouchers for 
              relocation of witnesses and victims of crime.
Sec. 502. Revisions to the lease addendum.
Sec. 503. Report regarding housing voucher program.
Sec. 504. Conducting quality standard inspections on a property basis 
              rather than a unit basis.

                    TITLE VI--PROGRAM MODERNIZATION

Sec. 601. Assistance for self-help housing providers.
Sec. 602. Local capacity building for community development and 
              affordable housing.
Sec. 603. Work requirement for public housing residents: coordination 
              of Federal housing assistance with State welfare reform 
              work programs.
Sec. 604. Simplified FHA downpayment calculation.
Sec. 605. Flexible use of CDBG funds.
Sec. 606. Use of section 8 assistance in grandfamily housing assisted 
              with HOME funds.
Sec. 607. Section 8 homeownership option downpayment assistance.
Sec. 608. Reauthorization of Neighborhood Reinvestment Corporation.

                  TITLE VII--STATE HOUSING BLOCK GRANT

Sec. 701. State control of public and assisted housing funds.

                 TITLE VIII--PRIVATE SECTOR INCENTIVES

Sec. 801. Sense of Congress regarding low-income housing tax credit 
              State ceilings and private activity bond caps.

                         TITLE IX--ENFORCEMENT

Sec. 901. Prohibition on use of appropriated funds for lobbying by the 
              department.
Sec. 902. Regulations.

     SEC. 2. DEFINITIONS.

       In this Act--
       (1) the term ``Committees'' means--
       (A) the Committee on Banking, Housing, and Urban Affairs of 
     the Senate and the Subcommittee on Housing and Transportation 
     of that Committee; and
       (B) the Committee on Banking and Financial Services of the 
     House of Representatives and the Subcommittee on Housing and 
     Community Opportunity of that Committee;
       (2) the term ``Department'' means the Department of Housing 
     and Urban Development; and
       (3) the term ``Secretary'' means the Secretary of Housing 
     and Urban Development.

     SEC. 3. EFFECTIVE DATE.

       Except as otherwise expressly provided in this Act or an 
     amendment made by this Act, this Act and the amendments made 
     by this Act shall take effect on October 1, 2001.

                     TITLE I--PROGRAM CONSOLIDATION

     SEC. 101. PROHIBITION OF UNAUTHORIZED PROGRAMS AT THE 
                   DEPARTMENT.

       (a) In General.--Beginning on the effective date of this 
     Act, the Secretary may not carry out any program that is not 
     explicitly authorized by Federal law.
       (b) Report.--Not later than 60 days after the date of 
     enactment of this Act, the Secretary shall submit to the 
     Committees a report, which shall include a detailed 
     description of each program carried out by the Department, 
     and the statutory authorization for that program or, if no 
     explicit authorization exists, an explanation of the legal 
     authority under which the program is being carried out.

     SEC. 102. ELIMINATION AND CONSOLIDATION OF HUD PROGRAMS.

       (a) Community Investment Corporation Demonstration.--
     Section 853 of the Housing and Community Development Act of 
     1992 (42 U.S.C. 5305 note) is repealed.
       (b) New Towns Demonstration Program for Emergency Relief of 
     Los Angeles.--

[[Page S7871]]

     Title XI of the Housing and Community Development Act of 1992 
     (42 U.S.C. 5318 note) is repealed.
       (c) Solar Assistance Financing Entity.--Section 912 of the 
     Housing and Community Development Act of 1992 (42 U.S.C. 
     5511a) is repealed.
       (d) Urban Development Action Grants.--
       (1) UDAG repeal.--Section 119 of the Housing and Community 
     Development Act of 1974 (42 U.S.C. 5318) is repealed.
       (2) Conforming amendments.--Title I of the Housing and 
     Community Development Act of 1974 (42 U.S.C. 5301 et seq.) is 
     amended--
       (A) in section 104(d)(1), by striking ``or 119'' and ``or 
     section 119'';
       (B) in section 104(d)(2), by striking ``or 119'';
       (C) in section 104(d)(2)(C), by striking ``or 119'';
       (D) in section 107(e)(1), by striking ``, section 
     106(a)(1), or section 119'' and inserting ``or section 
     106(a)(1),'';
       (E) in section 107(e)(2), by striking ``section 106(a)(1), 
     or section 119'' and inserting ``or section 106(a)(1)''; and
       (F) in section 113(a)--
       (i) in paragraph (2), by adding ``and'' at the end;
       (ii) by striking paragraph (3); and
       (iii) by redesignating paragraph (4) as paragraph (3).
       (e) Special Purpose Grants.--Section 107 of the Housing and 
     Community Development Act of 1974 (42 U.S.C. 5307) is 
     amended--
       (1) in subsection (a)(1)--
       (A) by striking subparagraphs (C), (D), and (G);
       (B) by redesignating subparagraphs (E), (F), (H), and (I) 
     as subparagraphs (C), (D), (E), and (F), respectively; and
       (C) in subparagraph (D) (as redesignated) by striking 
     ``(6)'' and inserting ``(5)''; and
       (2) in subsection (b)--
       (A) in paragraph (4), by adding ``and'' at the end;
       (B) by striking paragraphs (5) and (7);
       (C) by redesignating paragraph (6) as paragraph (5); and
       (D) in paragraph (5) (as redesignated) by striking ``; 
     and'' and inserting a period.
       (f) Moderate Rehabilitation Assistance in Disasters.--
     Section 932 of the Cranston-Gonzalez National Affordable 
     Housing Act (42 U.S.C. 1437c note) is repealed.
       (g) Rent Supplement Program.--
       (1) Repeal.--Section 101 of the Housing and Urban 
     Development Act of 1965 (12 U.S.C. 1701s) is repealed.
       (2) References.--Any reference in any provision of law to 
     section 101 of the Housing and Urban Development Act of 1965 
     (12 U.S.C. 1701s) shall be construed to refer to that section 
     as in existence immediately before the effective date of this 
     Act.
       (h) National Homeownership Trust Demonstration.--Subtitle A 
     of title III of the Cranston-Gonzalez National Affordable 
     Housing Act (42 U.S.C. 12851 et seq.) is repealed.
       (i) Hope Programs.--
       (1) Repeal of hope i program.--
       (A) Hope i program repeal.--Title III of the United States 
     Housing Act of 1937 (42 U.S.C. 1437aaa et seq.) is repealed.
       (B) Conforming amendments.--
       (i) United states housing act of 1937.--Section 8(b) of the 
     United States Housing Act of 1937 (42 U.S.C. 1437f(b)) is 
     amended--

       (I) in paragraph (1), by striking ``(1) In general.--''; 
     and
       (II) by striking paragraph (2).

       (ii) Housing and community development act of 1974.--
     Section 213(e) of the Housing and Community Development Act 
     of 1974 (42 U.S.C. 1439(e)) is amended by striking ``(b)(1)'' 
     and inserting ``(b)''.
       (2) Repeal of hope ii and iii programs.--
       (A) Hope ii.--Subtitle B of title IV of the Cranston-
     Gonzalez National Affordable Housing Act (42 U.S.C. 12871 et 
     seq.) is repealed.
       (B) Hope iii.--
       (i) In general.--Subtitle C of title IV of the Cranston-
     Gonzalez National Affordable Housing Act (42 U.S.C. 12891 et 
     seq.) is repealed.
       (ii) Closeout authority.--Notwithstanding the repeal made 
     by clause (i), the Secretary may continue to exercise the 
     authority under sections 445(b), 445(c)(3), 445(c)(4), and 
     446(4) of title IV of the Cranston-Gonzalez National 
     Affordable Housing Act (as amended by subparagraph (C) of 
     this paragraph) after the effective date of this Act, to the 
     extent necessary to terminate the programs under subtitle C 
     of title IV of that Act.
       (C) Amendment of hope iii program authority for closeout.--
       (i) Sale and resale proceeds.--Section 445 of the Cranston-
     Gonzalez National Affordable Housing Act (42 U.S.C. 12895) is 
     amended--

       (I) in subsection (b), by striking ``costs'' and all that 
     follows through ``expenses,'';
       (II) in subsection (c)(3), by striking ``the Secretary 
     or''; and
       (III) in subsection (c)(4)--

       (aa) in the first sentence, by striking ``Fifty percent of 
     any'' and inserting ``Any''; and
       (bb) by striking the second and third sentences.
       (ii) Eligibility of private property.--Section 446(4) of 
     the Cranston-Gonzalez National Affordable Housing Act (42 
     U.S.C. 12896(4)) is amended to read as follows:
       ``(4) The term `eligible property' means a single family 
     property containing not more than 4 units (excluding public 
     housing under the United States Housing Act of 1937, or 
     Indian housing under the Native American Housing Assistance 
     and Self-Determination Act of 1996).''.
       (3) Conforming amendments.--
       (A) In general.--Title IV of the Cranston-Gonzalez National 
     Affordable Housing Act is amended--
       (i) by striking sections 401 and 402 (42 U.S.C. 1437aaa 
     note; 12870);
       (ii) in section 454(b)(2) (42 U.S.C. 12899c(b)(2)), by 
     striking ``to be used for the purposes of providing 
     homeownership under subtitle B and subtitle C of this 
     title''; and
       (iii) in section 455 (42 U.S.C. 12899d), by striking 
     subsection (d) and redesignating subsections (e) through (g) 
     as subsections (d) through (f), respectively.
       (B) Department of housing and urban development act.--
     Section 7(r)(2) of the Department of Housing and Urban 
     Development Act (42 U.S.C. 3535(r)(2)) is amended--
       (i) in subparagraph (A), by striking ``titles I and II'' 
     and inserting ``title I''; and
       (ii) in subparagraph (K), by striking ``titles II, III, and 
     IV'' and inserting ``title II''.
       (j) Energy Efficiency Demonstration.--Section 961 of the 
     Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
     12712 note) is repealed.
       (k) Technical Assistance and Training for IHAs.--Section 
     917 of the Housing and Community Development Act of 1992 
     (Public Law 102-550; 106 Stat. 3882) is repealed.
       (l) Elimination of Investor-Owners Under the Section 203(k) 
     Program.--Section 203(g)(2) of the National Housing Act (12 
     U.S.C. 1709(g)(2)) is amended--
       (1) in subparagraph (D), by adding ``or'' at the end;
       (2) by striking subparagraph (E); and
       (3) by redesignating subparagraph (F) as subparagraph (E).
       (m) Certificate and Voucher Assistance for Rental 
     Rehabilitation Projects.--Section 8(u) of the United States 
     Housing Act of 1937 (42 U.S.C. 1437f(u)) is repealed.
       (n) Mortgage and Loan Insurance Programs.--
       (1) In general.--Sections 220(h), 245(b), and titles VI, 
     VII, and IX of the National Housing Act are repealed.
       (2) Additional amendments.--The National Housing Act is 
     amended--
       (A) in section 1 (12 U.S.C. 1702), by striking ``VI, VII, 
     VIII, IX'' each place it appears and inserting ``VIII,'';
       (B) in section 203(k)(5) (12 U.S.C. 1709(k)(5)), by 
     striking the second sentence; and
       (C) in section 223 (12 U.S.C. 1715n)--
       (i) by striking subsection (a) and inserting the following:
       ``(a) In General.--Notwithstanding any of the provisions of 
     this Act and without regard to limitations upon eligibility 
     contained in any section or title of this Act, other than the 
     limitation in section 203(g), the Secretary is authorized 
     upon application by the mortgagee, to insure or make 
     commitments to insure under any section or title of this Act 
     any mortgage--
       ``(1) given to refinance an existing mortgage insured under 
     this Act, except that the principal amount of any such 
     refinancing mortgage shall not exceed the original principal 
     amount or the unexpired term of such existing mortgage and 
     shall bear interest at such rate as may be agreed upon by the 
     mortgagor and the mortgagee, except that--
       ``(A) the principal amount of any such refinancing mortgage 
     may equal the outstanding balance of an existing mortgage 
     insured pursuant to section 245, if the amount of the monthly 
     payment due under the refinancing mortgage is less than that 
     due under the existing mortgage for the month in which the 
     refinancing mortgage is executed;
       ``(B) a mortgagee may not require a minimum principal 
     amount to be outstanding on the loan secured by the existing 
     mortgage;
       ``(C) in any case involving the refinancing of a loan in 
     which the Secretary determines that the insurance of a 
     mortgage for an additional term will inure to the benefits of 
     the applicable insurance fund, taking into consideration the 
     outstanding insurance liability under the existing insured 
     mortgage, such refinancing mortgage may have a term not more 
     than twelve years in excess of the unexpired term of such 
     existing insured mortgage; and
       ``(D) any multifamily mortgage that is refinanced under 
     this paragraph shall be documented through amendments to the 
     existing insurance contract and shall not be structured 
     through the provisions of a new insurance contract; or
       ``(2) executed in connection with the sale by the 
     Government of any housing acquired pursuant to section 1013 
     of the Demonstration Cities and Metropolitan Development Act 
     of 1966.''; and
       (ii) in subsection (d)(5), by striking ``A loan'' and all 
     that follows through ``and loans'' and inserting ``Loans''.
       (o) Transition Rules.--
       (1) Effect on contracts.--The repeal of program authorities 
     under this section shall not affect any legally binding 
     obligation entered into before the effective date of this 
     Act.
       (2) Savings provisions.--
       (A) In general.--Except as otherwise provided in this Act, 
     any funds or obligation authorized by, activity conducted 
     under, or mortgage or loan insured under, a provision of law 
     repealed by this section shall continue to be governed by the 
     provision as in existence immediately before the effective 
     date of this Act.

[[Page S7872]]

       (B) Insurance.--The insurance authorities repealed by 
     subsection (n)(1) and the provisions of the National Housing 
     Act applicable to a mortgage or loan insured under any of 
     such authorities, as such authorities and provisions existed 
     immediately before repeal, shall continue to apply to a 
     mortgage or loan insured under any of such authorities prior 
     to repeal, and a mortgage or loan for which, prior to the 
     date of repeal, the Secretary has issued a firm commitment 
     for insurance under any of such authorities or a Direct 
     Endorsement underwriter has approved, in a form acceptable to 
     the Secretary, a mortgage or loan for insurance under such 
     authorities.

     SEC. 103. HUD CONSOLIDATION TASK FORCE.

       (a) In General.--There is established a task force to be 
     known as the ``HUD Consolidation Task Force'', which shall--
       (1) consist of the Comptroller General of the United 
     States, the Secretary, and the Inspector General of the 
     Department; and
       (2) conduct an analysis of legislative and regulatory 
     options to reduce the number of programs carried out by the 
     Department through consolidation, elimination, and transfer 
     to other departments and agencies of the Federal government 
     and to State and local governments.
       (b) Report.--Not later than 6 months after the effective 
     date of this Act, the HUD Consolidation Task Force shall 
     submit to the Committees a report, which shall include the 
     results of the analysis under subsection (a)(2).

                    TITLE II--COMMUNITY EMPOWERMENT

     SEC. 201. REAUTHORIZATION OF COMMUNITY DEVELOPMENT BLOCK 
                   GRANTS AND PROHIBITION OF SET-ASIDES.

       (a) Reauthorization.--The last sentence of section 103 of 
     the Housing and Community Development Act of 1974 (42 U.S.C. 
     5303) is amended to read as follows: ``For purposes of 
     assistance under section 106, there is authorized to be 
     appropriated $4,850,000,000 for fiscal year 2001 and such 
     sums as may be necessary for each of fiscal years 2002 
     through 2005.''.
       (b) Prohibition of Set-Asides.--Section 103 of the Housing 
     and Community Development Act of 1974 (42 U.S.C. 5303) is 
     amended--
       (1) by inserting ``(a) In General.--'' after ``Sec. 103.''; 
     and
       (2) by adding at the end the following:
       ``(b) Prohibition of Set-Asides.--Except as provided in 
     paragraphs (1) and (2) of section 106(a) and in section 107, 
     amounts appropriated pursuant to subsection (a) of this 
     section or otherwise to carry out this title (other than 
     section 108) shall be used only for formula-based grants 
     allocated pursuant to section 106 and may not be otherwise 
     used unless the provision of law providing for such other use 
     specifically refers to this subsection and specifically 
     states that such provision modifies or supersedes the 
     provisions of this subsection.
       ``(c) Point of Order.--Notwithstanding any other provision 
     of law, it shall not be in order in the Senate to consider 
     any measure or amendment that provides for a set-aside 
     prohibited under subsection (b). The point of order provided 
     by this subsection may only be waived or suspended by a vote 
     of three-fifths of the members of the Senate duly chosen and 
     sworn.''.

     SEC. 202. COMMUNITY NOTIFICATION OF OPT-OUTS.

       Section 8(c)(8)(A) of the Housing Act of 1937 (42 U.S.C. 
     1437f(c)(8)(A)) is amended by adding at the end the 
     following: ``Upon receipt of a written notice under this 
     subparagraph, the Secretary shall forward a copy of the 
     notice to the top elected official for the unit of local 
     government in which the property is located.''.

     SEC. 203. URBAN HOMESTEAD REQUIREMENT.

       (a) Disposition of Unoccupied and Substandard Public 
     Housing.--
       (1) Publication in federal register.--
       (A) In general.--Subject to subparagraph (B), beginning 6 
     months after the effective date of this Act, and every 6 
     months thereafter, the Secretary shall publish in the Federal 
     Register a list of each unoccupied multifamily housing 
     project, substandard multifamily housing project, and other 
     residential property that is owned by the Secretary.
       (B) Exception for certain projects and properties.--
       (i) Projects.--A project described in subparagraph (A) 
     shall not be included in a list published under subparagraph 
     (A) if less than 6 months have elapsed since the later of--

       (I) the date on which the project was acquired by the 
     Secretary; or
       (II) the date on which the project was determined to be 
     unoccupied or substandard.

       (ii) Properties.--A property described in subparagraph (A) 
     shall not be included in a list published under subparagraph 
     (A) if less than 6 months have elapsed since the date on 
     which the property was acquired by the Secretary.
       (b) Transfer of Unoccupied and Substandard HUD-Held Housing 
     to Local Governments and Community Development 
     Corporations.--Section 204 of the Departments of Veterans 
     Affairs and Housing and Urban Development, and Independent 
     Agencies Appropriations Act, 1997 (12 U.S.C. 1715z-11a) is 
     amended--
       (1) by striking ``Flexible Authority.--'' and inserting the 
     following: ``(a) Flexible Authority for Disposition of 
     Multifamily Projects.--''; and
       (2) by adding at the end the following:
       ``(b) Transfer of Unoccupied and Substandard Housing to 
     Local Governments and Community Development Corporations.--
       ``(1) Definitions.--In this subsection:
       ``(A) Community development corporation.--The term 
     `community development corporation' means a nonprofit 
     organization whose primary purpose is to promote community 
     development by providing housing opportunities for low-income 
     families.
       ``(B) Cost recovery basis.--The term `cost recovery basis' 
     means, with respect to any sale of a residential property by 
     the Secretary, that the purchase price paid by the purchaser 
     is equal to or greater than or equal to the costs incurred by 
     the Secretary in connection with such property during the 
     period beginning on the date on which the Secretary acquires 
     title to the property and ending on the date on which the 
     sale is consummated.
       ``(C) Multifamily housing project.--The term `multifamily 
     housing project' has the meaning given the term in section 
     203 of the Housing and Community Development Amendments of 
     1978.
       ``(D) Qualified hud property.--The term `qualified HUD 
     property' means any property that is owned by the Secretary 
     and is--
       ``(i) an unoccupied multifamily housing project;
       ``(ii) a substandard multifamily housing project; or
       ``(iii) an unoccupied single family property that--

       ``(I) has been determined by the Secretary not to be an 
     eligible property under section 204(h) of the National 
     Housing Act (12 U.S.C. 1710(h)); or
       ``(II) is an eligible property under such section 204(h), 
     but--

       ``(aa) is not subject to a specific sale agreement under 
     such section; and
       ``(bb) has been determined by the Secretary to be 
     inappropriate for continued inclusion in the program under 
     such section 204(h) pursuant to paragraph (10) of such 
     section.
       ``(E) Residential property.--The term `residential 
     property' means a property that is a multifamily housing 
     project or a single family property.
       ``(F) Secretary.--The term `Secretary' means the Secretary 
     of Housing and Urban Development.
       ``(G) Severe physical problems.--The term `severe physical 
     problems' means, with respect to a dwelling unit, that the 
     unit--
       ``(i) lacks hot or cold piped water, a flush toilet, or 
     both a bathtub and a shower in the unit, for the exclusive 
     use of that unit;
       ``(ii) on not less than 3 separate occasions during the 
     preceding winter months, was uncomfortably cold for a period 
     of more than 6 consecutive hours due to a malfunction of the 
     heating system for the unit;
       ``(iii) has no functioning electrical service, exposed 
     wiring, any room in which there is not a functioning 
     electrical outlet, or has experienced 3 or more blown fuses 
     or tripped circuit breakers during the preceding 90-day 
     period;
       ``(iv) is accessible through a public hallway in which 
     there are no working light fixtures, loose or missing steps 
     or railings, and no elevator; or
       ``(v) has severe maintenance problems, including water 
     leaks involving the roof, windows, doors, basement, or pipes 
     or plumbing fixtures, holes or open cracks in walls or 
     ceilings, severe paint peeling or broken plaster, and signs 
     of rodent infestation.
       ``(H) Single family property.--The term `single family 
     property' means a 1- to 4-family residence.
       ``(I) Substandard.--The term `substandard' means, with 
     respect to a multifamily housing project, that 25 percent or 
     more of the dwelling units in the project have severe 
     physical problems.
       ``(J) Unit of general local government.--The term `unit of 
     general local government' has the meaning given that term in 
     section 102(a) of the Housing and Community Development Act 
     of 1974.
       ``(K) Unoccupied.--The term `unoccupied' means, with 
     respect to a residential property, that the unit of general 
     local government having jurisdiction over the area in which 
     the project is located has certified in writing that the 
     property is not inhabited.
       ``(2) Transfer authority.--Notwithstanding the authority 
     under subsection (a) and the last sentence of section 204(g) 
     of the National Housing Act (12 U.S.C. 1710(g)), the 
     Secretary of Housing and Urban Development shall transfer 
     ownership of any qualified HUD property included in the most 
     recent list published by the Secretary under subsection (a) 
     to a unit of general local government having jurisdiction for 
     the area in which the property is located or to a community 
     development corporation which operates within such a unit of 
     general local government in accordance with this subsection, 
     but only to the extent that units of general local government 
     and community development corporations submit a written 
     request for the transfer.
       ``(3) Timing.--The Secretary shall establish procedures 
     that provide for--
       ``(A) time deadlines for transfers under this subsection;
       ``(B) notification to units of general local government and 
     community development corporations of qualified HUD 
     properties in their jurisdictions;
       ``(C) such units and corporations to express interest in 
     the transfer under this subsection of such properties;
       ``(D) a right of first refusal for transfer of qualified 
     HUD properties to such units and corporations, under which 
     the Secretary shall accept an offer to purchase such a 
     property made by such unit or corporation during a period 
     established by the Secretary,

[[Page S7873]]

     but in the case of an offer made by a community development 
     corporation only if the offer provides for purchase on a cost 
     recovery basis; and
       ``(E) a written explanation, to any unit of general local 
     government or community development corporation making an 
     offer to purchase a qualified HUD property under this 
     subsection that is not accepted, of the reason that such 
     offer was not acceptable.
       ``(4) Other disposition.--With respect to any qualified HUD 
     property, if the Secretary does not receive an acceptable 
     offer to purchase the property pursuant to the procedure 
     established under paragraph (3), the Secretary shall dispose 
     of the property to the unit of general local government in 
     which property is located or to community development 
     corporations located in such unit of general local government 
     on a negotiated, competitive bid, or other basis, on such 
     terms as the Secretary deems appropriate.
       ``(5) Satisfaction of indebtedness.--Before transferring 
     ownership of any qualified HUD property pursuant to this 
     subsection, the Secretary shall satisfy any indebtedness 
     incurred in connection with the property to be transferred, 
     by canceling the indebtedness.
       ``(6) Determination of status of properties.--To ensure 
     compliance with the requirements of this subsection, the 
     Secretary shall take the following actions:
       ``(A) Upon enactment.--Not later than 60 days after the 
     effective date of the Local Housing Opportunities Act, the 
     Secretary shall assess each residential property owned by the 
     Secretary to determine whether the property is a qualified 
     HUD property.
       ``(B) Upon acquisition.--Upon acquiring any residential 
     property, the Secretary shall promptly determine whether the 
     property is a qualified HUD property.
       ``(C) Updates.--The Secretary shall periodically reassess 
     the residential properties owned by the Secretary to 
     determine whether any such properties have become qualified 
     HUD properties.
       ``(7) Tenant leases.--This subsection shall not affect the 
     terms or the enforceability of any contract or lease entered 
     into with respect to any residential property before the date 
     that such property becomes a qualified HUD property.
       ``(8) Use of property.--Property transferred under this 
     subsection shall be used only for appropriate neighborhood 
     revitalization efforts, including homeownership, rental 
     units, commercial space, and parks, consistent with local 
     zoning regulations, local building codes, and subdivision 
     regulations and restrictions of record.
       ``(9) Inapplicability to properties made available for 
     homeless.--Notwithstanding any other provision of this 
     subsection, this subsection shall not apply to any property 
     that the Secretary determines is to be made available for use 
     by the homeless pursuant to subpart E of part 291 of title 
     24, Code of Federal Regulations (as in effect on January 1, 
     2000), during the period that the properties are so 
     available.
       ``(10) Protection of existing contracts.--This subsection 
     may not be construed to alter, affect, or annul any legally 
     binding obligations entered into with respect to a qualified 
     HUD property before the property becomes a qualified HUD 
     property.''.
       (c) Procedures.--Not later than 6 months after the date of 
     enactment of this Act, the Secretary shall establish, by 
     rule, regulation, or order, such procedures as may be 
     necessary to carry out this section and the amendments made 
     by this section.

     SEC. 204. AUTHORIZATION OF MOVING TO WORK PROGRAM.

       Section 204 of the Departments of Veterans Affairs and 
     Housing and Urban Development, and Independent Agencies 
     Appropriations Act, 1996 (as contained in section 101(e) of 
     the Omnibus Consolidated Rescissions and Appropriations Act 
     of 1996) (42 U.S.C. 1437f note) is amended--
       (1) in the section heading, by striking ``demonstration'' 
     and inserting ``program'';
       (2) in subsection (a), by striking ``this demonstration'' 
     and inserting ``this section'';
       (3) in subsection (b)--
       (A) in the first sentence--
       (i) by striking ``demonstration''; and
       (ii) by striking ``up to 30'';
       (B) in the third sentence, by striking ``Under the 
     demonstration, notwithstanding'' and inserting 
     ``Notwithstanding''; and
       (C) by striking the second sentence;
       (4) in subsection (c)--
       (A) in the matter preceding paragraph (1), by striking 
     ``demonstration'' and inserting ``program under this 
     section'';
       (B) in paragraph (3)--
       (i) in subparagraph (A), by striking ``demonstration'';
       (ii) in subparagraph (B), by striking ``demonstration'' and 
     inserting ``section''; and
       (iii) in subparagraph (E), by striking ``demonstration 
     program'' and inserting ``program under this section''; and
       (C) in paragraph (4), by striking ``demonstration'' and 
     inserting ``program under this section'';
       (5) by striking subsection (d) and inserting the following:
       ``(d) Approval of Applications.--Not later than 60 days 
     after receiving an application submitted in accordance with 
     subsection (c), the Secretary shall approve the application, 
     unless the Secretary makes a written determination that the 
     applicant has a most recent score under the public housing 
     management assessment program under section 6(j)(2) of the 
     United States Housing Act of 1937 (or any successor 
     assessment program for public housing agencies), that is 
     among the lowest 20 percent of the scores of all public 
     housing agencies.'';
       (6) in subsection (e)--
       (A) in paragraph (1), by striking ``this demonstration'' 
     and inserting ``the program under this section''; and
       (B) in paragraph (2), by striking ``demonstration'' and 
     inserting ``program under this section'';
       (7) in subsection (f), by striking ``demonstration under 
     this part'' and inserting ``program under this section'';
       (8) in subsection (g)--
       (A) in paragraph (1), by striking ``this demonstration'' 
     and inserting ``the program under this section''; and
       (B) in paragraph (2), by striking ``demonstration'' and 
     inserting ``program under this section'';
       (9) in subsection (h), by striking ``demonstration'' each 
     place it appears and inserting ``program under this 
     section'';
       (10) in subsection (i), by striking ``demonstration'' and 
     inserting ``program under this section''; and
       (11) in subsection (j), by striking ``demonstration'' and 
     inserting ``program''.

                 TITLE III--HOMELESS ASSISTANCE REFORM

     SEC. 301. CONSOLIDATION OF HUD HOMELESS ASSISTANCE FUNDS.

       The purposes of this title are to facilitate the effective 
     and efficient management of the homeless assistance programs 
     of the Department by--
       (1) reducing and preventing homelessness by supporting the 
     creation and maintenance of community-based, comprehensive 
     systems dedicated to returning families and individuals to 
     self-sufficiency;
       (2) reorganizing the homeless housing assistance 
     authorities under the Stewart B. McKinney Homeless Assistance 
     Act into a McKinney Homeless Assistance Performance Fund;
       (3) assisting States and local governments, in partnership 
     with private nonprofit service providers, to use homeless 
     funding more efficiently and effectively;
       (4) simplifying and making more flexible the provision of 
     Federal homeless assistance;
       (5) maximizing the ability of a community to implement a 
     coordinated, comprehensive system for providing assistance to 
     homeless families and individuals;
       (6) making more efficient and equitable the manner in which 
     homeless assistance is distributed;
       (7) reducing the Federal role in local decisionmaking for 
     homeless assistance programs;
       (8) reducing the costs to governmental jurisdictions and 
     private nonprofit organizations in applying for and using 
     assistance; and
       (9) advancing the goal of meeting the needs of the homeless 
     population through mainstream programs and establishing 
     continuum of care systems necessary to achieve that goal.

     SEC. 302. ESTABLISHMENT OF THE MCKINNEY HOMELESS ASSISTANCE 
                   PERFORMANCE FUND.

       Title IV of the Stewart B. McKinney Homeless Assistance Act 
     (42 U.S.C. 11361 et seq.) is amended to read as follows:

       ``TITLE IV--McKINNEY HOMELESS ASSISTANCE PERFORMANCE FUND

     ``SEC. 401. DEFINITIONS.

       ``In this title:
       ``(1) Allocation unit of general local government.--
       ``(A) In general.--The term `allocation unit of general 
     local government' means a metropolitan city or an urban 
     county.
       ``(B) Consortia.--The term `allocation unit of general 
     local government' may include a consortium of geographically 
     contiguous metropolitan cities and urban counties, if the 
     Secretary determines that the consortium--
       ``(i) has sufficient authority and administrative 
     capability to carry out the purposes of this title on behalf 
     of its member jurisdictions; and
       ``(ii) will, according to a written certification by the 
     State (or States, if the consortium includes jurisdictions in 
     more than 1 State), direct its activities to the 
     implementation of a continuum of care system within the State 
     or States.
       ``(2) Applicant.--The term `applicant' means a grantee 
     submitting an application under section 403.
       ``(3) Consolidated plan.--The term `consolidated plan' 
     means the single comprehensive plan that the Secretary 
     prescribes for submission by jurisdictions (which shall be 
     coordinated and consistent with any 5-year comprehensive plan 
     of the public housing agency required under section 14(e) of 
     the United States Housing Act of 1937) that consolidates and 
     fulfills the requirements of--
       ``(A) the comprehensive housing affordability strategy 
     under title I of the Cranston-Gonzalez National Affordable 
     Housing Act;
       ``(B) the community development plan under section 104 of 
     the Housing and Community Development Act of 1974; and
       ``(C) the submission requirements for formula funding 
     under--
       ``(i) the Community Development Block Grant program 
     (authorized by title I of the Housing and Community 
     Development Act of 1974);
       ``(ii) the HOME program (authorized by title II of the 
     Cranston-Gonzalez National Affordable Housing Act);

[[Page S7874]]

       ``(iii) the McKinney Homeless Assistance Performance Fund 
     (authorized under this title); and
       ``(iv) the AIDS Housing Opportunity Act (authorized by 
     subtitle D of title VIII of the Cranston-Gonzalez National 
     Affordable Housing Act).
       ``(4) Continuum of care system.--The term `continuum of 
     care system' means a system developed by a State or local 
     homeless assistance board that includes--
       ``(A) a system of outreach and assessment, including drop-
     in centers, 24-hour hotlines, counselors, and other 
     activities designed to engage homeless individuals and 
     families, bring them into the continuum of care system, and 
     determine their individual housing and service needs;
       ``(B) emergency shelters with essential services to ensure 
     that homeless individuals and families receive shelter;
       ``(C) transitional housing with appropriate supportive 
     services to help ensure that homeless individuals and 
     families are prepared to make the transition to increased 
     responsibility and permanent housing;
       ``(D) permanent housing, or permanent supportive housing, 
     to help meet the long-term housing needs of homeless 
     individuals and families;
       ``(E) coordination between assistance provided under this 
     title and assistance provided under other Federal, State, and 
     local programs that may be used to assist homeless 
     individuals and families, including both targeted homeless 
     assistance programs and other programs administered by the 
     Departments of Veterans Affairs, Labor, Health and Human 
     Services, and Education; and
       ``(F) a system of referrals for subpopulations of the 
     homeless (such as homeless veterans, families with children, 
     battered spouses, persons with mental illness, persons who 
     have chronic problems with alcohol, drugs, or both, persons 
     with other chronic health problems, and persons who have 
     acquired immunodeficiency syndrome and related diseases) to 
     the appropriate agencies, programs, or services (including 
     health care, job training, and income support) necessary to 
     meet their needs.
       ``(5) Grantee.--The term `grantee' means--
       ``(A) an allocation unit of general local government or 
     insular area that administers a grant under section 
     408(b)(1); or
       ``(B) an allocation unit of general local government or 
     insular area that designates a public agency or a private 
     nonprofit organization (or a combination of such 
     organizations) to administer grant amounts under section 
     408(b)(2).
       ``(6) Homeless individual.--The term `homeless individual' 
     has the same meaning as in section 103 of this Act.
       ``(7) Insular area.--The term `insular area' means the 
     Virgin Islands, Guam, American Samoa, and the Northern 
     Mariana Islands.
       ``(8) Low-demand services and referrals.--The term `low-
     demand services and referrals' means the provision of health 
     care, mental health, substance abuse, and other supportive 
     services and referrals for services in a noncoercive manner, 
     which may include medication management, education, 
     counseling, job training, and assistance in obtaining 
     entitlement benefits and in obtaining other supportive 
     services, including mental health and substance abuse 
     treatment.
       ``(9) Metropolitan city.--The term `metropolitan city' has 
     the same meaning as in section 102(a) of the Housing and 
     Community Development Act of 1974.
       ``(10) Person with disabilities.--The term `person with 
     disabilities' means a person who--
       ``(A) has a disability as defined in section 223 of the 
     Social Security Act;
       ``(B) is determined to have, as determined by the 
     Secretary, a physical, mental, or emotional impairment 
     which--
       ``(i) is expected to be of long-continued and indefinite 
     duration;
       ``(ii) substantially impedes his or her ability to live 
     independently; and
       ``(iii) is of such a nature that such ability could be 
     improved by more suitable housing conditions;
       ``(C) has a developmental disability, as defined in section 
     102 of the Developmental Disabilities Assistance and Bill of 
     Rights Act; or
       ``(D) has the disease of acquired immunodeficiency syndrome 
     or any conditions arising from the etiologic agent for 
     acquired immunodeficiency syndrome, except that this 
     subparagraph shall not be construed to limit eligibility 
     under subparagraphs (A) through (C) or the provisions 
     referred to in subparagraphs (A) through (C).
       ``(11) Private nonprofit organization.--The term `private 
     nonprofit organization' means a private organization--
       ``(A) no part of the net earnings of which inures to 
     benefits of any member, founder, contributor, or individual;
       ``(B) that has a voluntary board;
       ``(C) that has an accounting system, or has designated a 
     fiscal agent in accordance with requirements established by 
     the Secretary; and
       ``(D) that practices nondiscrimination in the provision of 
     assistance.
       ``(12) Project sponsor.--The term `project sponsor' means 
     an entity that--
       ``(A) provides housing or assistance for homeless 
     individuals or families by carrying out activities under this 
     title; and
       ``(B) meets such minimum standards as the Secretary 
     considers appropriate.
       ``(13) Recipient.--The term `recipient' means a grantee 
     (other than a State when it is distributing grant amounts to 
     State recipients) and a State recipient.
       ``(14) Secretary.--The term `Secretary' means the Secretary 
     of Housing and Urban Development.
       ``(15) State.--The term `State' means each of the several 
     States and the Commonwealth of Puerto Rico. The term includes 
     an agency or instrumentality of a State that is established 
     pursuant to legislation and designated by the chief executive 
     officer to act on behalf of the jurisdiction with regard to 
     provisions of this title.
       ``(16) State recipient.--The term `State recipient' means 
     the following entities receiving amounts from the State under 
     section 408(c)(2)(B):
       ``(A) A unit of general local government within the State.
       ``(B) In the case of an area of the State with significant 
     homeless needs, if no State recipient is identified, 1 or 
     more private nonprofit organizations serving that area.
       ``(17) Unit of general local government.--The term `unit of 
     general local government' means--
       ``(A) a city, town, township, county, parish, village, or 
     other general purpose political subdivision of a State;
       ``(B) the District of Columbia; and
       ``(C) any agency or instrumentality thereof that is 
     established pursuant to legislation and designated by the 
     chief executive officer to act on behalf of the jurisdiction 
     with regard to provisions of this title.
       ``(18) Urban county.--The term `urban county' has the same 
     meaning as in section 102(a) of the Housing and Community 
     Development Act of 1974.
       ``(19) Very low-income families.--The term `very low-income 
     families' has the same meaning as in section 104 of the 
     Cranston-Gonzalez National Affordable Housing Act.

     ``SEC. 402. AUTHORIZATIONS.

       ``(a) In General.--The Secretary may make grants to carry 
     out activities to assist homeless individuals and families in 
     support of continuum of care systems in accordance with this 
     title.
       ``(b) Funding Amounts.--There are authorized to be 
     appropriated to carry out this title, to remain available 
     until expended--
       ``(1) $1,050,000,000 for fiscal year 2001;
       ``(2) $1,070,000,000 for fiscal year 2002; and
       ``(3) $1,090,000,000 for fiscal year 2003.

     ``SEC. 403. APPLICATION.

       ``(a) In General.--Each applicant shall submit the 
     application required under this section in such form and in 
     accordance with such procedures as the Secretary shall 
     prescribe. If the applicant is a State or unit of general 
     local government, the application shall be submitted as part 
     of the homeless assistance component of the consolidated 
     plan.
       ``(b) Continuum of Care Submission.--
       ``(1) In general.--The allocation unit of general local 
     government, insular area, or State shall prepare, and submit 
     those portions of the application related to the development 
     and implementation of the continuum of care system, as 
     described in paragraph (2) or (3), as applicable.
       ``(2) Submission by allocation unit of general local 
     government or insular area.--The allocation unit of general 
     local government or insular area shall develop and submit to 
     the Secretary--
       ``(A) a continuum of care system consistent with that 
     defined under section 401(4), which shall be designed to 
     incorporate any strengths and fill any gaps in the current 
     homeless assistance activities of the jurisdiction, and shall 
     include a description of efforts to address the problems 
     faced by each of the different subpopulations of homeless 
     individuals;
       ``(B) a multiyear strategy for implementing the continuum 
     of care system, including appropriate timetables and budget 
     estimates for accomplishing each element of the strategy;
       ``(C) a 1-year plan, identifying all activities to be 
     carried out with assistance under this title and with 
     assistance from other HUD resources allocated in accordance 
     with the consolidated plan, and describing the manner in 
     which these activities will further the strategy; and
       ``(D) any specific performance measures and benchmarks for 
     use in assessing the performance of the grantee under this 
     title that are in addition to national performance measures 
     and benchmarks established by the Secretary.
       ``(3) Submission by state.--The State shall develop and 
     submit to the Secretary--
       ``(A) a continuum of care system consistent with that 
     defined under section 401(4), which shall be designed to 
     incorporate any strengths and fill any gaps in the current 
     homeless assistance activities of the jurisdiction, and shall 
     include a description of efforts to address the problems 
     faced by each of the different subpopulations of homeless 
     individuals;
       ``(B) a multiyear strategy for implementing the continuum 
     of care systems in areas of the State outside allocation 
     units of general local government, including the actions the 
     State will take to achieve the goals set out in the strategy;
       ``(C) a 1-year plan identifying--
       ``(i) in the case of a State carrying out its own 
     activities under section 408(c)(2)(A), the activities to be 
     carried out with assistance under this title and describing 
     the manner in which these activities will further the 
     strategy; and

[[Page S7875]]

       ``(ii) in the case of a State distributing grant amounts to 
     State recipients under section 408(c)(2)(B), the criteria 
     that the State will use in distributing amounts awarded under 
     this title, the method of distribution, and the relationship 
     of the method of distribution to the homeless assistance 
     strategy; and
       ``(D) any specific performance measures and benchmarks for 
     use in assessing the performance of the grantee under this 
     title that are in addition to national performance measures 
     and benchmarks established by the Secretary.
       ``(c) Submission Requirements for Applicants Other Than 
     States.--Each application from an applicant other than a 
     State shall include, at a minimum--
       ``(1) the continuum of care submission described in 
     subsection (b)(2);
       ``(2) a determination on whether the assistance under this 
     title will be administered by the jurisdiction, a public 
     agency or private nonprofit organization, or the State, as 
     appropriate under subsections (b) and (c) of section 408;
       ``(3) certifications or other such forms of proof of 
     commitments of financial and other resources sufficient to 
     comply with the match requirements under section 405(a)(1);
       ``(4) a certification that the applicant is following a 
     current approved consolidated plan;
       ``(5) a certification that the grant will be conducted and 
     administered in conformity with title VI of the Civil Rights 
     Act of 1964, section 504 of the Rehabilitation Act of 1973, 
     and the Fair Housing Act, and the grantee will affirmatively 
     further fair housing; and
       ``(6) a certification that the applicant will comply with 
     the requirements of this title and other applicable laws.
       ``(d) Submission Requirements for States.--Each application 
     from a State shall include--
       ``(1) the continuum of care submission described in 
     subsection (b)(3);
       ``(2) certifications or other such forms of proof of 
     commitments of financial and other resources sufficient to 
     comply with the match requirements under section 405(a)(1);
       ``(3) a certification that the applicant is following a 
     current approved consolidated plan;
       ``(4) a certification that the grant will be conducted and 
     administered in conformity with title VI of the Civil Rights 
     Act of 1964, section 504 of the Rehabilitation Act of 1973, 
     and the Fair Housing Act, and the grantee will affirmatively 
     further fair housing; and
       ``(5) a certification that the State and State recipients 
     will comply with the requirements of this title and other 
     applicable laws.
       ``(e) Application Approval.--The application shall be 
     approved by the Secretary unless the Secretary determines 
     that the application is substantially incomplete.

     ``SEC. 404. ELIGIBLE PROJECTS AND ACTIVITIES; CONTINUUM OF 
                   CARE APPROVAL.

       ``(a) Eligible Projects.--Grants under this title may be 
     used to carry out activities described in subsection (b) in 
     support of the following types of projects:
       ``(1) Emergency assistance.--Assistance designed to prevent 
     homelessness or to meet the emergency needs of homeless 
     individuals and families, including 1 or more of the 
     following:
       ``(A) Prevention.--Efforts to prevent homelessness of a 
     very low-income individual or family that has received an 
     eviction notice, notice of mortgage foreclosure, or notice of 
     termination of utilities, if--
       ``(i) the individual or family cannot make the required 
     payments due to a sudden reduction in income or other 
     financial emergency; and
       ``(ii) the assistance is necessary to avoid imminent 
     eviction, foreclosure, or termination of services.
       ``(B) Outreach and assessment.--Efforts designed to inform 
     individuals and families about the availability of services, 
     to bring them into the continuum of care system, and to 
     determine which services or housing are appropriate to the 
     needs of the individual or family.
       ``(C) Emergency shelter.--The provision of short-term 
     emergency shelter with essential supportive services for 
     homeless individuals and families.
       ``(2) Safe haven housing.--A structure or a clearly 
     identifiable portion of a structure that--
       ``(A) provides housing and low-demand services and 
     referrals for homeless individuals with serious mental 
     illness--
       ``(i) who are currently residing primarily in places not 
     designed for, or ordinarily used as, a regular sleeping 
     accommodation for human beings; and
       ``(ii) who have been unwilling or unable to participate in 
     mental health or substance abuse treatment programs or to 
     receive other supportive services; except that a person whose 
     sole impairment is substance abuse shall not be considered an 
     eligible person;
       ``(B) provides 24-hour residence for eligible individuals 
     who may reside for an unspecified duration;
       ``(C) provides private or semiprivate accommodations;
       ``(D) may provide for the common use of kitchen facilities, 
     dining rooms, and bathrooms;
       ``(E) may provide supportive services to eligible persons 
     who are not residents on a drop-in basis;
       ``(F) provides occupancy limited to not more than 25 
     persons; and
       ``(G) provides housing for victims of spousal abuse, and 
     their dependents.
       ``(3) Transitional housing.--Housing and appropriate 
     supportive services that are designed to facilitate the 
     movement of homeless individuals to permanent housing, 
     generally within 24 months.
       ``(4) Permanent housing and permanent housing and 
     supportive services for persons with disabilities.--Permanent 
     housing for homeless individuals, and permanent housing and 
     supportive services for homeless persons with disabilities, 
     the latter of which may be designed to provide housing and 
     services solely for persons with disabilities, or may provide 
     housing for such persons in a multifamily housing, 
     condominium, or cooperative project.
       ``(5) Single room occupancy housing.--A unit for occupancy 
     by 1 person, which need not (but may) contain food 
     preparation or sanitary facilities, or both, and may provide 
     services such as mental health services, substance abuse 
     treatment, job training, and employment programs.
       ``(6) Other projects.--Such other projects as the Secretary 
     determines will further the purposes of title I of the 
     Homelessness Assistance and Management Reform Act of 1997.
       ``(b) Eligible Activities.--Grants under this title may be 
     used to carry out the following activities in support of 
     projects described in subsection (a):
       ``(1) Homelessness prevention activities.--Short-term 
     mortgage, rental, and utilities payments and other short-term 
     assistance designed to prevent the imminent homelessness of 
     the individuals and families described in subsection 
     (a)(1)(A).
       ``(2) Outreach and assessment.--Drop-in centers, 24-hour 
     hotlines, counselors, and other activities designed to engage 
     homeless individuals and families, bring them into the 
     continuum of care system, and determine their individual 
     housing and service needs.
       ``(3) Acquisition and rehabilitation.--The acquisition, 
     rehabilitation, or acquisition and rehabilitation of real 
     property.
       ``(4) New construction.--The new construction of a project, 
     including the cost of the site.
       ``(5) Operating costs.--The costs of operating a project, 
     including salaries and benefits, maintenance, insurance, 
     utilities, replacement reserve accounts, and furnishings.
       ``(6) Leasing.--Leasing of an existing structure or 
     structures, or units within these structures, including the 
     provision of long-term rental assistance contracts.
       ``(7) Tenant assistance.--The provision of security or 
     utility deposits, rent, or utility payments for the first 
     month of residence at a new location, and relocation 
     assistance.
       ``(8) Supportive services.--The provision of essential 
     supportive services including case management, housing 
     counseling, job training and placement, primary health care, 
     mental health services, substance abuse treatment, child 
     care, transportation, emergency food and clothing, family 
     violence services, education services, moving services, 
     assistance in obtaining entitlement benefits, and referral to 
     veterans services and referral to legal services.
       ``(9) Administration.--
       ``(A) In general.--Expenses incurred in--
       ``(i) planning, developing, and establishing a program 
     under this title; and
       ``(ii) administering the program.
       ``(B) Limitations.--Not more than the following amounts may 
     be used for administrative costs under subparagraph (A):
       ``(i) 10 percent of any grant amounts provided for a 
     recipient for a fiscal year (including amounts used by a 
     State to carry out its own activities under section 
     408(c)(1)(A)).
       ``(ii) 5 percent of any grant amounts provided to a State 
     for a fiscal year that the State uses to distribute funds to 
     a State recipient under section 408(c)(1)(B).
       ``(10) Capacity building.--
       ``(A) In general.--Building the capacity of private 
     nonprofit organizations to participate in the continuum of 
     care system of the recipient.
       ``(B) Limitations.--Not more than the following amounts may 
     be used for capacity building under subparagraph (A):
       ``(i) 2 percent of any grant amounts provided for a 
     recipient for a fiscal year (including amounts used by a 
     State to carry out its own activities under section 
     408(c)(1)(A)).
       ``(ii) 2 percent of any grant amounts provided to a State 
     for a fiscal year that the State uses to distribute funds to 
     a State recipient under section 408(c)(1)(B).
       ``(11) Other activities.--Other activities as the Secretary 
     determines will further the purposes of title I of the 
     Homelessness Assistance and Management Reform Act of 1997.
       ``(c) Targeting to Subpopulations of Persons With 
     Disabilities.--Notwithstanding any other provision of law, 
     projects for persons with disabilities assisted under this 
     title may be targeted to specific subpopulations of such 
     persons, including persons who--
       ``(1) are seriously mentally ill;
       ``(2) have chronic problems with drugs, alcohol, or both; 
     or
       ``(3) have acquired immunodeficiency syndrome or any 
     conditions arising from the etiologic agency for acquired 
     immunodeficiency syndrome.

     ``SEC. 405. MATCHING REQUIREMENT AND MAINTENANCE OF EFFORT.

       ``(a) Matching Requirement.--
       ``(1) In general.--Each recipient shall make contributions 
     totaling not less than $1 for every $3 made available for the 
     recipient

[[Page S7876]]

     for any fiscal year under this title to carry out eligible 
     activities. At the end of each program year, each recipient 
     shall certify to the Secretary that it has complied with this 
     section, and shall include with the certification a 
     description of the sources and amounts of the matching 
     contributions. Contributions under this section may not come 
     from assistance provided under this title.
       ``(2) Calculation of amounts.--In calculating the amount of 
     matching contributions required under paragraph (1), a 
     recipient may include--
       ``(A) any funds derived from a source, other than 
     assistance under this title or amounts subject to subsection 
     (b);
       ``(B) the value of any lease on a building; and
       ``(C) any salary paid to staff or any volunteer labor 
     contributed to carry out the program.
       ``(b) Limitation on Use of Funds.--No assistance received 
     under this title may be used to replace other funds 
     previously used, or designated for use, by the State, State 
     recipient (except when a State recipient is a private 
     nonprofit organization), allocation unit of general local 
     government or insular area to assist homeless individuals and 
     families.

     ``SEC. 406. RESPONSIBILITIES OF RECIPIENTS, PROJECT SPONSORS, 
                   AND OWNERS.

       ``(a) Use of Assistance Through Private Nonprofit 
     Organizations.--
       ``(1) In general.--Each recipient shall ensure that at 
     least 50 percent of the grant amounts that are made available 
     to it under this title for any fiscal year are made available 
     to project sponsors that are private nonprofit organizations.
       ``(2) Waiver.--The Secretary may waive or reduce the 
     requirement of paragraph (1), if the recipient demonstrates 
     to the Secretary that the requirement interferes with the 
     ability of the recipient to provide assistance under this 
     title because of the paucity of qualified private nonprofit 
     organizations in the jurisdiction of the recipient.
       ``(b) Housing Quality.--Each recipient shall ensure that 
     housing assisted with grant amounts provided under this title 
     is decent, safe, and sanitary and complies with all 
     applicable State and local housing codes, building codes, and 
     licensing requirements in the jurisdiction in which the 
     housing is located.
       ``(c) Prevention of Undue Benefit.--The Secretary may 
     prescribe such terms and conditions as the Secretary 
     considers necessary to prevent project sponsors from unduly 
     benefiting from the sale or other disposition of projects, 
     other than a sale or other disposition resulting in the use 
     of the project for the direct benefit of very low-income 
     families.
       ``(d) Confidentiality.--Each recipient shall develop and 
     implement procedures to ensure the confidentiality of records 
     pertaining to any individual provided services assisted under 
     this title for family violence prevention or treatment or for 
     such medical or other conditions as the Secretary may 
     prescribe, and to ensure that the address or location of any 
     project providing such services will, except with written 
     authorization of the person or persons responsible for the 
     operation of such project, not be made public.
       ``(e) Employment of Homeless Individuals.--
       ``(1) In general.--To the maximum extent practicable, the 
     Secretary shall ensure that recipients, through employment, 
     volunteer services, or otherwise, provide opportunities for 
     homeless individuals and families to participate in--
       ``(A) constructing, renovating, maintaining, and operating 
     facilities assisted under this title;
       ``(B) providing services so assisted; and
       ``(C) providing services for occupants of facilities so 
     assisted.
       ``(2) No displacement of employed workers.--In carrying out 
     paragraph (1), recipients shall not displace employed 
     workers.
       ``(f) Occupancy Charge.--Any homeless individual or family 
     residing in a dwelling unit assisted under this title may be 
     required to pay an occupancy charge in an amount determined 
     by the grantee providing the assistance, which may not exceed 
     an amount equal to 30 percent of the adjusted income (as 
     defined in section 3(b) of the United States Housing Act of 
     1937 or any other subsequent provision of Federal law 
     defining the term for purposes of eligibility for, or rental 
     charges in, public housing) of the individual or family. 
     Occupancy charges paid may be reserved, in whole or in part, 
     to assist residents in moving to permanent housing.

     ``SEC. 407. ALLOCATION AND DISTRIBUTION OF FUNDS.

       ``(a) Insular Areas.--
       ``(1) Allocation.--For each fiscal year, the Secretary 
     shall allocate assistance under this title to insular areas, 
     in an amount equal to 0.20 percent of the amounts 
     appropriated under the first sentence of section 402(b).
       ``(2) Distribution.--The Secretary shall provide for the 
     distribution of amounts reserved under paragraph (1) for 
     insular areas pursuant to specific criteria or a distribution 
     formula prescribed by the Secretary.
       ``(b) States and Allocation Units of General Local 
     Government.--
       ``(1) In general.--For each fiscal year, of the amounts 
     appropriated under the first sentence of section 402(b) that 
     remain after amounts are reserved for insular areas under 
     subsection (a), the Secretary shall allocate assistance 
     according to the formula described in paragraph (2).
       ``(2) Formula.--
       ``(A) Allocation.--The Secretary shall allocate amounts for 
     allocation units of general local government and States, in a 
     manner that ensures that the percentage of the total amount 
     available under this title for any fiscal year for any 
     allocation unit of general local government or State is equal 
     to the percentage of the total amount available for section 
     106 of the Housing and Community Development Act of 1974 for 
     the same fiscal year that is allocated for the allocation 
     unit of general local government or State.
       ``(B) Minimum allocation.--
       ``(i) Graduated minimum grant allocations.--A State, 
     metropolitan city, or urban county shall receive no less 
     funding in the first fiscal year after the effective date of 
     this Act than 90 percent of the average of the amounts 
     awarded annually to that jurisdiction for homeless assistance 
     programs administered by the Secretary under this title 
     during fiscal years 1996 through 1999, not less than 85 
     percent in the second full fiscal year after the effective 
     date of this Act, not less than 80 percent in the third and 
     fourth fiscal years after the effective date of this Act, and 
     not less than 75 percent in the fifth full fiscal year after 
     the effective date of this Act, but only if the amount 
     appropriated in each such fiscal year exceeds $1,000,000,000. 
     If that amount does not exceed $1,000,000,000 in any fiscal 
     year referred to in the first sentence of this paragraph, the 
     jurisdiction may receive its proportionate share of the 
     amount appropriated which may be less than the amount in such 
     sentence for such fiscal year.
       ``(ii) Reduction.--In any fiscal year, the Secretary may 
     provide a grant under this subsection for a State, 
     metropolitan city, or urban county, in an amount less than 
     the amount allocated under those paragraphs, if the Secretary 
     determines that the jurisdiction has failed to comply with 
     requirements of this title, or that such action is otherwise 
     appropriate.
       ``(C) Study; submission of information to congress related 
     to alternative methods of allocation.--Not later than 1 year 
     after the effective date of the Local Housing Opportunities 
     Act, the Secretary shall--
       ``(i) submit to Congress--

       ``(I) the best available methodology for determining a 
     formula relative to the geographic allocation of funds under 
     this subtitle among entitlement communities and 
     nonentitlement areas based on the incidence of homelessness 
     and factors that lead to homelessness;
       ``(II) proposed alternatives to the formula submitted 
     pursuant to subclause (I) for allocating funds under this 
     section, including an evaluation and recommendation on a 75/
     25 percent formula and other allocations of flexible block 
     grant homeless assistance between metropolitan cities and 
     urban counties and States under subparagraph (A);
       ``(III) an analysis of the deficiencies in the current 
     allocation formula described in section 106(b) of the Housing 
     and Community Development Act of 1974;
       ``(IV) an analysis of the adequacy of current indices used 
     as proxies for measuring homelessness; and
       ``(V) an analysis of the bases underlying each of the 
     proposed allocation methods;

       ``(ii) perform the duties required by this paragraph in 
     ongoing consultation with--

       ``(I) the Subcommittee on Housing Opportunity and Community 
     Development of the Committee on Banking, Housing, and Urban 
     Affairs of the Senate;
       ``(II) the Subcommittee on Housing and Community 
     Opportunity of the Committee on Banking and Financial 
     Services of the House of Representatives;
       ``(III) organizations representing States, metropolitan 
     cities, and urban counties;
       ``(IV) organizations representing rural communities;
       ``(V) organizations representing veterans;
       ``(VI) organizations representing persons with 
     disabilities;
       ``(VII) members of the academic community; and
       ``(VIII) national homelessness advocacy groups; and

       ``(iii) estimate the amount of funds that will be received 
     annually by each entitlement community and nonentitlement 
     area under each such alternative allocation system and 
     compare such amounts to the amount of funds received by each 
     entitlement community and nonentitlement area in prior years 
     under this section.

     ``SEC. 408. ADMINISTRATION OF PROGRAM.

       ``(a) In General.--The Secretary shall prescribe such 
     procedures and requirements as the Secretary deems 
     appropriate for administering grant amounts under this title.
       ``(b) Allocation Units of General Local Government and 
     Insular Areas.--
       ``(1) In general.--Except as provided in paragraph (2), an 
     allocation unit of general local government or insular area 
     shall administer grant amounts received under subsection (a) 
     or (b) of section 407 for any fiscal year.
       ``(2) Agencies and organizations designated by 
     jurisdiction.--
       ``(A) Designation of other entities to administer grant 
     amounts.--An allocation unit of general local government or 
     insular area may elect for any fiscal year to designate a 
     public agency or a private nonprofit organization (or a 
     collaboration of such organizations) to administer grant 
     amounts received under subsection (a) or (b) of section 407 
     instead of the jurisdiction.

[[Page S7877]]

       ``(B) Provision of grant amounts.--The Secretary may, at 
     the request of a jurisdiction under subparagraph (A), provide 
     grant amounts directly to the agency or organization 
     designated under that subparagraph.
       ``(c) States.--
       ``(1) In general.--The State--
       ``(A) may use not more than 15 percent of the amount made 
     available to the State under section 407(b)(2) for a fiscal 
     year to carry out its own homeless assistance program under 
     this title; and
       ``(B) shall distribute the remaining amounts to State 
     recipients.
       ``(2) Distribution of amounts to state recipients.--
       ``(A) In general.--
       ``(i) Options.--States distributing amounts under paragraph 
     (1)(B) to State recipients that are units of general local 
     government shall, for each fiscal year, afford each such 
     recipient the options of--

       ``(I) administering the grant amounts on its own behalf;
       ``(II) designating (as provided by subsection (b)(2)) a 
     public agency or a private nonprofit organization (or a 
     combination of such organizations) to administer the grant 
     amounts instead of the jurisdiction; or
       ``(III) entering into an agreement with the State, in 
     consultation with private nonprofit organizations providing 
     assistance to homeless individuals and families in the 
     jurisdiction, under which the State will administer the grant 
     amounts instead of the jurisdiction.

       ``(ii) Effect of designation.--A State recipient 
     designating an agency or organization as provided by clause 
     (i)(II), or entering into an agreement with the State under 
     clause (i)(III), shall remain the State recipient for 
     purposes of this title.
       ``(iii) Direct assistance.--The State may, at the request 
     of the State recipient, provide grant amounts directly to the 
     agency or organization designated under clause (i)(II).
       ``(B) Application.--
       ``(i) In general.--The State shall distribute amounts to 
     State recipients (or to agencies or organizations designated 
     under subparagraph (A)(i)(II), as appropriate) on the basis 
     of an application containing such information as the State 
     may prescribe, except that each application shall reflect the 
     State application requirements in section 403(d) and evidence 
     an intent to facilitate the establishment of a continuum of 
     care system.
       ``(ii) Waiver.--The State may waive the requirements in 
     clause (i) with respect to 1 or more proposed activities, if 
     the State determines that--

       ``(I) the activities are necessary to meet the needs of 
     homeless individuals and families within the jurisdiction; 
     and
       ``(II) a continuum of care system is not necessary, due to 
     the nature and extent of homelessness in the jurisdiction.

       ``(C) Preference.--In selecting State recipients and making 
     awards under subparagraph (B), the State shall give 
     preference to applications that demonstrate higher relative 
     levels of homeless need and fiscal distress.

     ``SEC. 409. CITIZEN PARTICIPATION.

       ``(a) In General.--Each recipient shall ensure that 
     citizens, appropriate private nonprofit organizations, and 
     other interested groups and entities participate fully in the 
     development and carrying out of the program authorized under 
     this title.
       ``(b) Allocation Units of General Local Government and 
     Insular Areas.--The chief executive officer of each 
     allocation unit of general local government or insular area 
     shall designate an entity, which shall assist the 
     jurisdiction--
       ``(1) by developing the continuum of care system and other 
     submission requirements, and by submitting the system and 
     such other submission requirements for its approval under 
     section 403(b);
       ``(2) in overseeing the activities carried out with 
     assistance under this title; and
       ``(3) in preparing the performance report under section 
     410(b).
       ``(c) State Recipients.--The chief executive officer of the 
     State shall designate an entity which shall assist the 
     State--
       ``(1) by developing the continuum of care system and other 
     submission requirements, and by submitting the system and 
     such other submission requirements for its approval under 
     section 403(b);
       ``(2) in determining the percentage of the grant that the 
     State should use--
       ``(A) to carry out its own homeless assistance program 
     under section 408(c)(1)(A); or
       ``(B) to distribute amounts to State recipients under 
     section 408(c)(1)(B);
       ``(3) in carrying out the responsibilities of the State, if 
     the State enters into an agreement with a State recipient to 
     administer the amounts of the State recipient under section 
     408(c)(2)(A)(i)(III);
       ``(4) in overseeing the activities carried out with 
     assistance under this title; and
       ``(5) in preparing the performance report under section 
     410(b).

     ``SEC. 410. PERFORMANCE REPORTS, REVIEWS, AUDITS, AND GRANT 
                   ADJUSTMENTS.

       ``(a) National Performance Measures and Benchmarks.--The 
     Secretary shall establish national performance measures and 
     benchmarks to assist the Secretary, grantees, citizens, and 
     others in assessing the use of funds made available under 
     this title.
       ``(b) Grantee Performance and Evaluation Report.--
       ``(1) In general.--Each grantee shall submit to the 
     Secretary a performance and evaluation report concerning the 
     use of funds made available under this title.
       ``(2) Timing and contents.--The report under subsection (a) 
     shall be submitted at such time as the Secretary shall 
     prescribe and contain an assessment of the performance of the 
     grantee as measured against any specific performance measures 
     and benchmarks (developed under section 403), the national 
     performance measures and benchmarks (as established under 
     subsection (a)), and such other information as the Secretary 
     shall prescribe. Such performance measures and benchmarks 
     shall include a measure of the number of homeless individuals 
     who transition to self-sufficiency, and a measure of the 
     number of homeless individuals who have ended a chemical 
     dependency or drug addiction.
       ``(3) Availability to public.--Before the submission of a 
     report under subsection (a), the grantee shall make the 
     report available to citizens, public agencies, and other 
     interested parties in the jurisdiction of the grantee in 
     sufficient time to permit them to comment on the report 
     before submission.
       ``(c) Performance Reviews, Audits, and Grant Adjustments.--
       ``(1) Performance reviews and audits.--The Secretary shall, 
     not less than annually, make such reviews and audits as may 
     be necessary or appropriate to determine--
       ``(A) in the case of a grantee (other than a grantee 
     referred to in subparagraph (B)), whether the grantee--
       ``(i) has carried out its activities in a timely manner;
       ``(ii) has made progress toward implementing the continuum 
     of care system in conformity with its application under this 
     title; and
       ``(iii) has carried out its activities and certifications 
     in accordance with the requirements of this title and other 
     applicable laws; and
       ``(B) in the case of States distributing grant amounts to 
     State recipients, whether the State--
       ``(i) has distributed amounts to State recipients in a 
     timely manner and in conformance with the method of 
     distribution described in its application;
       ``(ii) has carried out its activities and certifications in 
     compliance with the requirements of this title and other 
     applicable laws; and
       ``(iii) has made such performance reviews and audits of the 
     State recipients as may be necessary or appropriate to 
     determine whether they have satisfied the applicable 
     performance criteria set forth in subparagraph (A).
       ``(2) Grant adjustments.--The Secretary may make 
     appropriate adjustments in the amount of grants in accordance 
     with the findings of the Secretary under this subsection. 
     With respect to assistance made available for State 
     recipients, the Secretary may adjust, reduce, or withdraw 
     such assistance, or take other action as appropriate in 
     accordance with the performance reviews and audits of the 
     Secretary under this subsection, except that amounts already 
     properly expended on eligible activities under this title 
     shall not be recaptured or deducted from future assistance to 
     such recipients.

     ``SEC. 411. NONDISCRIMINATION IN PROGRAMS AND ACTIVITIES.

       ``No person in the United States shall, on the ground of 
     race, color, national origin, religion, or sex, be excluded 
     from participation in, be denied the benefits of, or be 
     subjected to discrimination under any program or activity 
     funded in whole or in part with funds made available under 
     this title. Any prohibition against discrimination on the 
     basis of age under the Age Discrimination Act of 1975 or with 
     respect to an otherwise qualified individual with a 
     disability, as provided in section 504 of the Rehabilitation 
     Act of 1973, shall also apply to any such program or 
     activity.

     ``SEC. 412. RETENTION OF RECORDS, REPORTS, AND AUDITS.

       ``(a) Retention of Records.--Each recipient shall keep such 
     records as may be reasonably necessary--
       ``(1) to disclose the amounts and the disposition of the 
     grant amounts, including the types of activities funded and 
     the nature of populations served with these funds; and
       ``(2) to ensure compliance with the requirements of this 
     title.
       ``(b) Access to Documents by the Secretary.--The Secretary 
     shall have access for the purpose of audit and examination to 
     any books, documents, papers, and records of any recipient 
     that are pertinent to grant amounts received in connection 
     with this title.
       ``(c) Access to Documents by the Comptroller General.--The 
     Comptroller General of the United States, or any duly 
     authorized representative of the Comptroller General, shall 
     have access for the purpose of audit and examination to any 
     books, documents, papers, and records of any recipient that 
     are pertinent to grant amounts received in connection with 
     this title.''.

     SEC. 303. REPEAL AND SAVINGS PROVISIONS.

       (a) Authority To Provide Assistance.--Beginning on the 
     effective date of this Act, the Secretary may not make 
     assistance available under title IV of the Stewart B. 
     McKinney Homeless Assistance Act (as in existence immediately 
     before such effective date), except pursuant to a legally 
     binding commitment entered into before that date.
       (b) Law Governing.--Any amounts made available under title 
     IV of the Stewart B.

[[Page S7878]]

     McKinney Homeless Assistance Act before the effective date of 
     this Act shall continue to be governed by the provisions of 
     that title, as they existed immediately before that effective 
     date, except that each grantee may, in its discretion, 
     provide for the use, in accordance with the provisions of 
     title IV of the Stewart B. McKinney Homeless Assistance Act 
     (as amended by this title), of any such amounts that it has 
     not obligated.
       (c) Status of Funds.--
       (1) In general.--Any amounts appropriated under title IV of 
     the Stewart B. McKinney Homeless Assistance Act before the 
     effective date of this Act that are available for obligation 
     immediately before such effective date, or that become 
     available for obligation on or after that date, shall be 
     transferred and added to amounts appropriated for title IV of 
     the Stewart B. McKinney Homeless Assistance Act (as amended 
     by this title), and shall be available for use in accordance 
     with the provisions of such title IV.
       (2) Availability.--Any amounts transferred under paragraph 
     (1) shall remain available for obligation only for the time 
     periods for which such respective amounts were available 
     before such transfer.

     SEC. 304. IMPLEMENTATION.

       (a) Initial Allocation of Assistance.--Not later than the 
     expiration of the 60-day period following the date of 
     enactment of an Act appropriating funds to carry out title IV 
     of the Stewart B. McKinney Homeless Assistance Act (as 
     amended by this title), the Secretary shall notify each 
     allocation unit of general local government, insular area, 
     and State of its allocation under the McKinney Homeless 
     Assistance Performance Fund.
       (b) Issuance of Necessary Regulations.--Notwithstanding 
     section 7(o) of the Department of Housing and Urban 
     Development Act (42 U.S.C. 3535(o)), the Secretary shall 
     issue such regulations as may be necessary to implement any 
     provision of title I of this Act, and any amendment made by 
     this title, in accordance with section 552 or 553 of title 5, 
     United States Code, as determined by the Secretary.
       (c) Use of Existing Rules.--In implementing any provision 
     of this title, the Secretary may, in the discretion of the 
     Secretary, provide for the use of existing rules to the 
     extent appropriate, without the need for further rulemaking.

                        TITLE IV--RURAL HOUSING

     SEC. 401. MUTUAL AND SELF-HELP HOUSING TECHNICAL ASSISTANCE 
                   AND TRAINING GRANTS AUTHORIZATION.

       Section 513(b) of the Housing Act of 1949 (42 U.S.C. 
     1483(b)) is amended by striking paragraph (8) and inserting 
     the following:
       ``(8) For grants under paragraphs (1)(A) and (2) of section 
     523(b)--
       ``(A) $40,000,000 for fiscal year 2001;
       ``(B) $45,000,000 for fiscal year 2002; and
       ``(C) $50,000,000 for fiscal year 2003.''.

     SEC. 402. ENHANCEMENT OF THE RURAL HOUSING REPAIR LOAN 
                   PROGRAM FOR THE ELDERLY.

       Section 504(a) of the Housing Act of 1949 (42 U.S.C. 
     1474(a)) is amended by striking ``$2,500'' and inserting 
     ``$7,500''.

     SEC. 403. ENHANCEMENT OF EFFICIENCY OF RURAL HOUSING 
                   PRESERVATION GRANTS.

       Section 533 of the Housing Act of 1949 (42 U.S.C. 1490m) is 
     amended--
       (1) by striking subsection (c);
       (2) in subsection (d)(3)(H), by striking ``(e)(1)(B)(iv)'' 
     and inserting ``(d)(1)(B)(iv)''; and
       (3) by redesignating subsections (d) through (i) as 
     subsections (c) through (h), respectively.

     SEC. 404. PROJECT ACCOUNTING RECORDS AND PRACTICES.

       Section 515 of the Housing Act of 1949 (42 U.S.C. 1485) is 
     amended by striking subsection (z) and inserting the 
     following:
       ``(z) Accounting and Recordkeeping Requirements.--
       ``(1) Accounting standards.--The Secretary shall require 
     that borrowers in programs authorized by this section 
     maintain accounting records in accordance with generally 
     accepted accounting principles for all projects that receive 
     funds from loans made or guaranteed by the Secretary under 
     this section.
       ``(2) Record retention requirements.--The Secretary shall 
     require that borrowers in programs authorized by this section 
     retain for a period of not less than 6 years and make 
     available to the Secretary in a manner determined by the 
     Secretary, all records required to be maintained under this 
     subsection and other records identified by the Secretary in 
     applicable regulations.
       ``(aa) Double Damage Remedy for Unauthorized Use of Housing 
     Projects Assets and Income.--
       ``(1) Action to recover assets or income.--
       ``(A) In general.--The Secretary may request the Attorney 
     General to bring an action in a district court of the United 
     States to recover any assets or income used by any person in 
     violation of the provisions of a loan made or guaranteed by 
     the Secretary under this section or in violation of any 
     applicable statute or regulation.
       ``(B) Improper documentation.--For purposes of this 
     subsection, a use of assets or income in violation of the 
     applicable loan, loan guarantee, statute, or regulation shall 
     include any use for which the documentation in the books and 
     accounts does not establish that the use was made for a 
     reasonable operating expense or necessary repair of the 
     project or for which the documentation has not been 
     maintained in accordance with the requirements of the 
     Secretary and in reasonable condition for proper audit.
       ``(C) Definition of person.--In this subsection, the term 
     `person' means--
       ``(i) any individual or entity that borrows funds in 
     accordance with programs authorized by this section;
       ``(ii) any individual or entity holding 25 percent or more 
     interest of any entity that borrows funds in accordance with 
     programs authorized by this section; or
       ``(iii) any officer, director, or partner of an entity that 
     borrows funds in accordance with programs authorized by this 
     section.
       ``(2) Amount recoverable.--
       ``(A) In general.--In any judgment favorable to the United 
     States entered under this subsection, the Attorney General 
     may recover double the value of the assets and income of the 
     project that the court determines to have been used in 
     violation of the provisions of a loan made or guaranteed by 
     the Secretary under this section or any applicable statute or 
     regulation, plus all costs related to the action, including 
     reasonable attorney and auditing fees.
       ``(B) Application of recovered funds.--Notwithstanding any 
     other provision of law, the Secretary may apply any recovery 
     of funds under this subsection to activities authorized under 
     this section and such funds shall remain available until 
     expended.
       ``(3) Time limitation.--Notwithstanding any other statute 
     of limitations, the Attorney General may bring an action 
     under this subsection at any time up to and including 6 years 
     after the date that the Secretary discovered or should have 
     discovered the violation of the provisions of this section or 
     any related statutes or regulations.
       ``(4) Continued availability of other remedies.--The remedy 
     provided in this subsection is in addition to and not in 
     substitution of any other remedies available to the Secretary 
     or the United States.''.

     SEC. 405. OPERATING ASSISTANCE FOR MIGRANT FARM WORKER 
                   PROJECTS.

       Section 521(a)(5)(A) of the Housing Act of 1949 (42 U.S.C. 
     1490a(a)(5)(A)) is amended in the last sentence by striking 
     ``project'' and inserting ``tenant or unit''.

                        TITLE V--VOUCHER REFORM

     SEC. 501. AUTHORIZATION OF APPROPRIATIONS FOR RENTAL VOUCHERS 
                   FOR RELOCATION OF WITNESSES AND VICTIMS OF 
                   CRIME.

       Section 8(o)(16) of the United States Housing Act of 1937 
     (42 U.S.C. 1437f(o)(16)) is amended--
       (1) in subparagraph (A), by striking ``Of amounts made 
     available for assistance under this subsection'' and 
     inserting ``Of the amount made available under subparagraph 
     (C)'';
       (2) in subparagraph (B), by striking ``Of amounts made 
     available for assistance under this section'' and inserting 
     ``Of the amount made available under subparagraph (C)''; and
       (3) by adding at the end the following:
       ``(C) Authorization of appropriations.--In addition to 
     amounts made available to carry out this section for each 
     fiscal year, there is authorized to be appropriated to carry 
     out this paragraph $25,000,000 for each fiscal year.''.

     SEC. 502. REVISIONS TO THE LEASE ADDENDUM.

       Section 8(o)(7)(F) of the United States Housing Act of 1937 
     (42 U.S.C. 1437f(o)(7)(F)) is amended striking the period at 
     the end and inserting the following: ``, except that--
       ``(i) the provisions of any such addendum shall supplement 
     any existing standard rental agreement to the extent that the 
     addendum does not modify, nullify, or in any way materially 
     alter any material provision of the rental agreement; and
       ``(ii) a provision of the addendum shall be nullified only 
     to extent that the provision conflicts with applicable State 
     or local law.''.

     SEC. 503. REPORT REGARDING HOUSING VOUCHER PROGRAM.

       (a) In General.--The Secretary shall publish in the Federal 
     Register a notice soliciting comments and recommendations 
     regarding the means by which the voucher program under 
     section 8(o) of the United States Housing Act of 1937 (42 
     U.S.C. 1437f(o)) may be changed and enhanced to promote 
     increased participation by private rental housing owners.
       (b) Report.--Not later than 6 months after the effective 
     date of this Act, the Secretary shall submit to the 
     Committees a report on the results of the solicitation under 
     subsection (a), which shall include a summary and analysis of 
     the recommendations received, especially recommendations 
     regarding legislative and administrative changes to the 
     program described in subsection (a).

     SEC. 504. CONDUCTING QUALITY STANDARD INSPECTIONS ON A 
                   PROPERTY BASIS RATHER THAN A UNIT BASIS.

       Section 8(o)(8) of the United States Housing Act of 1937 
     (42 U.S.C. 1437f(o)(8)) is amended--
       (1) in the paragraph heading, by inserting ``and 
     properties'' after ``units'';
       (2) in subparagraph (A)--
       (A) by striking ``Except as provided'' and inserting the 
     following:
       ``(i) Inspection requirement.--Except as provided''; and
       (B) by adding at the end the following:
       ``(ii) Inspection and certification on a property-wide 
     basis.--

       ``(I) In general.--For purposes of this subparagraph, each 
     owner shall have the option

[[Page S7879]]

     of having the property of the owner inspected and certified 
     on a property-wide basis, subject to the inspection 
     guidelines set forth in subparagraphs (C) and (D).
       ``(II) Certification.--Owners of properties electing a 
     property-wide inspection and not currently receiving tenant-
     based assistance for any dwelling unit in those properties 
     may elect a property-wide certification by having each 
     dwelling unit that is to be made available for tenant-based 
     assistance inspected before any housing assistance payments 
     are made. Any owner participating in the voucher program 
     under this subsection as of the effective date of Local 
     Housing Opportunities Act shall have the option of electing 
     property-wide certification by sending written notice to the 
     appropriate administering agency. Any property that is 
     inspected and certified on a property-wide basis shall not be 
     required to have units in the property inspected individually 
     in conjunction with each new rental agreement.'';

       (3) in subparagraph (C)--
       (A) in the first sentence--
       (i) by inserting ``or property'' after ``dwelling unit''; 
     and
       (ii) by inserting ``or property'' after ``the unit''; and
       (B) in the second sentence, by inserting ``or properties'' 
     after ``dwelling units''; and
       (4) in subparagraph (D), in the first sentence--
       (A) by inserting ``or property'' after ``dwelling unit'';
       (B) by inserting ``or property'' after ``payments contract 
     for the unit''; and
       (C) by inserting ``or property'' after ``whether the 
     unit''.

                    TITLE VI--PROGRAM MODERNIZATION

     SEC. 601. ASSISTANCE FOR SELF-HELP HOUSING PROVIDERS.

       (a) Reauthorization.--Section 11 of the Housing Opportunity 
     Program Extension Act of 1996 (42 U.S.C. 12805 note) is 
     amended by striking subsection (p) and inserting the 
     following:
       ``(p) Authorization of Appropriations.--There is 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 and 2003.''.
       (b) Eligible Expenses.--Section 11(d)(2)(A) of the Housing 
     Opportunity Program Extension Act of 1996 (42 U.S.C. 12805 
     note) is amended by inserting before the period at the end 
     the following: ``, which may include reimbursing an 
     organization, consortium, or affiliate, upon approval of any 
     required environmental review, for nongrant amounts of the 
     organization, consortium, or affiliate advanced before such 
     review to acquire land''.
       (c) Deadline for Recapture of Funds.--Section 11 of the 
     Housing Opportunity Program Extension Act of 1996 (42 U.S.C. 
     12805 note) is amended--
       (1) in subsection (i)(5)--
       (A) by striking ``if the organization or consortia has not 
     used any grant amounts'' and inserting ``the Secretary shall 
     recapture any grant amounts provided to the organization or 
     consortia that are not used'';
       (B) by striking ``(or,'' and inserting ``, except that such 
     period shall be 36 months''; and
       (C) by striking ``within 36 months), the Secretary shall 
     recapture such unused amounts'' and inserting ``and in the 
     case of a grant amounts provided to a local affiliate of the 
     organization or consortia that is developing 5 or more 
     dwellings in connection with such grant amounts''; and
       (2) in subsection (j), by inserting ``and grant amounts 
     provided to a local affiliate of the organization or 
     consortia that is developing 5 or more dwellings in 
     connection with such grant amounts'' before the period at the 
     end.
       (d) Technical Correction.--Section 11(e) of the Housing 
     Opportunity Program Extension Act of 1996 (42 U.S.C. 12805 
     note) is amended by striking ``consoria'' and inserting 
     ``consortia''.

     SEC. 602. LOCAL CAPACITY BUILDING FOR COMMUNITY DEVELOPMENT 
                   AND AFFORDABLE HOUSING.

       Section 4 of the HUD Demonstration Act of 1993 (42 U.S.C. 
     9816 note) is amended--
       (1) in subsection (a), by inserting ``National Association 
     of Housing Partnerships,'' after ``Humanity,''; and
       (2) in subsection (e), by striking ``$25,000,000'' and all 
     that follows before the period and inserting ``to carry out 
     this section, $40,000,000 for each of fiscal years 2001 
     through 2003''.

     SEC. 603. WORK REQUIREMENT FOR PUBLIC HOUSING RESIDENTS: 
                   COORDINATION OF FEDERAL HOUSING ASSISTANCE WITH 
                   STATE WELFARE REFORM WORK PROGRAMS.

       (a) In General.--Title I of the United States Housing Act 
     of 1937 (42 U.S.C. 1437 et seq.) is amended by adding at the 
     end the following:

     ``SEC. 36. WORK REQUIREMENT.

       ``(a) In General.--Each family residing in public housing, 
     shall comply with the requirements of section 407 of the 
     Social Security Act (42 U.S.C. 607) in the same manner and to 
     the same extent as a family receiving assistance under a 
     State program funded under part A of title IV of that Act (42 
     U.S.C. 601 et seq.).
       ``(b) Work Requirements.--
       ``(1) Annual determinations.--
       ``(A) Requirement.--For each family residing in public 
     housing that is subject to the requirement under subsection 
     (a), the public housing agency shall, 30 days before the 
     expiration of each lease term of the family under section 
     6(l)(1), review and determine the compliance of the family 
     with the requirement under subsection (a) of this subsection.
       ``(B) Due process.--Each determination under subparagraph 
     (A) shall be made in accordance with the principles of due 
     process and on a nondiscriminatory basis.
       ``(C) Noncompliance.-- If a public housing agency 
     determines that a family subject to the requirement under 
     subsection (a) has not complied with the requirement, the 
     agency--
       ``(i) shall notify the family--

       ``(I) of such noncompliance;
       ``(II) that the determination of noncompliance is subject 
     to the administrative grievance procedure under subsection 
     (k); and
       ``(III) that, unless the family enters into an agreement 
     under clause (ii) of this subparagraph, the family's lease 
     will not be renewed; and

       ``(ii) may not renew or extend the family's lease upon 
     expiration of the lease term and shall take such action as is 
     necessary to terminate the tenancy of the household, unless 
     the agency enters into an agreement, before the expiration of 
     the lease term, with the family providing for the family to 
     cure any noncompliance with the requirement under paragraph 
     (1), by participating in an economic self-sufficiency program 
     (as defined in section 12(g)) for or contributing to 
     community service as many additional hours as the family 
     needs to comply in the aggregate with such requirement over 
     the 12-month term of the lease.
       ``(2) Ineligibility for occupancy for noncompliance.--A 
     public housing agency may not renew or extend any lease, or 
     provide any new lease, for a dwelling unit in public housing 
     for any family who was subject to the requirement under 
     subsection (a) and failed to comply with the requirement.
       ``(3) Inclusion in plan.--Each public housing agency shall 
     include in its public housing agency plan a detailed 
     description of the manner in which the agency intends to 
     implement and administer this subsection.''.
       (b) Conforming Amendment.--Section 12(c) of the United 
     States Housing Act of 1937 (42 U.S.C. 1437j(c)) is repealed.

     SEC. 604. SIMPLIFIED FHA DOWNPAYMENT CALCULATION.

       Section 203(b) of the National Housing Act (12 U.S.C. 
     1709(b)) is amended--
       (1) in paragraph (2), by striking subparagraph (B) and all 
     that follows through ``applicability of this requirement.'' 
     and inserting the following:
       ``(B) not to exceed an amount equal to--
       ``(i) 98.75 percent of the appraised value of the property, 
     if such value is equal to or less than $50,000;
       ``(ii) 97.65 percent of the appraised value of the 
     property, if such value is in excess of $50,000 but not in 
     excess of $125,000;
       ``(iii) 97.15 percent of the appraised value of the 
     property, if such value is in excess of $125,000; or
       ``(iv) notwithstanding clauses (ii) and (iii), 97.75 
     percent of the appraised value of the property, if such value 
     is in excess of $50,000 and the property is in a State for 
     which the average closing cost exceeds 2.10 percent of the 
     average, for the State, of the sales price of properties 
     located in the State for which mortgages have been executed, 
     as determined by the Secretary, except that, in this clause, 
     the term `average closing cost' means, with respect to a 
     State, the average, for mortgages executed for properties in 
     the State, of the total amounts (as determined by the 
     Secretary) of initial service charges, appraisal, inspection, 
     and other fees and costs (as the Secretary shall approve) 
     that are paid in connection with such mortgages.''; and
       (2) by striking paragraph (10).

     SEC. 605. FLEXIBLE USE OF CDBG FUNDS.

       Section 105(a)(23) of the Housing and Community Development 
     Act of 1974 (42 U.S.C. 5305(a)(23)) is amended by striking 
     ``housing units acquired'' and all that follows before the 
     semicolon and inserting the following: ``housing (A) acquired 
     through tax foreclosure proceedings brought by a unit of 
     State or local government, or (B) placed under the 
     supervision of a court for the purpose of remedying 
     conditions dangerous to life, health, and safety, in order to 
     prevent the abandonment and deterioration of such housing 
     primarily in low- and moderate-income neighborhoods''.

     SEC. 606. USE OF SECTION 8 ASSISTANCE IN GRANDFAMILY HOUSING 
                   ASSISTED WITH HOME FUNDS.

       Section 215(a) of the Cranston-Gonzalez National Affordable 
     Housing Act (42 U.S.C. 12745(a)) is amended by adding at the 
     end the following:
       ``(6) Waiver of qualifying rent.--
       ``(A) In general.--For the purpose of providing affordable 
     housing appropriate for families described in subparagraph 
     (B), the Secretary may, upon the application of the project 
     owner, waive the applicability of paragraph (1)(A) with 
     respect to a dwelling unit if--
       ``(i) the unit is occupied by such a family, on whose 
     behalf tenant-based assistance is provided under section 8 of 
     the United States Housing Act of 1937 (42 U.S.C. 1437f);
       ``(ii) the rent for the unit is not greater than the 
     existing fair market rent for comparable units in the area, 
     as established by the Secretary under section 8 of the United 
     States Housing Act of 1937; and
       ``(iii) the Secretary determines that the waiver, together 
     with waivers under this paragraph for other dwelling units in 
     the project, will result in the use of amounts described in 
     clause (iii) in an effective manner that will improve the 
     provision of affordable housing for such families.

[[Page S7880]]

       ``(B) Eligible families.--A family described in this 
     subparagraph is a family that consists of at least 1 elderly 
     person (who is the head of household) and 1 or more of such 
     person's grandchildren, great grandchildren, great nieces, 
     great nephews, or great great grandchildren (as defined by 
     the Secretary), but does not include any parent of such 
     grandchildren, great grandchildren, great nieces, great 
     nephews, or great great grandchildren. Such term includes any 
     such grandchildren, great grandchildren, great nieces, great 
     nephews, or great great grandchildren who have been legally 
     adopted by such elderly person.''.

     SEC. 607. SECTION 8 HOMEOWNERSHIP OPTION DOWNPAYMENT 
                   ASSISTANCE.

       (a) Amendments.--Section 8(y) of the United States Housing 
     Act of 1937 (42 U.S.C. 1437f(y)) is amended--
       (1) by redesignating paragraph (7) as paragraph (8); and
       (2) by inserting after paragraph (6) the following:
       ``(7) Downpayment assistance.--
       ``(A) Authority.--A public housing agency may, in lieu of 
     providing monthly assistance payments under this subsection 
     on behalf of a family eligible for such assistance and at the 
     discretion of the public housing agency, provide assistance 
     for the family in the form of a single grant to be used only 
     as a contribution toward the downpayment required in 
     connection with the purchase of a dwelling for fiscal year 
     2001 and each fiscal year thereafter to the extent provided 
     in advance in appropriations Acts.
       ``(B) Amount.--The amount of a downpayment grant on behalf 
     of an assisted family may not exceed the amount that is equal 
     to the sum of the assistance payments that would be made 
     during the first year of assistance on behalf of the family, 
     based upon the income of the family at the time the grant is 
     to be made.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect immediately after the amendments made by 
     section 555(c) of the Quality Housing and Work Responsibility 
     Act of 1998 take effect pursuant to such section.

     SEC. 608. REAUTHORIZATION OF NEIGHBORHOOD REINVESTMENT 
                   CORPORATION.

       Section 608(a)(1) of the Neighborhood Reinvestment 
     Corporation Act (42 U.S.C. 8107(a)(1)) is amended by striking 
     the first sentence and inserting the following: ``There is 
     authorized to be appropriated to the corporation to carry out 
     this title $90,000,000 for fiscal year 2001, $95,000,000 for 
     fiscal year 2002, and $95,000,000 for fiscal year 2003.''.

                  TITLE VII--STATE HOUSING BLOCK GRANT

     SEC. 701. STATE CONTROL OF PUBLIC AND ASSISTED HOUSING FUNDS.

       Title I of the United States Housing Act of 1937 (42 U.S.C. 
     1437 et seq.) is amended by adding at the end the following:

     ``SEC. 37. STATE HOUSING BLOCK GRANT.

       ``(a) Purpose.--The purpose of this section is to create 
     options for States and to provide maximum freedom to States 
     to determine the manner in which to implement assisted 
     housing reforms.
       ``(b) Authority.--Notwithstanding any other provision of 
     law, a State may assume control of the Federal housing 
     assistance funds available to residents in that State 
     following the execution of a performance agreement with the 
     Secretary in accordance with this section.
       ``(c) Performance Agreement.--
       ``(1) In general.--A State may, at its option, execute a 
     performance agreement with the Secretary under which the 
     provisions of law described in subsection (d) shall not apply 
     to such State, except as otherwise provided in this section.
       ``(2) Approval of performance agreement.--A performance 
     agreement submitted to the Secretary under this section shall 
     be approved by the Secretary unless the Secretary makes a 
     written determination, within 60 days after receiving the 
     performance agreement, that the performance agreement is in 
     violation of the provisions of this section.
       ``(3) Terms of performance agreement.--Each performance 
     agreement executed pursuant to this section shall include 
     each of the following provisions:
       ``(A) Term.--A statement that the term of the performance 
     agreement shall be 5 years.
       ``(B) Application of program requirements.--A statement 
     that no program requirements of any program included by the 
     State in the performance agreement shall apply, except as 
     otherwise provided in this Act.
       ``(C) List.--A list provided by the State of the programs 
     that the State would like to include in the performance 
     agreement.
       ``(D) Use of funds to improve housing opportunities for 
     low-income individuals and families.--Include a 5-year plan 
     describing the manner in which the State intends to combine 
     and use the funds for programs included in the performance 
     agreement to advance the low-income housing priorities of the 
     State, improve the quality of low-income housing, reduce 
     homelessness, reduce crime, and encourage self-sufficiency by 
     achieving the performance goals.
       ``(E) Performance goals.--
       ``(i) In general.--A statement of performance goals 
     established by the State for the 5-year term of the 
     performance agreement that, at a minimum measures--

       ``(I) improvement in housing conditions for low-income 
     individuals and families;
       ``(II) the increase in the number of assisted units that 
     pass housing quality inspections;
       ``(III) the increase in economic opportunity and self-
     sufficiency and increases the number of residents that obtain 
     employment;
       ``(IV) the reduction in crime and assistance to victims of 
     crime;
       ``(V) the reduction in homelessness and the level of 
     poverty;
       ``(VI) the cost of assisted housing units provided;
       ``(VII) the level of assistance provided to people with 
     disabilities and to the elderly;
       ``(VIII) the success in maintaining and increasing the 
     stock of affordable housing and increasing home ownership.
       ``(IX) sets numerical goals to attain for each performance 
     goal by the end of the performance agreement.

       ``(ii) Additional indicators of performance.--A State may 
     identify in the performance agreement any indicators of 
     performance such as reduced cost.
       ``(F) Fiscal responsibilities.--An assurance that the State 
     will use fiscal control and fund accounting procedures that 
     will ensure proper disbursement of, and accounting for, 
     Federal funds paid to the State or community under this Act. 
     Recipients will use Generally Accepted Accounting Principles 
     (GAAP).
       ``(G) Civil rights.--An assurance that the State will meet 
     the requirements of applicable Federal civil rights laws 
     including section 25(k).
       ``(H) State financial participation.--An assurance that the 
     State will not significantly reduce the level of spending of 
     State funds for housing during the term of the performance 
     agreement.
       ``(I) Annual report.--An assurance that not later than 1 
     year after the execution of the performance agreement, and 
     annually thereafter, each State shall disseminate widely to 
     the general public, submit to the Secretary, and post on the 
     Internet, a report that includes low-income housing 
     performance data and a detailed description of the manner in 
     which the State has used Federal funds to provide low-income 
     housing assistance to meet the terms of the performance 
     agreement.
       ``(4) Amendment to performance agreement.--A State may 
     submit an amendment to the performance agreement to the 
     Secretary under the following circumstances:
       ``(A) Reduce scope of performance agreement.--Not later 
     than 1 year after the execution of the performance agreement, 
     a State may amend the performance agreement through a request 
     to withdraw a program from such agreement. Upon approval by 
     the Secretary of the amendment, the requirements of existing 
     law shall apply for any program withdrawn from the 
     performance agreement.
       ``(B) Expand scope of performance agreement.--Not later 
     than 1 year after the execution of the performance agreement, 
     a State may amend its performance agreement to include 
     additional programs and performance indicators for which it 
     will be held accountable.
       ``(d) Eligible Programs.--
       ``(1) In general.--The provisions of law referred to in 
     subsection (c), are--
       ``(A) the voucher program for rental assistance under 
     section 8(o) of the United States Housing Act of 1937;
       ``(B) the programs for project-based assistance under 
     section 8 of the United States Housing Act of 1937;
       ``(C) the program for housing for the elderly under section 
     202 of the Housing Act of 1959;
       ``(D) the program for housing for persons with disabilities 
     under section 811 of the Cranston-Gonzales National 
     Affordable Housing Act; and
       ``(2) Allocation amounts.--A State may choose to combine 
     funds from any or all the programs described in paragraph (1) 
     without regard to the program requirements of such 
     provisions, except as otherwise provided in this Act.
       ``(3) Uses of funds.--Funds made available under this 
     section to a State shall be used for any housing purpose 
     other than those prohibited by State law of the participating 
     State.
       ``(e) Within-State Distribution of Funds.--The distribution 
     of funds from programs included in the performance agreement 
     from a State to a local housing agency within the State shall 
     be determined by the State legislature and the Governor of 
     the State. In a State in which the State constitution or 
     State law designates another individual, entity, or agency to 
     be responsible for housing, such other individual, entity, or 
     agency shall work in consultation with the Governor and State 
     legislature to determine the local distribution of funds.
       ``(f) Set-Aside for State Administrative Expenditures.--A 
     State may use not more than 3 percent of the total amount of 
     funds allocated to such State under the programs included in 
     the performance agreement for administrative purposes.
       ``(g) Level of Block Grant.--
       ``(1) In general.--During the initial 5 years following 
     execution of the performance agreement, a participating State 
     shall receive the highest level of funding for the 3 years 
     prior to the first year of the performance agreement in each 
     program included in the block grant. This level will be 
     adjusted each year by multiplying the prior year's amount by 
     the cost-of-living adjustment determined under section 
     1(f)(3) of the Internal Revenue Code of 1986.
       ``(2) Formula.--Six months after the effective date of the 
     Local Housing Opportunities Act, the Secretary shall submit 
     to Congress

[[Page S7881]]

     recommendations for a block grant formula that reflects the 
     relative low-income level and affordable housing needs of 
     each State.
       ``(h) Performance Review.--
       ``(1) In general.--If at the end of the 5-year term of the 
     performance agreement a State has failed to meet at least 80 
     percent of the performance goals submitted in the performance 
     agreement, the Secretary shall terminate the performance 
     agreement and the State shall be required to comply with the 
     program requirement, in effect at the time of termination, of 
     each program included in the performance agreement.
       ``(2) Renewal.--A State that seeks to renew its performance 
     agreement shall notify the Secretary of its renewal request 
     not less that 6 months prior to the end of the term of the 
     performance agreement. A State that has met at least 80 
     percent of its performance goals submitted in the performance 
     agreement at the end of the 5-year term may reapply to the 
     Secretary to renew its performance agreement for an 
     additional 5-year period. Upon the completion of the 5-year 
     term of the performance agreement or as soon thereafter as 
     the State submits data required under the agreement, the 
     Secretary shall renew, for an additional 5-year term, the 
     performance agreement of any State or community that has met 
     at least 80 percent of its performance goals.
       ``(i) Performance Reward Fund.--To reward States that make 
     significant progress in meeting performance goals, the 
     Secretary shall annually set aside sufficient funds to grant 
     a reward of up to 5 percent of the funds allocated to 
     participating States.
       ``(j) Definitions.--In this section:
       ``(1) Community.--The term `community' means any local 
     governing jurisdiction within a State.
       ``(2) Secretary.--The term `Secretary' means the Secretary 
     of Housing and Urban Development.
       ``(3) State.--The term `State' means each of the 50 States, 
     the District of Columbia, the Commonwealth of Puerto Rico, 
     Guam, the United States Virgin Islands, the Commonwealth of 
     the Northern Mariana Islands, and American Samoa.''.

                 TITLE VIII--PRIVATE SECTOR INCENTIVES

     SEC. 801. SENSE OF CONGRESS REGARDING LOW-INCOME HOUSING TAX 
                   CREDIT STATE CEILINGS AND PRIVATE ACTIVITY BOND 
                   CAPS.

       (a) Findings.--Congress finds that--
       (1) the low-income housing tax credit and private activity 
     bonds have been valuable resources in the effort to increase 
     affordable housing;
       (2) the low-income housing tax credit and private activity 
     bonds effectively utilize the ability of the States to 
     deliver resources to the areas of greatest need within their 
     jurisdictions; and
       (3) the value of the low-income housing tax credit and the 
     private activity bonds have been eroded by inflation.
       (b) Sense of Congress.--It is the sense of Congress that--
       (1) the State ceiling for the low-income housing tax credit 
     should be increased by 40 percent in the year 2000, and the 
     level for the State ceiling should be adjusted annually to 
     account for increases in the cost of living; and
       (2) the private activity bond cap should be increased by 50 
     percent in the year 2000, and the value of the cap should be 
     adjusted annually to account for increases in the cost of 
     living.

                         TITLE IX--ENFORCEMENT

     SEC. 901. PROHIBITION ON USE OF APPROPRIATED FUNDS FOR 
                   LOBBYING BY THE DEPARTMENT.

       (a) In General.--Subchapter III of chapter 13 of title 31, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 1354. Prohibition on lobbying by the Department of 
       Housing and Urban Development

       ``(a) Prohibition.--Except as provided in subsection (b), 
     unless such activity has been specifically authorized by an 
     Act of Congress and notwithstanding any other provision of 
     law, no funds made available to the Department of Housing and 
     Urban Development by appropriation shall be used by such 
     agency for any activity (including the preparation, 
     publication, distribution, or use of any kit, pamphlet, 
     booklet, public presentation, news release, radio, 
     television, or film presentation, video, or other written or 
     oral statement) that in any way tends to promote public 
     support or opposition to any legislative proposal (including 
     the confirmation of the nomination of a public official or 
     the ratification of a treaty) on which congressional action 
     is not complete.
       ``(b) Exceptions.--
       ``(1) President and vice president.--Subsection (a) shall 
     not apply to the President or Vice President.
       ``(2) Congressional communications.--Subsection (a) shall 
     not be construed to prevent any officer or employee of the 
     Department of Housing and Urban Development from--
       ``(A) communicating directly to a Member of Congress (or to 
     any staff of a Member or committee of Congress) a request for 
     legislation or appropriations that such officer or employee 
     deems necessary for the efficient conduct of the public 
     business; or
       ``(B) responding to a request for information or technical 
     assistance made by a Member of Congress (or by any staff of a 
     Member or committee of Congress).
       ``(3) Public communications on views of president.--
       ``(A) In general.--Subsection (a) shall not be construed to 
     prevent any Federal agency official whose appointment is 
     confirmed by the Senate, any official in the Executive Office 
     of the President directly appointed by the President or Vice 
     President, or the head of any Federal agency described in 
     subsection (e)(2), from communicating with the public, 
     through radio, television, or other public communication 
     media, on the views of the President for or against any 
     pending legislative proposal.
       ``(B) Nondelegation.--Subparagraph (A) does not permit any 
     Federal agency official described in that subparagraph to 
     delegate to another person the authority to make 
     communications subject to the exemption provided by that 
     subparagraph.
       ``(c) Comptroller General.--
       ``(1) Assistance of inspector general.--In exercising the 
     authority provided in section 712, as applied to this 
     section, the Comptroller General may obtain, without 
     reimbursement from the Comptroller General, the assistance of 
     the Inspector General within the Department of Housing and 
     Urban Development when any activity prohibited by subsection 
     (a) of this section is under review.
       ``(2) Evaluation.--One year after the date of enactment of 
     this section, the Comptroller General shall report to the 
     Committee on Banking and Financial Services of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs of the Senate on the implementation of this 
     section.
       ``(3) Annual report.--The Comptroller General shall, in the 
     annual report under section 719(a), include summaries of 
     investigations undertaken by the Comptroller General with 
     respect to subsection (a).
       ``(d) Penalties and Injunctions.--
       ``(1) Penalties.--
       ``(A) In general.--The Attorney General may bring a civil 
     action in the appropriate district court of the United States 
     against any person who engages in conduct constituting an 
     offense under this section, whether such offense is due to 
     personal participation in any activity prohibited in 
     subsection (a) or improper delegation to another person the 
     authority to make exempt communications in violation of 
     subsection (b)(3), and, upon proof of such conduct by a 
     preponderance of the evidence, such person shall be subject 
     to a civil penalty of not less than $5,000 and not more than 
     $10,000 for each violation.
       ``(B) Other remedies not precluded.--The imposition of a 
     civil penalty under this subsection does not preclude any 
     other criminal or civil statutory, common law, or 
     administrative remedy, which is available by law to the 
     United States or any other person.
       ``(2) Injunctions.--
       ``(A) In general.--If the Attorney General has reason to 
     believe that a person is engaging in conduct constituting an 
     offense under this section, whether such offense is due to 
     personal participation in any activity prohibited in 
     subsection (a) or improper delegation to another person the 
     authority to make exempt communications in violation of 
     subsection (b)(3)--
       ``(i) the Attorney General may petition an appropriate 
     district court of the United States for an order prohibiting 
     that person from engaging in such conduct; and
       ``(ii) the court may issue an order prohibiting that person 
     from engaging in such conduct if the court finds that the 
     conduct constitutes such an offense.
       ``(B) Other remedies not precluded.--The filing of a 
     petition under this section does not preclude any other 
     remedy which is available by law to the United States or any 
     other person.
       ``(e) Definition.--In this section, the term `Federal 
     agency' means--
       ``(1) any executive agency, within the meaning of section 
     105 of title 5; and
       ``(2) any private corporation created by a law of the 
     United States for which the Congress appropriates funds.''.
       (b) Conforming Amendment.--The table of sections for 
     chapter 13 of title 31, United States Code, is amended by 
     inserting after the item relating to section 1353 the 
     following:

``1354. Prohibition on lobbying by the Department of Housing and Urban 
              Development.''.

       (c) Applicability.--The amendments made by this section 
     shall apply to the use of funds after the effective date of 
     this Act, including funds appropriated or received on or 
     before that date.

     SEC. 902. REGULATIONS.

       Not later than 6 months after the date of enactment of this 
     Act, the Secretary shall issue such regulations as may be 
     necessary to carry out this Act and the amendments made by 
     this Act.
                                 ______
                                 
      By Mr. WYDEN:
  S. 2970. A bill to provide for summer academic enrichment programs, 
and for the purposes; to the Committee on Health, Education, Labor, and 
Pensions.


            the student education enrichment development act

  Mr. WYDEN. Mr. President, approximately 3.4 million students entered 
kindergarten in U.S. public schools last

[[Page S7882]]

fall, and experts predict wildly different futures for them. Many 
children do well throughout elementary school, only to slip and fall 
between the cracks in middle school. This so-called ``achievement gap'' 
opens wide in middle school and grows throughout high school if nothing 
is done to stop it.
  Raising test scores in K-12 education has brought the achievement-gap 
issue to the forefront of the national education debate and created a 
new opportunity to support those states that are making a real effort 
to improve student achievement. But trying to close the gap by simply 
bumping up test standards only pushes kids out of school rather than 
across the gap.
  Few have really looked at the most logical place to begin to close 
the gap: summer school. Students take their achievement tests in April 
but have to return to school in the Fall. Summer school is one place to 
begin helping students close the gap, yet the Federal government does 
nothing to create and support successful summer academic programs.
  The legislation I am introducing today, the Student Education 
Enrichment Development Act, or SEED Act, will leverage summer academic 
programs to boost student performance. SEED will support all struggling 
students by providing the first federal funds to backstop state and 
local efforts to develop, plan, implement, and operate high quality 
summer academic enrichment programs.
  The disparity in school performance tied to race and ethnicity, known 
as the achievement gap, shows up in grades, test scores, course 
selection, and college completion. To a large extent, these factors 
predict a student's success in school, whether a student will go to 
college, and how much money the student will earn when he or she enters 
the working world. It happens in cities and in suburbs and in rural 
school districts. The gaps are so pronounced that in 1996, several 
national tests found African-American and Hispanic 12th graders scoring 
at roughly the same levels in reading and math as white 8th graders. By 
2019, when they are 24 years old, current trends indicate that the 
white children who are now nearing the end of their first year in 
school will be twice as likely as their African-American classmates, 
and three times as likely as Hispanics, to have a college degree.
  In Oregon last year, only 52 percent of the tenth graders met the 
state's standard for reading, while only 36 percent met the standard 
for math. But students in Oregon are actually doing better than the 
national average. More than two-thirds of American high-school seniors 
graduated last year without being able to read at a proficient level. 
Results like these are the reason we need SEED.
  This week's Time Magazine reports that at least 25 percent of our 
U.S. school districts are mandating summer school for struggling 
students--twice that number in poor urban areas. While these programs 
are helping some students, the results should be better. Only 40 
percent of New York students who failed state exams and completed 
summer school passed on the state exam on their second attempt. In the 
Pacific Northwest, Seattle canceled its summer program after students 
made only meager academic gains. I ask unanimous consent that the 
article from Time magazine be included in the record at the conclusion 
of my statement.
  Schools should strive to meet higher standards, and we should have 
high expectations for every child. But our kids should not be punished 
because our education system has failed them. It's time to make sure 
every child learns and succeeds. According to a recent study, more than 
half of our teachers promoted unprepared students because the current 
system does not provide adequate options.
  High-quality summer academic programs would give struggling students 
a chance to succeed in a system that has failed them and help reverse 
the trend of poor student performance by preparing students to succeed 
where they have previously failed. Over the past years, we've heard a 
lot of rhetoric about education, but empty promises won't help our kids 
learn. Our children deserve more.
  I am pleased to be joined by Senators Landrieu, Breaux and Bayh in 
introducing the bill today, and ask unanimous consent that my statement 
and a copy of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2970

       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 ``Student Education Enrichment 
     Demonstration Act''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) States are establishing new and higher academic 
     standards for students in kindergarten through grade 12;
       (2) no Federal funding streams are specifically designed to 
     help States and school districts with the costs of providing 
     students who are struggling academically, with the extended 
     learning time and accelerated curricula that the students 
     need to meet high academic standards;
       (3) forty-eight States now require State accountability 
     tests to determine student grade-level performance and 
     progress;
       (4) nineteen States currently rate the performance of all 
     schools or identify low-performing schools through State 
     accountability tests;
       (5) sixteen States now have the power to close, take over, 
     or overhaul chronically failing schools on the basis of those 
     tests;
       (6) fourteen States provide high-performing schools with 
     monetary rewards on the basis of those tests;
       (7) nineteen States currently require students to pass 
     State accountability tests to graduate from high school;
       (8) six States currently link student promotion to results 
     on State accountability tests;
       (9) excessive percentages of students are not meeting their 
     State standards and are failing to perform at high levels on 
     State accountability tests; and
       (10) while the Chicago Public School District implemented 
     the Summer Bridge Program to help remediate their students in 
     1997, no State has yet created and implemented a similar 
     program to complement the education accountability programs 
     of the State.

     SEC. 3. PURPOSE.

       The purpose of this Act is to provide Federal support 
     through a new demonstration program to States and local 
     educational agencies, to enable the States and agencies to 
     develop models for high quality summer academic enrichment 
     programs that are specifically designed to help public school 
     students who are not meeting State-determined performance 
     standards.

     SEC. 4. DEFINITIONS.

       In this Act:
       (1) Elementary school; secondary school; local educational 
     agency; state educational agency.--The terms ``elementary 
     school'', ``secondary school'', ``local educational agency'', 
     and ``State educational agency'' have the meanings given the 
     terms in section 14101 of the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 8801).
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of Education.
       (3) Student.--The term ``student'' means an elementary 
     school or secondary school student.

     SEC. 5. GRANTS TO STATES.

       (a) In General.--The Secretary shall establish a 
     demonstration program through which the Secretary shall make 
     grants to State educational agencies, on a competitive basis, 
     to enable the agencies to assist local educational agencies 
     in carrying out high quality summer academic enrichment 
     programs as part of statewide education accountability 
     programs.
       (b) Eligibility and Selection.--
       (1) Eligibility.--For a State educational agency to be 
     eligible to receive a grant under subsection (a), the State 
     served by the State educational agency shall--
       (A) have in effect all standards and assessments required 
     under section 1111 of the Elementary and Secondary Education 
     Act of 1965 (20 U.S.C. 6311); and
       (B) compile and annually distribute to parents a public 
     school report card that, at a minimum, includes information 
     on student and school performance for each of the assessments 
     required under section 1111 of the Elementary and Secondary 
     Education Act of 1965.
       (2) Selection.--In selecting States to receive grants under 
     this section, the Secretary shall make the selections in a 
     manner consistent with the purpose of this Act.
       (c) Application.--
       (1) In general.--To be eligible to receive a grant under 
     this section, a State educational agency shall submit an 
     application to the Secretary at such time, in such manner, 
     and containing such information as the Secretary may require.
       (2) Contents.--Such application shall include--
       (A) information describing specific measurable goals and 
     objectives to be achieved in the State through the summer 
     academic enrichment programs carried out under this Act, 
     which may include specific measurable annual educational 
     goals and objectives relating to--
       (i) increased student academic achievement;
       (ii) decreased student dropout rates; or
       (iii) such other factors as the State educational agency 
     may choose to measure; and

[[Page S7883]]

       (B) information on criteria, established or adopted by the 
     State, that--
       (i) the State will use to select local educational agencies 
     for participation in the summer academic enrichment programs 
     carried out under this Act; and
       (ii) at a minimum, will assure that grants provided under 
     this Act are provided to--

       (I) the local educational agencies in the State that have 
     the highest percentage of students not meeting basic or 
     minimum required standards for State assessments required 
     under section 1111 of the Elementary and Secondary Education 
     Act of 1965;
       (II) local educational agencies that submit grant 
     applications under section 6 describing programs that the 
     State determines would be both highly successful and 
     replicable; and
       (III) an assortment of local educational agencies serving 
     urban, suburban, and rural areas.

     SEC. 6. GRANTS TO LOCAL EDUCATIONAL AGENCIES.

       (a) In General.--
       (1) First year.--
       (A) In general.--For the first year that a State 
     educational agency receives a grant under this Act, the State 
     educational agency shall use the funds made available through 
     the grant to make grants to eligible local educational 
     agencies in the State to pay for the Federal share of the 
     cost of carrying out the summer academic enrichment programs, 
     except as provided in subparagraph (B).
       (B) Technical assistance and planning assistance.--The 
     State educational agency may use not more than 5 percent of 
     the funds--
       (i) to provide to the local educational agencies technical 
     assistance that is aligned with the curriculum of the 
     agencies for the programs;
       (ii) to enable the agencies to obtain such technical 
     assistance from entities other than the State educational 
     agency that have demonstrated success in using the 
     curriculum; and
       (iii) to assist the agencies in planning activities to be 
     carried out under this Act.
       (2) Succeeding years.--
       (A) In general.--For the second and third year that a State 
     educational agency receives a grant under this Act, the State 
     educational agency shall use the funds made available through 
     the grant to make grants to eligible local educational 
     agencies in the State to pay for the Federal share of the 
     cost of carrying out the summer academic enrichment programs, 
     except as provided in subparagraph (B).
       (B) Technical assistance and planning assistance.--The 
     State educational agency may use not more than 5 percent of 
     the funds--
       (i) to provide to the local educational agencies technical 
     assistance that is aligned with the curriculum of the 
     agencies for the programs;
       (ii) to enable the agencies to obtain such technical 
     assistance from entities other than the State educational 
     agency that have demonstrated success in using the 
     curriculum; and
       (iii) to assist the agencies in evaluating activities 
     carried out under this Act.
       (b) Application.--
       (1) In general.--To be eligible to receive a grant under 
     this section, a local educational agency shall submit an 
     application to the State educational agency at such time, in 
     such manner, and containing by such information as the 
     Secretary or the State may require.
       (2) Contents.--The State shall require that such an 
     application shall include, to the greatest extent 
     practicable--
       (A) information that--
       (i) demonstrates that the local educational agency will 
     carry out a summer academic enrichment program funded under 
     this section--

       (I) that provides intensive high quality programs that are 
     aligned with challenging State content and student 
     performance standards and that are focused on reinforcing and 
     boosting the core academic skills and knowledge of students 
     who are struggling academically, as determined by the State;
       (II) that focuses on accelerated learning, rather than 
     remediation, so that students served through the program will 
     master the high level skills and knowledge needed to meet the 
     highest State standards or to perform at high levels on all 
     State assessments required under section 1111 of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6311);
       (III) that is based on, and incorporates best practices 
     developed from, research-based enrichment methods and 
     practices;
       (IV) that has a proposed curriculum that is directly 
     aligned with State content and student performance standards;
       (V) for which only teachers who are certified and licensed, 
     and are otherwise fully qualified teachers, provide academic 
     instruction to students enrolled in the program;
       (VI) that offers to staff in the program professional 
     development and technical assistance that are aligned with 
     the approved curriculum for the program; and
       (VII) that incorporates a parental involvement component 
     that seeks to involve parents in the program's topics and 
     students' daily activities; and

       (ii) may include--

       (I) the proposed curriculum for the summer academic 
     enrichment program;
       (II) the local educational agency's plan for recruiting 
     highly qualified and highly effective teachers to participate 
     in the program; and
       (III) a schedule for the program that indicates that the 
     program is of sufficient duration and intensity to achieve 
     the State's goals and objectives described in section 
     5(c)(2)(A);

       (B) an outline indicating how the local educational agency 
     will utilize other applicable Federal, State, local, or other 
     funds, other than funds made available through the grant, to 
     support the program;
       (C) an explanation of how the local educational agency will 
     ensure that only highly qualified personnel who volunteer to 
     work with the type of student targeted for the program will 
     work with the program and that the instruction provided 
     through the program will be provided by qualified teachers;
       (D) an explanation of the types of intensive training or 
     professional development, aligned with the curriculum of the 
     program, that will be provided for staff of the program;
       (E) an explanation of the facilities to be used for the 
     program;
       (F) an explanation regarding the duration of the periods of 
     time that students and teachers in the program will have 
     contact for instructional purposes (such as the hours per day 
     and days per week of that contact, and the total length of 
     the program);
       (G) an explanation of the proposed student/teacher ratio 
     for the program, analyzed by grade level;
       (H) an explanation of the grade levels that will be served 
     by the program;
       (I) an explanation of the approximate cost per student for 
     the program;
       (J) an explanation of the salary costs for teachers in the 
     program;
       (K) a description of a method for evaluating the 
     effectiveness of the program at the local level;
       (L) information describing specific measurable goals and 
     objectives, for each academic subject in which the program 
     will provide instruction, that are consistent with, or more 
     rigorous than, the adequate yearly progress goals established 
     by the State under section 1111 of the Elementary and 
     Secondary Education Act of 1965;
       (M) a description of how the local educational agency will 
     involve parents and the community in the program in order to 
     raise academic achievement; and
       (N) a description of how the local educational agency will 
     acquire any needed technical assistance that is aligned with 
     the curriculum of the agency for the program, from the State 
     educational agency or other entities with demonstrated 
     success in using the curriculum.
       (c) Priority.--In making grants under this section, the 
     State educational agency shall give priority to applicants 
     who demonstrate a high level of need for the summer academic 
     enrichment programs.
       (d) Federal Share.--
       (1) In general.--The Federal share of the cost described in 
     subsection (a) is 50 percent.
       (2) Non-federal share.--The non-Federal share of the cost 
     may be provided in cash or in kind, fairly evaluated, 
     including plant, equipment, or services.

     SEC. 7. SUPPLEMENT NOT SUPPLANT.

       Funds appropriated pursuant to the authority of this Act 
     shall be used to supplement and not supplant other Federal, 
     State, and local public or private funds expended to provide 
     academic enrichment programs.

     SEC. 8. REPORTS.

       (a) State Reports.--Each State educational agency that 
     receives a grant under this Act shall annually prepare and 
     submit to the Secretary a report. The report shall describe--
       (1) the method the State educational agency used to make 
     grants to eligible local educational agencies and to provide 
     assistance to schools under this Act;
       (2) the specific measurable goals and objectives described 
     in section 5(c)(2)(A) for the State as a whole and the extent 
     to which the State met each of the goals and objectives in 
     the year preceding the submission of the report;
       (3) the specific measurable goals and objectives described 
     in section 6(b)(2)(L) for each of the local educational 
     agencies receiving a grant under this Act in the State and 
     the extent to which each of the agencies met each of the 
     goals and objectives in that preceding year;
       (4) the steps that the State will take to ensure that any 
     such local educational agency who did not meet the goals and 
     objectives in that year will meet the goals and objectives in 
     the year following the submission of the report or the plan 
     that the State has for revoking the grant of such an agency 
     and redistributing the grant funds to existing or new 
     programs;
       (5) how eligible local educational agencies and schools 
     used funds provided by the State educational agency under 
     this Act; and
       (6) the degree to which progress has been made toward 
     meeting the goals and objectives described in section 
     5(c)(2)(A).
       (b) Report to Congress.--The Secretary shall annually 
     prepare and submit to Congress a report. The report shall 
     describe--
       (1) the methods the State educational agencies used to make 
     grants to eligible local educational agencies and to provide 
     assistance to schools under this Act;
       (2) how eligible local educational agencies and schools 
     used funds provided under this Act; and

[[Page S7884]]

       (3) the degree to which progress has been made toward 
     meeting the goals and objectives described in sections 
     5(c)(2)(A) and 6(b)(2)(L).
       (c) Government Accounting Office Report to Congress.--The 
     Comptroller General of the United States shall conduct a 
     study regarding the demonstration program carried out under 
     this Act and the impact of the program on student 
     achievement. The Comptroller General shall prepare and submit 
     to Congress a report containing the results of the study.

     SEC. 9. ADMINISTRATION.

       The Secretary shall develop program guidelines for and 
     oversee the demonstration program carried out under this Act.

     SEC. 10. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to carry out this 
     Act $25,000,000 for each of fiscal years 2001 through 2004.

     SEC. 11. TERMINATION.

       The authority provided by this Act terminates 3 years after 
     the date of enactment of this Act.
                                 ______
                                 
      By Mr. HARKIN:
  S. 2971. A bill to amend the Clean Air Act to phase out the use of 
methyl tertiary butyl ether in fuels or fuel additives, to promote the 
use of renewable fuels, and for other purposes; to the Committee on 
Environment and Public Works.


                 clean and renewable fuels act of 2000

  Mr. HARKIN. Mr. President. I am introducing today legislation 
designed to address the extensive problems that have been caused by the 
gasoline additive methyl tertiary butyl ether (MTBE) and to make 
appropriate revisions to the reformulated gasoline (RFG) program in the 
Clean Air Act.
  It has become absolutely clear that MTBE has to go. Even in Iowa, 
where we are not required to have oxygenated fuels or RFG, a recent 
survey found a surprising level of water contamination with MTBE. So my 
legislation requires a phased reduction in the use of MTBE in motor 
fuel and then a prohibition on MTBE in fuel of fuel additives beginning 
three years after enactment. Retail pumps dispensing gasoline with MTBE 
would be labeled so that consumers know what they are buying. And in 
order to facilitate an orderly phase-out of MTBE, EPA may establish a 
credit trading system for the dispensing and sale of MTBE.
  My legislation recognizes the benefits that have been provided by the 
oxygen content requirement in the reformulated gasoline program. Oxygen 
added to gasoline reduces emissions of carbon monoxide, toxic compounds 
and fine particulate matter. So my legislation continues the oxygen 
content requirement, but it does allow for certain actions that would 
alleviate concerns about whether alternative oxygen additives will be 
available after MTBE is removed from gasoline. The bill allows for 
averaging of the oxygen content upon a proper showing and it also would 
allow for a temporary reduction or waiver of the minimum oxygen content 
requirement in very limited circumstances.
  The legislation also ensures that all health benefits of the 
reformulated gasoline program are maintained and improved. The bill 
includes very strong provisions to ensure that there is no backsliding 
in air quality and health benefits from cleaner burning reformulated 
gasoline. The petroleum companies would also be prohibited from taking 
the pollutants from gasoline in some areas and putting them back into 
gasoline in other areas of the country that are not subject to the more 
stringent air quality standards. Those are referred to as the anti-
dumping protections. My bill places tighter restrictions on highly 
polluting aromatic and olefin content of reformulated gasoline.
  My legislation also recognizes the important role of renewable fuels 
in improving our environment, building energy security for our nation, 
and increasing farm income, economic growth and job creation, 
especially in rural areas. The legislation creates a renewable content 
requirement for gasoline and for diesel fuel.
  Overall, this legislation will get MTBE out of gasoline, maintain and 
improve the air quality and health benefits of the reformulated 
gasoline program and the Clean Air Act, and put our nation on a solid 
path toward greater use of renewable fuels.
  I ask unanimous consent that a section-by-section summary of my 
legislation be printed in the Record. I urge my colleagues to support 
this important legislation.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

   Section-by-Section Summary--Clean and Renewable Fuels Act of 2000

     Section 1. Short title
       The bill may be cited as the ``Clean and Renewable Fuels 
     Act of 2000''
     Section 2. Use and cleanup of methyl tertiary butyl ether
       Prohibition Except in Specified Nonattainment Areas: 
     Section 211(c) of the Clean Air Act is amended to provide 
     that beginning January 1, 2001, a person shall not sell or 
     dispense to ultimate consumers any fuel or fuel additive 
     containing MTBE in any area that is not a specified 
     nonattainment area in which reformulated gasoline is required 
     to be used and in which MTBE was used to meet the oxygen 
     content requirement prior to January 1, 2000.
       Interim Period for Use of MTBE: The Administrator shall 
     issue regulations requiring, during the one-year period 
     beginning one year after enactment, a one-third reduction in 
     the quantity of MTBE that may be sold or dispensed for use in 
     a fuel or fuel additive, and during the one-year period 
     beginning two years after enactment, a two-thirds reduction 
     in the quantity of MTBE that may be sold or dispensed for use 
     in a fuel or fuel additive. In no area may the quantity of 
     MTBE sold or dispensed for use as a fuel or fuel additive 
     increase.
       Basis for Reductions; Equitable Treatment: The basis for 
     reductions shall be the quantity of MTBE sold or dispensed 
     for use as a fuel or fuel additive in the United States 
     during the one-year period ending on the date of enactment. 
     The regulations requiring such reductions shall to the 
     maximum extent practicable provide for equitable treatment on 
     a geographical basis and among manufacturers, refiners, 
     distributors and retailers.
       Trading of Authorizations to Sell or Dispense MTBE: To 
     facilitate the most orderly and efficient reduction in the 
     use of MTBE, the regulations may allow the sale and purchase 
     of authorizations to sell or dispense MTBE for use in a fuel 
     or fuel additive.
       Labeling: The Administrator shall issue regulations 
     requiring any person selling or dispensing gasoline that 
     contains MTBE at retail prominently to label the gasoline 
     dispensing system with a notice stating that the gasoline 
     contains MTBE and providing such information concerning the 
     human health and environmental risks of MTBE as the 
     Administrator determines appropriate.
       Prohibition on Use of MTBE or Other Ethers: Effective three 
     years after enactment, a person shall not manufacture, 
     introduce into commerce, offer for sale, sell, or dispense a 
     fuel or fuel additive containing MTBE or any other ether 
     compound. The Administrator may waive the prohibition on an 
     ether compound other than MTBE upon a determination that it 
     does not pose a significant risk to human health or the 
     environment. The Administrator may require a more rapid 
     reduction (including immediate termination) of the quantity 
     of MTBE sold or dispensed in an area upon a determination of 
     MTBE contamination or a substantial risk or contamination.
       State Authority to Regulate MTBE: A State may impose such 
     restrictions, including a prohibition, on the manufacture, 
     sale or use of MTBE in a fuel or fuel additive as the State 
     determines appropriate to protect human health and the 
     environment.
       Remedial Action Regarding MTBE Contamination: MTBE 
     contamination would be prioritized in state source water 
     assessment programs. EPA shall issue guidelines for MTBE 
     cleanup and may enter into cooperative agreements for, and 
     provide technical assistance to support, voluntary pilot 
     programs for the cleanup of MTBE and the protection of 
     private wells from MTBE contamination.
     Section 3. Reformulated gasoline--in general; oxygen content
       Opt-in Areas; General Provisions: Regulations issued for 
     the reformulated gasoline program shall apply to specified 
     nonattainment areas and opt-in areas. The regulations shall 
     require the greatest possible reduction in emissions of ozone 
     forming volatile organic and other compounds and emissions of 
     toxic air pollutants and precursors of toxic air pollutants.
       Waiver of Per-Gallon Oxygen Content Requirement: The 
     Administrator shall issue regulations establishing a 
     procedure providing for the submission of applications for a 
     waiver of any per-gallon oxygen content requirement otherwise 
     established and the averaging of oxygen content over an 
     appropriate period of time, not exceeding a year. After 
     consultation with the Secretary of Energy and the Secretary 
     of Agriculture, the Administrator shall grant a petition for 
     oxygen averaging where necessary to avoid a shortage or 
     disruption in supply of reformulated gasoline, to avoid 
     excessive prices for reformulated gasoline, or to facilitate 
     attainment by the area of a national ambient air quality 
     standard. The Administrator shall ensure that the human 
     health and environmental benefits of the reformulated 
     gasoline program are fully maintained during the period of 
     any waiver.
       Temporary Reduction of Oxygen Content Requirement: Upon 
     application of a state, if the Secretary of Energy with the 
     concurrence of the Secretary of Agriculture finds that there 
     is an insufficient supply of oxygenates in an area the 
     Administrator

[[Page S7885]]

     may temporarily reduce or waive the oxygen content 
     requirement for the area to the extent necessary to ensure an 
     adequate supply of reformulated gasoline. A temporary waiver 
     would be effective for 90 days, or a shorter period if a 
     sufficient supply of oxygenates exists, and may be extended 
     for an additional 90-day period. The regulations shall ensure 
     that the human health and environmental benefits of the 
     reformulated gasoline program are fully maintained during the 
     period of any temporary waiver of the oxygen content 
     requirement.
     Section 4. Limitations on aromatics and olefins in 
         reformulated gasoline
       Aromatic Content: The aromatic hydrocarbon content of 
     reformulated gasoline shall not exceed 22 percent by volume; 
     the average aromatic hydrocarbon content shall not exceed the 
     average aromatic hydrocarbon content of reformulated gasoline 
     sold in either calendar year 1999 or calendar year 2000; and 
     no gallon of reformulated gasoline shall have an aromatic 
     hydrocarbon content in excess of 30 percent.
       Olefin Content: The olefin content of reformulated gasoline 
     shall not exceed 8 percent by volume; the average olefin 
     content shall not exceed the average olefin content of 
     reformulated gasoline sold in either calendar year 1999 or 
     calendar year 2000; and no gallon of reformulated gasoline 
     shall have an olefin content in excess of 10 percent.
     Section 5. Reformulated gasoline performance standards
       Emissions of Volatile Organic Compounds: Required 
     reductions in VOC emissions shall be on a mass basis and, to 
     the maximum extent practicable using available science, on 
     the basis of ozone forming potential of VOCs and taking into 
     account the effect on ozone formation of reducing carbon 
     monoxide emissions.
       Emissions of Toxic Air Pollutants and Precursors: The 
     required reductions shall apply to toxic air pollutants or 
     precursors of toxic air pollutants. The required emissions 
     reductions shall be on a mass basis and, to the maximum 
     extent practicable using available science, on the basis of 
     relative toxicity or carcinogenic potency, whichever is more 
     protective of human health and the environment.
     Section 6. Anti-backsliding
       Ozone Forming Potential: The Administrator shall revise 
     performance standards to ensure that the ozone forming 
     potential, taking into account all ozone precursors, of the 
     aggregate emissions during the high ozone season from 
     baseline vehicles using reformulated gasoline does not exceed 
     the ozone forming potential of emissions when using 
     reformulated gasoline that complies with the regulations in 
     effect on January 1, 2000.
       Specified Pollutants: The Administrator shall revise 
     performance standards to ensure that the aggregate emissions 
     of specified pollutants or their precursors when using 
     reformulated gasoline do not exceed the aggregate emissions 
     of such pollutants or precursors from baseline vehicles when 
     using reformulated gasoline that complies with the 
     regulations in effect on January 1, 2000. The specified air 
     pollutants are toxic air pollutants, categorized by degree of 
     toxicity and carcinogenic potency; particulate matter and 
     fine particulate matter; pollutants regulated under section 
     108; and such other pollutants as the Administrator 
     determines should be controlled to prevent deterioration of 
     air quality and to achieve attainment of a national ambient 
     air quality standard in one or more areas.
       Adjustments for Carbon Monoxide Emissions: In carrying out 
     the ozone anti-backsliding requirement, the Administrator 
     shall adjust the performance standard to take into account 
     carbon monoxide emissions that are greater or less than the 
     carbon monoxide emissions achieved by reformulated gasoline 
     containing 2 percent oxygen by weight and meeting other 
     performance standards. An adjustment to the VOC emission 
     reduction requirements under the provisions of this section 
     shall be credited toward the requirement for VOC emissions 
     reductions under section 182 of the Clean Air Act.
       Updating of Baseline Vehicles: Not later than 3 years after 
     enactment, the Administrator shall revise the performance 
     standards to redefine the term ``baseline vehicles'' as 
     used in the anti-backsliding provisions to mean vehicles 
     representative of vehicles (including off-road vehicles) 
     in use as of January 1, 2000.
     Section 7. Certification of fuels
       Combined Reductions of Ozone Forming VOCs and Carbon 
     Monoxide: In certifying a fuel formulation or slate of fuel 
     formulations as equivalent to reformulated gasoline, the 
     Administrator shall determine whether the combined reductions 
     in emissions of VOCs and carbon monoxide result in a 
     reduction in ozone concentration equivalent to or greater 
     than the reduction achieved by a reformulated gasoline 
     meeting the statutory formula and performance requirements. A 
     certified fuel formulation or slate of fuel formulations 
     shall receive the same VOC reduction credit under section 182 
     as a reformulated gasoline meeting the statutory formula and 
     performance requirements.
       Carbon Monoxide Credit: In determining combined reductions 
     in emissions of VOCs and carbon monoxide by a fuel 
     formulation or slate of fuel formulations the Administrator 
     shall consider the change in carbon monoxide emissions from 
     baseline vehicles attributable to an oxygen content that 
     exceeds any minimum oxygen content for reformulated gasoline 
     applicable to the area and may consider the change in carbon 
     monoxide emissions attributable to such oxygen content from 
     vehicles other than baseline vehicles.
       Toxic Air Pollutants and Precursors: To be certified as 
     equivalent to reformulated gasoline, the fuel or slate of 
     fuels must achieve equivalent or greater reduction in 
     emissions of toxic air pollutants or precursors of toxic air 
     pollutants than are achieved by a reformulated gasoline 
     meeting the statutory formula and performance requirements.
       Certification Subject to Anti-Backsliding Rules: The 
     provisions on certification would clearly specify that a 
     requirement for certification of a fuel formulation or slate 
     of fuel formulations is compliance with the anti-backsliding 
     provisions.
     Section 8. Additional opt-in areas
       Upon application of the Governor of a State, the 
     Administrator shall apply the requirements relating to 
     reformulated gasoline in any area of the State that is not a 
     covered area or a classified area. The application shall be 
     published in the Federal Register as soon as practicable 
     after it is received.
     Section 9. Anti-dumping protections
       Updating Baseline Year; Additional Pollutants Covered: The 
     Administrator shall issue regulations to ensure that gasoline 
     sold or introduced into commerce by a refiner, blender or 
     importer (other than gasoline covered by the reformulated 
     gasoline rules) does not result in average per-gallon 
     emissions of VOCs, oxides of nitrogen, carbon monoxide, toxic 
     air pollutants, particulate matter, fine particulate matter, 
     or any precursor of such pollutants, in excess of 
     the emissions of each pollutants attributable to gasoline 
     sold or introduced into commerce by the refiner, blender 
     or importer in calendar year 1999 or calendar year 2000, 
     in whichever year the lower emissions occurred. In the 
     absence of adequate and reliable data for a refiner, 
     blender or importer for calendar year 1999 or calendar 
     year 2000, the Administrator shall substitute baseline 
     gasoline for 1999 or 2000 gasoline.
       Average Per-Gallon Emissions: In applying the anti-dumping 
     provisions, average per-gallon emissions shall be measured on 
     the basis of mass, and to the maximum extent practicable 
     using available science, on the basis of ozone-forming 
     potential, degree of toxicity and carcinogenic potency.
       Aromatic Hydrocarbon and Olefin Content: Anti-dumping 
     requirements also apply to ensure against increases in 
     aromatic hydrocarbon or olefin content of gasoline relative 
     to the levels in calendar year 1999 or calendar year 2000, in 
     whichever year the content was lower.
       Anti-Dumping Compliance: The Administrator shall issue 
     regulations providing that an increase in oxides of nitrogen 
     or volatile organic compounds caused by adding oxygenates may 
     be offset by an equal or greater reduction in emissions of 
     VOCs, carbon monoxide or toxic air pollutants. In making this 
     determination, the Administrator shall measure emissions on 
     the basis of mass, and to the maximum extent practicable 
     using available science, on the basis of ozone-forming 
     potential, degree of toxicity and carcinogenic potency.
     Section 10. Renewable content of gasoline and diesel fuel
       Renewable Content of Gasoline: Not later than September 1, 
     2000, the Administrator shall issue regulations requiring 
     each refiner, blender or importer of gasoline to comply with 
     renewable content requirements. On a quarterly basis, all 
     gasoline sold or introduced into commerce shall contain the 
     applicable percentage of fuel derived from a renewable 
     source. The applicable percentages increase from 1.3 percent 
     in 2000, to 2.4 percent in 2004 (coinciding with the expected 
     prohibition of MTBE by late 2003) and to 4.2 percent in 2010 
     and thereafter.
       Fuel Derived From A Renewable Source: The definition of 
     fuel derived from a renewable source includes fuel produced 
     from agricultural commodities, products and their residues; 
     plant materials, including grasses, fibers, wood and wood 
     residues; dedicated energy crops and trees; animal wastes, 
     byproducts and other materials of animal origin; municipal 
     wastes and refuse derived from plant or animal sources; and 
     other biomass that is used to replace or reduce the quantity 
     of fossil fuel in a fuel mixture used to operate a motor 
     vehicle, motor vehicle engine, nonroad vehicle, or nonroad 
     engine.
       Credit Program: The Administrator shall establish a program 
     for renewable fuel credit trading on a quarterly average 
     basis. The Administrator, in consultation with the Secretary 
     of Energy and the Secretary of Agriculture, may issue 
     regulations governing the generation and trading of such 
     credits in order to prevent excessive geographical 
     concentration in the use of fuel derived from renewable 
     sources that would tend unduly to affect the price, supply or 
     distribution of such fuels; impede the development of the 
     renewable fuels industry; or otherwise interfere with the 
     purposes of the renewable fuel content requirement.
       Waiver: A waiver from the renewable content requirement may 
     be granted for an area in whole or in part after consultation 
     with the Secretary of Agriculture and the Secretary of 
     Energy. The waiver may only be granted for an area upon a 
     determination that the renewable content requirement would 
     severely harm the economy or environment of the area, or 
     there is inadequate

[[Page S7886]]

     domestic supply or distribution capacity with respect to 
     fuels from renewable sources and only after a determination 
     that use of the credit trading program would not alleviate 
     the circumstances on which the petition is based. A waiver 
     shall terminate after one year, or at such earlier time as is 
     determined appropriate by the Administrator, but may be 
     renewed after consultation with the Secretary of Agriculture 
     and the Secretary of Energy.
       Labeling: The Administrator shall issue guidance to the 
     States for labeling at the point of retail sale of fuel 
     derived from a renewable source and the major fuel additive 
     components of the fuel.
       Reports to Congress: Concerning the renewable content 
     requirement, the Administrator shall report to Congress at 
     least every 3 years (1) regarding reductions in emissions of 
     air pollutants; (2) in consultation with the Secretary of 
     Agriculture, regarding the impact on demand for farm 
     commodities, biomass and other material used for producing 
     fuel derived from renewable sources; the adequacy of food and 
     feed supplies; and the effect upon farm income, employment 
     and economic growth, particularly in rural areas; and (3) in 
     consultation with the Secretary of Energy, describing 
     greenhouse gas emission reductions and assessing the effect 
     on U.S. energy security and reliance on imported petroleum.
       Renewable Content of Diesel Fuel: Not later than September 
     1, 2000, the Administrator shall issue regulations applicable 
     to each refiner, blender, or importer of diesel fuel to 
     ensure that diesel fuel sold or introduced into commerce in 
     the United States complies with renewable content 
     requirements. The Administrator shall establish requirements 
     for the content of diesel fuel that is derived from renewable 
     sources similar to the requirements of the program for 
     gasoline, using the same definition of fuel derived from a 
     renewable source. The regulations shall establish applicable 
     percentages by volume for renewable content for diesel fuel 
     on a quarterly basis, require a gradual increase in the 
     renewable content of diesel fuel, and require that for 
     calendar year 2010 and thereafter the applicable percentage 
     shall be 1.0 percent. The regulations shall provide for 
     credit trading and waiver applications on similar terms to 
     those of the program for gasoline.
       Prevention of effects on Highway Apportionments: States 
     would be protected from any adverse impacts as a consequence 
     of the sale and use within a State of ethanol in determining 
     the payments attributable to a State paid into the Highway 
     Trust Fund and the minimum guarantee based on payments into 
     the Highway Trust Fund.
                                 ______
                                 
      By Mr. KERRY (for himself, Mr. Grassley, Mr. Sarbanes, Mr. Levin, 
        and Mr. Rockefeller):
  S. 2972. A bill to combat international money laundering and protect 
the United States financial system, and for other purposes; to the 
Committee on Banking, Housing, and Urban Affairs.


 the international counter-money laundering and foreign anticorruption 
                              act of 2000

  Mr. KERRY. Mr. President, I believe the United States must do more to 
stop international criminals from washing the blood off their profits 
from the sale of drugs, from terror or from organized crime by 
laundering money into the United States financial system.
  That is why today, along with Senators Grassley, Sarbanes, Levin, and 
Rockefeller, I am introducing the International Counter-Money 
Laundering and Foreign Anticorruption Act of 2000 which will give the 
Secretary of the Treasury the tools to crack down on international 
money laundering havens and protect the integrity of the U.S. financial 
system from the influx of tainted money from abroad.
  I very much appreciate work of the Secretary of Treasury Lawrence 
Summers in the development of this legislation. Secretary Summers has 
been a leader in bringing the issue of money laundering to the 
attention of the American public and the Congress. Earlier this year, 
Secretary Summers said, ``The attack on money laundering is an 
essential front in the war on narcotics and the broader fight against 
organized crime worldwide. Money laundering may look like a polite form 
of white collar crime, but it is the companion of brutality, deceit and 
corruption.''
  I am deeply saddened that I will not have the pleasure of working 
with Senator Paul Coverdell, who was to be the primary cosponsor of 
this legislation. His passing is a tremendous loss to the both to the 
American people and the U.S. Senate.
  Money laundering is the financial side of international crime. It 
occurs when criminals seek to disguise money that was illegally 
obtained. It allows terrorists, drug cartels, organized crime groups, 
corrupt foreign government officials and others to preserve the profit 
from their illegal activities and to finance new crimes. It provides 
the fuel that allows criminal organizations to conduct their ongoing 
affairs. It has a corrosive effect on international markets and 
financial institutions. Money launderers rely upon the existence of 
jurisdictions outside the United States that offer bank secrecy and 
special tax or regulatory advantages to non-residents, and often 
complement those advantages with weak financial supervision and 
regulatory regimes.
  Today, the global volume of laundered money is estimated to be 2-5 
percent of global Gross Domestic Product, between $600 billion and $1.5 
trillion. The effects of money laundering extend far beyond the 
parameters of law enforcement, creating international political issues 
while generating domestic political crises.
  International criminals have taken advantage of the advances in 
technology and the weak financial supervision in some jurisdictions to 
place their illicit funds into the United States financial system. 
Globalization and advances in communications and technologies allow 
criminals to move their illicit gains faster and farther than ever 
before. The result has been a proliferation of international money 
laundering havens. The ability to launder money into the United States 
through these jurisdictions has allowed corrupt foreign officials to 
systemically divert public assets to their personal use, which in turn 
undermines U.S. efforts to promote democratic institutions and stable, 
vibrant economies abroad.
  In February, State and Federal regulators formally sanctioned the 
Bank of New York for ``deficiencies'' in its anti-money laundering 
practices including lax auditing and risk management procedures 
involving their international banking business. The sanctions were 
based on the Bank of New York's involvement in an alleged money 
laundering scheme where more than $7 billion in funds were transmitted 
from Russia into the bank. Federal investigators are 
currently attempting to tie the $7 billion to criminal activities in 
Russia such as corporate theft, political graft or racketeering.

  In November 1999, the minority staff of the Senate Governmental 
Affairs Subcommittee on Investigations released a report on private 
banking and money laundering. The report describes a number of 
incidences where high level government officials have used private 
banking accounts with U.S. financial institutions to launder millions 
of dollars from foreign governments. The report details how Raul 
Salinas, brother of former President of Mexico, Carlos Salinas, used 
private bank accounts to launder money out of Mexico. Representatives 
from Citigroup testified at a Subcommittee hearing that the bank had 
been slow to correct controls over their private banking accounts.
  During the 1980's, as chairman of the Senate Permanent Subcommittee 
on Investigations, I began an investigation of the Bank of Credit and 
Commerce International (BCCI), and uncovered a complex money laundering 
scheme. Unlike any ordinary bank, BCCI was from its earliest days made 
up of multiplying layers of entities, related to one another through an 
impenetrable series of holding companies, affiliates, subsidiaries, 
banks-within-banks, insider dealings, and nominee relationships.
  By fracturing corporate structure, record keeping, regulatory review, 
and audits, the complex BCCI family of entities was able to evade 
ordinary legal restrictions on the movement of capital and goods as a 
matter of daily practice and routine. In creating BCCI as a vehicle 
fundamentally free of government control, its creators developed an 
ideal mechanism for facilitating illicit activity by others.
  BCCI's used this complex corporate structure to commit fraud 
involving billions of dollars; and launder money for their clients in 
Europe, Africa, Asia and the Americas. Fortunately, we were able to 
bring many of those involved in BCCI to justice. However, my 
investigation clearly showed that rogue financial institutions have the 
ability to circumvent the laws designed to stop financial crimes.
  In recent years, the United States and other well-developed financial 
centers have been working together to improve their antimoney 
laundering regimes and to set international anti-

[[Page S7887]]

money laundering standards. Back in 1988, I included a provision in the 
State Department Reauthorization bill that requires major money 
laundering countries to adopt laws similar to our own on reporting 
currency, or face sanctions if they did not. Panama and Venezuela wound 
up negotiating what were called Kerry agreements with the United States 
and became less vulnerable to the placement of U.S. currency by drug 
traffickers in the process.
  Unfortunately, other nations--some small, remote islands--have moved 
in the other direction. Many have passed laws that provide for 
excessive bank secrecy, anonymous company incorporation, economic 
citizenship, and other provisions that directly conflict with well-
established international anti-money laundering standards. In doing so, 
they have become money laundering havens for international criminal 
networks. Some even blatantly advertise the fact that their laws 
protect anyone doing business from U.S. law enforcement.
  Just last month, the Financial Action Task Force, an 
intergovernmental body developed to develop and promote policies to 
combat financial crime, released a report naming fifteen 
jurisdictions--including the Bahamas, The Cayman Islands, Russia, 
Israel, Panama, and the Philippines--that have failed to take adequate 
measures to combat international money laundering. This is a clear 
warning to financial institutions in the United States that they must 
begin to scrutinize many of their financial transactions with customers 
in these countries as possibly being linked to crime and money 
laundering. Soon, the Financial Action Task Force will develop bank 
advisories and criminal sanctions that will have the effect of driving 
legitimate financial business from these nations, depriving them of a 
lucrative source of tax revenue. This report has provided important 
information that governments and financial institutions around the 
world should learn from in developing their own anti-money laundering 
laws and policies.

  The Financial Stability Forum has recently released a report that 
categorizes offshore financial centers according to their perceived 
quality of supervision and degree of regulatory cooperation. The 
Organization of Economic Cooperation and Development (OECD) has begun a 
new crackdown on harmful tax competition. Members of the European Union 
has reached an agreement in principle on sweeping changes to bank 
secrecy laws, intended to bring cross-border investment income within 
the net of tax authorities.
  The actions by the Financial Action Task Force, the European Union 
and others show a renewed international focus and commitment to curbing 
financial abuse around the world. I believe the United States has a 
similar obligation to use this new information to update our anti-money 
laundering status.
  The International Counter-Money Laundering and Anticorruption Act of 
2000 which I am introducing today would provide the tools the U.S. 
needs to crack down on international money laundering havens and 
protect the integrity of the U.S. financial system from the influx of 
tainted money from abroad. The bill provides for actions that will be 
graduated, discretionary, and targeted, in order to focus actions on 
international transactions involving criminal proceeds, while allowing 
legitimate international commerce to continue to flow unimpeded. It 
will give the Secretary of the Treasury--acting in consultation with 
other senior government officials and the Congress--the authority to 
designate a specific foreign jurisdiction, foreign financial 
institution, or class of international transactions as being of 
``primary money laundering concern.'' Then, on a case-by-case basis, 
the Secretary will have the option to use a series of new tools to 
combat the specific type of foreign money laundering threat we face. In 
some cases, the Secretary will have the option to require banks to 
pierce the veil of secrecy that foreign criminals hide behind. In other 
cases, the Secretary will have the option to require the identification 
of those using a foreign bank's correspondent or payable-through 
accounts. And if these transparency provisions were deemed to be 
inadequate to address the specific problem identified, the Secretary 
will have the option to restrict or prohibit U.S. banks from continuing 
correspondent or payable-through banking relationships with money 
laundering havens and rogue foreign banks. Through these steps, the 
Secretary will help prevent laundered money from slipping undetected 
into the U.S. financial system and, as a result, increase the pressure 
on foreign money laundering havens to bring their laws and practices 
into line with international anti-money laundering standards. The 
passage of this legislation will make it much more difficult for 
international criminal organizations to launder the proceeds of their 
crimes into the United States.
  This bill fills in the current gap between bank advisories and 
International Emergency Economic Powers Act (IEEPA) sanctions by 
providing five new intermediate measures. Under current law, the only 
counter-money laundering tools available to the federal governments are 
advisories, an important but relatively limited measure instructing 
banks to pay close attention to transactions that involve a given 
country, and full-blown economic sanctions under the IEEPA. This 
legislation gives five additional measures to increase the government's 
ability to apply pressure against targeted jurisdictions or 
institutions.
  This legislation will in no way jeopardize the privacy of the 
American public. The focus is on foreign jurisdictions, financial 
institutions and classes of transactions that present a threat to 
the United States, not on American citizens. The actions that the 
Secretary of the Treasury is authorized to take are designated solely 
to combat the abuse of our banks by specifically identified foreign 
money laundering threats. This legislation is in no way similar to the 
Know-Your-Customer regulations that were proposed by the regulators 
last year. Further, the intent of this legislation is not to add 
additional regulatory burdens on financial institutions, but, to give 
the Secretary of the Treasury the ability to take action against 
existing money laundering threats.

  Let me repeat, this legislation only gives the discretion to use 
these tools to the Secretary of the Treasury. There is no automatic 
trigger which forces action whenever evidence of money laundering is 
uncovered. Before any action is taken, the Secretary of the Treasury, 
in consultation with other key government officials, must first 
determine whether a specific country, financial institution or type of 
transaction is of primary money laundering concern. Then, a calibrated 
response will be developed that will consider the effectiveness of the 
measure to address the threat, whether other countries are taking 
similar steps, and whether the response will cause harm to U.S. 
financial institutions and other firms.
  This legislation will strengthen the ability of the Secretary to 
combat the international money laundering and help protect the 
integrity of the U.S. financial system. This bill is supported by the 
heads of all the major federal law enforcement agencies. The House 
Banking Committee recently reported out this legislation with a 
bipartisan 33-1 vote. I believe this legislation deserves consideration 
by the Senate during the 106th Congress.
  Today, advances in technology are bringing the world closer together 
than ever before and opening up new opportunities for economic growth. 
However, with these new advantages come equally important obligations. 
We must do everything possible to insure that the changes in technology 
do not give comfort to international criminals by giving them new ways 
to hide the financial proceeds of their crimes. I believe that this 
legislation is a first step toward limiting the scourge of money 
laundering will help stop the development of international criminal 
organizations.
  Mr. SARBANES. Mr. President, I am pleased to join Senators Kerry, 
Grassley, Levin, and Rockefeller in introducing the Clinton/Gore 
administration's International Counter-Money Laundering and Foreign 
Anti-Corruption Act of 2000 (``ICMLA''). Money laundering poses an 
ongoing threat to the financial stability of the United States. It is 
estimated by the Department of the Treasury that the global volume of 
laundered money accounts for between 2-5 percent of the global GDP.
  The ICMLA is designed to bolster the United States ability to counter 
the

[[Page S7888]]

laundering of the proceeds of drug trafficking, organized crime, 
terrorism, and official corruption from abroad. The bill broadens the 
authority of the Secretary of the Treasury, ensures that banking 
transactions and financial relationships do not contravene the purposes 
of current antimoney laundering statutes, provides a clear mandate for 
subjecting foreign jurisdictions that facilitate money laundering to 
special scrutiny, and enhances reporting of suspicious activities. The 
bill similarly strengthens current measures to prevent the use of the 
U.S. financial system for personal gain by corrupt foreign officials 
and to facilitate the repatriation of any stolen assets to the citizens 
of countries to whom such assets belong.
  First, section 101 of the ICMLA gives the Secretary of the Treasury, 
in consultation with other key government officials, discretionary 
authority to impose five new ``special measures'' against foreign 
jurisdictions and entities that are of ``primary money laundering 
concern'' to the United States. Under current law, the only counter-
money laundering tools available to the federal government are 
advisories, an important but relatively limited measure instructing 
banks to pay close attention to transactions that involve a given 
country, and full-blown economic sanctions under the International 
Emergency Economic Powers Act (``IEEPA''). The five new intermediate 
measures will increase the government's ability to apply well-
calibrated pressure against targeted jurisdictions or institutions. 
These new measures include: (1) requiring additional record keeping/
reporting on particular transactions, (2) requiring the identification 
of the beneficial foreign owner of a U.S. bank account, (3) requiring 
the identification of those individuals using a U.S. bank account 
opened by a foreign bank to engage in banking transactions (a 
``payable-through account''), (4) requiring the identification of those 
using a U.S. bank account established to receive deposits and make 
payments on behalf of a foreign financial institution (a 
``correspondent account''), and (5) restricting or prohibiting the 
opening or maintaining of certain correspondent accounts.
  Second, the bill seeks to enhance oversight into illegal activities 
by clarifying that the ``safe harbor'' from civil liability for filing 
a Suspicious Activity Report (``SAR'') applies in any litigation, 
including suit for breach of contract or in an arbitration proceeding. 
Under the Bank Secrecy Act (``BSA''), any financial institution or 
officer, director, employee, or agent of a financial institution is 
protected against private civil liability for filing a SAR. Section 201 
of the bill amends the BSA to clarify the prohibition on disclosing 
that a SAR has been filed. These reports are the cornerstone of our 
nation's money-laundering efforts because they provide the information 
necessary to alter law enforcement to illegal activity.
  Third, the bill enhances enforcement of Geographic Targeting Orders 
(``GTOs''). These orders lower the dollar thresholds for reporting 
transactions within a defined geographic area. Section 202 of the bill 
clarifies that civil and criminal penalties for violations of the Bank 
Secrecy Act and its regulations also apply to reports required by 
GTO's. In addition, the section clarifies that structuring a 
transaction to avoid a reporting requirement by a GTO is a criminal 
offense and extends the presumptive GTO period from 60 to 180 days.
  Fourth, section 203 of the bill permits a bank, upon request of 
another bank, to include suspicious illegal activity in written 
employment references. Under this provision, banks would be permitted 
to share information concerning the possible involvement of a current 
or former officer or employee in potentially unlawful activity without 
fear of civil liability for sharing the information.
  Finally, title III of the bill addresses corruption by foreign 
officials and ruling elites. Pursuant to a sense of Congress, the 
Secretary of the Treasury, in consultation with the Attorney General 
and the financial services regulators, is mandated to issue guidelines 
to financial institutions operating in the United States on appropriate 
practices and procedures to reduce the likelihood that such 
institutions could facilitate proceeds expropriated by or on behalf of 
foreign senior government officials.
  The ICMLA addresses many of the shortcomings of current law. The 
Secretary of Treasury is granted additional authority to require 
greater transparency of transactions and accounts as well as to 
narrowly target penalties and sanctions. The reporting and collection 
of additional information on suspected illegal activity will greatly 
enhance the ability of bank regulators and law enforcement to combat 
the laundering of drug money, proceeds from corrupt regimes, and other 
illegal activities.
  Mr. President, the House Banking Committee passed the identical 
antimoney laundering bill by a vote of 31 to 1 on June 8, 2000. I hope 
that we can move this legislation expeditiously in the Senate.
                                 ______
                                 
      By Mr. KERRY (for himself and Mr. Hollings):
  S. 2973. A bill to amend the Magnuson-Stevens Fishery Conservation 
and Management Act to improve fishery management and enforcement, and 
fisheries data collection, research, and assessment, and for other 
purposes; to the Committee on Commerce, Science, and Transportation.


              the magnuson-stevens act amendments of 2000

  Mr. KERRY. Mr. President, I rise today to introduce the Magnuson-
Stevens Act Amendments of 2000. I would like to thank Mr. Hollings for 
joining me as an original cosponsor of this legislation to reauthorize 
and update the Magnuson-Stevens Fishery Conservation and Management 
Act. As my colleagues and I well remember, we last substantially 
reauthorized the Act only four years ago with the Sustainable Fisheries 
Act--a three-year effort in itself. As in 1996, I look forward to 
working with members of the Commerce Committee as we update and improve 
this most important legislation.
  Mr. President, the fishery resources found off U.S. shores are a 
valuable national heritage. In 1998, the last year for which we have 
figures, U.S. commercial fisheries produced $3.1 billion in dockside 
revenues, contributing a total of more than $25 billion to the Gross 
National Product. By weight of catch, the United States is the world's 
fifth largest fishing nation, harvesting over 4 million tons of fish 
annually. The United States is also a significant seafood exporter, 
with exports valued at over $8 billion in 1998. In addition to 
supporting the commercial seafood industry, U.S. fishery resources 
provide enjoyment for about 9 million saltwater anglers who take home 
roughly 200 million pounds of fish each year.
  Over the past year, the Commerce Committee under Senator Snowe's 
leadership has been holding a series of hearings around the country in 
preparation for this year's reauthorization. These hearings have 
pointed to one central theme--while there is certainly room for 
improving fisheries management under the Magnuson-Stevens Act, the 
sweeping changes we made in 1996 are still being implemented in each 
region. In fact, a number of regions are showing good progress, 
including New England where the yellowtail flounder and haddock stocks 
are rebounding. For this reason, I believe this year's reauthorization 
should leave in place the core conservation provisions of the Act, and 
focus on providing adequate resources, and any organizational or other 
changes necessary for NOAA Fisheries and Regional Fishery Management 
Councils to achieve the goals we set forth in the Sustainable Fisheries 
Act.
  Mr. President, the bill I introduce today outlines a proposal for 
making this a reality. While we have added increasingly complex 
technical and scientific requirements to the fisheries management 
process, we have failed in many cases to provide the resources 
necessary to meet these requirements. Effective fisheries management 
for the future will rely on committing adequate resources and direction 
to the fisheries managers as well as the fishing participants. These 
include providing necessary funding increases to both the agency and 
the Councils, creation of a national observer program, establishing a 
nationwide cooperative research program with the fishing industry, and 
ensuring that we are collecting the socioeconomic data we need to 
design management measures that

[[Page S7889]]

make sense for fishermen. This legislation aims to remedy this by 
providing a significant increase in funding, and specifying amounts 
required to support both the new initiatives and existing programs.
  Over the years, we have reauthorized the Magnuson-Stevens Act many 
times, and each time we have wrestled with the question of how to 
improve the ability of the Regional Fisheries Management Councils to 
effectively and fairly implement the requirements of the Act. This bill 
suggests ways in which to begin remedying these concerns. First, the 
bill would clarify that the Secretary of Commerce must ensure 
representation on the Council of all qualified persons who are 
concerned with fisheries conservation and management. While fishermen 
are the source of tremendous wisdom and expertise needed in managing 
these fisheries, there are others such as scientists and those with 
other relevant experience who may also provide valuable service to the 
Councils. To help the Secretary meet this requirement, the bill 
requires Governors to consult with members of recreational, commercial, 
and other fishing or conservation interests within a State before 
selecting a list of nominees to send to the Secretary. We would like to 
see all those who can provide constructive attention to our fishery 
management problems to work together to forge innovative and 
progressive solutions. In addition, we must increase independent 
scientific involvement in the Councils, and my legislation would 
provide that Councils must involve Science and Statistics Committee 
members in the development and amendment of fisheries management plans.
  I do know of the grave concerns expressed by conservation groups, 
fishermen, scientists and managers about problems with the existing 
fishery management process. I believe we need to address these 
questions, both with respect to the Councils and the Agency. I would 
like to work on this further with my colleagues as we go forward, but 
in the meantime this bill asks the National Academy of Sciences to 
bring together international and regional experts to evaluate what 
works and what may be broken in the current system, and what additional 
changes may be necessary to modernize and make more effective our 
entire fishery management process.
  In our series of hearings around the country, we have consistently 
heard a call from both industry and conservation groups for observer 
coverage in our fisheries. We have failed to adequately provide funding 
mechanisms for observer coverage; each year, federally funded observers 
are deployed in as few as five to seven fisheries, and observer 
coverage is rarely over 20 percent. Without observer coverage, there is 
little hope that we will have statistically significant data, 
particularly data on actual levels of bycatch. I have included 
provisions to ensure that each fishery management plan details observer 
coverage and monitoring needs for a fishery, and created a new National 
Observer Program. This national program would address technical and 
administrative responsibilities over regional observer programs. I have 
also included provisions to allow Councils or the Secretary to develop 
observer monitoring plans, and have established a fishery observer fund 
which would include funds appropriated for this purpose, collected as 
fines under a new bycatch incentive program, or deposited through fees 
established under this section.
  In the 1996 reauthorization, we took a first step in dealing with the 
issue of bycatch by instructing NMFS to implement a standardized 
bycatch reporting methodology. Nonetheless, I believe we have a long 
way to go in dealing with the bycatch problem in many of our fisheries. 
In addition to establishing a national observer program, my bill would 
establish a task force to recommend measures to monitor, manage, and 
reduce bycatch and unobserved fishing mortality. The Secretary would 
then be charged with implementing these recommendations. In addition, I 
have provided for the development of bycatch reduction incentive 
programs that could include a system of fines, non-transferable bycatch 
quotas, or preferences for gear types with low-bycatch rates.
  It is also time for us to move forward on ecosystem-based fishery 
management. We do not yet have the data to actually manage most of our 
fisheries on an ecosystem basis, but I still believe we must begin the 
preparation and consideration of fishery ecosystem plans. We must 
strive to understand the complex ecological and socioeconomic 
environments in which fish and fisheries exist, if we hope to 
anticipate the effects that fishery management will have on the 
ecosystem, and the effects that ecosystem change will have on 
fisheries. My legislation would require each Council to develop one 
fishery ecosystem plan for a marine ecosystem under its jurisdiction. 
Each ecosystem plan would have to include a listing of data and 
information needs identified during development of the plan, and the 
means of addressing any scientific uncertainties associated with the 
plan.
  One of the most resounding comments we heard at all of our regional 
hearings was the need to continually improve scientific information, 
and to involve the fishing industry in the collection of this 
information. My bill would establish a national cooperative research 
program, patterned after the successful cooperative research program in 
the New England scallop fishery, for projects that are developed 
through partnerships among federal and state managers, fishing industry 
participants, and academic institutions. Priority would be given to 
projects to reduce bycatch, conservation engineering projects, projects 
to identify and protect essential fish habitat or habitat area of 
particular concern, projects to collect fishery ecosystem information 
and improve predictive capabilities, and projects to compile social and 
economic data on fisheries.
  Over the years, I have heard much complaint that NMFS does not 
communicate effectively with the fishing industry or the general 
public. To remedy this, my bill calls for the establishment of a 
fisheries outreach program within NMFS to heighten public understanding 
of NMFS research and technology, train Council members on 
implementation of National Standards 1 and 8 requirements of NEPA and 
the Regulatory Flexibility Act, and identify means of improving quality 
and reporting of fishery-dependent data. New provisions would also 
require improvement of the transparency of the stock assessment process 
and methods, and increase access and compatibility of data relied upon 
in fishery management decisions. I have required the Secretary to 
periodically review fishery data collection and assessment methods, and 
to establish a Center for Independent Peer Review under which 
independent experts would be provided for special peer review 
functions.
  Mr. President, I have also included provisions to address one of our 
biggest problems in fisheries today--too many fishermen chasing too few 
fish. It is true that many of our fisheries are overcapitalized. A 
buyout in New England several years ago attempted to deal with this 
problem, and according to Penny Dalton, Assistant Administrator for 
Fisheries, in a recent USA Today article, the buyout ``jump started 
recovery in the New England groundfish fishery.'' A section of my bill 
would require the Secretary to evaluate overcapacity in each fishery, 
and identify measures planned or taken to reduce any such overcapacity. 
My legislation would amend the existing Act to ensure that capacity 
reduction programs also consider and address latent fishing capacity, 
and would allow the use of Capital Construction Funds and funds from 
the Fisheries Finance Program for measures to benefit the conservation 
and management of fisheries such as capacity reduction, as well as for 
gear and safety improvements.
  In 1996, we enacted a new concept in defining, and requiring 
protection and identification of, essential fish habitat (EFH). While 
there has been much outcry that essential fish habitat has been 
identified too broadly and that EFH consultation processes have 
resulted in regulatory delay, GAO reports very few real problems 
resulting from such designations. As a result, I do not feel it is 
necessary to significantly modify EFH provisions. Instead, I believe we 
can improve the current work of NMFS and the Councils to identify EFH, 
and areas within them called ``habitat areas of particular concern'' 
(HAPCs). I have added new provisions that would require Councils to 
protect and identify

[[Page S7890]]

HAPCs as part of existing requirements to identify and protect EFH. My 
bill would clarify that HAPCs are to be identified pursuant to the NMFS 
EFH guidelines, and that these areas should receive priority 
identification and protection, as they are oftentimes the areas most 
critical to fish spawning and recruitment. It is crucial that we 
improve our understanding of fisheries habitat, and my bill would 
establish pilot cooperative research projects on fishery and non-
fishery impacts to HAPCs.

  Finally, Mr. President, I would like to address the issue of 
individual fishing quotas, which have been the subject of much debate 
over the past few years. There is a moratorium on these programs in 
place until September 30, 2000, and we have been skirting consideration 
of this new management tool for too long. We must begin debate and 
consideration of the panoply of exclusive quota-based programs that 
have developed over the past several years, which must include adoption 
of legislative guidance for these programs. For this reason, the bill 
suggests a set of national criteria that would permit establishment of 
exclusive quota based programs--including community-based quotas, 
fishing cooperatives, and individual fishing quotas--but still protect 
the concerns of those who do not wish to employ these tools. I invite 
all those who are concerned about these issues to engage in a 
discussion with my colleagues and me on the appropriate way to address 
this national issue as we move forward this session.
  I understand the many concerns of small fishermen in New England 
regarding the use of these tools. First, no region would have to 
implement an exclusive quota-based program without approval of a 3/5 
majority of eligible permit holders through a referendum process. In 
addition, any exclusive quota-based program developed under my 
legislation would have to meet a set of national criteria. These 
national criteria would include provisions specifically aimed at 
protecting small fishermen such as the following: (1) ensuring that 
quota-based programs provide a fair and equitable initial allocation of 
quota (including the establishment of an appeals process for 
qualification and allocation decisions), (2) preserving the historical 
distribution of catch among vessel categories and gear sectors, (3) 
considering allocation of a portion of the annual harvest specifically 
to small fishermen and crew members; and (4) requiring programs to 
consider the effects of consolidation of quota shares and establish 
limits necessary to prevent inequitable concentration of quota share or 
significant impacts on other fisheries or fishing communities. To 
respond to the concern that we must ensure quota-based programs meet 
conservation objectives, my legislation would provide a 7-year review 
of the performance of quota holders, including fulfillment of 
conservation requirements of the Act. Finally any quota-based program 
would have to have a plan to rationalize the fishery--which in some 
cases would require a buyout of excess capacity under section 312(b) of 
the Act.
  Mr. President, I believe this legislation provides the funding, 
tools, and programs to ensure the important changes made in the 1996 
amendments are implemented effectively and improved where necessary. 
During the last reauthorization, our nation's fisheries were at a 
crossroads, and action was required to remedy our marine resource 
management problems, to preserve the way of life of our coastal 
communities, and to promote the sustainable use and conservation of our 
marine resources for future generations and for the economic good of 
the nation. We made changes in 1996 that were good for the environment, 
good for the fish, and good for the fishermen. We must stay the course, 
and this bill will help us do just that. In addition, the bill will 
provide us with innovative tools, such as exclusive quota-based 
programs and the new national observer program, to further advance 
fisheries management. Mr. President, I remain committed to the goal of 
establishing biologically and economically sustainable fisheries so 
that fishing will continue to be an important part of the culture of 
coastal communities as well as the economy of the Nation and 
Massachusetts.
                                 ______
                                 
      By Mrs. FEINSTEIN:
  S. 2975. A bill to limit the administrative expenses and profits of 
managed care entities to not more than 15 percent of premium revenues; 
to the Committee on Finance.


           managed care health benefits integrity act of 2000

  Mrs. FEINSTEIN. Mr. President, today, I am introducing the Health 
Benefits Integrity Act to make sure that most health care dollars that 
people and employers pay into a managed care health insurance plan get 
spent on health care and not on overhead.
  Under my bill, managed care plans would be limited to spending 15 
percent of their premium revenues on administration. This means that if 
they spend 15 percent on administration, they would spend 85 percent of 
premium revenues on health care benefits or services.
  This bill was prompted by study by the Inspector General (IG) for the 
U.S. Department of Health and Human Services reported under a USA Today 
headline in February, ``Medicare HMOs Hit for Lavish Spending.'' The IG 
reviewed 232 managed care plans that contract with Medicare and found 
that in 1999 the average amount allocated for administration ranged 
from a high of 32 percent to a low of three percent. The IG recommended 
that the Department establish a ceiling on the amount of administrative 
expenditures of plans, noting that if a 15 percent ceiling had been 
placed in 1998, an additional $1 billion could have been passed on to 
Medicare beneficiaries in the form of additional benefits or reduce 
deductibles and copayments.
  The report said, ``This review, similar OIG reviews, and other 
studies have shown that MCOs' [managed care organizations'] exorbitant 
administrative costs have been problematic and can be the source for 
abusive behavior.'' Here are some examples cited by the Inspector 
General on page 7 of the January 18 report: $249,283 for food, gifts 
and alcoholic beverages for meetings by one plan; $190,417 for a sales 
award meeting in Puerto Rico for one plan; $157,688 for a party by one 
plan; $25,057 for a luxury box at a sports arena by one plan; $106,490 
for sporting events and/or theater tickets at four plans; $69,700 for 
holiday parties at three plans; and $37,303 for wine gift baskets, 
flowers, gifts and gift certificates at one plan.
  It is no wonder that people today are angry at HMOs. When our hard-
earned premium dollars are frittered away on purchases like these, we 
have to ask whether HMOs are really providing the best care possible. 
Furthermore, in the case of Medicare, we are also talking about wasted 
taxpayer dollars since Part B of Medicare is funded in part by the 
general treasury. One dollar wasted in Medicare is one dollar too much. 
Medicare needs all the funds it can muster to stay solvent and to be 
there for beneficiaries when they need it.
  I feel strongly that if HMOs are to be credible, they must be more 
prudent in how they spend enrollees' dollars. Administrative expenses 
must be limited to reasonable expenses.
  An October 1999 report by Interstudy found that for private HMO 
plans, administrative expenses range from 11 percent to 21 percent and 
that for-profit HMOs spend proportionately more on administrative cost 
than not-for-profit HMOs. This study found the lowest rate to be 3.6 
percent and the highest 38 percent in California! In some states the 
maximums were even higher.
  The shift from fee-for-service to managed care as a form of health 
insurance has been rapid in recent years. Nationally, 86 percent of 
people who have employment-based health insurance (81.3 million 
Americans) are in some form of managed care. Around 16 percent of 
Medicare beneficiaries are in managed care nationally (40 percent in 
California), a figure that doubled between 1994 and 1997. By 2010, the 
Congressional Budget Office predicts that 31 percent of Medicare 
beneficiaries will be in managed care. Between 1987 and 1999, the 
number of health plans contracting with Medicare went from 161 to 299. 
As for Medicaid, in 1993, 4.8 million people (14 percent of Medicaid 
beneficiaries) were in managed care. Today, 16.6 million (54 percent) 
are in managed care.
  In California, the State which pioneered managed care for the nation, 
an estimated 88 percent of the insured are in some form of managed 
care. Of the 3.7 million Californians who are in Medicare, 40 percent 
(1.4 million) are in

[[Page S7891]]

managed care, the highest rate in the U.S. As for Medicaid in 
California, 2.5 million people (50 percent) of beneficiaries are in 
managed care. And so managed care is growing and most people think it 
is here to stay.
  I am pleased to say that in California we already have a regulation 
along the lines of the bill I am proposing. We have in place a 
regulatory limit of 15 percent on commercial HMO plans' administrative 
expenses. This was established in my State for commercial plans because 
of questionable expenses like those the HHS IG found in Medicare HMO 
plans and because prior to the regulation, some plans had 
administrative expense as high as 30 percent of premium revenues.
  This bill would never begin to address all the problems patients 
experience with managed care in this country. That is why we also need 
a strong Patients Bill of Rights bill. I hope, however, this bill will 
discourage abuses like those the HHS Inspector General found and will 
help assure people that their health care dollars are spent on health 
care and are not wasted on outings, parties, and other activities 
totally unrelated to providing health care services.
  I call on my colleagues to join me in enacting this bill.
                                 ______
                                 
      By Mrs. FEINSTEIN (for herself, Mr. Byrd, and Mrs. Boxer):
  S. 2976. A bill to amend title XXI of the Social Security Act to 
allow States to provide health benefits coverage for parents of 
children eligible for child health assistance under the State 
children's health insurance program; to the Committee on Finance.


              family health insurance program act of 2000

  Mrs. FEINSTEIN. Mr. President, today, Senators Byrd, Boxer and I are 
introducing legislation to allow States, at their option, to enroll 
parents in the State-Children's Health Insurance Program, known as S-
CHIP. This bill could provide insurance to 2.7 million parents 
nationwide and 356,000 parents in California by using unspent 
allocations States will otherwise lose on September 30, 2000. Congress 
has appropriated a total of $12.9 billion for S-CHIP for fiscal years 
1998, 1999, and 2000, or about $4.3 billion for each fiscal year. 
California received $854.6 million in 1998, $850.6 million in 1999, and 
$765.5 million in 2000. Right now California stands to lose $588 
million just in fiscal year 1998 funds because California has faced 
many hurdles in enrolling children. That is in part why we are 
introducing this bill, to enhance enrollment of more children and to 
help states use available S-CHIP funds.
  S-CHIP is a low-cost health insurance program for low-income children 
up to age 19 that Congress created in the Balanced Budget Act of 1997. 
After three years, S-CHIP covers approximately two million children 
across the country, out of the three to four million children estimated 
to be eligible. Congress created it as a way to provide affordable 
health insurance for uninsured children in families that cannot afford 
to buy private insurance.
  States can choose from three options when designing their S-CHIP 
program: (1) expansion of their current Medicaid program; (2) creation 
of a separate State insurance program; or (3) a combination of both 
approaches. In California, S-CHIP, known as Health Families, is set up 
as a public-private program rather than a Medicaid expansion. Healthy 
Families allows California families to use federal and State S-CHIP 
funds to purchase private managed care insurance for their children. 
Under the federal law, States generally cover children in families with 
incomes up to 200 percent of poverty, although States can go higher if 
their Medicaid eligibility was higher than that when S-CHIP was enacted 
in 1997. In California, eligibility was raised to 250 percent in 
November 1999, increasing the number of eligible children by 129,000.
  Basic benefits in the California S-CHIP program include inpatient and 
outpatient hospital services, surgical and medical services, lab and x-
ray services, and well-baby and well-child care, including 
immunizations. Additional services which States are encouraged to 
provide, and which California has elected to include, are prescription 
drugs and mental health, visions, hearing, dental, and preventive care 
services such as prenatal care and routine physical examinations. In 
California, enrollees pay a $5.00 co-payment per visit which generally 
applies to inpatient services, selected outpatient services, and 
various other health care services.
  The United States faces a serious health care crisis that continues 
to grow as more and more people are becoming uninsured. Despite the 
robust health of the economy, the U.S. has seen an increase in the 
uninsured by nearly five million since 1994. Currently, 44 million 
people (or 18 percent) of the non-elderly population are uninsured. In 
California, 23.5 percent, or 7.3 million, are uninsured. One study 
cited in the May 2000 California Journal found that as many as 2,333 
Californians lose health insurance every day. A May 29, 2000 San Jose 
Mercury article cited California's emergency room doctors who 
``estimate that anywhere from 20 percent to 40 percent of their walk-in 
patients have no health coverage.'' This a problem that needs to be 
addressed now.

  The bill we are introducing would allow States to expand S-CHIP 
coverage to parents whose children are eligible for the program. In my 
State, that would be families up to 250 percent of the federal poverty 
level. For the year 2000, the federal poverty level for a family of 
four is $17,050. In California, with the upper eligibility limit of 250 
percent of poverty, families of four making up to $42,625 are eligible. 
This bill could reach approximately 2.7 million parents nationwide and 
more than 356,000 parents in California. The bill we are introducing 
retains the current funding formula, State allotments, benefits, 
eligibility rules, and cost-sharing requirements.
  An S-CHIP expansion should be accomplished without substituting S-
CHIP coverage for private insurance or other public health insurance 
that parents might already have. The current S-CHIP law requires that 
State plans include adequate provisions preventing substitution and my 
bill retains that. For example, many States require that an enrollee be 
uninsured before he or she is eligible for the program.
  This bill is important for several reasons. Many State officials say 
that by covering parents of uninsured children we can actually cover 
more children. More than 75 percent of uninsured children live with 
parents who are uninsured. If an entire family is enrolled in a plan 
and seeing the same group of doctors--in other words, if the care is 
convenient for the whole family--all the members of the family are more 
likely to be insured and to stay healthy. This is a key reason for this 
legislation, bringing in more children by targeting the whole family.
  Private health insurance in the commercial market can be very 
expensive. The average annual cost of family coverage in private health 
plans for 1999 was $5,742, according to the Kaiser Family Foundation. 
California has some of the lowest-priced health insurance, yet the 
State ranks fifth in uninsured for 1998-1996. In California, high 
housing costs, high gas prices, expensive commutes, and a high cost-of-
living make it difficult for many California families to buy health 
insurance. According to the California Institute, the median price of 
single family home rose 17 percent, to $231,710, from February 1999 to 
February 2000. The California Housing Affordability Index, which 
measures the percentage of Californians that are able to purchase mid-
priced homes, declined 11 percent from 1999 to 2000. With prices like 
these, many families are unable to afford health insurance even though 
they work full-time.
  Many low-income people work for employers who do not offer health 
insurance. In fact, forty percent of California small businesses (those 
employing between three and 50 employers) do not offer health 
insurance, according to a Kaiser Family Foundation study in June.
  We need to give hard-working, lower income American families 
affordable, comprehensive health insurance, and this bill does that.
  The President has proposed to cover parents under the S-CHIP program. 
The California Medical Association and Alliance of Catholic Health Care 
support our bill.
  Current law requires States to spend federal S-CHIP dollars within 
three years of the appropriation. Many States, including California, 
could lose millions of dollars of unspent federal

[[Page S7892]]

Fiscal Year 1998 funds on September 30, 2000. I am working to get an 
extension of that deadline. In the meantime, we could begin to cover 
parents while getting that extension and working to increase funds for 
the program. According to estimates from the Health Care Financing 
Administration, the following 39 States could lose the following 
amounts, totaling $1.9 billion. Arizona, California, Georgia, Illinois, 
Louisiana, Michigan, New Mexico, and Texas stand to lose the most 
money. These eight States alone would lose $1.4 billion.

        States                                                 Millions
Arizona...........................................................$77.2
Arkansas...........................................................45.4
California........................................................588.8
Colorado...........................................................12.9
Connecticut.........................................................9.4
Delaware..............................................................6
District of Columbia................................................2.4
Florida............................................................41.5
Georgia............................................................78.1
Hawaii..............................................................8.9
Idaho...............................................................4.1
Illinois...........................................................84.2
Iowa................................................................1.4
Kansas..............................................................1.5
Louisiana..........................................................73.3
Maryland...........................................................26.7
Michigan...........................................................51.4
Minnesota..........................................................28.3
Montana.............................................................1.8
Nevada.............................................................18.6
New Hampshire.......................................................7.5
New Jersey............................................................2
New Mexico.........................................................57.9
North Dakota........................................................2.9
Ohio...............................................................19.8
Oklahoma...........................................................37.6
Oregon.............................................................18.3
Pennsylvania.......................................................0.64
Rhode Island........................................................4.6
South Dakota........................................................4.4
Tennessee..........................................................26.4
Texas.............................................................443.6
Utah................................................................1.7
Vermont.............................................................1.6
Virginia...........................................................38.4
Washington.........................................................45.1
West Virginia......................................................11.3
Wisconsin............................................................23
Wyoming.............................................................6.9

  Our bill would offer another option for States like mine to use these 
unspent funds.
  I urge my colleagues to join us in supporting and passing this bill. 
By giving States the option to cover parents--whole families--we can 
reduce the number of uninsured with existing funds and encourage the 
enrollment of more children and we can help keep people healthy by 
better using this valuable, but currently under-utilized program.
                                 ______
                                 
      By Mrs. FEINSTEIN:
  S. 2977. A bill to assist in the establishment of an interpretive 
center and museum in the vicinity of the Diamond Valley Lake in 
southern California to ensure the protection and interpretation of the 
paleontology discoveries made at the lake and to develop a trail system 
for the lake for use by pedestrians and nonmotorized vehicles; to the 
Committee on Energy and Natural Resources.


  bill to Establish an Interpretive Center around Diamond Valley Lake

  Mrs. FEINSTEIN. Mr. President, I am pleased to introduce a bill today 
to benefit 17 million citizens of Southern California and visitors from 
around the country and world through the development of the Western 
Center for Archaeology and Paleontology. At this center, visitors will 
be able to marvel at the archaeological and paleontological past of 
inland southern California.
  This bill would help create an interpretive center and museum around 
Diamond Valley Lake to highlight the animals and habitat of the Ice Age 
up to the European settlement period.
  I understand that the paleontological resources are world class and 
include hundreds of thousands of historic and pre-historic artifacts. 
These include a mastodon skeleton, a mammoth skeleton, a seven-foot 
long tusk, and bones from extinct species previously not believed to 
have lived in the area, including the giant long-horned bison and North 
American lion.
  Additionally, visitors will enjoy unprecedented recreational 
opportunities through a system of hiking, biking, and equestrian trails 
wandering through the grasslands, chaparral, and oak groves that 
surround the reservoir.
  The total cost of the project is $58 million. The State has agreed to 
commit one quarter of the tab, the Metropolitan Water District has 
agreed to contribute one-quarter, and other local governments will also 
contribute one-quarter. This bill would authorize the federal 
government's share of one-quarter or $14 million.
  I urge the Senate to adopt this legislation.
                                 ______
                                 
      By Mr. DASCHLE (for himself, Mr. Bingaman, Mr. Conrad, Mr. 
        Baucus, Mr. Kerrey, Mr. Kohl, Mr. Akaka, Mr. Johnson, Mr. Reid, 
        Mr. Kennedy, and Mr. Dodd):
  S. 2978. A bill to recruit and retain more qualified individuals to 
teach in Tribal Colleges or Universities; to the Committee on Indian 
Affairs.


         The Tribal College or University Loan Forgiveness Act.

  Mr. DASCHLE. Mr. President, our tribal colleges and universities have 
come to play a critically important role in educating Native Americans 
across the country. For more than 30 years, these institutions have 
proven instrumental in providing a quality education for those who had 
previously been failed by our mainstream educational system. Before the 
tribal college movement began, only six or seven out of 100 Native 
American students attended college. Of those few, only one or two would 
graduate with a degree. Since these institutions have curricula that is 
culturally relevant and is often focused on a tribe's particular 
philosophy, culture, language and economic needs, they have a high 
success rate in educating Native American people. As a result, I am 
happy to say that tribal college enrollment has increased 62 percent 
over the last six years.
  The results of a tribal college education are impressive. Recent 
studies show that 91 percent of 1998 tribal college and university 
graduates are working or pursuing additional education one year after 
graduating. Over the last ten years, the unemployment rate of recently 
polled tribal college graduates was 15 percent, compared to 55 percent 
on many reservations overall.
  While tribal colleges and universities have been highly successful in 
helping Native Americans obtain a higher education, many challenges 
remain to ensure the future success of these institutions. These 
schools rely heavily on federal resources to provide educational 
opportunities for all students. As a result, I strongly support efforts 
to provide additional funding to these colleges through the Interior, 
Agriculture and Labor, Health and Human Services, and Education 
Appropriations bills.
  In addition to resource constraints, administrators have expressed a 
particular frustration over the difficulty they experience in 
attracting qualified individuals to teach at tribal colleges. 
Geographic isolation and low faculty salaries have made recruitment and 
retention particularly difficult for many of these schools. This 
problem is increasing as enrollment rises.
  That is why I am introducing the Tribal College or University Loan 
Forgiveness Act. This legislation will provide loan forgiveness to 
individuals who commit to teach for up to five years in one of the 32 
tribal colleges nationwide. Individuals who have Perkins, Direct, or 
Guaranteed loans may qualify to receive up to $15,000 in loan 
forgiveness. This program will provide these schools extra help in 
attracting qualified teachers, and thus help ensure that deserving 
students receive a high quality education.
  This measure will benefit individual students and their communities. 
By providing greater opportunities for Native American students to 
develop skills and expertise, this bill will spur economic growth and 
help bring prosperity and self-sufficiency to communities that 
desperately need it. Native Americans and the tribal college system 
deserve nothing less. I believe our responsibility was probably best 
summed up by one of my state's greatest leaders, Sitting Bull. He once 
said, ``Let us put our minds together and see what life we can make for 
our children.''
  I am pleased that Senators Bingaman, Conrad, Baucus, Kerrey, Kohl, 
Akaka, Johnson, Reid, Kennedy, and Dodd are original cosponsors of this 
bill, and I look forward to working with my colleagues to pass this 
important legislation.
  I ask unanimous consent that the text of the Tribal Colleges or 
University Loan Forgiveness Act be printed in the Record following my 
remarks.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

[[Page S7893]]

                                S. 2978

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

     SECTION 1. LOAN REPAYMENT OR CANCELLATION FOR INDIVIDUALS WHO 
                   TEACH IN TRIBAL COLLEGES OR UNIVERSITIES.

       (a) Short Title.--This Act may be cited as the ``Tribal 
     College or University Teacher Loan Forgiveness Act''.
       (b) Perkins Loans.--
       (1) Amendment.--Section 465(a) of the Higher Education Act 
     of 1965 (20 U.S.C. 1087ee(a)) is amended--
       (A) in paragraph (2)--
       (i) in subparagraph (H), by striking ``or'' after the 
     semicolon;
       (ii) in subparagraph (I), by striking the period and 
     inserting ``; or''; and
       (iii) by adding at the end the following:
       ``(J) as a full-time teacher at a tribal College or 
     University as defined in section 316(b).''; and
       (B) in paragraph (3)(A)(i), by striking ``or (I)'' and 
     inserting ``(I), or (J)''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall be effective for service performed during academic year 
     1998-1999 and succeeding academic years, notwithstanding any 
     contrary provision of the promissory note under which a loan 
     under part E of title IV of the Higher Education Act of 1965 
     (20 U.S.C. 1087aa et seq.) was made.
       (c) FFEL and Direct Loans.--Part G of title IV of the 
     Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is 
     amended by adding at the end the following:

     ``SEC. 493C. LOAN REPAYMENT OR CANCELLATION FOR INDIVIDUALS 
                   WHO TEACH IN TRIBAL COLLEGES OR UNIVERSITIES.

       ``(a) Program Authorized.--The Secretary shall carry out a 
     program, through the holder of a loan, of assuming or 
     canceling the obligation to repay a qualified loan amount, in 
     accordance with subsection (b), for any new borrower on or 
     after the date of enactment of the Tribal College or 
     University Teacher Loan Forgiveness Act, who--
       ``(1) has been employed as a full-time teacher at a Tribal 
     College or University as defined in section 316(b); and
       ``(2) is not in default on a loan for which the borrower 
     seeks repayment or cancellation.
       ``(b) Qualified Loan Amounts.--
       ``(1) Percentages.--Subject to paragraph (2), the Secretary 
     shall assume or cancel the obligation to repay under this 
     section--
       ``(A) 15 percent of the amount of all loans made, insured, 
     or guaranteed after the date of enactment of the Tribal 
     College or University Teacher Loan Forgiveness Act to a 
     student under part B or D, for the first or second year of 
     employment described in subsection (a)(1);
       ``(B) 20 percent of such total amount, for the third or 
     fourth year of such employment; and
       ``(C) 30 percent of such total amount, for the fifth year 
     of such employment.
       ``(2) Maximum.--The Secretary shall not repay or cancel 
     under this section more than $15,000 in the aggregate of 
     loans made, insured, or guaranteed under parts B and D for 
     any student.
       ``(3) Treatment of consolidation loans.--A loan amount for 
     a loan made under section 428C may be a qualified loan amount 
     for the purposes of this subsection only to the extent that 
     such loan amount was used to repay a loan made, insured, or 
     guaranteed under part B or D for a borrower who meets the 
     requirements of subsection (a), as determined in accordance 
     with regulations prescribed by the Secretary.
       ``(c) Regulations.--The Secretary is authorized to issue 
     such regulations as may be necessary to carry out the 
     provisions of this section.
       ``(d) Construction.--Nothing in this section shall be 
     construed to authorize any refunding of any repayment of a 
     loan.
       ``(e) Prevention of Double Benefits.--No borrower may, for 
     the same service, receive a benefit under both this section 
     and subtitle D of title I of the National and Community 
     Service Act of 1990 (42 U.S.C. 12571 et seq.).
       ``(f) Definition.--For purposes of this section, the term 
     `year', when applied to employment as a teacher, means an 
     academic year as defined by the Secretary.''.
                                 ______
                                 
      By Mr. GRAHAM (for himself and Mr. Mack):
  S. 2979. A bill to amend the Internal Revenue Code of 1986 to clarify 
the status of professional employer organizations and to promote and 
protect the interests of professional employer organizations, their 
customers, and workers; to the Committee on Finance.


    professional employer organization workers benefits act of 2000

  Mr. GRAHAM. Mr. President, today along with my Finance Committee 
colleague, Senator Mack, I am introducing the Professional Employer 
Organization Workers Benefits Act of 2000. This legislation will expand 
retirement and health benefits for workers at small and medium-sized 
businesses in this country.
  The bill makes it easier for certified professional employer 
organizations (PEO's) to assist small and medium-sized businesses in 
complying with the many responsibilities of being an employer. It 
permits PEO's to collect Federal employment taxes on behalf of the 
employer and provide benefits to the small business' workers. For many 
of these workers, the pension, health and other benefits that a PEO 
provides would not be available from the small business itself because 
they are too costly for the small business to provide on its own. The 
average client of a PEO is a small business with 18 workers and an 
average wage of $20,000. PEO's have the expertise and can take 
advantage of economies of scale to provide health and retirement 
benefits in an affordable and efficient manner.
  A recent Dunn & Bradstreet survey of small businesses reveled that 
only 39 percent offered health care and just 19 percent offer 
retirement plans. We must take every opportunity to assist these small 
businesses in providing retirement and health benefits to their 
employees. PEO's offer one creative way to bridge the gap between what 
workers need and what small businesses can afford to provide. In fact, 
one analyst at Alex. Brown & Sons estimates that 40 percent of 
companies in a PEO coemployment relationship upgrade their total 
employee benefits package as a result of the partnership with the PEO. 
Twenty-five percent of those companies offer health and other benefits 
for the first time.
  Over the past few years, small and medium-sized businesses have 
sought out the services offered by PEO's. In response, many states have 
created programs to recognize, license and regulate PEO's to ensure 
that a viable industry could grow. Unfortunately, federal law has not 
kept pace. Current rules for who can collect employment taxes and 
provide benefits do not fit with the PEO model. Under some 
interpretations, PEO's would be prohibited from performing the very 
services that small businesses are asking them to undertake.
  This legislation clarifies the tax laws to make it clear that PEO's 
meeting certain standards will be able to assist small businesses in 
providing employee benefits and collecting Federal employment taxes. 
This bill is a narrower version of a provision that was included in the 
pension legislation I sponsored in the last Congress. This new bill 
incorporates comments we received from interested parties over the 
course of the past year, including those received from the Treasury and 
Labor Departments. As a result the bill we are introducing today is 
much improved from previous versions.
  In addition, I would like to make clear what this bill does not do. 
Unlike earlier versions, this legislation applies only to PEO's, and 
not to temporary staffing agencies. Further, this bill applies only to 
the two specific areas of tax law--employment taxes and employee 
benefits. It does not affect any other law nor does it affect the 
determination of who is the employer for any other purpose. The bill 
specifically provides that it creates no inferences with respect to 
those issues.
  I am hopeful that, with this narrower focus, this legislation can be 
considered on its own merits, without getting bogged down in larger 
disputes involving contingent workforces and independent contractors. 
Those issues are important ones that Congress may want to examine, but 
we should not allow them to delay resolution of the unrelated PEO 
issued addressed by this bill.
  I look forward to working with Senator Mack, my other colleagues on 
the Finance Committee, and the administration to move this bill during 
the 106th Congress so that we can help small- and medium-sized 
businesses operate more efficiently while at the same time expanding 
the benefits available to their workers.
  Mr. President, I ask unanimous consent that the following explanation 
of the bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  Technical Explanation of Professional Employer Organization Workers 
                          Benefits Act of 2000

       The bill would amend the Internal Revenue Code of 1986 to 
     clarify the treatment of certain qualifying organizations--
     called Certified Professional Employer Organizations 
     (CPEOs)--for employee benefit and employment tax purposes. 
     Generally, the bill provides that an entity which meets 
     certain requirements may be certified as a CPEO by the 
     Internal Revenue Service (IRS) and will be allowed (1) to 
     take responsibility for employment taxes with respect to 
     worksite employees of an unrelated client and (2) to provide 
     such workers with employee benefits

[[Page S7894]]

     under a single employer plan maintained by the CPEO.
       While the legislation will allow the CPEO to take 
     responsibility for certain functions, the bill expressly 
     states (1) that it does not override the common law 
     determination of an individual's employer and (2) that it 
     will not affect the determination of who is a common law 
     employer under federal tax laws or who is an employer under 
     other provisions of law (including the characterization of an 
     arrangement as a MEWA under ERISA). Status as a CPEO (or 
     failure to be a CPEO) will also not be a factor in 
     determining employment status under current rules.


          CERTIFICATION OF PROFESSIONAL EMPLOYER ORGANIZATIONS

       In order to be certified as a CPEO, an entity must 
     demonstrate to the IRS by written application that it meets 
     (or, if applicable, will meet) certain requirements. 
     Generally, the requirements for certification will be 
     developed by the IRS using the ERO (electronic return 
     originator) program and the requirements to practice before 
     the IRS (as described in Circular 230) as a model. Standards 
     will include review of the experience of the PEO and issuance 
     of an opinion by a certified public accountant on the CPEOs 
     financial statements. As part of the certification process, 
     the applicant must disclose any criminal complaints against 
     it, its principal owners and officers, or related entities, 
     and any incidence of failure to timely file tax returns or 
     pay taxes (either income or employment taxes) by it, its 
     principal owners and officer, or related entities. The IRS 
     would have the ability to do a background and tax check of 
     the applicant, its principal owners and officers, or related 
     entities, and may reject an application on the basis of 
     information determined in that process. In addition, in order 
     to be certified, a CPEO must represent that it (or the 
     client) will maintain a qualified retirement plan for the 
     benefit of 95% of worksite employees.
       The CPEO must notify the IRS in writing of any change that 
     affects the continuing accuracy of any representation made in 
     the initial certification request. In addition, after initial 
     certification, the CPEO must continue to file copies of its 
     audited financial statements with the IRS by the last day of 
     the sixth month following the end of the fiscal year. 
     Procedures would be established for suspending or revoking 
     CPEO status (similar to those under the ERO program). There 
     would be a right to administrative appeal from an IRS denial, 
     suspension, or revocation or certification.


               cpeo relationship with particular workers

       After certification, a CPEO will be allowed to take 
     responsibility for employment taxes and to provide employee 
     benefits to ``worksite employees.'' A worker who performs 
     services at a client's worksite is a ``worksite employee'' if 
     the worker (and at least 85% of the individuals working at 
     the worksite) are subject to a written service contract that 
     expressly provide that the CPEO will:
       (1) Assume responsibility for payment of wages to the 
     worker, without regard to the receipt or adequacy of payment 
     from the client for such services;
       (2) Assume responsibility for employment taxes with respect 
     to the worker, without regard to the receipt or adequacy of 
     payment from the client for such services;
       (3) Assume responsibility for any worker benefits that may 
     be required by the service contract, without regard to the 
     receipt or adequacy of payment from the client for such 
     services;
       (4) Assume shared responsibility with the client for firing 
     the worker and recruiting and hiring any new worker; and
       (5) Maintain employee records.
       (6) Agrees to be treated as a CPEO with respect to the 
     worksite employees covered under the agreement.
       For this purpose, a worksite is defined as a physical 
     location at which a worker generally performs service or, if 
     there is no such location, the location from which the worker 
     receives job assignments. Contiguous locations would be 
     treated as a single physical location. Noncontiguous 
     locations would generally be treated as separate worksites, 
     except that each worksite within a reasonably proximate area 
     would be required to satisfy the 85% test for the workers at 
     that worksite.
       While the determination of whether noncontiguous locations 
     are reasonably proximate is a facts and circumstances 
     determination, certain situations will be deemed not to be 
     reasonably proximate. If the worksite is separated from all 
     other client worksites by at least 35 miles, it will not be 
     considered reasonably proximate. Thus, a client (or any 
     member of its controlled group) that maintains two worksites 
     that are more than 35 miles apart could treat the worksites 
     as separate for purposes of applying the 85% standard. Within 
     a 35-mile radius, a worksite will not be considered 
     reasonably proximate to another if the worksite operates in a 
     different industry or industries from other worksites within 
     the 35-mile radius pursuant to standards similar to those 
     established in Revenue Procedure 91-64 (relating to industry 
     classification codes). For example, a client that maintained 
     a restaurant and a hardware store in the same town could 
     treat them as separate worksites because they are in 
     different industries. In addition, based on all the facts 
     and circumstances, under rules prescribed by the IRS, a 
     worksite would not be reasonably proximate if it operates 
     independently for a bona fide business reason (that is 
     unrelated to employment taxes and employee benefits). For 
     example, a convenience store and a restaurant which have 
     no supervisory personnel in common but which are under 
     common ownership control could, under rules prescribed by 
     the IRS, be treated as different worksites. Similarly, two 
     noncontiguous wholesale and retail operations owned by the 
     same individual but which are operated independently 
     (including independent supervisory personnel) may, under 
     rules prescribed by the IRS, be determined to be not 
     reasonably proximate.
       The 85% rule generally is intended to describe the typical, 
     non-abusive PEO arrangement whereby a business contracts with 
     a PEO to take over substantially all its workers at a 
     particular worksite. The 85% rule is intended to ensure that 
     the benefits of the bill are not available in any situation 
     in which a business uses a PEO arrangement to artificially 
     divide its workforce.


                      cpeo employee benefit plans

       To the extent consistent with the Internal Revenue Code and 
     corresponding provisions of other federal laws, the CPEO may 
     generally provide worksite employees with most types of 
     retirement plans or other employee benefit plans that the 
     client could provide. Worksite employees may not, however, be 
     offered a plan that the client would be prohibited from 
     offering on its own. For example, if the client is a state or 
     local government, worksite employees performing services for 
     that client may not be offered participation in a section 
     401(k) plan. Similarly, a CPEO may not maintain a plan that 
     it would be prohibited from offering on its own (e.g., a 
     section 403(b) plan). However, an eligible client could 
     maintain such a plan.
       Size Limitations.--In general, employee benefit provisions 
     (in the Internal Revenue Code and in directly correlative 
     provisions in other Federal laws) that reference the size of 
     the employer or number of employees will generally be applied 
     based on the size or number of employees and worksite 
     employees of the CPEO. For example, worksite employees will 
     be entitled to COBRA health care continuation coverage even 
     if the client would have qualified for the small employer 
     exception to those rules. Similarly, a CPEO welfare benefit 
     plan will be treated as a single employer plan for purposes 
     of Internal Revenue Code section 419A(f)(6). Plan reporting 
     requirements are met at the CPEO level. However, a client 
     which could meet the size requirements for eligibility for an 
     MSA or a SIMPLE plan could contribute to such an arrangement 
     maintained by the CPEO.
       Nondiscriminaiton Testing.--The legislation intends that 
     clients of a CPEO will not generally receive significantly 
     better or worse treatment with respect to coverage, 
     nondiscrimination or other Internal Revenue Code rules than 
     they would get outside of the CPEO arrangement. Consequently, 
     nondiscrimination and other rules of the Code relating to 
     retirement plans (including sections 401(a)(4), 401(a)(17), 
     401(a)(26), 401(k), 401(m), 410(b) and 416 and similar rules 
     applicable to welfare and fringe benefit plans such as 
     section 125) will generally be applied on a client-by-client 
     basis.
       The portion of the CPEO plan covering worksite employees 
     with respect to a client will be tested taking into account 
     the worksite employees at a client location and all other 
     nonexcludable employees of the client taking into account 
     414(b), (c), (m), (n) (with respect to workers not otherwise 
     included as worksite employees) and (o), but one client's 
     worksite employees would not be included in applying the 
     coverage or other nondiscrimination rules (1) to portions of 
     the CPEO plan covering worksite employees of other clients, 
     (2) to the portion of the CPEO plan covering nonworksite 
     employees, (3) to other plans maintained by the CPEO (except 
     to the extent such plan covers worksite employees of the same 
     client), or (4) to other plans maintained by members of the 
     CPEO's controlled group.
       The legislation also treats any worksite employees as ``per 
     se'' leased employees of the client, thus requiring clients 
     to include all worksite employees in plan testing. In 
     accordance with current leased employee rules, the client 
     would take into account CPEO plan contributions or benefits 
     made on behalf of worksite employees of that client. 
     Consistent with this treatment of worksite employees, the 
     client would be permitted to cover worksite employees under 
     any employee benefit plan maintained by the client and 
     compensation paid by the CPEO to worksite employees would be 
     treated as paid by the client for purposes of applying 
     applicable qualification tests.
       For example, assume a CPEO maintained a plan covering 
     worksite employees performing services for Corporation X, 
     worksite employees performing services for Corporation Y, and 
     employees of the CPEO who are not worksite employees. In that 
     case the nondiscrimination tests would be applied separately 
     to the portions of the plan covering (1) worksite employees 
     performing services for Corporation X; (2) worksite employees 
     performing services for corporation Y, and (3) CPEO employees 
     who are not worksite employees, as if each of (1), (2), and 
     (3) were a separate plan. In addition, worksite employees 
     performing services for Corporation X, for example, would be 
     per se leased employees of Corporation X and thus would be 
     included in testing any other plans maintained by Corporation 
     X or any members of Corporation X's controlled group. 
     Similarly, the CPEO workforce (other than worksite employees) 
     will be treated as a separate employer for testing purposes 
     (and will

[[Page S7895]]

     be included in applying the nondiscrimination rules to any 
     plans maintained by the CPEO or members of its controlled 
     group).
       In applying nondiscrimination rules to plans maintained by 
     other entities within the CPEO's controlled group for workers 
     who are not worksite employees, worksite employees will not 
     be taken into account. Thus, in the example above, worksite 
     employees performing services for Corporation X or 
     Corporation Y would not be taken into account in testing 
     plans maintained by other members of the CPEO's controlled 
     group.
       For purposes of testing a particular client's portion of 
     the plan under the rules above, general rules applicable to 
     that client would apply as if the client maintained that 
     portion of the plan. Thus, if the terms of the benefits 
     available to the client's worksite employees satisfied the 
     requirements of the section 401(k) testing safe harbor, then 
     that client could take advantage of the safe harbor. 
     Similarly, a client that meets the eligibility criteria for a 
     SIMPLE 401(k) plan would be allowed to utilize the SIMPLE 
     rules to demonstrate compliance with the applicable 
     nondiscrimination rules for that client.
       Application of certain other qualified plan and welfare 
     benefit plan rules will generally be determined as if the 
     client and the CPOE are a single employer (consistent with 
     the principle that the CPEO arrangement will not result in 
     better or worse treatment). Thus, there would be a single 
     annual limit under section 415. Section 415 will provide that 
     any cutbacks required as a result of the single annual limit 
     will be made in the client plan. Deduction limits and funding 
     requirements would apply at the CPEO level. In addition, if 
     the client portion of a plan is part of a top heavy group, 
     any required top heavy minimum contribution or benefit will 
     generally need to be made by the CPEO plan. There will be 
     complete ``crediting'' of service for all benefit purposes. 
     The ``break in service'' rules for plan vesting will be 
     applied with respect to worksite employees using rules 
     generally based on Code section 413.
       The bill also provides the Secretary with the authority to 
     promulgate rules and regulations that streamline, to the 
     extent possible, the application of certain requirements, the 
     exchange of information between the client and the CPEO, and 
     the reporting and record keeping obligations of the CPEO with 
     respect to its employee benefit plans.
       Worksite employees will not generally be entitled to 
     receive plan distributions of elective deferrals until the 
     worker leaves the CPEO group. In cases where a client 
     relationship terminates with a CPEO that maintains a plan, 
     the CPEO will be able to ``spin off'' the former client's 
     portion of the plan to a new or existing plan maintained by 
     the client. Where the terminated client does not establish a 
     plan or wish to maintain the client's portion of the CPEO 
     plan, the CPEO plan may distribute elective deferrals of 
     worksite employees associated with a terminated client only 
     in a direct rollover to an IRA designated by the worker. In 
     the event that no such IRA is designated before the second 
     anniversary of the termination of the CPEO/client 
     relationship the assets attributable to a client's worksite 
     employees may be distributed under the general plan terms 
     (and law) that applies to a distribution upon a separation 
     from service or severance from employment after that time.
       Similar to IRS practice in multiple employer plans, 
     disqualification of the entire plan will occur if a 
     nondiscrimination failure occurs with respect to worksite 
     employees of a client and either that failure is not 
     corrected under one of the IRS correction programs or that 
     portion of the plan is not spun off and/or terminated. If 
     that portion of the plan is corrected or spun off and/or 
     terminated, then the failure of a CPEO retirement plan to 
     satisfy applicable nondiscrimination requirements with 
     respect to that client will not result in the 
     disqualification of the plan as applied to other clients. 
     Existing government programs for correcting violations would 
     be available to the CPEO for the plan and, in the case of 
     nondiscrimination failures tested at the client level, to the 
     client portion of the plan with the fee to be based on the 
     size of the affected client's portion of the plan. Moreover, 
     the CPEO plan will be treated as one plan for purposes of 
     obtaining a determination letter.


                        employment tax liability

       An entity that has been certified as a CPEO must accept 
     responsibility for employment taxes with respect to wages it 
     pays to worksite employees performing services for clients. 
     Such liability will be exclusive or primary, as provided 
     below. It is expected that the CPEO would (as provided by the 
     Secretary) be required, on an ongoing basis, to provide the 
     IRS with a list of clients for which employment tax liability 
     has been assumed and a list of clients for whom it no longer 
     has employment tax liability. Reporting and other 
     requirements that apply to an employer with respect to 
     employment taxes would generally apply to the CPEO for 
     remuneration remitted by the CPEO (as provided by the 
     Secretary). In addition, the remittance frequency of 
     employment taxes will be determined with reference to 
     collections and the liability of the CPEO.
       Wages paid by the client during the calendar year prior to 
     the assumption of employment tax liability would be counted 
     towards the applicable FICA or FUTA tax wage base for the 
     year in determining the employment tax liability of the CPEO 
     (and vice versa). Exceptions to payments as wages or 
     activities as employment, and thus to the required payment of 
     employment taxes, are determined by reference to the client. 
     Also, for purposes of crediting state unemployment insurance 
     (SUI) taxes against FUTA tax liability, payments by the CPEO 
     (or transmitted by the CPEO for the client) with respect to 
     worksite employees would be taken into account. Thus, in 
     determining FUTA liability, CPEO's would be treated as the 
     employer for crediting SUI collection purposes on essentially 
     the same terms as they would be authorized to process wage 
     withholding, FICA and FUTA. The bill is, however, limited to 
     Federal law and does not address the issue of whether a CPEO 
     (i) would be eligible for successor status for SUI tax 
     collection or (ii) how the state experience rating formula 
     would be applied to the CPEO. Determinations with respect to 
     these issues will be made pursuant to state law.
       A CPEO will have exclusive liability for employment taxes 
     with respect to wage payments made by the CPEO to worksite 
     employees (including owners of the client who are worksite 
     employees) if the CPEO meets the net worth requirement and, 
     at least quarterly, an examination level attestation by an 
     independent Certified Public Accountant attesting to the 
     adequate and timely payment of federal employment taxes has 
     been filed with the IRS.
       The net worth requirement is satisfied if the CPEO's net 
     worth (less goodwill and other intangibles) is, on the last 
     day of the fiscal quarter preceding the date on which payment 
     is due and on the last day of the fiscal quarter in which the 
     payment is due, at least:
       $50,000 if the number of worksite employees is fewer than 
     500;
       $100,000 if the number of worksite employees is 500 to 
     1,499;
       $150,000 if the number of worksite employees is 1,500 to 
     2,499;
       $200,000 if the number of worksite employees is 2,500 to 
     3,999; and
       $250,000 if the number of worksite employees is more than 
     3,999;
       In the alternative, the net worth requirement could be 
     satisfied through a bond (for employment taxes up to the 
     applicable net worth amount) similar to an appeal bond filed 
     with the Tax Court by a taxpayer or by an insurance bond 
     satisfying similar rules.
       Within 60 days after the end of each fiscal quarter, the 
     CPEO will provide the IRS with an examination level 
     attestation from an independent certified public accountant 
     that states that the accountant has found no material reason 
     to question the CPEO's assertions with respect to the 
     adequacy of federal employment tax payments for the fiscal 
     quarter. In the event that such attestation is not provided 
     on a timely basis, the CPEO will cease to have exclusive 
     liability with respect to employment taxes (regardless of the 
     net worth or bonding requirement) effective the due date for 
     the attestation. Exclusive liability will not be restored 
     until the first day of the quarter following two successive 
     quarters for which an examination level attestations were 
     timely filed. In addition, the Secretary will have the 
     authority, under final regulations, to provide limits on a 
     CPEO's exclusive liability for employment taxes with respect 
     to a particular customer in cases where there is an undue and 
     large risk with respect to the ultimate collection of those 
     taxes.
       For any tax period for which any of these criteria for 
     exclusive liability for employment taxes are not satisfied, 
     or to the extent the client has not made adequate payments to 
     the CPEO for the payment of wages, taxes, and benefits, the 
     CPEO will have primary liability and the client will have 
     secondary liability for employment taxes. In that instance, 
     the IRS will assess and attempt to collect unpaid employment 
     taxes against the CPEO first and may not generally take any 
     action against a client with respect to liability for 
     employment taxes until at least 45 days following the date 
     the IRS mails a notice and demand to the CPEO. For this 
     purpose, the statute of limitations for assessment or 
     collection against the client will not expire until one year 
     after the date that is 45 days after mailing of notice and 
     demand to the CPEO (in the same manner as transferee 
     liability under section 6901(c)). With respect to employment 
     taxes attributable to periods during which a CPEO has 
     liability, the client will be liable to the IRS for taxes, 
     penalties (applicable to client actions or to the time 
     periods after assessment of the client for the taxes), and 
     interest (with such liability to be reduced by amounts paid 
     to the IRS by the CPEO that are allocable, under rules to be 
     determined by the IRS, to the client).


                             effective date

       These provisions will be effective on January 1, 2002. The 
     IRS will be directed to establish the PEO certification 
     program at least three months prior to the effective date. 
     The bill directs the IRS to accommodate transfers of assets 
     in existing plans maintained by a CPEO or CPEO clients into a 
     new plan (or amended plan) meeting the requirements of the 
     legislation (e.g., client-by-client nondiscrimination 
     testing) without regard to whether or not such plans might 
     fail the exclusive benefit rule because worksite employees 
     might be considered common law employees of the client.
  Mr. THOMAS. Mr. President, I rise today to join my colleagues in 
introducing the ``Rural Health Care in the 21st Century Act.'' I am 
pleased to have worked with my colleagues in crafting this bill that 
will address the

[[Page S7896]]

needs of rural providers and beneficiaries as we begin the new century.
  This legislation establishes a grant and loan program to assist rural 
providers in acquiring the necessary technologies to improve patient 
safety and meet the continually changing records management 
requirements. Rural hospitals and other providers do not have the 
capital needed to purchase these expensive technologies nor the 
resources to train their staff. This new program will enable these 
providers to purchase such crucial equipment as patient tracking 
systems, bar code systems to avoid drug errors and software equipped 
with artificial intelligence.
  Another reason this legislation is so important is because it will 
bring equity to the Medicare Disproportionate Share Hospital (DSH) 
program, which has been inherently biased against rural providers since 
it was implemented in 1986. The premise of this program is to give 
hospitals that provide a substantial amount of care to low-income 
patients additional funding to assist with the higher costs associated 
with caring for this population.
  Mr. President, the current DSH program does almost nothing for rural 
hospitals because different eligibility requirements have been 
established for rural and urban providers. To qualify for the increased 
payments the DSH program provides, urban hospitals are required to 
demonstrate that 15 percent of their patient load consists of Medicaid 
patients and Medicare patients eligible for Supplemental Security 
Income. However, rural hospitals must meet a higher threshold of 45 
percent. Mr. President, there is no justification for this inequity. 
Our bill will level the playing field by applying the same eligibility 
threshold currently enjoyed by urban hospitals to all rural hospitals 
as well. According to the Medicare Payment Advisory Commission this 
reform will open the door for 55 percent of all rural hospitals to 
benefit from the DSH program--a significant increase over the 15.6 
percent of rural hospitals currently participating.
  The ``Rural Health Care in the 21st Century Act'' also addresses 
other inequities faced by rural providers because federal regulators do 
not adequately reflect the unique circumstances of delivering health 
care in rural America. This bill provides rural home health agencies 
with a 10 percent bonus payment as they have average per episode costs 
that are 20 percent higher than urban agencies.
  Rural Health Clinics and Critical Access Hospitals are a key 
component of maintaining access to primary and emergency services in 
rural communities. This legislation makes modifications to the Balanced 
Budget Act to ensure these providers will continue to be an integral 
part of the rural health care delivery system.
  Mr. President, I believe this bill is an important step in ensuring 
rural providers are treated equally under federal programs. This 
equalization must be accomplished so we can guarantee that rural 
Medicare beneficiaries have the same choices and access to services as 
their urban counterparts.
                                 ______
                                 
      By Mr. BROWNBACK (for himself, Mr. Daschle, Mr. DeWine, Mr. 
        Kerrey, Mr. Grassley, Mr. Byrd, and Mr. Lugar):
  S. 2982. A bill to enhance international conservation, to promote the 
role of carbon sequestration as a means of slowing the building of 
greenhouse gases in the atmosphere, and to reward and encourage 
voluntary, pro-active environmental efforts on the issue of global 
climate change; to the Committee on Finance.


            International Carbon Sequestration Incentive Act

  Mr. BROWNBACK. Mr. President, I rise today to introduce the 
International Carbon Sequestration Incentive Act. I am joined by 
Senators Daschle, DeWine, Bob Kerrey, Grassley and Byrd.
  Environmental issues have traditionally been filled with 
controversy--pitting beneficial environmental measures against hard-
working small business and state interests. It is unfortunate that the 
atmosphere surrounding environmental debate is filled with accusations 
of blame rather than basic problem-solving.
  From listening to the public discourse concerning environmental 
issues, one would thing there is no other choice but to handicap our 
booming economy in order to have a clean environment, despite the fact 
that pollution is often, unfortunately, an unavoidable consequence of 
meeting public needs.
  Mr. President, I stand here today to illustrate that there is a 
better way to deal with important environmental concerns. There is a 
way to encourage the best rather than expecting the worst. There is a 
way to create environmental incentives and environmental markets, 
rather than only environmental regulations. There is a way to chip away 
at environmental challenges, rather than demagoging an ``all or 
nothing'' stance.
  This bill--the International Carbon Sequestration Incentive Act, 
takes a pro-active, incentive-driven approach to one of the most 
difficult environmental issues of our time--global climate change.
  Specifically, this bill provides investment tax credits for groups 
who invest in international carbon sequestration projects--including 
investments which prevent rainforest destruction and projects which 
reforest abandoned native forest areas. These projects will reduce the 
amount of carbon dioxide emitted into the air--helping to offset 
climate change since carbon dioxide is one of the main greenhouse 
gases.
  This bill achieves these environmental benefits by promoting carbon 
sequestration--the process of converting carbon dioxide in the 
atmosphere into carbon which is stored in plants, trees and soils.
  Under this bill, eligible projects can receive funding at a rate of 
$2.50 per verified ton of carbon stored or sequestered--up to 50% of 
the total project cost. The minimum length of these projects is 30 
years and the Implementing Panel can only approve $200 million in tax 
credits each year.
  Why do this? Carbon dioxide is a greenhouse gas believed to 
contribute to global warming. While there is debate over the role in 
which human activity plays in speeding up the warming process, there is 
broad consensus that there are increased carbon levels in the 
atmosphere today.
  Until now, the only real approach seriously considered to address 
climate change was an international treaty which calls for emission 
limits on carbon dioxide--which would mean limiting the amount that 
comes from your car, your business and your farm. This treaty--the 
Kyoto treaty, also favored exempting developing nations from emission 
limits--putting the U.S. economy at a distinct disadvantage. 
Approaching the issue of climate change in this fashion would be very 
costly and would not respond to the global nature of this problem.
  Instead, my approach encourages offsetting greenhouse gases through 
improved land management and conservation--and by engaging developing 
nations rather than cutting them out of the process.
  In addition to reducing greenhouse gas emissions, sponsored projects 
under this bill will also help to preserve the irreplaceable 
biodiversity that flourishes in the Earth's tropical rain forests and 
other sensitive eco-systems. In addition to diverse plant life, these 
projects will be protecting countless endangered and rare species.
  This bill requires investors to work closely with foreign 
governments, non-governmental organizations and indigenous peoples to 
find the capital necessary to set aside some of the last great 
resources of the planet. Rain forests have been called the lungs of the 
Earth--helping to filter out pollution and provide sanctuary for 
numerous pharmaceutical finds which may one day cure many of our human 
diseases.
  This bill rewards the partnership and pro-active vision of companies 
that want to be part of the solution to climate change. We are lucky in 
the fact that private industry is already looking at this issue and 
working to find a way to contribute. An example of what this bill would 
promote can be seen by looking at the Noel Kempff Mercado National Park 
in Bolivia.
  As you can see by looking at these photos [DISPLAY FOREST SCENES], 
Noel Kempff is a beautiful, biodiverse part of the world. This park 
spans nearly 4 million acres in Bolivia, hosts several hundred species 
of rare and endangered wildlife--including 130 species of mammals, 620 
species of birds and 70 species of reptiles--not to mention 110 
different species of orchids and grasses.

[[Page S7897]]

  This park was in direct danger of deforestation. The land would have 
been cleared and eventually turned into large commercial farming 
operations. The loss of this park would have led to carbon dioxide 
emissions of between 25-36 million tons as well as increased commercial 
agricultural competition.
  Instead, the Bolivian government came together with The Nature 
Conservancy, American Electric Power and other investors to preserve 
the park and conduct extensive verification of the carbon being stored 
in trees and soils of the now protected area.
  Companies like American Electric Power, BP Amoco and PacifiCorp want 
to invest in projects like Noel Kempff because they want to promote the 
role of carbon sequestration as a means to combat climate change. These 
companies have taken a big step in contributing to the solution--think 
how much more good they, and other companies, could do if there were 
incentives to encourage this activity.
  In the U.S., we are lucky enough to have programs like the 
Conservation Reserve Program and federal parks--which help preserve 
some of the natural resources of this great nation. Unfortunately, 
developing countries do not have access to the kind of capital it takes 
to make similar investments in their own countries. It is therefore, a 
worthy investment in the world environment--since climate change is a 
global problem, to chip away at this problem by doing what we know 
helps reduce pollution and greenhouse gases: planting and preserving 
trees.
  This bill is designed to encourage more participation in projects 
like the Noel Kempff Park. By using limited and very targeted tax 
credits, we have an opportunity as a nation--to take a leadership role 
on climate change without crushing our own economy. This bill also 
furthers the goal of including developing countries in the climate 
change issue--since any agreement to reduce greenhouse gases must 
ultimately include these areas which will become the largest emitters.
  Mr. President, I do not pretend that this bill will resolve the 
climate change issue. That is not my intent. Rather, this bill takes 
the view that where we do agree that good can be achieved--we should 
move forward. It is my hope that this bill will contribute to the 
solution on climate change and help to re-shape the way we view 
environmental problems.
                                 ______
                                 
      By Mr. AKAKA (for himself and Mr. Inouye):
  S. 2983. A bill to provide for the return of land to the Government 
of Guam, and for other purposes; to the Committee on Energy and Natural 
Resources.


                   the guam omnibus opportunities act

  Mr. AKAKA. Mr. President, I rise to introduce the Guam Omnibus 
Opportunities Act, which seeks to address important issues to the 
people of Guam dealing with land, economic development and social 
issues. On July 25, the House passed similar legislation, H.R. 2462, 
which was introduced by Congressman Robert Underwood, the Delegate from 
Guam. During the 105th Congress, the Senate passed similar provisions 
of H.R. 2462 as part of S. 210, an omnibus territories bill.
  There are several provisions of the Guam Omnibus Opportunities Act. 
First, Section 2 of the bill provides a process for the Government of 
Guam to receive lands from the U.S. government for specified public 
purposes by giving Guam the right of first refusal for declared federal 
excess lands by the General Services Administration prior to it being 
made available to any other federal agency. It also provides for a 
process for the Government of Guam and the U.S. Fish and Wildlife 
Service to engage in negotiations on the future ownership and 
management of declared federal excess lands within the Guam National 
Wildlife Refuge.
  Section 3 provides the Government of Guam with the authority to tax 
foreign investors at the same rates as states under U.S. tax treaties 
with foreign countries since Guam cannot change the withholding tax 
rate on its own under current law. Under the U.S. Internal Revenue 
Code, there is a 30 percent withholding tax rate for foreign investors 
in the United States. Since Guam's tax law ``mirrors'' the rate 
established under the U.S. Code, the standard rate of foreign investors 
in Guam is 30 percent. It is a common feature in U.S. tax treaties for 
countries to negotiate lower withholding rates on investment returns. 
Unfortunately, while there are different definitions for the term 
``United States'' under these treaties, Guam is not included. This 
omission has adversely impacted Guam since 75 percent of Guam's 
commercial development is funded by foreign investors. As an example, 
with Japan, the U.S. rate for foreign investors is 10 percent. This 
means that while Japanese investors are taxed at a 10 percent 
withholding tax rate on their investments in the fifty states, those 
same investors are taxed at a 30 percent withholding rate on Guam.
  While the long-term solution is for U.S. negotiators to include Guam 
in the definition of the term ``United States'' for all future tax 
treaties, the immediate solution is to amend the Organic Act of Guam 
and authorize the Government of Guam to tax foreign investors at the 
same rates as the fifty states. It is my understanding that all other 
U.S. territories have remedied this problem in one way or another. 
Therefore, Guam is the only U.S. jurisdiction in the country that is 
not extended tax equity for foreign investors.
  With an unemployment rate of 15 percent, Guam continues to struggle 
economically due to the Asian financial crisis. That is why I believe 
it is vitally important for the federal government to assist Guam in 
stimulating its economy through sound federal policies and technical 
assistance. This section would greatly assist the Government of Guam in 
promoting economic development on the island and would provide long 
needed tax equity.
  Section 4 considers Guam within the U.S. Customs zone in the 
treatment of betel nuts, which are part of Chamorro tradition and 
culture. While betel nuts are grown in the United States, the Food and 
Drug Administration (FDA) has an important alert for betel nuts from 
foreign countries in place due to the influx of betel nuts from Asian 
countries for commercial consumption and the FDA's contention that the 
betel nut is ``adulterated.'' This means an automatic detention of 
betel nuts by U.S. Customs agents when entering the United States. 
Although Guam is a U.S. territory, Guam is considered to be outside the 
U.S. Customs zone. Betel nuts grown in Guam, therefore, are subject to 
the FDA ban in the same manner as foreign countries. This section 
narrowly applies to Guam, limits use to personal consumption, and 
ensure that the FDA ban against foreign countries remains in place.
  Section 5 empowers the governors of the territories and the State of 
Hawaii to report to the Secretary of the Interior on the financial and 
social impacts of the Compacts of Free Association on their respective 
jurisdictions and requires that the Secretary forward Administration 
comments and recommendations on the report to Congress. This is an 
important issue to the State of Hawaii as the numbers of migrants to 
Hawaii from the Republic of the Marshall Islands, the Federated States 
of Micronesia, and the Republic of Palau continue to grow. The State of 
Hawaii has spent well over $14 million in public funds in the past year 
alone, with most of the funds being spent on our educational and health 
care systems.
  Under the compact agreements, the Federal government made clear that 
it would compensate jurisdictions affected, yet the State of Hawaii has 
not received federal funding since the implementation of these 
agreements. This section seeks to improve the reporting requirements 
for Compact Impact Aid to address this situation.
  Section 6 establishes a five-member Guam War Claims Review Commission 
to be appointed by the Secretary of the Interior. The goal of the 
Commission is to review the facts and circumstances surrounding U.S. 
restitution to Guamanians who suffered compensable injury during the 
occupation of Guam by Japan during World War II. Compensable injury 
includes death, personal injury, or forced labor, forced march, or 
internment. The Commission would review the relevant historical facts 
and determine the eligible claimants, the eligibility requirements, and 
the total amount necessary for compensation, and report its findings 
and recommendations for action to Congress nine months after the 
Commission is established.
  The 1951 Treaty of Peace between the U.S. and Japan effectively 
barred

[[Page S7898]]

claims by U.S. citizens against Japan. As a consequence, the U.S. 
inherited these claims, which was acknowledged by Secretary of State 
John Foster Dulles when the issue was raised during consideration of 
the treaty before the Committee on Foreign Relations in 1952.
  Considerable historical information indicates that the United States 
intended to remedy the issue of war restitution for the people of Guam. 
In 1945, the Guam Meritorious Claims Act was enacted which authorized 
the Navy to adjudicate and settle war claims in Guam for property 
damage for a period of one year. Claims in access of $5,000 for 
personal injury or death were to be forwarded to Congress. 
Unfortunately, the Act never fulfilled its intended purposes due to the 
limited time frame for claims and the preoccupation of the local 
population with recovery from the war, resettlement of their homes, and 
rebuilding their lives.
  On March 25, 1947, the Hopkins Commission, a civilian commission 
appointed by the Navy Secretary, issued a report which revealed the 
flaws of the 1945 Guam Meritorious Claims Act and recommended that the 
Act be amended to provide on the spot settlement and payment of all 
claims, both property and for the death and personal injury.
  Despite the recommendations of the Hopkins Commission, the U.S. 
government failed to remedy the flaws of the Guam Meritorious Act when 
it enacted the War Claims Act of 1948, legislation which provided 
compensations for U.S. citizens who were victims of the Japanese war 
effort during World War II. Guamanians were U.S. nationals at the time 
of the enactment of the War Claims Act, thereby making them ineligible 
for compensation. In 1950, with the enactment of the Organic Act of 
Guam, Guamanians became U.S. citizens.
  In 1962, Congress again attempted to address the remaining 
circumstances of U.S. citizens and nationals that had not received 
reparations from previous enacted laws. Once again, however, the 
Guamanians were inadvertently made ineligible because policymakers 
assumed that the War Claims Act of 1948 included them. Section 6 brings 
closure to this longstanding issue.
  In summary, Mr. President, the Guam Omnibus Opportunities Act will go 
a long way toward resolving issues that the Federal Government has been 
working on with the Government of Guam on land, economic development 
and social issues. I look forward to working with my colleagues in the 
Senate to resolve these issues to assist Guam in achieving greater 
economic self-sufficiency.
                                 ______
                                 
      By Mr. CONRAD:
  S. 2984. A bill to amend the Internal Revenue Code of 1986 and to 
provide a refundable caregivers tax credit; to the Committee on 
Finance.


              long-term caregivers assistance act of 2000

  Mr. CONRAD. Mr. President, today I am introducing the Long-Term 
Caregivers Assistance Act of 2000, a proposal that would provide much 
needed assistance to individuals with long-term care needs and their 
caregivers.
  Nationwide, more than 8 million individuals require some level of 
assistance with activities of daily living. Over the next 30 years, 
this number is expected to increase significantly as our nation 
experiences an unprecedented growth in its elderly population.
  We know that for many people leaving their homes to obtain care is 
not their first choice--the cost of nursing home care can be 
prohibitive, and such care often takes individuals away from their 
communities. While federal support for long-term care is primarily 
spent on nursing home services, many people receive assistance with 
their long-term care needs in the home from their families, often 
without the help of public assistance or private insurance.
  Nationwide, nearly 37 million individuals provide unpaid care to 
family members of all ages with functional or cognitive impairments. In 
my state, there are about 61,000 individuals providing informal 
caregiving services.
  Unfortunately, the need for long-term care can cause substantial 
financial burdens on many individuals and their families. According to 
a recent study, almost two-thirds of those serving as caregivers suffer 
financial setbacks--setbacks that can total thousands of dollars in 
lost wages and other benefits over a caregiver's lifetime. This is a 
burden that caregivers and their families should not have to bear 
alone.
  For this reason, I am introducing this proposal to provide a $2,000 
tax credit that could be used by individuals with substantial care 
needs or by their caregivers.
  Taxpayers who have long-term care needs, or who care for others with 
such needs, may not have the same ability to pay taxes as other 
taxpayers--a reasonable and legitimate concern in a tax system based on 
the principle of ability-to-pay. Providing a tax credit is an equitable 
and efficient way of helping caregivers and individuals with long-term 
care needs meet their formal and informal costs.
  I recognize that this tax credit is only a piece of the long-term 
care puzzle--but I believe it is an important piece. This credit could 
be used to help pay for prescription drugs or other out-of-pocket 
expenses. It could be used to pay for some formal home care services. 
It could also be used to help family members offset some of the 
expenses they incur in caregiving.
  We must act now to address the long-term care needs of our nation. I 
urge my colleagues to support this important legislation.
                                 ______
                                 
      By Mr. DURBIN (for himself and Mr. Kennedy):
  S. 2985. A bill to amend the Agricultural Trade Act of 1978 to 
authorize the Commodity Credit Corporation to reallocate certain 
unobligated funds from the export enhancement program to other 
agricultural trade development and assistance programs; to the 
Committee on Finance.


     providing school lunches to hungry children--the agricultural 
      flexibility in export development and assistance act of 2000

  Mr. DURBIN. Mr. President, if you had happened to be in the Senate 
Dining Room a few months ago, you might have seen a group of people 
having lunch and wondered what in the world would gather Ambassador 
George McGovern, Senators Bob Dole and Ted Kennedy, Agriculture 
Secretary Dan Glickman, Congressmen Jim McGovern and Tony Hall and 
myself all at one table.
  The answer to your question is that we were working together on a 
bipartisan initiative that could have a positive impact on children 
around the world and be of great benefit to America's farmers.
  Former Senator and now Ambassador McGovern has advocated an idea to 
emulate one of the most beneficial programs ever launched on behalf of 
children in this country--the school lunch program.
  He has worked with Senator Dole and others to establish an 
international school lunch program and President Clinton has jump-
started this proposal with his announcement that the United States will 
provide $300 million in surplus commodities for the initiative.
  Today, I am introducing legislation to provide a long-term funding 
source for international school feeding programs that will allow such 
programs to expand and reach more kids.
  Today there are more than 300 million children throughout the world--
more kids than the entire population of the United States--who go 
through the day and then to bed at night hungry. Some 130 million of 
these kids don't go to school right now, mainly because their parents 
need them to stay at home or work to pitch in any way that they can.
  In January of this year, I traveled to sub-Saharan Africa, the 
epicenter of the AIDS crisis, with more than two-thirds of AIDS cases 
worldwide. There I saw first-hand the horrible impact AIDS is having on 
that continent. I met a woman in Uganda named Mary Nalongo Nassozzi, 
who is a 63-year-old widow.
  All of her children died from AIDS and she has created an 
``orphanage'' with 16 of her grandchildren now living in her home. 
People like Mary need our help to keep these kids in school.
  Linking education and nutrition is not a new idea. Private voluntary 
organizations like CARE, Catholic Relief Services, ADRA, World Vision, 
Save the Children and Food for the Hungry are already helping kids with 
education, mother/child nutrition programs and school feeding programs.

[[Page S7899]]

These organizations and the World Food Program operate programs in more 
than 90 countries at this time, but typically can only target the 
poorest children in the poorest districts of the country.
  Ambassador McGovern, Senator Dole, myself and others have called for 
an expanded effort, and as I noted earlier, President Clinton has 
responded. I applaud the President for the program he announced last 
Sunday in Okinawa. This $300 million initiative is expected to help 
serve a solid, nutritious meal to nine million children every day they 
go to school.
  Think about it: for only 10 cents a day for each meal, we can feed a 
hungry child and help that child learn. With what you or I pay for a 
Big Mac, fries and a soft drink, we could afford to feed two classrooms 
of kids in Ghana or Nepal.


                The Benefits of School Feeding Programs

  While we need to consider the costs of an international school 
feeding program, I think we should also look at the benefits.
  Malnourished children find it difficult to concentrate and make poor 
students. But these school feeding programs not only help 
concentration, they have many benefits, including increased attendance 
rates and more years of school attendance, improved girls' enrollment 
rates, improved academic performance, lower malnutrition rates, greater 
attention spans and later ages for marriage and childbirth.
  These benefits ripple in many directions: higher education levels for 
girls and later marriage for women help slow population growth; greater 
education levels overall help spur economic development; and giving 
needy children a meal at school could also help blunt the terrible 
impact AIDS is having throughout Africa, where there are more than 10 
million AIDS orphans who no longer have parents to feed and care for 
them.


                           domestic benefits

  Some will question our involvement in overseas feeding programs, so 
let me describe what we're doing at home and how we benefit from these 
efforts.
  This year, we're spending more than $20 billion in our food stamp 
program. More than half of this amount goes to kids. We're also 
spending over $9 billion for school child nutrition programs, and more 
than $4 billion for the WIC program. While this sounds like a lot, we 
need to do more. Many people who are eligible for these programs are 
not aware of it and the Department of Agriculture must do a better job 
getting the word out. Still, these figures put the costs of an 
international school feeding effort in perspective: they will be a 
small fraction of what we're spending here at home.

  Through our international efforts, we share some of what we have 
learned with less fortunate countries. But we also benefit.
  An international school lunch program will provide a much-needed 
boost to our beleaguered farm economy, where surpluses and low prices 
have been hurting farmers for the third year in a row. Congress has 
provided more than $20 billion in emergency aid to farmers over the 
last three years. Buying farm products for this proposal would boost 
prices in the marketplace, helping U.S. farmers and needy kids in the 
process. It is a common-sense proposal for helping our farmers, and the 
right thing to do.
  Second, the education of children leads to economic development, 
which in turn increases demand for U.S. products in the future. Some of 
the largest food aid recipients in the 1950s are now our largest 
commercial customers.
  Finally, let's consider the positive foreign policy implications of 
this measure. It helps fulfill the commitments we made in Rome in 1996 
to work to improve world food security and helps satisfy the commitment 
to net food importing developing countries we made in Marrakesh in 1995 
at the conclusion of the Uruguay Round. It also supports the goals of 
``Education for All'' made in April in Dakar to achieve universal 
access to primary education.
  It goes beyond demonstrating our commitment to summit texts and 
documents and has a real impact on our national security. When people 
are getting enough to eat, internal instability is less likely. Most of 
the conflicts taking place right now around the world are related at 
least in part to food insecurity.


                  we can't and shouldn't do this alone

  The United States shouldn't go it alone. This needs to be an 
international effort. If the full costs for this program are shared 
fairly among developed countries, as we do now for United Nations 
peacekeeping efforts or humanitarian food aid relief efforts, then our 
resource commitments will be multiplied many times over. I encourage 
the Administration to continue its efforts to gain multilateral support 
for this initiative.
  We should also seek the involvement and commitment of America's 
corporations and philanthropic organizations. Companies can contribute 
books and school supplies, computer equipment, kitchen equipment, 
construction supplies and management expertise.


                          proposed legislation

  The food aid laws we already have in place allow USDA and USAID to 
start up these kinds of programs, but resources are limited.
  The President's initiative is a concrete first step in the effort to 
assure that every kid is going to school, and that every kid going to 
school has a meal.

  However--and this is not to detract in any way from the important 
action he has taken--the President's initiative relies on surplus 
commodities. That is a sensible approach at this time. But we may not 
always have an overabundance. We all hope for and are working for an 
end to the farm crisis, which means the quantity of surplus commodities 
will decline. We need to look at how we will continue to pay for this 
program in the future as it helps more children and as surplus 
commodities dwindle.
  The legislation I am introducing today, the Agricultural Flexibility 
in Export Development and Assistance Act of 2000, addresses the longer-
term funding issue.
  My legislation authorizes the Secretary of Agriculture to reallocate 
unspent Export Enhancement Program (EEP) money to school feeding and 
other food aid programs. When EEP was first authorized, one of its main 
purposes was to increase demand for U.S. agricultural commodities--to 
put money in the wallets of farmers by promoting overseas demand for 
our products. Because U.S. commodity prices have come down, it hasn't 
been used to any major extent since 1995. We are sitting on a pot of 
money, authorized but not being spent, while the EU spends over $5 
billion annually on similar programs. My legislation would free up the 
Secretary of Agriculture to devote those funds to school feeding and 
other food aid programs.
  Because I recognize some would like to see a portion of the surplus 
EEP funds to be spent on export development programs, my bill also 
permits a portion of the funds to be spent on export promotion.
  To maintain flexibility while ensuring our food aid goals are 
addressed, the measure would require that a minimum of 75 percent of 
reallocated EEP funding be spent for either PL480 (Title I or Title II) 
or Food for Progress food aid, with at least half of this amount 
devoted to school feeding or child nutrition programs. It would allow 
up to 20 percent of the reallocated funds to be spent on the Market 
Access Program to promote agricultural exports, and a maximum of five 
percent to be spent on the Foreign Market Development (Cooperator) 
program.
  To ensure new artificial restraints don't block our intention in this 
legislation, the measure also raises the caps currently in place 
regarding the quantity of food aid permitted under Food for Progress 
and the amount that may be used to pay for the administrative expenses 
associated with the program.
  Both the Coalition for Food Aid and Friends of the World Food Program 
support this measure. Major commodity groups such as the American 
Soybean Association and the National Corn Growers Association also 
support it.
  Mr. President, I urge my colleagues to join me as cosponsors of this 
legislation and in support of the broader effort to respond to the 
nutrition needs of 300 million children, 130 million of whom are not 
but could and should be in school. With our help, these statistics can 
change.
  Mr. HUTCHINSON. Mr. President, I rise today to introduce the Just 
Opportunities in Bidding (JOB) Act which is

[[Page S7900]]

necessary to ensure that companies who seek to do business with our 
government are treated fairly. The JOB Act would prohibit the 
implementation of proposed regulations which would dramatically amend 
the Federal Acquisition Regulation.
  I have many concerns about these proposed regulations, but I am 
deeply troubled by the discrimination which it will inevitably foster 
when implemented. The regulations will de facto amend many of our 
nation's laws and give government contracting officers, who are not 
trained in the interpretation of these laws, unfettered discretion to 
deny contracts to companies based on any alleged violation of any labor 
and employment, environmental, antitrust, tax, or consumer protection 
laws over the three years immediately preceding the contract. This is a 
dramatic change from the current requirements of the Federal 
Acquisition Regulation which requires that violations must be 
substantial to trigger denial of contract eligibility and does not 
extend to unrelated, past violations.
  The proposed regulations would also allow for the denial of contracts 
on the basis of a mere complaint issued by a federal agency, which 
often are based solely upon information provided by outside, interested 
parties. Moreover, the proposal's terminology is vague and extremely 
subjective--placing tremendous and unprecedented discretion in the 
hands of federal contracting officers. That is discretion that they do 
not need nor qualified to exercise. Terms such as ``legal compliance'' 
by bidding parties are well-intentioned, I am sure, however, I view 
this as a trial lawyer's greatest wish come true. What does ``legal 
compliance'' mean? Does it mean that employers must ensure that they 
are 100 percent in compliance with all of the pertinent laws? Can even 
the most prudent employers guarantee that they and their worksites are 
100 percent in compliance with all federal tax, labor, environmental, 
and anti-trust statutes and regulations? That's certainly a question 
which many creative lawyers will undoubtedly rush to answer in 
courthouses across our nation.
  This proposal is in direct contradiction to existing policy which is 
to fulfill governmental needs for goods and services at a fair and 
reasonable price from contractors who are technically qualified and 
able to perform the contract. Our current policy is based upon a good 
balance between our desire to get the best value for our constituents' 
taxdollars while being fair to all qualified companies who want to have 
the opportunity to provide their goods and services to the government. 
The proposed regulations will result in the unjustified exclusion of 
many of these companies from the bidding process and will result in 
less competition, reduced job opportunities for many employees--
especially small businesses--and less value for our constituents' 
taxdollars.
  As elected representatives of our constituents, we cannot condone 
this and as a legislative body we must refuse to allow a continuation 
of this Administration's legislation by regulation. The JOB Act would 
require the GAO to thoroughly examine this issue and report back to 
Congress with its findings. To me, this is a sound and reasonable 
approach rather than a political one. If you agree that the proposed 
regulations--and the millions of American workers, employers, and 
taxpayers that they will profoundly affect--deserve more thorough 
consideration, join me in my effort to enact the JOB Act.
  I ask consent that the text of the bill be included in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2986

       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 ``Just Opportunities in 
     Bidding Act of 2000''.

     SEC. 2. REGULATIONS PROHIBITED PENDING GAO REVIEW.

       (a) Regulations Not To Have Legal Effect.--The proposed 
     regulations referred to in subsection (c) shall not take 
     effect and may not be enforced.
       (b) Limitation on Additional Proposed Regulations.--No 
     proposed or final regulations on the same subject matter as 
     the proposed regulations referred to in subsection (c) may be 
     issued before the date on which the Comptroller General 
     submits to Congress the report required by section 3.
       (c) Covered Regulations.--Subsection (a) applies to the 
     following:
       (1) The proposed regulations that were published in the 
     Federal Register, volume 64, number 131, beginning on page 
     37360, on July 9, 1999.
       (2) The proposed regulations that were published in the 
     Federal Register, volume 65, number 127, beginning on page 
     40830, on June 30, 2000.

     SEC. 3. COMPTROLLER GENERAL REVIEW OF CONTRACTOR COMPLIANCE 
                   WITH FEDERAL LAW.

       The Comptroller General shall--
       (1) conduct a general review of the level of compliance by 
     Federal contractors with the Federal laws that--
       (A) are applicable to the contractors; and
       (B) affect--
       (i) the rights and responsibilities of contractors to 
     participate in contracts of the United States; and
       (ii) the administration of such contracts with respect to 
     contractors; and
       (2) submit to Congress a report on the findings resulting 
     from the review.
                                 ______
                                 
      By Mr. ROBERTS (for himself, Mr. Grassley, Mr. Jeffords, and Mr. 
        Thomas):
  S. 2987. A bill to amend title XVIII of the Social Security Act to 
promote access to health care services in rural areas, and for other 
purposes; to the Committee on Finance.


           rural health care in the 21st century act of 2000

  Mr. ROBERTS. Mr. President, I rise today to introduce the Rural 
Health Care in the 21st Century Act of 2000. This legislation will 
improve access to technology necessary to improve rural health care and 
expand access to quality health care in rural areas.
  The future of health care in this country is being challenged by a 
variety of factors. The growing pains associated with managed care, an 
increasing elderly population and the drive to ensure the solvency of 
the federal Medicare Trust Fund are just a few of the factors placing 
pressure on health care facilities and health care providers across the 
country. Small, rural hospitals that provide services to a relatively 
low volume of patients are faced with even greater challenges in this 
environment.
  The bill I am introducing today takes critical steps to improve 
access to high technology in rural areas and establishes a new high 
technology acquisition grant and loan program to improve patient safety 
and outcomes. At the same time hospitals need to update equipment, 
comply with new regulatory requirements and join the effort to reduce 
medical errors, many hospitals are finding it difficult to access the 
financial backing necessary to acquire the telecommunications equipment 
necessary to develop innovative solutions. This bill establishes a 5-
year grant program through the Office of Rural Health Policy that 
allows hospitals, health care centers and related organizations to 
apply for matching grants or loans up to $100,000 to purchase the 
advanced technologies necessary to improve patient safety and keep pace 
with the changing records management requirements of the 21st Century.
  This bill also increases Disproportionate Share Hospitals payments to 
rural hospitals. The Medicare DSH adjustment is based on a complex 
formula and the hospital's percentage of low-income patients. This 
percentage of low-income patients is different for each hospital, 
depending on where the hospital is located and the number of beds in 
the hospital. This bill establishes one formula to distribute payments 
to all hospitals covered by the inpatient PPS. This will give rural 
hospitals an equal opportunity to qualify for the DSH adjustment.
  Twenty-five percent of our nation's senior citizens live in rural 
areas where access to modern health care services is often lacking. 
Telehealth technologies have evolved significantly and can serve to 
connect rural patients to the health care providers that they need. 
This bill includes provisions of S. 2505, a telehealth bill introduced 
by my colleague from Vermont, Senator Jeffords. These provisions 
address eight areas of Medicare reimbursement policy that need 
improvement. It eliminates requirements for fee-sharing between 
providers and provides a standard professional fee to the health care 
provider who delivers the care. The site where the patient is presented 
is made eligible for a standard facility fee. The requirement for a 
telepresenter is

[[Page S7901]]

eliminated and the codes that can be billed for are expanded to reflect 
current practice. All rural counties and urban HPSAs are covered by 
this legislation and demonstration projects are established to access 
reimbursement for store and forward activities. Also, the law 
is clarified to allow for home health agencies to incorporate 
telehomecare into their care plans where appropriate.

  The Health Care Financing Administration is currently administering 
five telemedicine demonstration projects. This provision extends these 
projects an additional two years to give the projects adequate time to 
produce useful data.
  The Medicare Rural Hospital Flexibility Program established by the 
Balanced Budget Act of 1997 allows rural hospitals to be reclassified 
as limited service facilities, known as Critical Access Hospitals. 
Critical Access Hospitals are important components of the rural health 
care infrastructure. They are working to provide quality health care 
services in sparsely populated areas of the country. However, they are 
restricted by burdensome regulations and inadequate Medicare payments. 
In addition to reduced staffing requirements, Congress intended to 
reimburse CAH inpatient and outpatient hospital services on the basis 
of reasonable costs. This legislation exempts Medicare swing beds in 
CAHs for the Skilled Nursing Facility (SNF) Prospective Payment System 
(PPS) and reimburses based on reasonable costs, and provides reasonable 
cost payment for ambulance services and home health services in CAHs.
  In addition, this legislation directs the Secretary of HHS to 
establish a procedure to ensure that a single FI will provide services 
to all CAHs and allows CAHs to choose between two options for payment 
for outpatient services: (1) reasonable costs for facility services, or 
(2) an all-inclusive rate which combines facility and professional 
services.
  This bill permanently guarantees pre-Balanced Budget Act payment 
levels for outpatient services provided by rural hospitals with under 
100 beds, modifies the 50 bed exemption language and for Rural Health 
Clinics allows RHCs to qualify as long as their average daily patient 
census does not exceed 50, allows Physician Assistant-owned RHCs that 
lose their clinic status to maintain Medicare Part B payments, and 
clarifies that when services already excluded from the PPS system are 
delivered to Skilled Nursing Facility patients by practitioners 
employed by the RHCs, those visits are also excluded from the PPS 
payment system. In addition, this bill increases payments under the 
Medicare home health PPS for beneficiaries who reside in rural areas by 
increasing the standardized payment per 60-day episode by 10 percent.
  Current law allows states the option to reimburse hospitals for 
Qualified Medicare Beneficiary (QMB) services attributable to 
deductibles and coinsurance amounts. However, many state Medicaid 
programs have chosen not to pay these costs, leaving rural hospitals 
with a significant portion of unpaid bad debt expenses. This is 
especially burdensome since federal law prohibits hospitals from 
seeking payment for the cost-sharing amounts from QMB patients. This 
legislation provides additional relief to rural hospitals by restoring 
100% Medicare bad debt reimbursement for QMBs.
  Although, as a general rule, scholarships are excluded from income, 
the Internal Revenue Service has taken the position that National 
Health Service Corp scholarships are included in income. Imposing taxes 
on the scholarships could have disastrous effects on a program that for 
over 20 years has helped funnel doctors, nurse-practitioners, physician 
assistants, and other health professionals into medically underserved 
communities. This provision excludes from gross income of certain 
scholarships any amounts received under the National Health Service 
Corps Scholarship Program.
  Finally, this bill includes important technical corrections to the 
Balanced Budget Refinement Act of 1999. This bill extends the option to 
rebase target amounts to all Sole Community Hospitals and allows 
Critical Access Hospitals to receive reimbursement for lab services on 
a reasonable cost basis.
  Exciting changes are taking place in rural America. This legislation 
will enable small rural hospitals to take advantage of the latest 
technology and improve health care for rural residents across the 
country. Mr. President, I invite my colleagues to join me in support of 
this endeavor. I am unanimous consent that a copy of the bill appear in 
the Congressional Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2987

       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 ``Rural 
     Health Care in the 21st Century Act of 2000''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                        TITLE I--HIGH TECHNOLOGY

Sec. 101. High technology acquisition grant and loan program.
Sec. 102. Refinement of medicare reimbursement for telehealth services.
Sec. 103. Extension of telemedicine demonstration projects.

  TITLE II--IMPROVEMENTS IN THE DISPROPORTIONATE SHARE HOSPITAL (DSH) 
                                PROGRAM

Sec. 201. Disproportionate share hospital adjustment for rural 
              hospitals.

 TITLE III--IMPROVEMENTS IN THE CRITICAL ACCESS HOSPITAL (CAH) PROGRAM

Sec. 301. Treatment of swing-bed services furnished by critical access 
              hospitals.
Sec. 302. Treatment of ambulance services furnished by certain critical 
              access hospitals.
Sec. 303. Treatment of home health services furnished by certain 
              critical access hospitals.
Sec. 304. Designation of a single fiscal intermediary for all critical 
              access hospitals.
Sec. 305. Establishment of an all-inclusive payment option for 
              outpatient critical access hospital services.

       TITLE IV--OUTPATIENT SERVICES FURNISHED BY RURAL PROVIDERS

Sec. 401. Permanent guarantee of pre-BBA payment levels for outpatient 
              services furnished by rural hospitals.
Sec. 402. Provider-based rural health clinic cap exemption.
Sec. 403. Payment for certain physician assistant services.
Sec. 404. Exclusion of rural health clinic services from the PPS for 
              skilled nursing facilities.
Sec. 405. Bonus payments for rural home health agencies.

                           TITLE V--BAD DEBT

Sec. 501. Restoration of full payment for bad debts of qualified 
              medicare beneficiaries.

      TITLE VI--NATIONAL HEALTH SERVICE CORPS SCHOLARSHIP PROGRAM

Sec. 601. Exclusion of certain amounts received under the National 
              Health Service Corps scholarship program.

 TITLE VII--TECHNICAL CORRECTIONS TO BALANCED BUDGET REFINEMENT ACT OF 
                                  1999

Sec. 701. Extension of option to use rebased target amounts to all sole 
              community hospitals.
Sec. 702. Payments to critical access hospitals for clinical diagnostic 
              laboratory tests.

                        TITLE I--HIGH TECHNOLOGY

     SEC. 101. HIGH TECHNOLOGY ACQUISITION GRANT AND LOAN PROGRAM.

       (a) Establishment of Program.--Title III of the Public 
     Health Service Act (42 U.S.C. 241 et seq.) is amended by 
     inserting after section 330D the following:

     ``SEC. 330E. HIGH TECHNOLOGY ACQUISITION GRANT AND LOAN 
                   PROGRAM.

       ``(a) Establishment of Program.--The Secretary, acting 
     through the Director of the Office of Rural Health Policy (of 
     the Health Resources and Services Administration), shall 
     establish a High Technology Acquisition Grant and Loan 
     Program for the purpose of--
       ``(1) improving the quality of health care in rural areas 
     through the acquisition of advanced medical technology;
       ``(2) fostering the development the networks described in 
     section 330D(c);
       ``(3) promoting resource sharing between urban and rural 
     facilities; and
       ``(4) improving patient safety and outcomes through the 
     acquisition of high technology, including software, 
     information services, and staff training.
       ``(b) Grants and Loans.--Under the program established 
     under subsection (a), the Secretary, acting through the 
     Director of the Office of Rural Health Policy, may award 
     grants and make loans to any eligible entity (as defined in 
     subsection (d)(1)) for any costs incurred by the eligible 
     entity in acquiring eligible equipment and services (as 
     defined in subsection (d)(2)).
       ``(c) Limitations.--
       ``(1) In general.--Subject to paragraph (2), the total 
     amount of grants and loans made

[[Page S7902]]

     under this section to an eligible entity may not exceed 
     $100,000.
       ``(2) Federal sharing.--
       ``(A) Grants.--The amount of any grant awarded under this 
     section may not exceed 70 percent of the costs to the 
     eligible entity in acquiring eligible equipment and services.
       ``(B) Loans.--The amount of any loan made under this 
     section may not exceed 90 percent of the costs to the 
     eligible entity in acquiring eligible equipment and services.
       ``(d) Definitions.--In this section:
       ``(1) Eligible entity.--The term `eligible entity' means a 
     hospital, health center, or any other entity that the 
     Secretary determines is appropriate that is located in a 
     rural area or region.
       ``(2) Eligible equipment and services.--The term `eligible 
     equipment and services' includes--
       ``(A) unit dose distribution systems;
       ``(B) software and information services and staff training;
       ``(C) wireless devices to transmit medical orders;
       ``(D) clinical health care informatics systems, including 
     bar code systems designed to avoid medication errors and 
     patient tracking systems; and
       ``(E) any other technology that improves the quality of 
     health care provided in rural areas.
       ``(e) Authorization of Appropriations.--For the purpose of 
     carrying out this section there are authorized to be 
     appropriated such sums as may be necessary for each of the 
     fiscal years 2001 through 2006.''.

     SEC. 102. REFINEMENT OF MEDICARE REIMBURSEMENT FOR TELEHEALTH 
                   SERVICES.

       (a) Revision of Telehealth Payment Methodology and 
     Elimination of Fee-Sharing Requirement.--Section 4206(b) of 
     the Balanced Budget Act of 1997 (42 U.S.C. 1395l note) is 
     amended to read as follows:
       ``(b) Methodology for Determining Amount of Payments.--
       ``(1) In general.--The Secretary shall pay to--
       ``(A) the physician or practitioner at a distant site that 
     provides an item or service under subsection (a) an amount 
     equal to the amount that such physician or provider would 
     have been paid had the item or service been provided without 
     the use of a telecommunications system; and
       ``(B) the originating site a facility fee for facility 
     services furnished in connection with such item or service.
       ``(2) Application of part b coinsurance and deductible.--
     Any payment made under this section shall be subject to the 
     coinsurance and deductible requirements under subsections 
     (a)(1) and (b) of section 1833 of the Social Security Act (42 
     U.S.C. 1395l).
       ``(3) Definitions.--In this subsection:
       ``(A) Distant site.--The term `distant site' means the site 
     at which the physician or practitioner is located at the time 
     the item or service is provided via a telecommunications 
     system.
       ``(B) Facility fee.--The term `facility fee' means an 
     amount equal to--
       ``(i) for 2000 and 2001, $20; and
       ``(ii) for a subsequent year, the facility fee under this 
     subsection for the previous year increased by the percentage 
     increase in the MEI (as defined in section 1842(i)(3)) for 
     such subsequent year.
       ``(C) Originating site.--
       ``(i) In general.--The term `originating site' means the 
     site described in clause (ii) at which the eligible 
     telehealth beneficiary under the medicare program is located 
     at the time the item or service is provided via a 
     telecommunications system.
       ``(ii) Sites described.--The sites described in this 
     paragraph are as follows:

       ``(I) On or before January 1, 2002, the office of a 
     physician or a practitioner, a critical access hospital, a 
     rural health clinic, and a Federally qualified health center.
       ``(II) On or before January 1, 2003, the sites described in 
     subclause (I), a hospital, a skilled nursing facility, a 
     comprehensive outpatient rehabilitation facility, a renal 
     dialysis facility, an ambulatory surgical center, an Indian 
     Health Service facility, and a community mental health 
     center.''.

       (b) Elimination of Requirement for Telepresenter.--Section 
     4206 of the Balanced Budget Act of 1997 (42 U.S.C. 1395l 
     note) is amended--
       (1) in subsection (a), by striking ``, notwithstanding that 
     the individual physician'' and all that follows before the 
     period at the end; and
       (2) by adding at the end the following new subsection:
       ``(e) Telepresenter Not Required.--Nothing in this section 
     shall be construed as requiring an eligible telehealth 
     beneficiary to be presented by a physician or practitioner 
     for the provision of an item or service via a 
     telecommunications system.''.
       (c) Reimbursement for Medicare Beneficiaries Who Do Not 
     Reside in a HPSA.--Section 4206(a) of the Balanced Budget Act 
     of 1997 (42 U.S.C. 1395l note), as amended by subsection (b), 
     is amended--
       (1) by striking ``In General.--Not later than'' and 
     inserting the following: ``Telehealth Services Reimbursed.--
       ``(1) In general.--Not later than'';
       (2) by striking ``furnishing a service for which payment'' 
     and all that follows before the period and inserting ``to an 
     eligible telehealth beneficiary''; and
       (3) by adding at the end the following new paragraph:
       ``(2) Eligible telehealth beneficiary defined.--In this 
     section, the term `eligible telehealth beneficiary' means a 
     beneficiary under the medicare program under title XVIII of 
     the Social Security Act (42 U.S.C. 1395 et seq.) that resides 
     in--
       ``(A) an area that is designated as a health professional 
     shortage area under section 332(a)(1)(A) of the Public Health 
     Service Act (42 U.S.C. 254e(a)(1)(A));
       ``(B) a county that is not included in a Metropolitan 
     Statistical Area;
       ``(C) an inner-city area that is medically underserved (as 
     defined in section 330(b)(3) of the Public Health Service Act 
     (42 U.S.C. 254b(b)(3))); or
       ``(D) an area in which there is a Federal telemedicine 
     demonstration program.''.
       (d) Telehealth Coverage for Direct Patient Care.--
       (1) In general.--Section 4206 of the Balanced Budget Act of 
     1997 (42 U.S.C. 1395l note), as amended by subsection (c), is 
     amended--
       (A) in subsection (a)(1), by striking ``professional 
     consultation via telecommunications systems with a 
     physician'' and inserting ``items and services for which 
     payment may be made under such part that are furnished via a 
     telecommunications system by a physician''; and
       (B) by adding at the end the following new subsection:
       ``(f) Coverage of Items and Services.--Payment for items 
     and services provided pursuant to subsection (a) shall 
     include payment for professional consultations, office 
     visits, office psychiatry services, including any service 
     identified as of July 1, 2000, by HCPCS codes 99241-99275, 
     99201-99215, 90804-90815, and 90862, and any additional item 
     or service specified by the Secretary.''.
       (2) Study and report regarding additional items and 
     services.--
       (A) Study.--The Secretary of Health and Human Services 
     shall conduct a study to identify items and services in 
     addition to those described in section 4206(f) of the 
     Balanced Budget Act of 1997 (as added by paragraph (1)) that 
     would be appropriate to provide payment under title XVIII of 
     the Social Security Act (42 U.S.C. 1395 et seq.).
       (B) Report.--Not later than 2 years after the date of 
     enactment of this Act, the Secretary shall submit a report to 
     Congress on the study conducted under subparagraph (A) 
     together with such recommendations for legislation that the 
     Secretary determines are appropriate.
       (e) All Physicians and Practitioners Eligible for 
     Telehealth Reimbursement.--Section 4206(a) of the Balanced 
     Budget Act of 1997 (42 U.S.C. 1395l note), as amended by 
     subsection (d), is amended--
       (1) in paragraph (1), by striking ``(described in section 
     1842(b)(18)(C) of such Act (42 U.S.C. 1395u(b)(18)(C))''; and
       (2) by adding at the end the following new paragraph:
       ``(3) Practitioner defined.--For purposes of paragraph (1), 
     the term `practitioner' includes--
       ``(A) a practitioner described in section 1842(b)(18)(C) of 
     the Social Security Act (42 U.S.C. 1395u(b)(18)(C)); and
       ``(B) a physical, occupational, or speech therapist.''.
       (f) Telehealth Services Provided Using Store-and-Forward 
     Technologies.--Section 4206(a)(1) of the Balanced Budget Act 
     of 1997 (42 U.S.C. 1395l note), as amended by subsection (e), 
     is amended by adding at the end the following new paragraph:
       ``(4) Use of store-and-forward technologies.--For purposes 
     of paragraph (1), in the case of any Federal telemedicine 
     demonstration program in Alaska or Hawaii, the term 
     `telecommunications system' includes store-and-forward 
     technologies that provide for the asynchronous transmission 
     of health care information in single or multimedia 
     formats.''.
       (g) Construction Relating to Home Health Services.--Section 
     4206(a) of the Balanced Budget Act of 1997 (42 U.S.C. 1395l 
     note), as amended by subsection (f), is amended by adding at 
     the end the following new paragraph:
       ``(5) Construction relating to home health services.--
       ``(A) In general.--Nothing in this section or in section 
     1895 of the Social Security Act (42 U.S.C. 1395fff) shall be 
     construed as preventing a home health agency that is 
     receiving payment under the prospective payment system 
     described in such section from furnishing a home health 
     service via a telecommunications system.
       ``(B) Limitation.--The Secretary shall not consider a home 
     health service provided in the manner described in 
     subparagraph (A) to be a home health visit for purposes of--
       ``(i) determining the amount of payment to be made under 
     the prospective payment system established under section 1895 
     of the Social Security Act (42 U.S.C. 1395fff); or
       ``(ii) any requirement relating to the certification of a 
     physician required under section 1814(a)(2)(C) of such Act 
     (42 U.S.C. 1395f(a)(2)(C)).''.
       (h) Effective Date.--The amendments made by this Act shall 
     apply to items and services provided on or after the date of 
     enactment of this Act.

     SEC. 103. EXTENSION OF TELEMEDICINE DEMONSTRATION PROJECTS.

       The Secretary of Health and Human Services shall maintain 
     through September 30, 2003, the grant and operational phases 
     of any telemedicine demonstration project conducted under the 
     medicare program under title XVIII of the Social Security Act 
     (42 U.S.C. 1395 et seq.)--

[[Page S7903]]

       (1) for which funds were expended before the date of 
     enactment of the Balanced Budget Act of 1997 (Public Law 105-
     133; 111 Stat. 251); and
       (2) that is ongoing as of the date of enactment of this 
     Act.

  TITLE II--IMPROVEMENTS IN THE DISPROPORTIONATE SHARE HOSPITAL (DSH) 
                                PROGRAM

     SEC. 201. DISPROPORTIONATE SHARE HOSPITAL ADJUSTMENT FOR 
                   RURAL HOSPITALS.

       (a) Application of Uniform 15 Percent Threshold.--Section 
     1886(d)(5)(F)(v) of the Social Security Act (42 U.S.C. 
     1395ww(d)(5)(F)(v)) is amended by striking ``exceeds--'' and 
     all that follows and inserting ``exceeds 15 percent.''.
       (b) Change in Payment Percentage Formulas.--Section 
     1886(d)(5)(F) of the Social Security Act (42 U.S.C. 
     1395ww(d)(5)(F)) is amended--
       (1) in clause (iv), by striking ``and that--'' and all that 
     follows and inserting ``is equal to the percentage determined 
     in accordance with the applicable formula described in clause 
     (vii).'';
       (2) in clause (vii), by striking ``clause (iv)(I)'' and 
     inserting ``clause (iv)''; and
       (3) by striking clause (viii) and inserting the following 
     new clause:
       ``(viii) No hospital described in clause (iv) may receive a 
     payment amount under this section that is less than the 
     payment amount that would have been made under this section 
     if the amendments made by section 201 of the Rural Health 
     Care in the 21st Century Act of 2000 had not been enacted.''.
       (c) Effective Date.--The amendments made by this section 
     apply to discharges occurring on or after October 1, 2000.

 TITLE III--IMPROVEMENTS IN THE CRITICAL ACCESS HOSPITAL (CAH) PROGRAM

     SEC. 301. TREATMENT OF SWING-BED SERVICES FURNISHED BY 
                   CRITICAL ACCESS HOSPITALS.

       (a) Exemption From SNF PPS.--Section 1888(e)(7) of the 
     Social Security Act (42 U.S.C. 1395yy(e)(7)) is amended--
       (1) in the heading, by striking ``Transition for'' and 
     inserting ``Treatment of'';
       (2) in subparagraph (A), by striking ``In general.--The'' 
     and inserting ``Transition.--Except as provided in 
     subparagraph (C), the'';
       (3) in subparagraph (B), by striking ``, for which'' and 
     all that follows before the period at the end and inserting 
     ``(other than critical access hospitals)''; and
       (4) by adding at the end the following new subparagraph:
       ``(C) Critical access hospitals.--In the case of facilities 
     described in subparagraph (B) that are critical access 
     hospitals--
       ``(i) the prospective payment system established under this 
     subsection shall not apply to services furnished pursuant to 
     an agreement described in section 1883; and
       ``(ii) such services shall be paid on the basis specified 
     in subsection (a)(3) of such section.''.
       (b) Payment Basis for Swing-Bed Services Furnished by 
     Critical Access Hospitals.--Section 1883(a) of the Social 
     Security Act (42 U.S.C. 1395tt(a)) is amended--
       (1) in paragraph (2)(A), by inserting ``(other than a 
     critical access hospital)'' after ``any hospital''; and
       (2) by adding at the end the following new paragraph:
       ``(3) Notwithstanding any other provision of this title, a 
     critical access hospital shall be paid for services furnished 
     under an agreement entered into under this section on the 
     basis of the reasonable costs of such services (as determined 
     under section 1861(v)).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to cost reporting periods beginning on or after 
     October 1, 1999.

     SEC. 302. TREATMENT OF AMBULANCE SERVICES FURNISHED BY 
                   CERTAIN CRITICAL ACCESS HOSPITALS.

       (a) Exemption From Ambulance Fee Schedule.--
       (1) In general.--Section 1834(l) of the Social Security Act 
     (42 U.S.C. 1395m(l)) is amended by adding at the end the 
     following new paragraph:
       ``(8) Inapplicability of fee schedule to certain 
     services.--In the case of ambulance services (described in 
     section 1861(s)(7)) that are provided in a locality by a 
     critical access hospital that is the only provider of 
     ambulance services in the locality, or by an entity that is 
     owned and operated by such a critical access hospital--
       ``(A) the fee schedule established under this subsection 
     shall not apply; and
       ``(B) payment under this part shall be paid on the basis of 
     the reasonable costs incurred in providing such services.''.
       (2) Conforming amendments.--Section 1833(a)(1) of the 
     Social Security Act (42 U.S.C. 1395l(a)(1)) is amended--
       (A) in subparagraph (R)--
       (i) by inserting ``except as provided in subparagraph 
     (T),'' before ``with respect''; and
       (ii) by striking ``and'' at the end; and
       (B) in subparagraph (S), by striking the semicolon at the 
     end and inserting ``, and (T) with respect to ambulance 
     services described in section 1834(l)(8), the amount paid 
     shall be 80 percent of the lesser of the actual charge for 
     the services or the amount determined under such section;''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to cost reporting periods beginning on or after 
     October 1, 1999.
       (b) Exemption From Reasonable Cost Reductions.--
       (1) Exemption.--Section 1861(v)(1)(U) of the Social 
     Security Act (42 U.S.C. 1395x(v)(1)(U)) is amended by 
     inserting after the first sentence the following new 
     sentence: ``The reductions required by the preceding sentence 
     shall not apply in the case of ambulance services that are 
     provided in a locality on or after October 1, 1999, by a 
     critical access hospital that is the only provider of 
     ambulance services in the locality, or by an entity that is 
     owned and operated by such a critical access hospital.''.
       (2) Technical amendment.--Section 1861(v)(1) of the Social 
     Security Act (42 U.S.C. 1395x(v)(1)) is amended by realigning 
     subparagraph (U) so as to align the left margin of such 
     subparagraph with the left margin of subparagraph (T).

     SEC. 303. TREATMENT OF HOME HEALTH SERVICES FURNISHED BY 
                   CERTAIN CRITICAL ACCESS HOSPITALS.

       (a) Exemption From Home Health Interim Payment System.--
     Section 1861(v)(1)(L) of the Social Security Act (42 U.S.C. 
     1395x(v)(1)(L)) is amended by adding at the end the following 
     new clause:
       ``(xi) The preceding provisions of this subparagraph shall 
     not apply to home health services that are furnished on or 
     after October 1, 2000, by a home health agency that is--

       ``(I) the only home health agency serving a locality; and
       ``(II) owned and operated by a critical access hospital.''.

       (b) Exemption From PPS.--
       (1) In general.--Section 1895 of the Social Security Act 
     (42 U.S.C. 1395fff) is amended by adding at the end the 
     following new subsection:
       ``(e) Exemption.--The prospective payment system 
     established under this section shall not apply in determining 
     payments for home health services furnished by a home health 
     agency that is--
       ``(1) the only home health agency serving a locality; and
       ``(2) owned and operated by a critical access hospital.''.
       (2) Conforming amendment.--Section 1833(a)(2)(A) of the 
     Social Security Act (42 U.S.C. 1395(a)(2)(A)) is amended by 
     inserting ``home health services described in section 1895(e) 
     and other than'' after ``other than''.
       (3) Technical amendment.--Section 1833(a)(2)(A) of the 
     Social Security Act (42 U.S.C. 1395(a)(2)(A)) is amended by 
     striking ``drug) (as defined in section 1861(kk))'' and 
     inserting ``drug (as defined in section 1861(kk)))''.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to cost reporting periods beginning on or after 
     October 1, 2000.

     SEC. 304. DESIGNATION OF A SINGLE FISCAL INTERMEDIARY FOR ALL 
                   CRITICAL ACCESS HOSPITALS.

       Section 1816 of the Social Security Act (42 U.S.C. 1395h) 
     is amended by adding at the end the following:
       ``(m) Not later than October 1, 2000, the Secretary shall 
     designate a national agency or organization with an agreement 
     under this section to perform functions under the agreement 
     with respect to each critical access hospital electing to 
     have such functions performed by such agency or 
     organization.''.

     SEC. 305. ESTABLISHMENT OF AN ALL-INCLUSIVE PAYMENT OPTION 
                   FOR OUTPATIENT CRITICAL ACCESS HOSPITAL 
                   SERVICES.

       (a) All-Inclusive Payment Option for Outpatient Critical 
     Access Hospital Services.--Section 1834(g) of the Social 
     Security Act (42 U.S.C. 1395m(g)) is amended--
       (1) by striking paragraph (1) and inserting the following 
     new paragraph:
       ``(1) Election of cah.--At the election of a critical 
     access hospital, the amount of payment for outpatient 
     critical access hospital services under this part shall be 
     determined under paragraph (2) or (3), such amount determined 
     under either paragraph without regard to the amount of the 
     customary or other charge.''; and
       (2) by striking paragraph (3) and inserting the following 
     new paragraph:
       ``(3) All-inclusive rate.--If a critical access hospital 
     elects this paragraph to apply, with respect to both facility 
     services and professional services, there shall be paid 
     amounts equal to the reasonable costs of the critical access 
     hospital in providing such services (except that in the case 
     of clinical diagnostic laboratory services furnished by a 
     critical access hospital the amount of payment shall be equal 
     to 100 percent of the reasonable costs of the critical access 
     hospital in providing such services), less the amount that 
     such hospital may charge as described in section 
     1866(a)(2)(A).''.
       (b) Effective Date.--The amendments made by subparagraph 
     (a) shall take effect as if included in the enactment of 
     section 403(d) of the Medicare, Medicaid, and SCHIP Balanced 
     Budget Refinement Act of 1999 (113 Stat. 1501A-371), as 
     enacted into law by section 1000(a)(6) of Public Law 106-113.

       TITLE IV--OUTPATIENT SERVICES FURNISHED BY RURAL PROVIDERS

     SEC. 401. PERMANENT GUARANTEE OF PRE-BBA PAYMENT LEVELS FOR 
                   OUTPATIENT SERVICES FURNISHED BY RURAL 
                   HOSPITALS.

       (a) In General.--Section 1833(t)(7)(D) of the Social 
     Security Act (42 U.S.C. 1395l(t)(7)(D)), as added by section 
     202 of the Medicare, Medicaid, and SCHIP Balanced Budget 
     Refinement Act of 1999 (113 Stat. 1501A-342), as enacted into 
     law by section 1000(a)(6) of Public Law 106-113, is amended 
     to read as follows:

[[Page S7904]]

       ``(D) Hold harmless provisions for small rural hospitals 
     and cancer hospitals.--In the case of a hospital located in a 
     rural area and that has not more than 100 beds or a hospital 
     described in section 1886(d)(1)(B)(v), for covered OPD 
     services for which the PPS amount is less than the pre-BBA 
     amount, the amount of payment under this subsection shall be 
     increased by the amount of such difference.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the enactment of section 
     202 of the Medicare, Medicaid, and SCHIP Balanced Budget 
     Refinement Act of 1999 (113 Stat. 1501A-342), as enacted into 
     law by section 1000(a)(6) of Public Law 106-113.

     SEC. 402. PROVIDER-BASED RURAL HEALTH CLINIC CAP EXEMPTION.

       (a) In General.--The matter in section 1833(f) of the 
     Social Security Act (42 U.S.C. 1395l(f)) preceding paragraph 
     (1) is amended by striking ``with less than 50 beds'' and 
     inserting ``with an average daily patient census that does 
     not exceed 50''.
       (b) Effective Date.--The amendment made by subparagraph (A) 
     applies to services furnished on or after January 1, 2001.

     SEC. 403. PAYMENT FOR CERTAIN PHYSICIAN ASSISTANT SERVICES.

       (a) Payment for Certain Physician Assistant Services.--
     Section 1842(b)(6)(C) of the Social Security Act (42 U.S.C. 
     1395u(b)(6)(C)) is amended by striking ``for such services 
     provided before January 1, 2003,''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of enactment of this Act.

     SEC. 404. EXCLUSION OF RURAL HEALTH CLINIC SERVICES FROM THE 
                   PPS FOR SKILLED NURSING FACILITIES.

       (a) In General.--Section 1888(e)(2)(A)(ii) of the Social 
     Security Act (42 U.S.C. 1395yy(e)(2)(A)(ii)) is amended by 
     inserting after the first sentence the following: ``Services 
     described in this clause also include services that are 
     provided by a physician, a physician assistant, a nurse 
     practitioner, a certified nurse midwife, or a qualified 
     psychologist who is employed, or otherwise under contract, 
     with a rural health clinic.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to services furnished on or after January 1, 
     2001.

     SEC. 405. BONUS PAYMENTS FOR RURAL HOME HEALTH AGENCIES.

       (a) Increase in Payment Rates for Rural Agencies.--
       (1) In general.--Section 1895(b) of the Social Security Act 
     (42 U.S.C. 1395fff(b)) is amended by adding at the end the 
     following new paragraph:
       ``(7) Additional payment amount for services furnished in 
     rural areas.--In the case of home health services furnished 
     in a rural area (as defined in section 1886(d)(2)(D)), the 
     Secretary shall provide for an addition or adjustment to the 
     payment amount otherwise made under this section for services 
     furnished in a rural area in an amount equal to 10 percent of 
     the amount otherwise determined under this subsection.''.
       (2) Waiving budget neutrality.--Section 1895(b)(3) of such 
     Act (42 U.S.C. 1395fff(b)(3)) is amended by adding at the end 
     the following new subparagraph:
       ``(D) No adjustment for additional payments for rural 
     services.--The Secretary shall not reduce the standard 
     prospective payment amount (or amounts) under this paragraph 
     applicable to home health services furnished during a period 
     to offset the increase in payments resulting from the 
     application of paragraph (7) (relating to services furnished 
     in rural areas).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to episodes of care beginning on or after April 
     1, 2001.

                           TITLE V--BAD DEBT

     SEC. 501. RESTORATION OF FULL PAYMENT FOR BAD DEBTS OF 
                   QUALIFIED MEDICARE BENEFICIARIES.

       (a) Medicare Cost-Sharing Uncollectible and Not Covered by 
     Medicaid State Plans.--Section 1902(n)(3)(B) of the Social 
     Security Act (42 U.S.C. 1396a(n)(3)(B)) is amended--
       (1) by inserting ``(i)'' after ``(B)''; and
       (2) by adding at the end the following new clause:
       ``(ii) the amount of medicare cost-sharing that is 
     uncollectible from the beneficiary because of clause (i) and 
     that is not paid by any other individual or entity shall be 
     deemed to be bad debt for purposes of title XVIII; and''.
       (b) Recognition of 100 Percent of Bad Debt.--
       (1) Nonapplication of reduction.--Section 1861(v)(1)(T) of 
     the Social Security Act (42 U.S.C. 1395x(v)(1)(T)) is amended 
     by inserting ``(other than any amount deemed to be bad debt 
     under section 1902(n)(3)(B)(ii))'' after ``amounts under this 
     title''.
       (2) Recognition with respect to certified nurse 
     anesthetists, nurse practitioners, and clinical nurse 
     specialists.--Section 1833 of the Social Security Act (42 
     U.S.C. 1395l) is amended--
       (A) in subsection (l)(5)(B), by striking ``No hospital'' 
     and inserting ``Except as provided in section 
     1902(n)(3)(B)(ii), no hospital''; and
       (B) in subsection (r)(2), by striking ``No hospital'' and 
     inserting ``Except as provided in section 1902(n)(3)(B)(ii), 
     no hospital''.
       (c) Technical Amendment.--Section 1861(v)(1)(T) of the 
     Social Security Act (42 U.S.C. 1395x(v)(1)(T)) is amended by 
     striking ``1833(t)(5)(B)'' and inserting ``1833(t)(8)(B)'' in 
     the matter preceding clause (i).
       (d) Effective Date.--The amendments made by this section 
     shall apply to bad debt incurred on or after the date of 
     enactment of this Act.

      TITLE VI--NATIONAL HEALTH SERVICE CORPS SCHOLARSHIP PROGRAM

     SEC. 601. EXCLUSION OF CERTAIN AMOUNTS RECEIVED UNDER THE 
                   NATIONAL HEALTH SERVICE CORPS SCHOLARSHIP 
                   PROGRAM.

       (a) In General.--Section 117(c) of the Internal Revenue 
     Code of 1986 (relating to the exclusion from gross income 
     amounts received as a qualified scholarship) is amended--
       (1) by striking ``Subsections (a)'' and inserting the 
     following:
       ``(1) In general.--Except as provided in paragraph (2), 
     subsections (a)''; and
       (2) by adding at the end the following new paragraph:
       ``(2) Exception.--Paragraph (1) shall not apply to any 
     amount received by an individual under the National Health 
     Service Corps Scholarship Program under section 338A(g)(1)(A) 
     of the Public Health Service Act.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to amounts received in taxable years beginning 
     after December 31, 1994.

 TITLE VII--TECHNICAL CORRECTIONS TO BALANCED BUDGET REFINEMENT ACT OF 
                                  1999

     SEC. 701. EXTENSION OF OPTION TO USE REBASED TARGET AMOUNTS 
                   TO ALL SOLE COMMUNITY HOSPITALS.

       (a) In General.--Section 1886(b)(3)(I)(i) of the Social 
     Security Act (42 U.S.C. 1395ww(b)(3)(I)(i)) (as added by 
     section 405 of the Medicare, Medicaid, and SCHIP Balanced 
     Budget Refinement Act of 1999 (113 Stat. 1501A-372), as 
     enacted into law by section 1000(a)(6) of Public Law 106-113) 
     is amended--
       (1) in the matter preceding subclause (I)--
       (A) by striking ``for its cost reporting period beginning 
     during 1999 is paid on the basis of the target amount 
     applicable to the hospital under subparagraph (C) and that''; 
     and
       (B) by striking ``such target amount'' and inserting ``the 
     amount otherwise determined under subsection (d)(5)(D)(i)'';
       (2) in subclause (I), by striking ``target amount otherwise 
     applicable'' and all that follows through ``target amount')'' 
     and inserting ``the amount otherwise applicable to the 
     hospital under subsection (d)(5)(D)(i) (referred to in this 
     clause as the `subsection (d)(5)(D)(i) amount')''; and
       (3) in each of subclauses (II) and (III), by striking 
     ``subparagraph (C) target amount'' and inserting ``subsection 
     (d)(5)(D)(i) amount''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect as if included in the enactment of the 
     Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act 
     of 1999, as enacted into law by section 1000(a)(6) of Public 
     Law 106-113.

     SEC. 702. PAYMENTS TO CRITICAL ACCESS HOSPITALS FOR CLINICAL 
                   DIAGNOSTIC LABORATORY TESTS.

       (a) Payment on Cost Basis Without Beneficiary Cost-
     Sharing.--
       (1) In general.--Section 1833(a)(6) of the Social Security 
     Act (42 U.S.C. 1395l(a)(6)) is amended by inserting 
     ``(including clinical diagnostic laboratory services 
     furnished by a critical access hospital)'' after ``outpatient 
     critical access hospital services''.
       (2) No beneficiary cost-sharing.--
       (A) In general.--Section 1834(g) of the Social Security Act 
     (42 U.S.C. 1395m(g)) is amended by inserting ``(except that 
     in the case of clinical diagnostic laboratory services 
     furnished by a critical access hospital the amount of payment 
     shall be equal to 100 percent of the reasonable costs of the 
     critical access hospital in providing such services)'' before 
     the period at the end.
       (B) BBRA amendment.--Section 1834(g) of the Social Security 
     Act (42 U.S.C. 1395m(g)) is amended--
       (i) in paragraph (1), by inserting ``(except that in the 
     case of clinical diagnostic laboratory services furnished by 
     a critical access hospital the amount of payment shall be 
     equal to 100 percent of the reasonable costs of the critical 
     access hospital in providing such services)'' after ``such 
     services,''; and
       (ii) in paragraph (2)(A), by inserting ``(except that in 
     the case of clinical diagnostic laboratory services furnished 
     by a critical access hospital the amount of payment shall be 
     equal to 100 percent of the reasonable costs of the critical 
     access hospital in providing such services)'' before the 
     period at the end.
       (b) Conforming Amendments.--Paragraphs (1)(D)(i) and 
     (2)(D)(i) of section 1833(a) of the Social Security Act (42 
     U.S.C. 1395l(a)(1)(D)(i); 1395l(a)(2)(D)(i)) are each amended 
     by striking ``or which are furnished on an outpatient basis 
     by a critical access hospital''.
       (c) Technical Amendment.--Section 403(d)(2) of the 
     Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act 
     of 1999 (113 Stat. 1501A-371), as enacted into law by section 
     1000(a)(6) of Public Law 106-113, is amended by striking 
     ``subsection (a)'' and inserting ``paragraph (1)''.
       (d) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to services 
     furnished on or after November 29, 1999.
       (2) BBRA and technical amendments.--The amendments made by 
     subsections

[[Page S7905]]

     (a)(2)(B) and (c) shall take effect as if included in the 
     enactment of section 403(d) of the Medicare, Medicaid, and 
     SCHIP Balanced Budget Refinement Act of 1999 (113 Stat. 
     1501A-371), as enacted into law by section 1000(a)(6) of 
     Public Law 106-113.

                                 ______
                                 
      By Mr. FRIST (for himself, Mr. Breaux, Mr. Bond, and Mr. 
        Hollings):
  S. 2988. A bill to establish a National Commission on Space; to the 
Committee on Commerce, Science, and Transportation.


              millennium national commission on space act

  Mr. FRIST. Mr. President, I rise to introduce the Millennium National 
Commission on Space Act.
  The year 1999 proved to be very difficult for NASA. The Commerce 
Committee reviewed reports on such incidents as:
  Workers searching for misplaced Space Station tanks in a landfill;
  Loose pins in the Shuttle's main engine;
  Failure to make English-metric conversions causing the failure of a 
$125 million mission to Mars;
  Two-time use of ``rejected'' seals on Shuttle's turbopumps;
  $1 billion of cost overruns on the prime contract for the Space 
Station with calls from the Inspector General at NASA for improvement 
in the agency's oversight;
  Workers damaging the main antennae on the Shuttle for communication 
between mission control and the orbiting Shuttle;
  Urgent repair mission to the Hubble telescope;
  Approximately $1 billion invested in an experimental vehicle and 
currently no firm plans for its first flight, if it flies at all; and
  The lack of long-term planning for the Space Station, an issue on 
which the Science, Technology, and Space Subcommittee of the Commerce 
Committee has repeatedly questioned NASA.
  It is the last of these items, the lack of long-term planning for the 
Space Station and the lack of long-term planning of NASA and the 
civilian space program, that is of a concern to me. I feel that the 
civilian space program is in need of some guidance. Just as the space 
policy of the 1980's had changed since the creation of NASA in 1958, 
the space policy of the New Millennium needs to change from the 1980's.
  Space has become more commercialized. Today, the private sector 
conducts more space launches than the government. There are many more 
companies developing plans to implement other new and innovative 
commercial ventures.
  I feel that the long term civilian space goals and objectives of the 
nation are in need of some major revisions. As I mentioned earlier, 
today's environment has changed drastically since the last commission 
of this type was assembled.
  This bill proposes a Presidential Commission to address these points. 
The commission will do the ``homework'' that will form the basis for a 
revised civilian space program. The civilian space industry has proven 
to be a valuable national asset over the years. The goal of this bill 
will be to ensure that the U.S. maintains its preeminence in space.
  This commission will consist of 15 Members appointed by the President 
based upon the recommendations of Congressional leadership. My hope is 
that today's new environment will be reflected in the make-up of the 
commission's members. For that reason, the bill sets limits on how many 
members shall be from the government and how many should serve on their 
first federal commission. Ex-officio members of the commission are also 
specified in the bill. Advisory members from the Senate and the House 
of Representatives are to be appointed to the commission by the 
President of the Senate and the Speaker of the House of 
Representatives.
  The final report of the commission is to identify the long range 
goals, opportunities, and policy options for the U.S. civilian space 
activity for the next 20 years.
  As Chairman of the Science, Technology and Space Subcommittee of the 
Commerce Committee, I will continue our oversight responsibilities at 
NASA. I look forward to working with other Members of this body to 
further perfect this bill.
  Mr. President, I thank you for this opportunity to introduce this 
legislation which addresses these very important issues for the space 
community.
  Mr. BREAUX. Mr. President, as the Ranking Democratic Member of the 
Commerce Committee's Science, Technology, and Space Supcommittee, I am 
joining my Chairman, Senator Frist, in introducing legislation to 
establish a National Space Commission.
  If past experience holds true, NASA will be a catalyst for scientific 
discovery in this new century. In the past year, NASA has worked on a 
variety of valuable projects from finding a value for the Hubble 
Constant which measures how fast the universe is expanding to docking 
with the International Space Station for the very first time. Earlier 
this week, NASA and the Russian Space Agency completed the docking of 
the Service Module to the International Space Station, setting the 
stage for the first permanent crew to occupy the station.
  Now, our space exploration agency is poised at a crossroads. After 
several failures, management has made some changes and reinvested in 
the work force and in project oversight. During the next year, NASA 
will try to meet a very aggressive schedule for the assembly of the 
Space Station, and we will finally have our orbiting laboratory in 
space. At the same time, a new Administration will be entering the 
White House. It seems to be an appropriate moment to stand back and ask 
where our space program is going in the next twenty years.
  Now is the time to look to the future. The Millennium National Space 
Commission will build on the work of the 1985 National Space Commission 
and help us formulate an agenda for the civilian space program. In 
doing so, it will help keep this nation in the forefront of scientific 
exploration of ``the final frontier.''
                                 ______
                                 
      By Mr. McCAIN (for himself and Mr. Kerrey):
  S. 2989. A bill to provide for the technical integrity of the FM 
radio band, and for other purposes; to the Committee on Commerce, 
Science, and Transportation.


                      low power radio act of 2000

  Mr. McCAIN. Mr. President, I rise today to introduce a bill with my 
friend and colleague Senator Kerrey to resolve the controversy that has 
erupted over the Federal Communications Commission's creation of a new, 
noncommercial low-power FM radio service.
  As you undoubtedly know, the FCC's low-power FM rules will allow the 
creation of thousands of new noncommercial FM radio stations with 
coverage of about a mile or so. Although these new stations will give 
churches and community groups new outlets for expression of their 
views, commercial FM broadcasters as well as National Public Radio 
oppose the new service. They argue that the FCC ignored studies showing 
that the new low-power stations would cause harmful interference to the 
reception of existing full-power FM stations.
  Mr. President, legislation before the House of Representatives would 
call a halt to the institution of low-power FM service by requiring 
further independent study of its potential for causing harmful 
interference to full-power stations, and Senator Gregg has introduced 
the same legislation in the Senate. While this would undoubtedly please 
existing FM radio broadcasters, it understandably angers the many 
parties who are anxious to apply for the new low-power licenses. Most 
importantly, it would delay the availability of whatever new 
programming these new low-power licensees might provide, even where the 
station would have caused no actual interference at all had it been 
allowed to operate.
  With all due respect to Senator Gregg and to the supporters of the 
House bill, Senator Kerrey and I think we can reach a fairer result, 
and the bill we are introducing, the Low Power Radio Act of 2000, is 
intended to do just that.
  Unlike Senator Gregg's bill, the Low Power Radio Act would allow the 
FCC to license low-power FM radio stations. The only low-power FM 
stations that would be affected would be those whose transmissions are 
actually causing harmful interference to a full-power radio station. 
The Commission would determine which stations are causing such 
interference and what the low-power station must do to alleviate it,

[[Page S7906]]

as the expert agency with the experience and engineering resources 
required to make such determinations.
  The Act gives full-power broadcasters the right to file a complaint 
with the Commission against any low-power FM licensee for causing 
harmful interference, and stipulates that the costs of the proceeding 
shall be borne by the losing party. Finally, to make sure that the FCC 
does not relegate the interests of full-power radio broadcasters to 
secondary importance in its eagerness to launch the new low-power FM 
service, the bill requires the FCC to complete all rulemakings 
necessary to implement full-power stations' transition to digital 
broadcasting no later than June 1, 2001.
  Mr. President, this legislation strikes a fair balance by allowing 
non-interfering low-power FM stations to operate without further delay, 
while affecting only those low-power stations that the FCC finds to be 
causing harmful interference in their actual, everyday operations. This 
is totally consistent with the fact that low-power FM is a secondary 
service which, by law, must cure any interference caused to any 
primary, full-power service. This legislation will provide an efficient 
and effective means to detect and resolve harmful interference. By 
providing a procedural remedy with costs assigned to the losing party, 
the bill will discourage the creation of low-power stations most likely 
to cause harmful interference even as it discourages full-power 
broadcasters from making unwarranted interference claims. And for these 
reasons it will provide a more definitive resolution of opposing 
interference claims than any number of further studies ever could.
  Mr. President, in the interests of would-be new broadcasters, 
existing broadcasters, but, most of all, the listening public, I urge 
the enactment of the Low Power Radio Act of 2000.
  Mr. KERREY. Mr. President, I am pleased to introduce today the Low 
Power Radio Act of 2000 with Senator McCain. Low power FM radio is an 
effort to bring more diversity to the airwaves. Though radio airwaves 
belong to the public, only a handful of people currently control what 
we hear on-air. Low power FM will expand that number by thousands, 
giving a voice to local governments, community groups, churches, and 
schools.
  I understand that there is some concern that these new low-power 
signals will interfere with existing full-power stations. I believe 
these fears are greatly exaggerated. The Federal Communications 
Commission (FCC) has decades-long experience dealing with FM-spectrum 
issues, and they have conducted extensive testing to ensure that these 
new stations will not cause interference.
  Should interference occur, however, I believe that full-power 
stations must have a process for alleviating the problem. The Low Power 
Radio Act allows any broadcaster or listener to file a formal complaint 
with the FCC. If the FCC determines that a low-power station is causing 
harmful interference, the low power station will be removed from the 
airwaves while a technical remedy is found. To discourage frivolous 
complaints, however, the FCC is authorized to assess reimbursement of 
costs associated with the proceeding as well as punitive damages onto 
any full-power station who files a complaint without any purpose other 
than to impede a low-power radio transmission.
  This initiative has undergone a considerable period of testing and 
public comment. Delaying implementation will only result in more 
conflicting engineering studies without guaranteeing that interference 
will not occur. I believe that it is time to let low power FM go 
forward. The Low Power Radio Act gives the FCC the authority to resolve 
harmful interference complaints on a case-by-case, common sense basis. 
It is a compromise that can work to the benefit of existing 
broadcasters, potential low power licensees, and all radio listeners.
                                 ______
                                 
      By Mr. KERRY (for himself and Mr. Feingold):
  S. 2990. A bill to amend chapter 42 of title 28, United States Code, 
to establish the Judicial Education Fund for the payment of reasonable 
expenses of judges participating in seminars, to prohibit the 
acceptance of seminar gifts, and for other purposes; to the Committee 
on the Judiciary.


               the judicial education reform act of 2000

  Mr. KERRY. Mr. President, I send to the desk a bill for introduction. 
The bill is entitled the Judicial Education Reform Act of 2000. Mr. 
Feingold is cosponsoring the legislation.
  Mr. President, as the arbiters of justice in our democracy, judges 
must be honest and fair in their duties. As importantly, if the rule of 
law is to have force in our society, citizens must have faith that 
judges approach their duties honestly and fairly, and that their 
decisions are based solely on the law and the facts of each case. Even 
if every judge were uncorrupt and incorruptible, their honesty would 
mean nothing if the public loses confidence in them. Court rulings are 
effectively only if the public believes that they have been arrived at 
through impartial decision-making. The judiciary must avoid the 
appearance of conflict as fastidiously as it avoids conflict.
  Recent press coverage and an investigation by the public interest law 
firm Community Rights Counsel have revealed that more than 230 federal 
judges have taken more than 500 trips to resort locations for legal 
seminars paid for by corporations, foundations, and individuals between 
1192 and 1998. Many of these sponsors have one-sided legal agendas in 
the courts designed to advance their own interests at the expense of 
the public interest. In many cases, judges accepted seminar trips while 
relevant cases were pending before their court. In some cases, judges 
ruled in favor of a litigant bankrolled by a seminar sponsor. And in 
one case a judge ruled one way, attended a seminar and returned to 
switch his vote to agree with the legal views expressed by the sponsor 
of the trip.
  The notion that federal judges are accepting all-expense-paid trips 
that combine highly political legal theory with stays at resort 
locations from persons with interests before their courts creates an 
appearance of conflict that is unacceptable and unnecessary. At a 
minimum, it creates a perception of improper influence that erodes the 
trust the American people must have in our judicial system.
  Fortunately, the problems posed by improper judicial junkets can be 
remedied and the appearance of judicial impartiality restored. The 
Judicial Education Reform Act will seek to amend the Ethics Reform Act 
of 1989 to close the loophole that allows for privately-funded seminars 
by requiring federal judges to live by the same rules that now govern 
federal prosecutors. The proposal is modeled after the successful 
Federal Judicial Center. It will ensure that legal educational seminars 
for judges serve to educate, not improperly influence. It will ensure 
that these seminars improve our judiciary through better-trained and 
better-informed judges, not undermine it by eroding public confidence 
in judicial neutrality.
  Specifically, the legislation bans privately-funded seminars by 
prohibiting judges from accepting private seminars as gifts, providing 
appropriate exceptions, such as where a judge is a speaker, presenter 
or panel participant in such a seminar. The proposal establishes a 
Judicial Education Fund of $2 million within the U.S. Treasury for the 
payment of expenses incurred by judges attending seminars approved by 
the Board of the Federal Judicial Center. It requires the Judicial 
Conference to promulgate guidelines to ensure that the Board approves 
only those  seminars that are conducted in a manner that will maintain 
the public's confidence the judiciary. Finally, the proposal requires 
that the Board approve a seminar only after information on its content, 
presenters, funding and litigation activities of sponsors and 
presenters are provided. If approved, information on the seminar must 
be posted on the Internet.

  Mr. President, in introducing this legislation, I am not charging the 
federal judiciary or any single judge with improper behavior. I do not 
question the integrity of judges, rather I question a system that 
creates the clear appearance of conflict. I understand the need for 
education. Our economy has mainstreamed once exotic technologies in 
communication, medicine and other fields, and it is important that 
judges have access to experts to keep current on technological 
advances. And I recognize the need for judges to be exposed to diverse 
legal views and to test current legal views. The Judicial Education 
Reform Act legislation provides

[[Page S7907]]

$2 million for precisely that purpose. No judge will be without access 
to continuing education. But, that education will not be funded by 
private entities with broad legal agendas before the federal courts, 
or, as has happened in some of the most unfortunate cases, private 
entities with cases pending before participating judges.
  Finally, Mr. President, I ask unanimous consent to place in the 
record a statement from the Honorable Abner J. Mikva on this subject. 
Mr. Mikva is a former Chief Judge on the United States Court of Appeals 
for the D.C. Circuit and a current Visiting Professor of Law at the 
University of Chicago. His statement captures this the essence this 
issue and need for reform.
  There being no objection, the material ordered to be printed in the 
Record, as follows:

                      Statement of Abner J. Mikva

       The notion that judges must be honest for the system to 
     work is hardly a profound statement. As early as the 
     Declaration of Independence, our founders complained about 
     judges who were obsequious to King George, rather than the 
     cause of justice. But a pure heart is not all that judges 
     must bring to the judicial equation. For the system to work 
     as it should, the judges must be perceived to be honest, to 
     be without bias, to have no tilt in the cause that is being 
     heard.
       That perception of integrity is much more difficult to 
     obtain. After spending 15 years as a judge and a lifetime as 
     a lawyer and lawmaker, I can safely say that the number of 
     judges who were guilty of outright dishonesty--malum in se--
     were happily very few. Even taking into account that I 
     started practicing law in Chicago in the bad old days, the 
     number of crooked judges was small. But that is not what 
     people believe--then or now.
       The framers and attenders to our judicial system have taken 
     many steps to help foster the notion of the integrity of its 
     judges. Some relate to smoke and mirrors--the high bench, the 
     black robe, the ``all rise'' custom when the judge enters the 
     room. Some, like life tenure for federal judges, the codes of 
     conduct promulgated for all judges, are intended to create 
     the climate for integrity and good behavior. (The 
     Constitution limits the life tenure of federal judges to 
     their ``good behavior''.)
       All of those steps become meaningless when private 
     interests are allowed to wine and dine judges at fancy 
     resorts under the pretext of ``educating'' them about 
     complicated issues. If an actual party to a case took the 
     judge to a resort, all expenses paid, shortly before the case 
     was heard, it would not matter what they talked about. Even 
     if all they discussed were their prostate problems, the judge 
     and the party would be perceived to be acting improperly. 
     The conduct is no less reprehensible when an interest 
     group substitutes for the party to the case, and the 
     format for discussion is seminars on environmental policy, 
     or law and economics, or the ``takings clause'' of the 
     Constitution.
       That's what this report is about. It is about the 
     perception of dishonesty that arises when judges attend 
     seminars and study sessions sponsored by corporations and 
     foundations that have a special interest in the 
     interpretation given to environmental laws. It may be a 
     coincidence that the judges who attend these meetings usually 
     come down on the same side of important policy questions as 
     the funders who finance these meetings. It may even be a 
     coincidence that very few environmentalists are invited to 
     address the judges in the bucolic surroundings where the 
     seminars are held. But I doubt it. More importantly, any 
     citizen who reads about judges attending such fancy meetings 
     under such questionable sponsorship, will doubt it even more.
       The federal judiciary has a very effective Federal Judicial 
     Center. It already provides many of the educational services 
     that these special interest groups seek to provide to judges. 
     Admittedly, since the Center is using taxpayer funds and must 
     answer to Congress, the locals of their programs are not as 
     exotic. (The last ones I attended were in South Bend, Indiana 
     in October, and Washington, D.C. in December.) The purpose of 
     Center sponsored programs is as vanilla as it claims: there 
     is no agenda to get the judges to perform in any particular 
     way in handling environmental cases. As a result, the 
     programs are not only balanced as to presentation, but they 
     provide no tilt to the judges' subsequent performance.
       Unfortunately, the U.S. Judicial Conference, the governing 
     body for all federal judges, has punted on the propriety of 
     judges attending seminars funded by special interest groups. 
     It advised judges to consider the propriety of such seminars 
     on a ``case by case'' process. That delicacy has not begun to 
     stem the erosion of public confidence in the fairness of the 
     judicial process when it comes to environmental causes. One 
     of the special interest sponsoring groups publishes a ``Desk 
     Reference for Federal Judges'' which it distributes to all 
     its judge attendees. That must be a real confidence builder 
     for an environmental group that sees it on the desk of a 
     judge sitting on its case. One of the judges on the court on 
     which I sat has attended some 12 trips sponsored by the three 
     most prominent special interest seminar groups. I remember at 
     least two occasions where co-panelist judges took positions 
     that they had heard advocated at seminars sponsored by groups 
     with more than a passing interest in the litigation under 
     consideration.
       When I was in the executive branch, all senior officials 
     operated under a very prophylactic rule. Whenever we were 
     invited to attend or speak at a private gathering, the 
     government paid our way. Whether it was the U.S. Chamber of 
     Commerce or the A.F.L.-C.I.O., nobody could even imply that 
     the official was being wined and dined and brainwashed to 
     further some special interest. Experience showed that such a 
     policy was not sufficient in itself to restore people's 
     confidence in the Executive Branch; at least we didn't make 
     the problem worse.
       If the Federal Judicial Center can't provide sufficient 
     judicial education to the task, maybe the federal judges 
     could use such a prophylaxis. If the judges want to go 
     traveling, let the government pay for the trip. It may or may 
     not change the places they go or the things they learn, but 
     it will at least change the transactional analysis.

  Mr. FEINGOLD. Mr. President, at the very foundation of our system of 
justice is the notion that judges will be fair and impartial. Strict 
ethical guidelines have been in effect for years to remove even the 
hint of impropriety from the conduct of those we entrust with the 
responsibility of adjudicating disputes and applying the law.
  In recent years, there have been disturbing reports of judges 
participating in legal education seminars sponsored and paid for by 
organizations that simultaneously fund federal court litigation on the 
same topics that are covered by the seminars. Some of these seminars 
have a clearly biased agenda in favor a certain legal philosophy. A 
recent report released by Community Rights Counsel found that at least 
1,030 federal judges took over 5,800 privately funded trips between 
1992 and 1998. The appearance created by these seminars is not 
consistent with the image of an impartial judiciary.
  Some of these seminars are conducted at posh vacation resorts in 
locations such as Amelia Island, Florida and Hilton Head, South 
Carolina, and include ample time for expense-paid recreation. These 
kinds of education/vacation trips, which have been valued at over 
$7,000 in some cases, create an appearance that the judges who attend 
are profiting from their positions. Again, this is an appearance that 
is at odds with the traditions of our judiciary.
  One-sided seminars given in wealthy resorts funded by wealthy 
corporate interests to ``educate'' our judges in a particular view of 
the law cannot help but undermine public confidence in the decisions 
that judges who attend the seminars ultimately make. I am pleased, 
therefore, to join with my colleague from Massachusetts, Senator Kerry, 
to introduce the Judicial Education Reform Act of 2000. Our bill 
instructs the judicial conference to issue guidelines prohibiting 
judges from attending privately funded education seminars. The bill 
also authorizes $2 million per year over five years so that the Federal 
Judicial Center, FJC, can reimburse judges for seminars they wish to 
attend, as long as those seminars are approved by the FJC under 
guidelines that will ensure that the seminars are balanced and will 
maintain public confidence in the judiciary. And the bill makes clear 
that the FJC cannot reimburse judges for the expense of recreational 
activities at the seminars.
  Mr. President, I have expressed concern throughout my time in the 
Congress about the improper influence of campaign contributions and 
gifts on members of Congress and the executive branch. Community Rights 
Counsel's report has turned the spotlight on the judicial branch and 
what it reveals is not at all comforting. The influence of powerful 
interests on judicial decision-making through these education seminars 
should concern everyone who believes in the rule of law in this 
country. If judges are seen to be under the influence of the wealthy 
and powerful in our society, ``equal justice under law'' will become an 
empty platitude rather than a powerful aspiration for the greatest 
judicial system on earth. I believe this bill will help us fulfill the 
promise of that great aspiration, and I hope my colleagues will join 
Senator Kerry and me in supporting it.
  I yield the floor.
                                 ______
                                 
      By Mr. LEAHY (for himself and Mr. Kohl):
  S. 2993. A bill to enhance competition for prescription drugs by 
increasing the

[[Page S7908]]

ability of the Department of Justice and Federal Trade Commission to 
enforce existing antitrust laws regarding brand name drugs and generic 
drugs; to the Committee on the Judiciary.

                          ____________________