[Congressional Record Volume 147, Number 21 (Wednesday, February 14, 2001)]
[Senate]
[Pages S1395-S1425]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. THOMAS (for himself and Mr. Helms):
S. 322. A bill to limit the acquisition by the United States of land
located in a State in which 25 percent or more of the land in that
State is owned by the United States; to the Committee on Energy and
Natural Resources.
Mr. THOMAS. Mr. President, I rise today to introduce the no net loss
of private lands bill. This legislation has to do with acquisition of
lands by the Federal Government, particularly lands to be acquired by
the Federal Government in the West. This is a commonsense proposal, I
believe, to Federal land acquisitions in public land States of the
West.
The Federal Government continues to acquire large amounts of land
throughout the Nation. In many instances, it is justified. There are
many reasons why land should be acquired, but there does become a
question of how much land in any given State will belong to the Federal
Government.
In almost every State, officials and concerned citizens are saying we
need to address this question of public land needs before we continue
to increase the holdings of the Federal Government. The Federal
Government is not always the best neighbor of the people in the West,
largely because so much land in our States--in my State, 50 percent of
the State--belongs to the Federal Government. Even though everyone
wants to protect the lands, and that is an obligation we all have, we
also have an opportunity for the most part to use these lands in
multiple use. We should be able to have both access for hunting,
fishing, grazing, for visitation and camping, and use the lands for
other economic activity in such a way that we can protect the
environment.
What we have run into from time to time is the effort to lock up the
public lands and restrict access. We find this happening in a number of
ways, including excessive emphasis on roads, where people cannot have
access to the lands they occupy.
Interestingly enough, we hear from all kinds of people. Often they
say it is the oil companies. As a matter of fact, it is often disabled
veterans. For example, they say they would like to go into the back
country and get into some of the public lands, but if we don't have
highway access for doing that, it is impossible.
This setting aside and this decisionmaking that comes from the top
down creates great hardships for many local communities, destroys jobs,
and depresses the economy in many places around the West. As we provide
funds--and there is always a proposition to provide automatic funding
for acquisition--it threatens the culture, it threatens the economics
of many of our States and local governments, and the rights of
individual property owners throughout the Nation. Even this proposed
language would put constraints on mandatory spending and Federal land
acquisition. If we don't do that, we will see it increasing at a faster
and faster pace.
How does it work? The bill limits the amount of private land the
Federal Government acquires in States where 25 percent or more now
belongs to the Federal Government. When a Federal Government has
reason, and they will have reasons to purchase 100 acres or more, it
will require disposing of an equal value of amount away from Federal
ownership. If there is 40-percent Federal ownership in your State, and
there were good reasons to acquire more, there would have to be an
exchange of lands so the 40-percent factor continues.
Fifty percent of Wyoming and much of the West is already owned by the
Federal Government. Many people throughout the country don't realize
that. They know about Yellowstone Park. But much of the State was left
in Federal ownership when the homestead proposition was completed and
these lands were never really set aside for value of the land. They
were just there when this homestead stopped. They came under Federal
ownership, not because of any particular reason but because that is the
way it was at that time.
I think it is time for the Federal Government to make a move to
protect private property owners and use restraint in terms of land
acquisition. The no net loss of private lands acquisition bill will
provide that discipline. As I mentioned, this amendment does not limit
the ability to acquire pristine or special areas in the future, areas
that have a particular use and that use should be under Federal
ownership. They can continue to acquire more land in many areas. But in
order to do that, as I mentioned, there would have to be some trading.
Regarding the Federal land ownership pattern, I suppose many people
expected more, but in Alaska almost 68 percent of the State belongs to
the Federal Government. Even in Arizona, as highly populated as it is,
almost half, 47 percent, is Federally owned. In Colorado, it is 36
percent; in Idaho, 61 percent of the State is in Federal ownership; the
number in Montana is 28 percent, and Nevada is 83 percent federally
owned. Really, you could make a case that much of this land could be
better managed by local or State governments or if it were in the
private sector. In New Mexico, the percentage of Federal land ownership
is 33 percent; Oregon, 52; Utah, 64; Washington, 29; and Wyoming, 49
percent.
So we are talking about providing an opportunity for the Federal
Government to continue to acquire those lands if there is good reason
to do that, but to recognize the impact that it does have on private
ownership, on the economy, and on the culture of the states. We have
some offsets.
In our State, we have 23 counties. They are quite different, but in
some of those counties--for instance, my home county, ark County, Cody,
WY, which is right outside of Yellowstone Park--82 percent of that
county belongs to the Federal Government. In Teton County, next to
Yellowstone, It is 96 percent. Four percent of Teton's land is in non-
Federal ownership.
I think this is a reasonable thing to do. It certainly does not
preclude the acquisition of lands the Federal Government has a good
reason to acquire. It simply says if you want to acquire some, let's
take a look at the other 50 percent that you already own of the State
and see if we can't dispose of something in equal value.
______
By Mr. SHELBY:
S. 324. A bill to amend the Gramm-Leach-Bliley Act, to prohibit the
sale and purchase of the social security number of an individual by
financial institutions, to include social security numbers in the
definition of nonpublic personal information, and for other purposes;
to the Committee on Banking, Housing, and Urban Affairs.
Mr. SHELBY. Mr. President, I rise today to introduce the Social
Security Privacy Act of 2001. This legislation would prohibit the sale
and purchase of an individual's Social Security number by financial
institutions and include Social Security numbers as ``nonpublic
personal information'' thereby subjecting the sharing of Social
Security
[[Page S1396]]
numbers to the privacy protections of the Gramm-Leach-Bliley Act.
I believe Congress has a duty to stop Social Security numbers from
being bought and sold like some common commodity. While the Social
Security number was created by the federal government to track workers'
earnings and eligibility for Social Security benefits, we all recognize
that it has become something much more than that. The number is now the
key to just about all the personal information concerning an
individual.
There was never any intention or consideration for financial
institutions to use a person's social security number as a universal
access number. Such easy access and extreme availability of personal
information leads to adverse consequences including fraud, abuse,
identity theft and in the most extreme cases--staking and death.
While Congress waits to act, the number of incidents involving
identity theft are rapidly increasing. In fact, last year the
Washington Post, reported that ``ID Theft Becoming Public Fear No. 1.''
The New York Times noted that, ``Law enforcement authorities are
becoming increasingly worried about a sudden, sharp rise in the
incidence of identity theft, the outright pilfering of peoples personal
information for use in obtaining credit cards, loans and other goods.''
Not only is identity theft happening more often, recent events
confirm that no one is immune from this problem. Just last month, a
California man was convicted of using Tiger Woods' Social Security
number to obtain credit cards that he used to run up more than $17,000
in charges in Mr. Woods' name.
Identity theft can affect anyone. It is extremely serious. It costs
our economy hundreds of millions of dollars each year. Once it occurs,
it is very difficult for the victim to restore his or her good name and
credit rating. The incidences of identity theft are growing at an ever
increasing pace.
Now, how does identity theft relate to the average financial
institution? In 1999, a reputable Fortune 500 company, U.S. Bancorp,
legally sold account information--including Social Security numbers--of
one million of its customers to MemberWorks, a telemarketer
of membership programs that offer discounts on such things as travel to
health care services. Now some may believe we stopped such activity by
including a provision, Section 502 (d), in the Gramm-Leach-Bliley Act
limiting the ability of institutions to share account information with
telemarketers.
That provision, however, does not stop a financial institution from
buying and selling individual Social Security numbers. Indeed, it is
even legal to sell individual's birth date, and mother's maiden name.
If you have those three things, you have the keys to the kingdom--not
to mention any and every account that individual has.
The evolution of technology is making the collection, aggregation,
and dissemination of vast amounts of personal information easier and
cheaper. The longer we wait to act on this very important issue--an
issue that is supported by a vast majority of Americans--the more the
American people lose confidence in the U.S. Congress and out ability to
lead.
This legislation would basically prohibit the sale and purchase of an
individual's Social Security number. I do not know anyone in this
country that believes financial institutions should be making a profit
by trafficking individual's Social Security numbers. While financial
institutions have used the Social Security number as an identifier, the
sale and purchase of these numbers facilitates criminal activity and
can result in significant invasions of individual privacy.
In addition, my legislation would include Social Security numbers as
``nonpublic personal information'' for the purpose of the Gramm-Leach-
Bliley Act, thereby subjecting the sharing of Social Security numbers
to the privacy protections in that Act. Current regulations say that
Social Security numbers are not considered nonpublic personal
information if the number is ``publicly available,'' as in bankruptcy
filings, etc.
I just cannot find a reason as to why Congress should aid and abet
criminals in attaining individual Social Security numbers by having a
law on the books that treats Social Security numbers as ``public
information.'' Indeed, no American would agree the public good is being
served by making their personal Social Security number available for
anyone who wants to see it.
For those of you who are concerned that this legislation would hinder
a financial holding company from sharing information among its
affiliates, fear not. This legislation does not limit a financial
institution's ability to share an individual's Social Security number
among affiliates in any way.
I hope my colleagues will join me in protecting the Social Security
numbers.
______
By Mr. FRIST (for himself, Mr. DeWine, Mr. Durbin, Mrs. Murray,
and Mr. Thurmond):
S. 325. A bill to establish a congressional commemorative medal for
organ donors and their families; to the Committee on Banking, Housing,
and Urban Affairs.
Mr. FRIST. Mr. President, I am pleased today to introduce the Gift of
Life Congressional Medal Act of 2001. This legislation, which does not
cost taxpayers a penny, will recognize the thousands of individuals
each year who share the gift of life through organ donation. Moreover,
it will encourage potential donors and enhance public awareness of the
importance of organ donation to the over 74,000 Americans waiting for a
transplant.
In 1999, there were almost 22,000 transplants--a large increase over
the roughly 13,000 transplants performed ten years ago. However, the
demand for transplants has skyrocketed, more than tripling in the past
ten years.
As a heart and lung transplant surgeon, I saw one in four of my
patients die because of the lack of available donors, and more and more
patients waiting for an organ transplant die each year before they can
receive an organ. More than 6000 patients died in 1999 before they
could receive a transplant. Since 1988, more than 38,000 patients have
died because of the lack of organ donors. There are simply not enough
organ donors; public awareness has not kept up with the rapid advances
of transplantation. It is our duty to do all we can to raise awareness
about the gift of life.
Last fall, the Department of Health and Human Services announced an
increase of nearly 4 percent in organ donation levels. While I was
pleased to see this news, this is only a small step towards addressing
our nation's organ shortage. Much more remains to be done.
The Gift of Life Congressional Medal Act will make each donor or
donor family eligible to receive a commemorative Congressional medal.
This creates a tremendous opportunity to honor those sharing life
through donation and increase public awareness of this issue.
Recent years have witnessed a tremendous coalescing on both sides of
the aisle around the importance of awakening public compassion and
awareness of those needing organ transplants. I appreciate the growing
support for this issue and look forward to working with my colleagues
to encourage people to give life to others.
______
By Ms. COLLINS (for herself, Mr. Bond, Mr. Kerry, Mr. Reed, Mr.
Jeffords, Mr. Roberts, Mr. Levin, Mr. Hutchinson, Mrs. Murray,
Mr. Enzi, Ms. Mikulski, Mr. Smith of New Hampshire, Mr.
Santorum, Mr. Chafee, Mr. DeWine, Mr. Helms, Mrs. Hutchison,
Mr. Specter, Mr. Murkowski, Ms. Snowe, Mr. Warner, Mr. Gregg,
Mrs. Carnahan, Mr. Lugar, and Mr. Cochran):
S. 326. A bill to amend title XVIII of the Social Security Act to
eliminate the 15 percent reduction in payment rates under the
prospective payment system for home health services and to permanently
increase payments for such services that are furnished in rural areas;
to the Committee on Finance.
Ms. COLLINS. Mr. President, I am pleased to join with Senators Bond,
Reed, Jeffords, Kerry, Roberts, Murray, Hutchinson, Levin, Enzi,
Mikulski, Santorum, Hutchison, Chafee, DeWine, Helms, Specter,
Murkowski, Warner, Bob Smith, Lugar, Snowe, and others in introducing
the Home Care Stability Act of 2001 to eliminate the automatic 15
percent reduction in Medicare payments to home health
[[Page S1397]]
agencies that is currently scheduled to go into effect on October 1,
2002. The legislation we are introducing this morning will also extend
the temporary 10 percent add-on payment for home health patients in
rural areas to ensure that these patients continue to have access to
care.
Health care has gone full circle. Patients are spending less time in
the hospital. More and more procedures are being done on an outpatient
basis, and recovery and care for patients with chronic diseases and
conditions has increasingly been taking place in the home. Moreover,
the number of older Americans who are chronically ill or disabled in
some way continues to grow each year.
Concerns about how to care effectively and compassionately for these
individuals will only multiply as our population ages and as it is at
greater risk for chronic disease and disability.
As a consequence, home health care has become an increasingly
important part of our health care system. The kind of highly skilled
and often technically complex services that our Nation's home health
agencies provide have enabled millions of our most frail and vulnerable
senior citizens to avoid hospitals and nursing homes and to receive the
care they need just where they want to be: in the security, privacy,
and comfort of their own homes.
By the late 1990s, home health care was the fastest growing component
of Medicare spending. The program was growing at an average annual rate
of 25 percent. For this reason, Congress and the administration, as
part of the Balanced Budget Act of 1997, initiated changes that were
intended to slow the growth in spending and make the program more cost-
effective and efficient.
These measures, however, have unfortunately produced cuts in home
health care spending that were far, far beyond what Congress ever
intended. According to preliminary estimates by the CBO, home health
care spending dropped to $9.2 billion last year, half the amount that
was being spent just 3 years earlier, in 1997.
On the horizon is yet an additional 15-percent cut that would put
many of our already struggling home health agencies at risk and which
would seriously jeopardize access to critical home health services for
millions of our Nation's seniors.
It is now crystal clear that the savings goals set for home health in
the Balanced Budget Act of 1997 have not only been met, but far
exceeded. The most recent CBO projections show that the post-Balanced
Budget Act reductions in home health will be about $69 billion between
fiscal years 1998 and 2002. That is more than four times the $16
billion the CBO originally estimated for that time period, and it is a
clear indication that the Medicare home health cutbacks have been far
deeper and far more wide-reaching than Congress ever intended.
As a consequence, we have home health agencies across the country
that are experiencing acute financial difficulties and cashflow
problems. These financial difficulties are inhibiting their ability to
deliver much needed care. Approximately 3,300 home health agencies have
either closed or stopped serving Medicare patients nationwide--3,300,
Mr. President. That is how deep these cuts were.
Moreover, the Health Care Financing Administration estimates that
900,000 fewer home health patients received services in 1999 than in
1997. This points to the most central and important consequence of
these cuts. The fact is that cuts of this magnitude simply cannot be
sustained without adversely affecting the quality and availability of
patient care.
The effects of these regulations and cuts have been particularly
devastating in my home State of Maine. The number of home health
patients in Maine dropped from almost 49,000 to 37,545. That is a
change of 23 percent. This means there are 11,000 senior citizens or
disabled citizens in Maine who are no longer receiving home health
services.
What has happened to those 11,000 individuals? I have talked with
patients, and I have talked with home health nurses throughout the
State of Maine, and I found that many of these patients have ended up
going into nursing homes prematurely. Others have been repeatedly
hospitalized with problems that could have been avoided had they been
continuing to receive their home health benefits. Still others are
trying to pay for the care themselves, often on very limited means. And
yet others are going without care altogether.
A home health nurse in Saco, ME, told me of a patient who she
believes ultimately died because she lost her home health benefits. She
lost those nurses coming to check on her condition. The result was that
she developed an infection that the home health nurse undoubtedly would
have caught. The result was a tragedy in this case.
We have seen a 40-percent drop in the number of visits in the State
of Maine and a 31-percent cut in Medicare reimbursements to home health
agencies.
Keep in mind that Maine's home health agencies have historically been
very prudent in their use of resources. They were low cost to begin
with. The problem is, when you have cuts of these magnitudes imposed on
agencies that are already low-cost providers, they simply cannot
sustain the cuts and continue to deliver the services that our seniors
need.
The real losers in this situation are our Nation's seniors,
particularly those sicker Medicare patients with complex care needs who
are already experiencing difficulty in getting the home care services
they deserve.
I am very concerned that additional deep cuts are already on the
horizon. As I mentioned, on October 1, 2002, an additional automatic
15-percent cut is scheduled to go into effect. We need to act.
Last year we passed legislation, the Medicare, Medicaid, and S-CHIP
Benefits Improvement and Protection Act, which did provide a small
measure of relief to our Nation's struggling home health agencies. It
did, for example, delay by another year the 15-percent cut I have
discussed this morning, but I do not think that goes far enough. The
automatic reduction should be eliminated completely. We do not need it
to achieve the savings estimated by the Balanced Budget Act. Those have
already been far surpassed, and the implications for health care for
some of our most frail and ill senior citizens are enormous.
The fact is, an additional 15-percent cut in Medicare home health
payments would ring the death knell for those low-cost agencies which
are currently struggling to hang on, and it would further reduce our
seniors' access to critical home care services.
This is the fourth year we have fought this battle. To simply keep
delaying this cut by yet another year is to leave a sword of Damocles
hanging over our home health system. It makes it very difficult for our
home health agencies to plan how they are going to serve their Medicare
patients in the future. It encourages them to turn away patients who
are going to be very expensive to care for, and it forces us to spend
valuable time, energy, and resources fighting for repeal every single
year--time and resources that would far better be spent ensuring the
success of the Medicare home health prospective payments system.
The legislation we are introducing today would once and for all
eliminate the automatic cut. It would also make permanent the temporary
10-percent add-on for home health services furnished patients in rural
areas. That was included in the legislation last year. We would make it
permanent.
As the Presiding Officer well knows, it is sometimes very expensive
for home health agencies to deliver services to rural patients. They
have to travel long distances, and it takes a long time to reach those
patients. That all adds to the cost. In fact, surveys show that the
delivery of home health services in rural areas can be as much as 12 to
15 percent more costly because of the extra travel time required,
higher transportation expenses, and other factors.
This provision will ensure that our seniors living in rural areas
continue to have access to critical high-quality home health services.
Mr. President, the Home Health Care Stability Act will provide a
needed measure of relief and certainty for cost-efficient home health
agencies across the country that are experiencing acute financial
problems that are inhibiting their ability to deliver much needed care,
particularly to chronically ill Medicare patients with complex care
needs. I urge all of my colleagues to join us in cosponsoring this
important legislation.
[[Page S1398]]
Let's get the job done once and for all this year. Let's repeal that
15-percent cut that otherwise would go into effect. Let's remove that
uncertainty that is hanging over our home health agencies, and let's
recommit ourselves to providing quality home health care benefits to
our seniors and our disabled citizens.
Mr. BOND. Mr. President, I rise today to join with my colleague from
Maine, Senator Collins, to introduce legislation that addresses the
ongoing crisis in home health care. Twenty-two of our colleagues join
with us today to offer the Home Health Payment Fairness Act to deal
with this crisis and to try to ensure that seniors and disabled
Americans have appropriate access to high-quality home health care.
Home health care is an important part of Medicare in which seniors
and the disabled can get basic nursing and therapy care in their home,
if their health or physical condition makes it almost impossible to
leave home. Often home health is an alternative to more expensive
services that may be provided in a hospital or a skilled nursing
facility--and thus is a cost-effective way to provide needed care.
It is convenient, but much more importantly, patients love it. They
love it because home health care is the key to fulfilling what is
virtually a universal desire among seniors and those with
disabilities--to remain independent and within the comfort of their own
homes despite their health problems.
Yet we have a crisis in home health--too many seniors who could and
should be receiving home health are not getting it. They may be
suffering, in their home, without getting the health care they need.
Or, they may be getting care, but only because they have been forced
into a nursing home rather than being able to stay in the comfort and
the dignity of their home. Either way, they are not getting the most
appropriate care--and this is tragic.
As with so many other problems with Medicare in the last few years,
the problem comes from two sources--the Balanced Budget Act, and the
Health Care Financing Administration.
We all know the basic story by now--in an effort to balance the
budget, Congress in the BBA tried to cut the growth in Medicare
spending. Yet the real-world results went much further than we
intended--partially because of things beyond anyone's control, but
largely due to faulty implementation and the excessive regulatory zeal
of HCFA. As the cuts and regulation went out-of-control, health care
providers struggled to survive, but many were forced to close entirely
or to stop serving Medicare. This harmed patients because they lost
care options that had been available previously.
This basic storyline applies to patients and providers in all parts
of Medicare--hospitals, nursing homes, home health care--everyone. But
there are two things that distinguish the home health crisis from all
of the other problems that stem from the Balanced Budget Act.
First and most importantly, no other group of Medicare patients and
providers have endured as many difficulties. This is a big claim, given
the many horror stories we've heard about the Balanced Budget Act. But
absolutely nobody has suffered like home health patients and home
health agencies. The numbers don't lie.
Two years after the Balanced Budget Act, almost 900,000 fewer seniors
and disabled Americans were receiving home health care than previously.
That's upwards of a million patients--one of every four who had been
receiving home health--who simply disappeared from the world of home
care. Unfortunately, the explanation is not a miraculous improvement in
the health of our nation's seniors that drastically reduced the need
for home health care. No, almost one million fewer people were
receiving home care because the help just wasn't available.
This is partly because more than 3,300 of the nation's 10,000 home
health agencies have either gone out-of-business, or have stopped
serving Medicare patients. That's one-third of the home health
providers--gone. Can you imagine the outrage we would have in this
country if one-third of the hospitals simply disappeared?
In some areas, this hasn't been a major problem because there were
other local home health agencies to pick up the slack. But in many
parts of America--particularly in rural America--this has led to a
serious problem of getting access to care.
In one sense, what's bad for the patient is good for the budget.
Medicare home health spending has actually gone down for three straight
years--dropping by 46 percent from 1997 and 2000. In Medicare, these
types of cuts in spending are absolutely unprecedented. No other type
of health care service in Medicare has ever seen drastic cuts like
this. Remember, our goal in the Balanced Budget Act was to slow down
the growth of the program, not to slash almost half of the spending out
of vital services like home health care. In 1997, we envisioned $16
billion in savings from home health over five years--but the most
recent estimates show that we are on target to get $69 billion in
savings, more then four times the target figure. This is not how
anybody wanted to balance the federal budget.
No State has been spared this crisis, but the seniors and the
disabled in my home state of Missouri have been particularly hard-hit.
27,000 fewer patients are receiving home care than before--that's a
drop of 30 percent. And while Missouri had 300 home health agencies
when the Balanced Budget Act passed, we now have just 161. That's
almost 140 health care providers that Missourians need--but that are
now gone.
All of this points to the fact that the breadth and the depth of the
post-Balanced Budget Act problems are undeniably worse in home health
care than any other part of Medicare. That's the first thing that
distinguishes home care from other struggling Medicare providers.
The second thing that is unique about home health--the biggest cuts
may be yet to come.
While hospitals, nursing homes, hospice programs, and other Medicare
providers still face some additional Balanced Budget Act cuts, most of
the BBA provisions have already either taken effect or been erased by
the two ``Medicare giveback'' bills we have passed into law.
But home health care patients and providers still have the largest
BBA cut of all staring them in the fact--the 15-percent across-the-
board home health cuts that are now scheduled for October of 2002.
That's a 15-percent cut on top of everything else that has happened
thus far--on top of the loss of 900,000 patients, on top of the loss of
3,000-plus home health agencies, and on top of the loss of almost half
of Medicare home health spending.
I do not believe this should happen, and I actually don't know of
anybody who believes the 15-percent home health cuts should go into
effect. That's why Congress has already delayed the 15-percent cuts
three separate times.
To impose these cuts, given all that home health care has been
through, would be adding insult to injury. It would risk putting
thousands more home health agencies out-of-business, perhaps risking
the care for a million more patients.
Today, Senator Collins and I propose to fix this once and for all--no
more mere delays, no more half-measures. The key provision in the Home
Health Payment Fairness Act would permanently eliminate these 15-
percent cuts. This will be expensive--probably more than $10 billion
over 10 years. I don't think anybody in Congress wants to drop the
guillotine on home health by imposing these cuts--that's what the three
delays have shown. We need to just bite the bullet and get rid of them
once and for all.
The one additional key provision in our bill would make permanent the
10-percent bonus payments that we are about to start giving rural home
health agencies. These new rural payments recognize that, historically,
rural patients have been more expensive due to the added transportation
and labor costs incurred as home health nurses travel longer distances
between visits. The second Medicare ``giveback'' bill that Congress
just passed into law in December authorized these bonus payments for
the first time--but only for a two-year period. The reasons that rural
patients cost more are going to last for more than two years--we
believe the added rural payments should as well.
This policy change will provide desperately-needed assistance to help
home health care in rural America--which, as I mentioned earlier, has
been much harder hit by the home health
[[Page S1399]]
crisis. These added payments would be similar to the 10-percent
incentive bonus Medicare currently pays to doctors in rural areas, and
would serve the same purpose as the various Medicare mechanisms we have
to protect rural hospitals. The rural incentives for doctors and
hospitals are part of permanent law; the rural incentives for home
health should be too.
Home health care has been through enough. Our Nation's dedicated home
health providers--and you know they are dedicated if they have struck
with it through the difficulties of the last few years--deserve to be
left along and given a rest. They deserve to be left alone to recover
from the post-Balanced Budget Act chaos. They deserve to be left alone
in order to adjust to a brand new home health payment system that
Medicare put into place a few months ago--a new payment system
specifically designed to reduce overuse of service in a much more
intelligent and appropriate way than arbitrary cuts like those that are
scheduled. And they deserve to be left alone to focus on providing
high-quality care to Medicare patients. The seniors and disabled
Americans who rely on home health for their health care, and for their
independence, deserve no less.
Mr. ALLARD. I thank the Senator from Missouri for his leadership on
home health care. I agree with him. It does save money for the patient,
and we want to encourage it as far as health care is concerned.
Mr. REED. Mr. President, I rise today to join the chorus of support
for the Home Health Payment Fairness Act. The intent of this important
legislation is two-fold--first, eliminate the impending 15 percent
reduction in home health payments scheduled to take effect in October
2002, and second, restore a modicum of stability and predictability to
the home health funding stream after years of volatility and turmoil. I
was pleased to introduce similar language with Senator Collins last
Congress; I am pleased to do so again.
Over the past several years, Congress has worked to address the
unintended consequences of the 1997 Balanced Budget Act, BBA.
Specifically, we have sought to alleviate the tremendous financial
burdens that have been borne by the home health industry and the
patients who rely on these agencies for care. Since the enactment of
the BBA, there has been a remarkable 48 percent decline in Medicare
home health expenditures. Moreover, across the nation, home health
agencies have been forced to cut back on services, and in some cases,
close their doors forever. As a result, vulnerable and frail Medicare
beneficiaries are being deprived of medically needed health services
that enable these populations to receive care while remaining in the
comfort of their homes and communities.
While we have been able to correct for a number of the problems, one
issue we have yet to resolve affirmatively is the impending 15 percent
for home health services. This reduction, which was originally
scheduled to take effect in October 2000, has been delayed since 2002.
While this delay is certainly significant, we can and must do more to
restore predictability to the home health reimbursement system. We must
see to it that the 15 percent cut is eliminated--and I hope we can
achieve that goal this year.
As we have already seen, reductions of this magnitude are all too
often shouldered by small, nonprofit home health agencies and the
elderly and disabled beneficiaries they serve. Home health care
agencies in my home state of Rhode Island have been especially hard hit
by these changes. We have seen a significant decline in the number of
beneficiaries served and access to care for more medically complex
patients threatened by these cuts. These reductions have clearly had
negative impact on patients who heavily rely on home health services.
Nationally, between 1997 and 1998, the number of Medicare
beneficiaries receiving home health services has fallen 14 percent,
while the total number of home health visits has fallen by 40 percent.
We have seen a similar trend in Rhode Island, where over 3,000 fewer
beneficiaries are receiving home health care--representing a decline of
16 percent--and the total number of visits has fallen 38 percent. These
individuals are either being forced to turn to more expensive
alternatives, such as institutional-based nursing homes and skilled
nursing facilities for their care, or these individuals are simply
going without care, which places an immeasurable burden on the family
and friends of vulnerable beneficiaries.
I truly do not believe this is the path we want to remain on when it
comes to home health care. In light of the impending ``senior boom''
that will be hitting our entitlement programs in a few short years, we
should be doing all we can to preserve and strengthen the Medicare home
health benefit. We can begin to do so by eliminating the 15 percent
reduction in home health payments. By taking this step, we will
alleviate an enormous burden that has been looming over financially
strapped home health agencies as well as the frail and vulnerable
Medicare beneficiaries who rely on these critical services.
I urge my colleagues to join us in supporting this critical
legislation, and I look forward to working with Senator Collins and my
other colleagues on the home health issue this Congress.
______
By Mr. REED (for himself, Mr. Cochran, Mr. Kennedy, Mr. Dodd, Mr.
Bingaman, Mr. Wellstone, Mrs. Murray, Ms. Mikulski, Mrs.
Clinton, Mr. Chafee, Mr. Rockefeller, Mr. Reid, Mr. Sarbanes,
and Mr. Baucus):
S. 327. A bill to amend the Elementary and Secondary Education Act of
1965 to provide up-to-date school library media resources and well-
trained, professionally certified school library media specialists for
elementary schools and secondary schools, and for other purposes; to
the Committee on Health, Education, Labor, and Pensions.
Mr. REED. Mr. President, I rise today to introduce bipartisan
legislation to support and strengthen America's school libraries.
Research shows that well-equipped and well-staffed school libraries
are essential to promoting literacy, learning, and achievement. Indeed,
recent studies in Colorado, Pennsylvania, and Alaska reveal that a
strong library media program, consisting of a well-stocked school
library staffed by a trained, school-library media specialist, helps
students learn more and score higher on standardized tests than their
peers in library-impoverished schools. These findings echo earlier
studies conducted in the 1990s, which found that students in schools
with well-equipped libraries and professional library specialists
performed better on achievement tests for reading comprehension and
basic research skills.
Mr. President, with our ever-changing global economy, access to
information and the skills to use it are vital to ensuring that young
Americans are competitive and informed citizens of the world. That is
why the school library is so important in supplementing what is learned
in the classroom; promoting better learning, including reading,
research, library use, and electronic database skills; and providing
the foundation for independent learning that allows students to achieve
throughout their educational careers and their lives.
While the promise of a well-equipped school library to promote
literacy, learning, and achievement is boundless, and its importance
greater than ever, the condition of libraries today does not live up to
that potential. As Linda Wood, a school-library media specialist from
South Kingstown High School in Rhode Island, noted during a Health,
Education, Labor, and Pensions Committee hearing two years ago, school
library collections are outdated and sparse.
Many schools across the nation are dependent on books purchased in
the mid-1960s with dedicated funding provided under the original
Elementary and Secondary Education Act (ESEA) of 1965. Many of the
books still on school library shelves today were purchased with this
funding and have not been replaced since 1981, when this dedicated
funding was folded into what is now the Title VI block grant. As a
result, many books in our school libraries predate the landing of
manned spacecraft on the moon, the breakup of the Soviet Union, the end
of Apartheid, the Internet, and advances in DNA research.
Mr. President, over the past several months I have received over one
hundred books pulled from library shelves
[[Page S1400]]
across the country which further illustrate the sad state of school
libraries today. I would like to cite just a few examples.
A book entitled Rockets Into Space, copyright 1959, informs students
that ``there is a way to get to the moon and even distant planets, [but
the trip must] be made in two stages. The first stage would be from
earth to a space station. The second stage would be from the space
station to the moon. It would cost a lot of money to buy a ticket to
the moon.'' This book was checked out of a Los Angeles school library
13 times since 1995.
Further, a book found on a Rhode Island school library shelf,
entitled Studying the Middle East in Elementary and Secondary Schools,
copyright 1968, contains the following information: ``UNDERSTANDING
SOME CHARACTERISTICS OF THE ARABS--It is difficult to generalize about
any group of people and yet there are some characteristics which seem
predominant and helpful in understanding the Arabs.'' Needless to say,
the book then proceeds to describe characteristics of Arab people in
derogatory terms.
And finally, a book entitled Colonial Life in America, copyright
1962, found on a shelf in a Philadelphia school library, informs the
student that life on ``a large plantation in the South was like a
village. Slave families had their own cabins.'' This book describes
southern plantation life as idyllic, without reference to the harshness
and injustice of life as a slave.
As you can see, in a rapidly changing world, our students are placed
at a major disadvantage if the only scientific, geographical, and
historical materials they have access to are outdated and inaccurate.
The reason for this sad state of affairs is the loss of targeted,
national funding for school libraries.
In sum, school library funding is grossly inadequate to the task of
improving and supplementing collections. Library spending per student
today is a small fraction of the cost of a new book. Indeed, while the
average school library book costs $16, the average spending per student
for books is approximately $6.75 in elementary schools; $7.30 in middle
schools; and $6.25 in high schools. Consequently, many schools cannot
remove outdated books from their shelves because there is no money to
replace these books.
My home state of Rhode Island is working on an innovative effort to
ensure that students gain access to materials not available in their
own school libraries. RILINK, the Rhode Island Library Information
Network for Kids, gives students and teachers 24-hour Internet access
to a statewide catalog of school library holdings, complete with
information about the book's status on the shelf. RILINK also allows
for on-line request of materials via interlibrary loan, with rapid
delivery through a statewide courier system, and provides links from
book information records to related Internet research sites, allowing a
single book request to serve as a point of departure for a galaxy of
information sources.
Unfortunately, such innovations, which could benefit schoolchildren
across the nation, cannot be expanded without adequate library funding.
Indeed, the only federal funding that is currently available to school
libraries is the Title VI block grant, which allows expenditure for
school library and instructional materials as one of nine choices for
local uses of funds. Since 1981, states have chosen other needs above
school library books and technology. Sadly, districts only spend an
estimated 17 percent of funds on school library and instructional
materials. This amount is wholly insufficient to replace outdated books
in both our classrooms and school libraries, and this lack of targeting
and diffusion of funding is why block grants are so harmful.
Mr. President, well-trained school library media specialists are also
essential to helping students unlock their potential. These individuals
are at the heart of guiding students in their work, providing research
training, maintaining and developing collections, and ensuring that a
library fulfills its potential. In addition, they have the skills to
guide students in the use of the broad variety of advanced
technological education resources now available.
Unfortunately, only 68 percent of schools have state-certified
library media specialists, according to Department of Education
figures, and, on average, there is only one specialist for every 591
students. This shortage means that many school libraries are staffed by
volunteers and are open only a few days a week.
I am introducing this bipartisan bill today, along with Senators
Cochran, Kennedy, Dodd, Bingaman, Wellstone, Murray, Mikulski, Clinton,
Chafee, Rockefeller, Reid, Sarbanes, and Baucus to restore the funding
that is critical to improving school libraries. The Improving Literacy
Through School Libraries Act authorizes $500 million to help school
libraries with the greatest needs update their collections and would
ensure that students have access to the informational tools they need
to learn and achieve at the highest levels. This bill allows for
maximum flexibility, enabling schools to use the funds to update
library media resources, such as books and advanced technology, train
school-library media specialists, and facilitate resource-sharing among
school libraries. The bill also establishes the School Library Access
Program to provide students with access to school libraries during non-
school hours, including before and after school, weekends, and summers.
Providing access to the most up-to-date school library collections is
an essential part of increasing student achievement, improving literacy
skills, and helping students become lifelong learners. The bipartisan
Improving Literacy Through School Libraries Act is strongly supported
by the American Library Association, and will help accomplish these
essential goals. I urge my colleagues to cosponsor this important
legislation and work for its inclusion in the upcoming reauthorization
of the Elementary and Secondary Education Act.
I ask unanimous consent that the text of this bill and a letter of
support written by the American Library Association be printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 327
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 ``Improving Literacy Through
School Libraries Act of 2001''.
SEC. 2. SCHOOL LIBRARY MEDIA RESOURCES.
Title II of the Elementary and Secondary Education Act of
1965 (20 U.S.C. 6801 et seq.) is amended--
(1) by redesignating part E as part F; and
(2) by inserting after part D the following:
``PART E--ASSISTANCE TO SCHOOL LIBRARIES TO IMPROVE LITERACY
``Subpart 1--Library Media Resources
``SEC. 2350. PURPOSE.
``The purposes of this subpart are--
``(1) to improve literacy skills and academic achievement
of students by providing students with increased access to
up-to-date school library materials, a well-equipped,
technologically advanced school library media center, and
well-trained, professionally certified school library media
specialists;
``(2) to support the acquisition of up-to-date school
library media resources for the use of students, school
library media specialists, and teachers in elementary schools
and secondary schools;
``(3) to provide school library media specialists with the
tools and training opportunities necessary for the
specialists to facilitate the development and enhancement of
the information literacy, information retrieval, and critical
thinking skills of students; and
``(4)(A) to ensure the effective coordination of resources
for library, technology, and professional development
activities for elementary schools and secondary schools; and
``(B) to ensure collaboration between school library media
specialists, and elementary school and secondary school
teachers and administrators, in developing curriculum-based
instructional activities for students so that school library
media specialists are partners in the learning process of
students.
``SEC. 2351. STATE ALLOTMENTS.
``The Secretary shall allot to each eligible State
educational agency for a fiscal year an amount that bears the
same relation to the amount appropriated under section 2360
and not reserved under section 2359 for the fiscal year as
the amount the State educational agency received under part A
of title I for the preceding fiscal year bears to the amount
all eligible State educational agencies received under part A
of title I for the preceding fiscal year.
``SEC. 2352. STATE APPLICATIONS.
``To be eligible to receive an allotment under section 2351
for a State for a fiscal
[[Page S1401]]
year, the State educational agency shall submit to the
Secretary an application at such time, in such manner, and
containing such information as the Secretary shall require.
The application shall contain a description of--
``(1) the manner in which the State educational agency will
use the needs assessment described in section 2355(1) and
poverty data to allocate funds made available through the
allotment to the local educational agencies in the State with
the greatest need for school library media improvement;
``(2) the manner in which the State educational agency will
effectively coordinate all Federal and State funds available
for literacy, library, technology, and professional
development activities to assist local educational agencies,
elementary schools, and secondary schools in--
``(A) acquiring up-to-date school library media resources
in all formats, including books and advanced technology such
as Internet connections; and
``(B) providing training for school library media
specialists;
``(3) the manner in which the State educational agency will
develop standards for the incorporation of new technologies
into the curricula of elementary schools and secondary
schools through school library media programs to develop and
enhance the information literacy, information retrieval, and
critical thinking skills of students; and
``(4) the manner in which the State educational agency will
evaluate the quality and impact of activities carried out
under this subpart by local educational agencies to make
determinations regarding the need of the agencies for
technical assistance and whether to continue funding the
agencies under this subpart.
``SEC. 2353. STATE RESERVATION.
``A State educational agency that receives an allotment
under section 2351 may reserve not more than 3 percent of the
funds made available through the allotment to provide
technical assistance, disseminate information about effective
school library media programs, and pay administrative costs,
relating to this subpart.
``SEC. 2354. LOCAL ALLOCATIONS.
``(a) In General.--A State educational agency that receives
an allotment under section 2351 for a fiscal year shall use
the funds made available through the allotment and not
reserved under section 2353 to make allocations to local
educational agencies.
``(b) Agencies.--The State educational agency shall
allocate the funds to the local educational agencies in the
State that have--
``(1) the greatest need for school library media
improvement according to the needs assessment described in
section 2355(1); and
``(2) the highest percentages of poverty, as measured in
accordance with section 1113(a)(5).
``SEC. 2355. LOCAL APPLICATION.
``To be eligible to receive an allocation under section
2354 for a fiscal year, a local educational agency shall
submit to the State educational agency an application at such
time, in such manner, and containing such information as the
State educational agency shall require. The application shall
contain--
``(1) a needs assessment relating to need for school
library media improvement, based on the age and condition of
school library media resources (including book collections),
access of school library media centers to advanced
technology, including Internet connections, and the
availability of well-trained, professionally certified school
library media specialists, in schools served by the local
educational agency;
``(2) a description of the manner in which the local
educational agency will use the needs assessment to assist
schools with the greatest need for school library media
improvement;
``(3) a description of the manner in which the local
educational agency will use the funds provided through the
allocation to carry out the activities described in section
2356;
``(4) a description of the manner in which the local
educational agency will develop and carry out the activities
described in section 2356 with the extensive participation of
school library media specialists, elementary school and
secondary school teachers and administrators, and parents;
``(5) a description of the manner in which the local
educational agency will effectively coordinate--
``(A) funds provided under this subpart with the Federal,
State, and local funds received by the agency for literacy,
library, technology, and professional development activities;
and
``(B) activities carried out under this subpart with the
Federal, State, and local library, technology, and
professional development activities carried out by the local
educational agency; and
``(6) a description of the manner in which the local
educational agency will collect and analyze data on the
quality and impact of activities carried out under this
subpart by schools served by the local educational agency.
``SEC. 2356. LOCAL ACTIVITIES.
``A local educational agency that receives a local
allocation under section 2354 may use the funds made
available through the allocation--
``(1) to acquire up-to-date school library media resources,
including books;
``(2) to acquire and utilize advanced technology,
incorporated into the curricula of the schools, to develop
and enhance the information literacy, information retrieval,
and critical thinking skills of students;
``(3) to acquire and utilize advanced technology, including
Internet links, to facilitate resource-sharing among schools
and school library media centers, and public and academic
libraries, where possible;
``(4) to provide professional development opportunities for
school library media specialists; and
``(5) to foster increased collaboration between school
library media specialists and elementary school and secondary
school teachers and administrators.
``SEC. 2357. ACCOUNTABILITY AND CONTINUATION OF FUNDS.
``Each local educational agency that receives funding under
this subpart for a fiscal year shall be eligible to continue
to receive the funding--
``(1) for each of the 2 following fiscal years; and
``(2) for each fiscal year subsequent to the 2 following
fiscal years, if the local educational agency demonstrates
that the agency has increased--
``(A) the availability of, and the access of students,
school library media specialists, and elementary school and
secondary school teachers to, up-to-date school library media
resources, including books and advanced technology, in
elementary schools and secondary schools served by the local
educational agency;
``(B) the number of well-trained, professionally certified
school library media specialists in those schools; and
``(C) collaboration between school library media
specialists and elementary school and secondary school
teachers and administrators for those schools.
``SEC. 2358. SUPPLEMENT NOT SUPPLANT.
``Funds made available under this subpart shall be used to
supplement and not supplant other Federal, State, and local
funds expended to carry out activities relating to library,
technology, or professional development activities.
``SEC. 2359. NATIONAL ACTIVITIES.
``The Secretary shall reserve not more than 3 percent of
the amount appropriated under section 2360 for a fiscal
year--
``(1) for an annual, independent, national evaluation of
the activities assisted under this subpart, to be conducted
not later than 3 years after the date of enactment of this
subpart; and
``(2) to broadly disseminate information to help States,
local educational agencies, school library media specialists,
and elementary school and secondary school teachers and
administrators learn about effective school library media
programs.
``SEC. 2360. AUTHORIZATION OF APPROPRIATIONS.
``There are authorized to be appropriated to carry out this
subpart $475,000,000 for fiscal year 2002 and such sums as
may be necessary for each of fiscal years 2003 through 2006.
``Subpart 2--School Library Access Program
``SEC. 2361. PROGRAM.
``(a) In General.--The Secretary may make grants to local
educational agencies to provide students with access to
libraries in elementary schools and secondary schools during
non-school hours, including the hours before and after
school, weekends, and summer vacation periods.
``(b) Applications.--To be eligible to receive a grant
under subsection (a), a local educational agency shall submit
an application to the Secretary at such time, in such manner,
and containing such information as the Secretary may require.
``(c) Priority.--In making grants under subsection (a), the
Secretary shall give priority to local educational agencies
that demonstrate, in applications submitted under subsection
(b), that the agencies--
``(1) seek to provide activities that will increase
literacy skills and student achievement;
``(2) have effectively coordinated services and funding
with entities involved in other Federal, State, and local
efforts, to provide programs and activities for students
during the non-school hours described in subsection (a); and
``(3) have a high level of community support.
``(d) Authorization of Appropriations.--There are
authorized to be appropriated to carry out this subpart
$25,000,000 for fiscal year 2002 and such sums as may be
necessary for each of fiscal years 2003 through 2006.''.
____
American Library Association,
Washington, DC, February 13, 2001.
Hon. Jack Reed,
U.S. Senate,
Washington, DC.
Dear Senator Reed: I would like to take this opportunity to
thank you and Senator Thad Cochran for your bi-partisan
support of school libraries as you introduce the Improving
Literacy Through School Libraries Act of 2001. This bill
would provide assistance to the nation's school libraries and
school library media specialists at a time when they are
laboring mightily to cope with the challenges of increasing
school enrollment, new technology and the lack of funding for
school library resources.
As an academic librarian in New York, I know personally how
this legislation will contribute to effective learning by our
school children. Many of the nation's school
[[Page S1402]]
libraries have collections that are old, inaccurate and out
of date. How can we encourage children to read, continue
their education in college and become life-long learners if
the material we have available for them is inadequate?
Your legislation proposes to upgrade collections, encourage
and train school librarians, and effect greater cooperation
between school professionals directly involved teaching
children--school library media specialists, teachers and
administrators. This critical legislation should be included
in the reauthorization process now going forward in the
Senate. The school children of today deserve the best
resources we have to give them.
On behalf of the 61,000 school, public, academic and
special librarians, library trustees, friends of libraries
and library supporters, I thank you for your effort to
improve the resources in school libraries. We offer the
support of our members in working towards passage of the
legislation.
Sincerely,
Nancy C. Kranich,
President.
______
By Mr. AKAKA (for himself, Mr. Inouye, and Mr. Graham):
S. 329. A bill to require the Secretary of the Interior to conduct a
theme study on the peopling of America, and for other purposes; to the
Committee on Energy and Natural Resources.
Mr. AKAKA. Mr. President, America is truly unique in that almost all
of us are migrants or immigrants to the United States, originating in
different regions--whether from Asia, from islands in the Pacific
Ocean, Mexico, or valleys and mesas of the Southwest, Europe or other
regions of the world. The prehistory and the contemporary history of
this nation are inextricably linked to the mosaic or migrations,
immigrations and existing cultures in the U.S. that has resulted in the
peopling of America. Americans are all travelers from diverse areas,
regions, continents and islands.
We need a better understanding of this coherent and unifying theme in
America. With this in mind, I am introducing legislation, along with my
colleagues Senator Inouye and Senator Graham, authorizing the National
Park Service to conduct a theme study on the peopling of America. An
identical bill passed the Senate last Congress, and I am optimistic
that the Senate will again pass this bill.
The purpose of the study is to provide a basis for identifying,
interpreting and preserving sites related to the migration, immigration
and settling of America. The peopling of America is the story of our
nation's population and how we came to be the diverse set of people
that we are today. The peopling of America will acknowledge the
contributions and trials of the first peoples who settled the North
American continent, the Pacific Islands, and the lands that later
became the United States of America. The peopling of America has
continued as Spanish, Portuguese, French, Dutch, and English laid claim
to lands and opened the floodgates of European migration and the
involuntary migration of Africans to the Americas.
This was just the beginning. America has been growing and changing
ever since. It is critical that we document and include the growth and
change in the United States as groups of people move across external
and internal boundaries that make up our nation. By understanding all
our contributions, the strength within all cultures, and the diffusion
of cultural ways through the United States, we will be a better nation.
The strength of American culture is in our diversity and rests on a
comprehensive understanding of the peopling of America.
The theme study I am proposing will authorize the Secretary of the
Interior to identify regions, areas, trails, districts and cultures
that illustrate and commemorate key events in the migration,
immigration and settlement of the population of the United States, and
which can provide a basis for the preservation and interpretation of
the peopling of America. It includes preservation and education
strategies to capture elements of our national culture and history such
as immigration, migration, ethnicity, family, gender, health,
neighborhood, and community. In addition, the study will make
recommendations regarding National Historic Landmark designations and
National Register of Historic Places nominations, as appropriate. The
study will also facilitate the development of cooperative programs with
education institutions, public history organizations, state and local
governments, and groups knowledgeable about the peopling of America.
We are entering a new millennium with hope and opportunity. It is
incumbent on us to reflect on the extent to which the energy and wealth
of the United States depends on our population diversity. Looking back,
we understand that our history, and our very national character, is
defined by the grand, entangled movements of people to America and
across the American landscape--through original residency, European
colonization, forced migrations, economic migrations, or politically-
motivated immigration--that has given rise to the rich interactions
that make the American character and experience unique. I would venture
to say that no other nation has the heterogeneous patchwork of
migration and movement around the country that is found and that makes
us the American Nation.
We embody the cultures and traditions that our forebears brought from
other places and shores, as well as the new traditions and cultures
that we adopted or created anew upon arrival. Whether we are the
original inhabitants of the rich Pacific Northwest, settled in the
rangelands and agrarian West, the industrialized Northeast, the small
towns of the Midwest, or the genteel cities of the South, our forebears
inevitably contributed their background and created new relationships
with peoples of other backgrounds and cultures. Our rich heritage as
Americans is comprehensible only through the stories of our various
constituent cultures, carried with us from other lands and transformed
by encounters with other cultures.
All Americans are travelers. All cultures have creation stories and
histories that place us here from somewhere. Whether we came to this
land as native peoples. English colonists, Africans who were brought in
slavery, Filipinos who came to work in Hawaii's cane fields, Mexican
ranchers, or Chinese merchants, the process by which our nation was
peopled transformed us from strangers from different shores into
neighbors unified in our inimitable diversity--Americans all. It is
essential for us to understand this process, not only to understand who
and where we are, but also to help us understand who we wish to be and
where we should be headed as a nation. As the caretaker of some of our
most important cultural and historical resources, from Ellis Island to
San Juan Island, from Chaco Canyon to Kennesaw Mountain, the National
Park Service is in a unique position to conduct a study that can offer
guidance on this fundamental subject.
Currently we have only one focal point in the national park system
that celebrates the peopling of America with significance. Ellis Island
and the Statue of Liberty National Monument. Ellis Island welcomed over
12 million immigrants between 1892 and 1954, an overwhelming majority
of whom crossed the Atlantic from Europe. Ellis Island celebrates these
immigrant experiences through their museum, historic buildings, and
memorial wall. Immensely popular as it is, Ellis Island is focused on
Atlantic immigration and thus reflects the experience only of those
groups (primarily Eastern and Southern Europeans) who were processed at
the island during its active period, 1892-1954.
Not all immigrants and their descendants can identify with Ellis
Island. Tens of millions of other immigrants traveled to our great
country through other ports of entry and in different periods of our
Nation's history and prehistory. Ellis Island tells only part of the
American story. There are other chapters, just as compelling, that must
be told.
On the West Coast, Angel Island Immigration Station, tucked in San
Francisco Bay, was open from 1910 to 1940 and processed hundreds of
thousands of Pacific Rim immigrants through its portals. An estimated
175,000 Chinese immigrants and more than 20,000 Japanese made the long
Pacific passage to the United States. Their experiences are a West
Coast mirror of the Ellis Island experience. But the migration story on
the West Coast is much longer and broader than Angel Island. Many
earlier migrants to the West Coast contributed to the rich history of
California, including the original resident
[[Page S1403]]
Native Americans, Spanish explorers, Mexican ranchers, Russian
colonists, American migrants from the Eastern states who came overland
or around the Horn, German and Irish military recruits, Chinese
railroad laborers, Portuguese and Italian farmers, and many other
groups. The diversity and experience of these groups reflects the
diversity and experience of all immigrants who entered the United
States via the Western states, including Alaska, Washington, Oregon,
and California.
The study we propose is consistent with the agency's latest official
thematic framework which establishes the subject of human population
movement and change--or ``peopling places''--as a primary thematic
category for study and interpretation. The framework, which serves as a
general guideline for interpretation, was revised in 1996 in response
to a Congressional mandate--Civil War Sites Study Act of 1990, Public
Law 101-628, Sec. 1209--that the full diversity of American history and
prehistory be expressed in the National Park Service's identification
and interpretation of historic and prehistoric properties.
In conclusion, we believe that this bill will shed light on the
unique blend of pluralism and unity that characterizes our national
polity. With its responsibility for cultural and historical parks, the
Park Service plays a unique role in enhancing our understanding of the
peopling of America and thus of a fuller comprehension of our
relationships with each other--past, present, and future.
I urge my colleagues to support this initiative. 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. 329
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 ``Peopling of America Theme
Study Act''.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings.--Congress finds that--
(1) an important facet of the history of the United States
is the story of how the United States was populated;
(2) the migration, immigration, and settlement of the
population of the United States--
(A) is broadly termed the ``peopling of America''; and
(B) is characterized by--
(i) the movement of groups of people across external and
internal boundaries of the United States and territories of
the United States; and
(ii) the interactions of those groups with each other and
with other populations;
(3) each of those groups has made unique, important
contributions to American history, culture, art, and life;
(4) the spiritual, intellectual, cultural, political, and
economic vitality of the United States is a result of the
pluralism and diversity of the American population;
(5) the success of the United States in embracing and
accommodating diversity has strengthened the national fabric
and unified the United States in its values, institutions,
experiences, goals, and accomplishments;
(6)(A) the National Park Service's official thematic
framework, revised in 1996, responds to the requirement of
section 1209 of the Civil War Sites Study Act of 1990 (16
U.S.C. 1a-5 note; title XII of Public Law 101-628), that
``the Secretary shall ensure that the full diversity of
American history and prehistory are represented'' in the
identification and interpretation of historic properties by
the National Park Service; and
(B) the thematic framework recognizes that ``people are the
primary agents of change'' and establishes the theme of human
population movement and change--or ``peopling places''--as a
primary thematic category for interpretation and
preservation; and
(7) although there are approximately 70,000 listings on the
National Register of Historic Places, sites associated with
the exploration and settlement of the United States by a
broad range of cultures are not well represented.
(b) Purposes.--The purposes of this Act are--
(1) to foster a much-needed understanding of the diversity
and contribution of the breadth of groups who have peopled
the United States; and
(2) to strengthen the ability of the National Park Service
to include groups and events otherwise not recognized in the
peopling of the United States.
SEC. 3. DEFINITIONS.
In this Act:
(1) Secretary.--The term ``Secretary'' means the Secretary
of the Interior.
(2) Theme study.--The term ``theme study'' means the
national historic landmark theme study required under section
4.
(3) Peopling of america.--The term ``peopling of America''
means the migration, immigration, and settlement of the
population of the United States.
SEC. 4. NATIONAL HISTORIC LANDMARK THEME STUDY ON THE
PEOPLING OF AMERICA.
(a) Theme Study Required.--The Secretary shall prepare and
submit to Congress a national historic landmark theme study
on the peopling of America.
(b) Purpose.--The purpose of the theme study shall be to
identify regions, areas, trails, districts, communities,
sites, buildings, structures, objects, organizations,
societies, and cultures that--
(1) best illustrate and commemorate key events or decisions
affecting the peopling of America; and
(2) can provide a basis for the preservation and
interpretation of the peopling of America that has shaped the
culture and society of the United States.
(c) Identification and Designation of Potential New
National Historic Landmarks.--
(1) In general.--The theme study shall identify and
recommend for designation new national historic landmarks.
(2) List of appropriate sites.--The theme study shall--
(A) include a list, in order of importance or merit, of the
most appropriate sites for national historic landmark
designation; and
(B) encourage the nomination of other properties to the
National Register of Historic Places.
(3) Designation.--On the basis of the theme study, the
Secretary shall designate new national historic landmarks.
(d) National Park System.--
(1) Identification of sites within current units.--The
theme study shall identify appropriate sites within units of
the National Park System at which the peopling of America may
be interpreted.
(2) Identification of new sites.--On the basis of the theme
study, the Secretary shall recommend to Congress sites for
which studies for potential inclusion in the National Park
System should be authorized.
(e) Continuing Authority.--After the date of submission to
Congress of the theme study, the Secretary shall, on a
continuing basis, as appropriate to interpret the peopling of
America--
(1) evaluate, identify, and designate new national historic
landmarks; and
(2) evaluate, identify, and recommend to Congress sites for
which studies for potential inclusion in the National Park
System should be authorized.
(f) Public Education and Research.--
(1) Linkages.--
(A) Establishment.--On the basis of the theme study, the
Secretary may identify appropriate means for establishing
linkages--
(i) between--
(I) regions, areas, trails, districts, communities, sites,
buildings, structures, objects, organizations, societies, and
cultures identified under subsections (b) and (d); and
(II) groups of people; and
(ii) between--
(I) regions, areas, trails, districts, communities, sites,
buildings, structures, objects, organizations, societies, and
cultures identified under subsection (b); and
(II) units of the National Park System identified under
subsection (d).
(B) Purpose.--The purpose of the linkages shall be to
maximize opportunities for public education and scholarly
research on the peopling of America.
(2) Cooperative arrangements.--On the basis of the theme
study, the Secretary shall, subject to the availability of
funds, enter into cooperative arrangements with State and
local governments, educational institutions, local historical
organizations, communities, and other appropriate entities to
preserve and interpret key sites in the peopling of America.
(3) Educational initiatives.--
(A) In general.--The documentation in the theme study shall
be used for broad educational initiatives such as--
(i) popular publications;
(ii) curriculum material such as the Teaching with Historic
Places program;
(iii) heritage tourism products such as the National
Register of Historic Places Travel Itineraries program; and
(iv) oral history and ethnographic programs.
(B) Cooperative programs.--On the basis of the theme study,
the Secretary shall implement cooperative programs to
encourage the preservation and interpretation of the peopling
of America.
SEC. 5. COOPERATIVE AGREEMENTS.
The Secretary may enter into cooperative agreements with
educational institutions, professional associations, or other
entities knowledgeable about the peopling of America--
(1) to prepare the theme study;
(2) to ensure that the theme study is prepared in
accordance with generally accepted scholarly standards; and
(3) to promote cooperative arrangements and programs
relating to the peopling of America.
SEC. 6. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated such sums as are
necessary to carry out this Act.
______
By Mr. TORRICELLI:
S. 330. A bill to expand the powers of the Secretary of the Treasury
to regulate the manufacture, distribution, and
[[Page S1404]]
sale of firearms and ammunition, and to expand the jurisdiction of the
Secretary to include firearm products and non-powder firearms; to the
Committee on the Judiciary.
Mr. TORRICELLI. Mr. President, I rise today to introduce the Firearms
Safety and Consumer Protection Act of 2001. I am sure that this bill
will face opposition, but I am equally sure that the need for this bill
is so clear, and the logic so unquestionable, that we will eventually
see gun consumers fighting for the passage of the legislation.
Mr. President, I have long fought against the gun injuries that have
plagued America for years. We succeeded in enacting the Brady bill and
the ban on devastating assault weapons. And in the 104th Congress, even
in the midst of what many consider a hostile Congress, we told domestic
violence offenders that they could no longer own a gun. These were each
measures aimed at the criminal misuse of firearms.
But there is another subject that the NRA just hates to talk about--
the countless injuries that occur to innocent gun owners, recreational
hunters, and to law enforcement. Every year in this country, countless
people die and many more are injured by defective or poorly
manufactured firearms. Yet the Consumer Products Safety Commission,
which has the power to regulate every other product sold to the
American consumer, lacks the ability to regulate the manufacture of
firearms.
Amazingly, in a nation that regulates everything from the air we
breathe, to the cars we drive, to the cribs that hold our children, the
most dangerous consumer product sold, firearms, are unregulated.
Studies show that inexpensive safety technology and the elimination of
flawed guns could prevent a third of accidental firearms deaths.
Despite this fact, the Federal government is powerless to stop gun
companies from distributing defective guns or failing to warn consumers
of dangerous products.
This gaping loophole in our consumer protection laws can often be
disastrous for gun users. To take just one recent example, even when a
gun manufacturer discovered that it had sold countless defective guns
with a tendency to misfire, no recall was mandated and no action could
be taken by the federal government. The guns remained on the street,
and consumers were defenseless. Time after time, consumers, hunters,
and gun owners are each left out in the cold, without the knowledge of
danger or the assistance necessary to protect themselves from it.
For too long now, the gun industry has successfully kept guns exempt
from consumer protection laws, and we must finally bring guns into line
with every other consumer product. Logic, common sense, and the many
innocent victims of defective firearms all cry out for us to act--and
act we must.
To that end, I am introducing the Firearms Safety and Consumer
Protection Act, legislation giving the Secretary of the Treasury the
power to regulate the manufacture, distribution, and sale of firearms
and ammunition. The time has come to stop dangerous and defective guns
from killing American consumers. I urge my colleagues to support this
bill. I ask 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. 330
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 ``Firearms
Safety and Consumer Protection Act of 2001''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Purposes.
Sec. 3. Definitions.
TITLE I--REGULATION OF FIREARM PRODUCTS
Sec. 101. Regulatory authority.
Sec. 102. Orders; inspections.
TITLE II--PROHIBITIONS
Sec. 201. Prohibitions.
Sec. 202. Inapplicability to governmental authorities.
TITLE III--ENFORCEMENT
Subtitle A--Civil Enforcement
Sec. 301. Civil penalties.
Sec. 302. Injunctive enforcement and seizure.
Sec. 303. Imminently hazardous firearms.
Sec. 304. Private cause of action.
Sec. 305. Private enforcement of this Act.
Sec. 306. Effect on private remedies.
Subtitle B--Criminal Enforcement
Sec. 351. Criminal penalties.
TITLE IV--ADMINISTRATIVE PROVISIONS
Sec. 401. Firearm injury information and research.
Sec. 402. Annual report to Congress.
TITLE V--RELATIONSHIP TO OTHER LAW
Sec. 501. Subordination to the Arms Export Control Act.
Sec. 502. Effect on State law.
SEC. 2. PURPOSES.
The purposes of this Act are--
(1) to protect the public against unreasonable risk of
injury and death associated with firearms and related
products;
(2) to develop safety standards for firearms and related
products;
(3) to assist consumers in evaluating the comparative
safety of firearms and related products;
(4) to promote research and investigation into the causes
and prevention of firearm-related deaths and injuries; and
(5) to restrict the availability of weapons that pose an
unreasonable risk of death or injury.
SEC. 3. DEFINITIONS.
(a) Specific Terms.--In this Act:
(1) Firearms dealer.--The term ``firearms dealer'' means--
(A) any person engaged in the business (as defined in
section 921(a)(21)(C) of title 18, United States Code) of
dealing in firearms at wholesale or retail;
(B) any person engaged in the business (as defined in
section 921(a)(21)(D) of title 18, United States Code) of
repairing firearms or of making or fitting special barrels,
stocks, or trigger mechanisms to firearms; and
(C) any person who is a pawnbroker.
(2) Firearm part.--The term ``firearm part'' means--
(A) any part or component of a firearm as originally
manufactured;
(B) any good manufactured or sold--
(i) for replacement or improvement of a firearm; or
(ii) as any accessory or addition to the firearm; and
(C) any good that is not a part or component of a firearm
and is manufactured, sold, delivered, offered, or intended
for use exclusively to safeguard individuals from injury by a
firearm.
(3) Firearm product.--The term ``firearm product'' means a
firearm, firearm part, nonpowder firearm, and ammunition.
(4) Firearm safety regulation.--The term ``firearm safety
regulation'' means a regulation prescribed under this Act.
(5) Firearm safety standard.--The term ``firearm safety
standard'' means a standard promulgated under this Act.
(6) Nonpowder firearm.--The term ``nonpowder firearm''
means a device specifically designed to discharge BBs,
pellets, darts, or similar projectiles by the release of
stored energy.
(7) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury or the designee of the Secretary.
(b) Other Terms.--Each term used in this Act that is not
defined in subsection (a) shall have the meaning (if any)
given that term in section 921(a) of title 18, United States
Code.
TITLE I--REGULATION OF FIREARM PRODUCTS
SEC. 101. REGULATORY AUTHORITY.
(a) In General.--The Secretary shall prescribe such
regulations governing the design, manufacture, and
performance of, and commerce in, firearm products, consistent
with this Act, as are reasonably necessary to reduce or
prevent unreasonable risk of injury resulting from the use of
those products.
(b) Maximum Interval Between Issuance of Proposed and Final
Regulation.--Not later than 120 days after the date on which
the Secretary issues a proposed regulation under subsection
(a) with respect to a matter, the Secretary shall issue a
regulation in final form with respect to the matter.
(c) Petitions.--
(1) In general.--Any person may petition the Secretary to--
(A) issue, amend, or repeal a regulation prescribed under
subsection (a) of this section; or
(B) require the recall, repair, or replacement of a firearm
product, or the issuance of refunds with respect to a firearm
product.
(2) Deadline for action on petition.--Not later than 120
days after the date on which the Secretary receives a
petition referred to in paragraph (1), the Secretary shall--
(A) grant, in whole or in part, or deny the petition; and
(B) provide the petitioner with the reasons for granting or
denying the petition.
SEC. 102. ORDERS; INSPECTIONS.
(a) Authority To Prohibit Manufacture, Sale, or Transfer of
Firearm Products Made, Imported, Transferred, or Distributed
in Violation of Regulation.--The Secretary may issue an order
prohibiting the manufacture, sale, or transfer of a firearm
product which the Secretary finds has been manufactured, or
has been or is intended to be imported, transferred, or
distributed in violation of a regulation prescribed under
this Act.
(b) Authority To Require the Recall, Repair, or Replacement
of, or the Provision of Refunds With Respect to Firearm
Products.--The Secretary may issue an order requiring the
manufacturer of, and any dealer
[[Page S1405]]
in, a firearm product which the Secretary determines poses an
unreasonable risk of injury to the public, is not in
compliance with a regulation prescribed under this Act, or is
defective, to--
(1) provide notice of the risks associated with the
product, and of how to avoid or reduce the risks, to--
(A) the public;
(B) in the case of the manufacturer of the product, each
dealer in the product; and
(C) in the case of a dealer in the product, the
manufacturer of the product and the other persons known to
the dealer as dealers in the product;
(2) bring the product into conformity with the regulations
prescribed under this Act;
(3) repair the product;
(4) replace the product with a like or equivalent product
which is in compliance with those regulations;
(5) refund the purchase price of the product, or, if the
product is more than 1 year old, a lesser amount based on the
value of the product after reasonable use;
(6) recall the product from the stream of commerce; or
(7) submit to the Secretary a satisfactory plan for
implementation of any action required under this subsection.
(c) Authority To Prohibit Manufacture, Importation,
Transfer, Distribution, or Export of Unreasonably Risky
Firearm Products.--The Secretary may issue an order
prohibiting the manufacture, importation, transfer,
distribution, or export of a firearm product if the Secretary
determines that the exercise of other authority under this
Act would not be sufficient to prevent the product from
posing an unreasonable risk of injury to the public.
(d) Inspections.--When the Secretary has reason to believe
that a violation of this Act or of a regulation or order
issued under this Act is being or has been committed, the
Secretary may, at reasonable times--
(1) enter any place in which firearm products are
manufactured, stored, or held, for distribution in commerce,
and inspect those areas where the products are manufactured,
stored, or held; and
(2) enter and inspect any conveyance being used to
transport a firearm product.
TITLE II--PROHIBITIONS
SEC. 201. PROHIBITIONS.
(a) Failure of Manufacturer To Test and Certify Firearm
Products.--It shall be unlawful for the manufacturer of a
firearm product to transfer, distribute, or export a firearm
product unless--
(1) the manufacturer has tested the product in order to
ascertain whether the product is in conformity with the
regulations prescribed under section 101;
(2) the product is in conformity with those regulations;
and
(3) the manufacturer has included in the packaging of the
product, and furnished to each person to whom the product is
distributed, a certificate stating that the product is in
conformity with those regulations.
(b) Failure of Manufacturer To Provide Notice of New Types
of Firearm Products.--It shall be unlawful for the
manufacturer of a new type of firearm product to manufacture
the product, unless the manufacturer has provided the
Secretary with--
(1) notice of the intent of the manufacturer to manufacture
the product; and
(2) a description of the product.
(c) Failure of Manufacturer or Dealer To Label Firearm
Products.--It shall be unlawful for a manufacturer of or
dealer in firearms to transfer, distribute, or export a
firearm product unless the product is accompanied by a label
that--
(1) contains--
(A) the name and address of the manufacturer of the
product;
(B) the name and address of any importer of the product;
(C) the model number of the product and the date the
product was manufactured;
(D) a specification of the regulations prescribed under
this Act that apply to the product; and
(E) the certificate required by subsection (a)(3) with
respect to the product; and
(2) is located prominently in conspicuous and legible type
in contrast by typography, layout, or color with other
printed matter on the label.
(d) Failure To Maintain or Permit Inspection of Records.--
It shall be unlawful for an importer of, manufacturer of, or
dealer in a firearm product to fail to--
(1) maintain such records, and supply such information, as
the Secretary may require in order to ascertain compliance
with this Act and the regulations and orders issued under
this Act; and
(2) permit the Secretary to inspect and copy those records
at reasonable times.
(e) Importation and Exportation of Uncertified Firearm
Products.--It shall be unlawful for any person to import into
the United States or export a firearm product that is not
accompanied by the certificate required by subsection (a)(3).
(f) Commerce in Firearm Products in Violation of Order
Issued or Regulation Prescribed Under This Act.--It shall be
unlawful for any person to manufacture, offer for sale,
distribute in commerce, import into the United States, or
export a firearm product--
(1) that is not in conformity with the regulations
prescribed under this Act; or
(2) in violation of an order issued under this Act.
(g) Stockpiling.--It shall be unlawful for any person to
manufacture, purchase, or import a firearm product, after the
date a regulation is prescribed under this Act with respect
to the product and before the date the regulation takes
effect, at a rate that is significantly greater than the rate
at which the person manufactured, purchased, or imported the
product during a base period (prescribed by the Secretary in
regulations) ending before the date the regulation is so
prescribed.
SEC. 202. INAPPLICABILITY TO GOVERNMENTAL AUTHORITIES.
Section 201 does not apply to any department or agency of
the United States, of a State, or of a political subdivision
of a State, or to any official conduct of any officer or
employee of such a department or agency.
TITLE III--ENFORCEMENT
Subtitle A--Civil Enforcement
SEC. 301. CIVIL PENALTIES.
(a) Authority To Impose Fines.--
(1) In general.--The Secretary shall impose upon any person
who violates section 201 a civil fine in an amount that does
not exceed the applicable amount described in subsection (b).
(2) Scope of offense.--Each violation of section 201 (other
than of subsection (a)(3) or (d) of that section) shall
constitute a separate offense with respect to each firearm
product involved.
(b) Applicable Amount.--
(1) First 5-year period.--The applicable amount for the 5-
year period immediately following the date of enactment of
this Act is $5,000, or $10,000 if the violation is willful.
(2) Thereafter.--The applicable amount during any time
after the 5-year period described in paragraph (1) is
$10,000, or $20,000 if the violation is willful.
SEC. 302. INJUNCTIVE ENFORCEMENT AND SEIZURE.
(a) Injunctive Enforcement.--Upon request of the Secretary,
the Attorney General of the United States may bring an action
to restrain any violation of section 201 in the United States
district court for any district in which the violation has
occurred, or in which the defendant is found or transacts
business.
(b) Condemnation.--
(1) In general.--Upon request of the Secretary, the
Attorney General of the United States may bring an action in
rem for condemnation of a qualified firearm product in the
United States district court for any district in which the
Secretary has found and seized for confiscation the product.
(2) Qualified firearm product defined.--In paragraph (1),
the term ``qualified firearm product'' means a firearm
product--
(A) that is being transported or having been transported
remains unsold, is sold or offered for sale, is imported, or
is to be exported; and
(B)(i) that is not in compliance with a regulation
prescribed or an order issued under this Act; or
(ii) with respect to which relief has been granted under
section 303.
SEC. 303. IMMINENTLY HAZARDOUS FIREARMS.
(a) In General.--Notwithstanding the pendency of any other
proceeding in a court of the United States, the Secretary may
bring an action in a United States district court to restrain
any person who is a manufacturer of, or dealer in, an
imminently hazardous firearm product from manufacturing,
distributing, transferring, importing, or exporting the
product.
(b) Imminently Hazardous Firearm Product.--In subsection
(a), the term ``imminently hazardous firearm product'' means
any firearm product with respect to which the Secretary
determines that--
(1) the product poses an unreasonable risk of injury to the
public; and
(2) time is of the essence in protecting the public from
the risks posed by the product.
(c) Relief.--In an action brought under subsection (a), the
court may grant such temporary or permanent relief as may be
necessary to protect the public from the risks posed by the
firearm product, including--
(1) seizure of the product; and
(2) an order requiring--
(A) the purchasers of the product to be notified of the
risks posed by the product;
(B) the public to be notified of the risks posed by the
product; or
(C) the defendant to recall, repair, or replace the
product, or refund the purchase price of the product (or, if
the product is more than 1 year old, a lesser amount based on
the value of the product after reasonable use).
(d) Venue.--An action under subsection (a)(2) may be
brought in the United States district court for the District
of Columbia or for any district in which any defendant is
found or transacts business.
SEC. 304. PRIVATE CAUSE OF ACTION.
(a) In General.--Any person aggrieved by any violation of
this Act or of any regulation prescribed or order issued
under this Act by another person may bring an action against
such other person in any United States district court for
damages, including consequential damages. In any action under
this section, the court, in its discretion, may award to a
prevailing plaintiff a reasonable attorney's fee as part of
the costs.
(b) Rule of Interpretation.--The remedy provided for in
subsection (a) shall be in addition to any other remedy
provided by common law or under Federal or State law.
SEC. 305. PRIVATE ENFORCEMENT OF THIS ACT.
Any interested person may bring an action in any United
States district court to enforce this Act, or restrain any
violation of
[[Page S1406]]
this Act or of any regulation prescribed or order issued
under this Act. In any action under this section, the court,
in its discretion, may award to a prevailing plaintiff a
reasonable attorney's fee as part of the costs.
SEC. 306. EFFECT ON PRIVATE REMEDIES.
(a) Irrelevancy of Compliance With This Act.--Compliance
with this Act or any order issued or regulation prescribed
under this Act shall not relieve any person from liability to
any person under common law or State statutory law.
(b) Irrelevancy of Failure To Take Action Under This Act.--
The failure of the Secretary to take any action authorized
under this Act shall not be admissible in litigation relating
to the product under common law or State statutory law.
Subtitle B--Criminal Enforcement
SEC. 351. CRIMINAL PENALTIES.
Any person who has received from the Secretary a notice
that the person has violated a provision of this Act or of a
regulation prescribed under this Act with respect to a
firearm product and knowingly violates that provision with
respect to the product shall be fined under title 18, United
States Code, imprisoned not more than 2 years, or both.
TITLE IV--ADMINISTRATIVE PROVISIONS
SEC. 401. FIREARM INJURY INFORMATION AND RESEARCH.
(a) In General.--The Secretary shall--
(1) collect, investigate, analyze, and share with other
appropriate government agencies circumstances of death and
injury associated with firearms; and
(2) conduct continuing studies and investigations of
economic costs and losses resulting from firearm-related
deaths and injuries.
(b) Other Data.--The Secretary shall--
(1) collect and maintain current production and sales
figures for each licensed manufacturer, broken down by the
model, caliber, and type of firearms produced and sold by the
licensee, including a list of the serial numbers of such
firearms;
(2) conduct research on, studies of, and investigation into
the safety of firearm products and improving the safety of
firearm products; and
(3) develop firearm safety testing methods and testing
devices.
(c) Availability of Information.--On a regular basis, but
not less frequently than annually, the Secretary shall make
available to the public the results of the activities of the
Secretary under subsections (a) and (b).
SEC. 402. ANNUAL REPORT TO CONGRESS.
(a) In General.--The Secretary shall prepare and submit to
the President and Congress at the beginning of each regular
session of Congress, a comprehensive report on the
administration of this Act for the most recently completed
fiscal year.
(b) Contents.--Each report submitted under subsection (a)
shall include--
(1) a thorough description, developed in coordination with
the Secretary of Health and Human Services, of the incidence
of injury and death and effects on the population resulting
from firearm products, including statistical analyses and
projections, and a breakdown, as practicable, among the
various types of such products associated with the injuries
and deaths;
(2) a list of firearm safety regulations prescribed that
year;
(3) an evaluation of the degree of compliance with firearm
safety regulations, including a list of enforcement actions,
court decisions, and settlements of alleged violations, by
name and location of the violator or alleged violator, as the
case may be;
(4) a summary of the outstanding problems hindering
enforcement of this Act, in the order of priority; and
(5) a log and summary of meetings between the Secretary or
employees of the Secretary and representatives of industry,
interested groups, or other interested parties.
TITLE V--RELATIONSHIP TO OTHER LAW
SEC. 501. SUBORDINATION TO ARMS EXPORT CONTROL ACT.
In the event of any conflict between any provision of this
Act and any provision of the Arms Export Control Act, the
provision of the Arms Export Control Act shall control.
SEC. 502. EFFECT ON STATE LAW.
(a) In General.--This Act shall not be construed to preempt
any provision of the law of any State or political
subdivision thereof, or prevent a State or political
subdivision thereof from enacting any provision of law
regulating or prohibiting conduct with respect to a firearm
product, except to the extent that such provision of law is
inconsistent with any provision of this Act, and then only to
the extent of the inconsistency.
(b) Rule of Construction.--A provision of State law is not
inconsistent with this Act if the provision imposes a
regulation or prohibition of greater scope or a penalty of
greater severity than any prohibition or penalty imposed by
this Act.
______
By Mr. LUGAR (for himself, Mr. Roberts, Mr. McConnell, and Mr.
Burns):
S. 333. A bill to provide tax and regulatory relief for farmers and
to improve the competitiveness of American agricultural commodities and
products in global markets; to the Committee on Finance.
Mr. LUGAR. Mr. President, I rise today to introduce the Rural America
Prosperity Act of 2001. I am pleased that Senator Roberts, Senator
McConnell, and Senator Burns joined as cosponsors of this bill.
A Republican controlled Congress in 1996 produced a sweeping reform
of farm programs. Farmers were no longer told by the government what
crops they had to plant. Farmers were no longer forced by the
government to idle part of their land in exchange for program payments.
That farm bill disentangled farmers from government controls and
enabled them to make production decisions based on market signals.
Freeing farmers from excessive, and often counterproductive,
government controls is an important step, but we still need to do more
to give farmers the tools they need to succeed. Specifically, we need
to work to open foreign markets for our agricultural commodities and
products, ease the tax and regulatory burden, and provide new risk
management tools for farmers. The Rural America Prosperity Act of 2001,
which we are introducing today, will help us meet these unfulfilled
promises to rural America.
There are three tax provisions in this legislation that I have long
advocated as crucial to the financial health of farmers. First is the
repeal of the estate tax. A repeal of this tax, which has prevented
some farms from being passed from one generation to the next, is
essential. We are proposing the same 10-year phase-out of the estate
tax which Congress passed last year but President Clinton vetoed.
Excluding capital gains from the sale of farmland would put production
agriculture on the same footing as homeowners who benefit from a
capital gains exclusion for their home. The deduction of health care
insurance premiums is needed for farmers and others who are self-
employed.
Last year Congress provided over $8 billion to improve the federal
crop insurance program. While crop insurance is an important risk
management tool, today we offer two other risk management tools for
farmers--income averaging and FARRM accounts. Three years ago Congress
made income averaging a permanent risk management tool for farmers when
calculating taxes. Unfortunately, the interaction between income
averaging and the alternative minimum tax has prevented many farmers
from receiving the benefit of income averaging. This bill fixes that
problem. Under this bill, farmers will be able to contribute up to 20
percent of annual farm income into a FARRM account and deduct this
amount from their taxes. This is an important tool for managing
financial volatility associated with farming.
We also address regulatory reform in our bill. We are seeking a
review of existing and proposed regulations to determine the cost of
compliance for farmers, ranchers and foresters. We want to determine if
there are more cost-effective ways for farmers, ranchers and foresters
to achieve the objectives of these regulations.
Finally, we must do more to help develop new markets abroad for our
farm commodities and agricultural products. Opportunity lies in
developing countries where growing wealth allows for increased demand
for meat and processed commodities. Authorizing fast-track authority
for the President to negotiate international trade agreements may be
the single most important thing we can do to facilitate exports.
We also need to address sanctions. Sanctions that prohibit the export
of U.S. agricultural products into the sanctioned country are often
morally indefensible because they deny necessities to people, not the
offending government. Such sanctions also deny markets for U.S.
agricultural products which are then captured by our competitors. This
legislation only affects commercial sales (excluding all Government
subsidized trade programs) involving United States agricultural
commodities, livestock, and value-added products.
This legislation represents what I believe is necessary to further
the historic reforms initiated in the farm bill almost five years ago.
I urge my colleagues to cosponsor this bill. I will encourage my
colleagues and the new Bush administration to work to enact these
proposals.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
[[Page S1407]]
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 333
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
America Prosperity Act of 2001''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--TAX RELIEF FOR FARMERS
Subtitle A--General Tax Provisions
Sec. 101. Deduction for 100 percent of health insurance costs of self-
employed individuals.
Sec. 102. Exclusion of gain from sale of farmland.
Sec. 103. Income averaging for farmers not to increase alternative
minimum tax liability.
Sec. 104. Farm and ranch risk management accounts.
Subtitle B--Estate and Gift Tax Relief
Sec. 111. Repeal of estate, gift, and generation-skipping taxes.
Sec. 112. Termination of step up in basis at death.
Sec. 113. Carryover basis at death.
Sec. 114. Additional reductions of estate and gift tax rates.
Sec. 115. Unified credit against estate and gift taxes replaced with
unified exemption amount.
Sec. 116. Deemed allocation of GST exemption to lifetime transfers to
trusts; retroactive allocations.
Sec. 117. Severing of trusts.
Sec. 118. Modification of certain valuation rules.
Sec. 119. Relief provisions.
Sec. 120. Expansion of estate tax rule for conservation easements.
TITLE II--STUDY OF COSTS OF REGULATIONS ON FARMERS, RANCHERS, AND
FORESTERS
Sec. 201. Comptroller General study of regulations.
Sec. 202. Response of Secretary of Agriculture.
TITLE III--EXTENSION OF TRADE AUTHORITIES PROCEDURES FOR RECIPROCAL
TRADE AGREEMENTS
Sec. 301. Short title.
Sec. 302. Trade negotiating objectives.
Sec. 303. Trade agreements authority.
Sec. 304. Consultations.
Sec. 305. Implementation of trade agreements.
Sec. 306. Treatment of certain trade agreements.
Sec. 307. Conforming amendments.
Sec. 308. Definitions.
TITLE IV--AGRICULTURAL TRADE FREEDOM
Sec. 401. Short title.
Sec. 402. Definitions.
Sec. 403. Agricultural commodities, livestock, and products exempt from
unilateral agricultural sanctions.
Sec. 404. Sale or barter of food assistance.
TITLE I--TAX RELIEF FOR FARMERS
Subtitle A--General Tax Provisions
SEC. 101. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS
OF SELF-EMPLOYED INDIVIDUALS.
(a) In General.--Paragraph (1) of section 162(l) of the
Internal Revenue Code of 1986 (relating to special rules for
health insurance costs of self-employed individuals) is
amended to read as follows:
``(1) Allowance of deduction.--In the case of an individual
who is an employee within the meaning of section 401(c)(1),
there shall be allowed as a deduction under this section an
amount equal to 100 percent of the amount paid during the
taxable year for insurance which constitutes medical care for
the taxpayer, his spouse, and dependents.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2001.
SEC. 102. EXCLUSION OF GAIN FROM SALE OF FARMLAND.
(a) In General.--Part III of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 (relating to items
specifically excluded from gross income) is amended by
inserting after section 121 the following:
``SEC. 121A. EXCLUSION OF GAIN FROM SALE OF QUALIFIED FARM
PROPERTY.
``(a) Exclusion.--In the case of a natural person, gross
income shall not include gain from the sale or exchange of
qualified farm property.
``(b) Limitation.--
``(1) In general.--The amount of gain excluded from gross
income under subsection (a) with respect to any taxable year
shall not exceed $500,000 ($250,000 in the case of a married
individual filing a separate return), reduced by the
aggregate amount of gain excluded under subsection (a) for
all preceding taxable years.
``(2) Special rule for joint returns.--The amount of the
exclusion under subsection (a) on a joint return for any
taxable year shall be allocated equally between the spouses
for purposes of applying the limitation under paragraph (1)
for any succeeding taxable year.
``(c) Qualified Farm Property.--For purposes of this
section--
``(1) In general.--The term `qualified farm property' means
real property located in the United States if, during periods
aggregating 3 years or more of the 5-year period ending on
the date of the sale or exchange of such real property--
``(A) such real property was used by the taxpayer or a
member of the family of the taxpayer as a farm for farming
purposes, and
``(B) there was material participation by the taxpayer (or
such a member) in the operation of the farm.
``(2) Other definitions.--The terms `member of the family',
`farm', and `farming purposes' have the respective meanings
given such terms by paragraphs (2), (4), and (5) of section
2032A(e).
``(3) Special rules.--Rules similar to the rules of
paragraphs (4) and (5) of section 2032A(b) and paragraphs (3)
and (6) of section 2032A(e) shall apply.
``(d) Other Rules.--For purposes of this section, rules
similar to the rules of subsection (e) and subsection (f) of
section 121 shall apply.''.
(b) Conforming Amendment.--The table of sections for part
III of subchapter B of chapter 1 of the Internal Revenue Code
of 1986 is amended by inserting after the item relating to
section 121 the following:
``Sec. 121A. Exclusion of gain from sale of qualified farm property.''.
(c) Effective Date.--The amendments made by this section
shall apply to any sale or exchange after the date of
enactment of this Act in taxable years ending after such
date.
SEC. 103. INCOME AVERAGING FOR FARMERS NOT TO INCREASE
ALTERNATIVE MINIMUM TAX LIABILITY.
(a) In General.--Section 55(c) of the Internal Revenue Code
of 1986 (defining regular tax) is amended by redesignating
paragraph (2) as paragraph (3) and by inserting after
paragraph (1) the following:
``(2) Coordination with income averaging for farmers.--
Solely for purposes of this section, section 1301 (relating
to averaging of farm income) shall not apply in computing the
regular tax.''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
1997.
SEC. 104. FARM AND RANCH RISK MANAGEMENT ACCOUNTS.
(a) In General.--Subpart C of part II of subchapter E of
chapter 1 of the Internal Revenue Code of 1986 (relating to
taxable year for which deductions taken) is amended by
inserting after section 468B the following:
``SEC. 468C. FARM AND RANCH RISK MANAGEMENT ACCOUNTS.
``(a) Deduction Allowed.--In the case of an individual
engaged in an eligible farming business, there shall be
allowed as a deduction for any taxable year the amount paid
in cash by the taxpayer during the taxable year to a Farm and
Ranch Risk Management Account (hereinafter referred to as the
`FARRM Account').
``(b) Limitation.--The amount which a taxpayer may pay into
the FARRM Account for any taxable year shall not exceed 20
percent of so much of the taxable income of the taxpayer
(determined without regard to this section) which is
attributable (determined in the manner applicable under
section 1301) to any eligible farming business.
``(c) Eligible Farming Business.--For purposes of this
section, the term `eligible farming business' means any
farming business (as defined in section 263A(e)(4)) which is
not a passive activity (within the meaning of section 469(c))
of the taxpayer.
``(d) FARRM Account.--For purposes of this section--
``(1) In general.--The term `FARRM Account' means a trust
created or organized in the United States for the exclusive
benefit of the taxpayer, but only if the written governing
instrument creating the trust meets the following
requirements:
``(A) No contribution will be accepted for any taxable year
in excess of the amount allowed as a deduction under
subsection (a) for such year.
``(B) The trustee is a bank (as defined in section 408(n))
or another person who demonstrates to the satisfaction of the
Secretary that the manner in which such person will
administer the trust will be consistent with the requirements
of this section.
``(C) The assets of the trust consist entirely of cash or
of obligations which have adequate stated interest (as
defined in section 1274(c)(2)) and which pay such interest
not less often than annually.
``(D) All income of the trust is distributed currently to
the grantor.
``(E) The assets of the trust will not be commingled with
other property except in a common trust fund or common
investment fund.
``(2) Account taxed as grantor trust.--The grantor of a
FARRM Account shall be treated for purposes of this title as
the owner of such Account and shall be subject to tax thereon
in accordance with subpart E of part I of subchapter J of
this chapter (relating to grantors and others treated as
substantial owners).
``(e) Inclusion of Amounts Distributed.--
``(1) In general.--Except as provided in paragraph (2),
there shall be includible in the gross income of the taxpayer
for any taxable year--
``(A) any amount distributed from a FARRM Account of the
taxpayer during such taxable year, and
``(B) any deemed distribution under--
``(i) subsection (f)(1) (relating to deposits not
distributed within 5 years),
[[Page S1408]]
``(ii) subsection (f)(2) (relating to cessation in eligible
farming business), and
``(iii) subparagraph (A) or (B) of subsection (f)(3)
(relating to prohibited transactions and pledging account as
security).
``(2) Exceptions.--Paragraph (1)(A) shall not apply to--
``(A) any distribution to the extent attributable to income
of the Account, and
``(B) the distribution of any contribution paid during a
taxable year to a FARRM Account to the extent that such
contribution exceeds the limitation applicable under
subsection (b) if requirements similar to the requirements of
section 408(d)(4) are met.
For purposes of subparagraph (A), distributions shall be
treated as first attributable to income and then to other
amounts.
``(f) Special Rules.--
``(1) Tax on deposits in account which are not distributed
within 5 years.--
``(A) In general.--If, at the close of any taxable year,
there is a nonqualified balance in any FARRM Account--
``(i) there shall be deemed distributed from such Account
during such taxable year an amount equal to such balance, and
``(ii) the taxpayer's tax imposed by this chapter for such
taxable year shall be increased by 10 percent of such deemed
distribution.
The preceding sentence shall not apply if an amount equal to
such nonqualified balance is distributed from such Account to
the taxpayer before the due date (including extensions) for
filing the return of tax imposed by this chapter for such
year (or, if earlier, the date the taxpayer files such return
for such year).
``(B) Nonqualified balance.--For purposes of subparagraph
(A), the term `nonqualified balance' means any balance in the
Account on the last day of the taxable year which is
attributable to amounts deposited in such Account before the
4th preceding taxable year.
``(C) Ordering rule.--For purposes of this paragraph,
distributions from a FARRM Account (other than distributions
of current income) shall be treated as made from deposits in
the order in which such deposits were made, beginning with
the earliest deposits.
``(2) Cessation in eligible business.--At the close of the
first disqualification period after a period for which the
taxpayer was engaged in an eligible farming business, there
shall be deemed distributed from the FARRM Account of the
taxpayer an amount equal to the balance in such Account (if
any) at the close of such disqualification period. For
purposes of the preceding sentence, the term
`disqualification period' means any period of 2 consecutive
taxable years for which the taxpayer is not engaged in an
eligible farming business.
``(3) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 220(f)(8) (relating to treatment on death).
``(B) Section 408(e)(2) (relating to loss of exemption of
account where individual engages in prohibited transaction).
``(C) Section 408(e)(4) (relating to effect of pledging
account as security).
``(D) Section 408(g) (relating to community property laws).
``(E) Section 408(h) (relating to custodial accounts).
``(4) Time when payments deemed made.--For purposes of this
section, a taxpayer shall be deemed to have made a payment to
a FARRM Account on the last day of a taxable year if such
payment is made on account of such taxable year and is made
on or before the due date (without regard to extensions) for
filing the return of tax for such taxable year.
``(5) Individual.--For purposes of this section, the term
`individual' shall not include an estate or trust.
``(6) Deduction not allowed for self-employment tax.--The
deduction allowable by reason of subsection (a) shall not be
taken into account in determining an individual's net
earnings from self-employment (within the meaning of section
1402(a)) for purposes of chapter 2.
``(g) Reports.--The trustee of a FARRM Account shall make
such reports regarding such Account to the Secretary and to
the person for whose benefit the Account is maintained with
respect to contributions, distributions, and such other
matters as the Secretary may require under regulations. The
reports required by this subsection shall be filed at such
time and in such manner and furnished to such persons at such
time and in such manner as may be required by such
regulations.''.
(b) Tax on Excess Contributions.--
(1) Subsection (a) of section 4973 of the Internal Revenue
Code of 1986 (relating to tax on excess contributions to
certain tax-favored accounts and annuities) is amended by
striking ``or'' at the end of paragraph (3), by redesignating
paragraph (4) as paragraph (5), and by inserting after
paragraph (3) the following:
``(4) a FARRM Account (within the meaning of section
468C(d)), or''.
(2) Section 4973 of such Code, is amended by adding at the
end the following:
``(g) Excess Contributions to FARRM Accounts.--For purposes
of this section, in the case of a FARRM Account (within the
meaning of section 468C(d)), the term `excess contributions'
means the amount by which the amount contributed for the
taxable year to the Account exceeds the amount which may be
contributed to the Account under section 468C(b) for such
taxable year. For purposes of this subsection, any
contribution which is distributed out of the FARRM Account in
a distribution to which section 468C(e)(2)(B) applies shall
be treated as an amount not contributed.''.
(3) The section heading for section 4973 of such Code is
amended to read as follows:
``SEC. 4973. EXCESS CONTRIBUTIONS TO CERTAIN ACCOUNTS,
ANNUITIES, ETC.''.
(4) The table of sections for chapter 43 of such Code is
amended by striking the item relating to section 4973 and
inserting the following:
``Sec. 4973. Excess contributions to certain accounts, annuities,
etc.''.
(c) Tax on Prohibited Transactions.--
(1) Subsection (c) of section 4975 of the Internal Revenue
Code of 1986 (relating to tax on prohibited transactions) is
amended by adding at the end the following:
``(6) Special rule for farrm accounts.--A person for whose
benefit a FARRM Account (within the meaning of section
468C(d)) is established shall be exempt from the tax imposed
by this section with respect to any transaction concerning
such account (which would otherwise be taxable under this
section) if, with respect to such transaction, the account
ceases to be a FARRM Account by reason of the application of
section 468C(f)(3)(A) to such account.''.
(2) Paragraph (1) of section 4975(e) of such Code is
amended by redesignating subparagraphs (E) and (F) as
subparagraphs (F) and (G), respectively, and by inserting
after subparagraph (D) the following:
``(E) a FARRM Account described in section 468C(d),''.
(d) Failure To Provide Reports on FARRM Accounts.--
Paragraph (2) of section 6693(a) of the Internal Revenue Code
of 1986 (relating to failure to provide reports on certain
tax-favored accounts or annuities) is amended by
redesignating subparagraphs (C) and (D) as subparagraphs (D)
and (E), respectively, and by inserting after subparagraph
(B) the following:
``(C) section 468C(g) (relating to FARRM Accounts),''.
(e) Clerical Amendment.--The table of sections for subpart
C of part II of subchapter E of chapter 1 of the Internal
Revenue Code of 1986 is amended by inserting after the item
relating to section 468B the following:
``Sec. 468C. Farm and Ranch Risk Management Accounts.''.
(f) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.
Subtitle B--Estate and Gift Tax Relief
SEC. 111. REPEAL OF ESTATE, GIFT, AND GENERATION-SKIPPING
TAXES.
(a) In General.--Subtitle B of the Internal Revenue Code of
1986 is hereby repealed.
(b) Effective Date.--The repeal made by subsection (a)
shall apply to the estates of decedents dying, and gifts and
generation-skipping transfers made, after December 31, 2010.
SEC. 112. TERMINATION OF STEP UP IN BASIS AT DEATH.
(a) Termination of Application of Section 1014.--Section
1014 of the Internal Revenue Code of 1986 (relating to basis
of property acquired from a decedent) is amended by adding at
the end the following:
``(f) Termination.--In the case of a decedent dying after
December 31, 2010, this section shall not apply to property
for which basis is provided by section 1022.''.
(b) Conforming Amendment.--Subsection (a) of section 1016
of the Internal Revenue Code of 1986 (relating to adjustments
to basis) is amended by striking ``and'' at the end of
paragraph (26), by striking the period at the end of
paragraph (27) and inserting ``, and'', and by adding at the
end the following:
``(28) to the extent provided in section 1022 (relating to
basis for certain property acquired from a decedent dying
after December 31, 2010).''.
SEC. 113. CARRYOVER BASIS AT DEATH.
(a) General Rule.--Part II of subchapter O of chapter 1 of
the Internal Revenue Code of 1986 (relating to basis rules of
general application) is amended by inserting after section
1021 the following new section:
``SEC. 1022. CARRYOVER BASIS FOR CERTAIN PROPERTY ACQUIRED
FROM A DECEDENT DYING AFTER DECEMBER 31, 2010.
``(a) Carryover Basis.--Except as otherwise provided in
this section, the basis of carryover basis property in the
hands of a person acquiring such property from a decedent
shall be determined under section 1015.
``(b) Carryover Basis Property Defined.--
``(1) In general.--For purposes of this section, the term
`carryover basis property' means any property--
``(A) which is acquired from or passed from a decedent who
died after December 31, 2010, and
``(B) which is not excluded pursuant to paragraph (2).
The property taken into account under subparagraph (A) shall
be determined under section 1014(b) without regard to
subparagraph (A) of the last sentence of paragraph (9)
thereof.
``(2) Certain property not carryover basis property.--The
term `carryover basis property' does not include--
``(A) any item of gross income in respect of a decedent
described in section 691,
[[Page S1409]]
``(B) property of the decedent to the extent that the
aggregate adjusted fair market value of such property does
not exceed $1,300,000, and
``(C) property which was acquired from the decedent by the
surviving spouse of the decedent (and which would be
carryover basis property without regard to this subparagraph)
but only if the value of such property would have been
deductible from the value of the taxable estate of the
decedent under section 2056, as in effect on the day before
the date of enactment of the Rural America Prosperity Act of
2001.
For purposes of this subsection, the term `adjusted fair
market value' means, with respect to any property, fair
market value reduced by any indebtedness secured by such
property.
``(3) Limitation on exception for property acquired by
surviving spouse.--The adjusted fair market value of property
which is not carryover basis property by reason of paragraph
(2)(C) shall not exceed $3,000,000.
``(4) Allocation of excepted amounts.--The executor shall
allocate the limitations under paragraphs (2)(B) and (3).
``(5) Inflation adjustment of excepted amounts.--In the
case of decedents dying in a calendar year after 2011, the
dollar amounts in paragraphs (2)(B) and (3) shall each be
increased by an amount equal to the product of--
``(A) such dollar amount, and
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year, determined by
substituting `2010' for `1992' in subparagraph (B) thereof.
If any increase determined under the preceding sentence is
not a multiple of $10,000, such increase shall be rounded to
the nearest multiple of $10,000.
``(c) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
this section.''.
(b) Miscellaneous Amendments Related To Carryover Basis.--
(1) Capital gain treatment for inherited art work or
similar property.--
(A) In general.--Subparagraph (C) of section 1221(a)(3) of
the Internal Revenue Code of 1986 (defining capital asset) is
amended by inserting ``(other than by reason of section
1022)'' after ``is determined''.
(B) Coordination with section 170.--Paragraph (1) of
section 170(e) of such Code (relating to certain
contributions of ordinary income and capital gain property)
is amended by adding at the end the following: ``For purposes
of this paragraph, the determination of whether property is a
capital asset shall be made without regard to the exception
contained in section 1221(a)(3)(C) for basis determined under
section 1022.''.
(2) Definition of executor.--Section 7701(a) of such Code
(relating to definitions) is amended by adding at the end the
following:
``(47) Executor.--The term `executor' means the executor or
administrator of the decedent, or, if there is no executor or
administrator appointed, qualified, and acting within the
United States, then any person in actual or constructive
possession of any property of the decedent.''.
(3) Clerical amendment.--The table of sections for part II
of subchapter O of chapter 1 of such Code is amended by
adding at the end the following new item:
``Sec. 1022. Carryover basis for certain property acquired from a
decedent dying after December 31, 2010.''.
(c) Effective Date.--The amendments made by this section
shall apply to estates of decedents dying after December 31,
2010.
SEC. 114. ADDITIONAL REDUCTIONS OF ESTATE AND GIFT TAX RATES.
(a) Maximum Rate of Tax Reduced to 50 Percent.--
(1) In general.--The table contained in section 2001(c)(1)
of the Internal Revenue Code of 1986 is amended by striking
the two highest brackets and inserting the following:
$1,025,800, plus 50% of the excess over $2,500,000.''..................
(2) Phase-in of reduced rate.--Subsection (c) of section
2001 of such Code is amended by adding at the end the
following new paragraph:
``(3) Phase-in of reduced rate.--In the case of decedents
dying, and gifts made, during 2002, the last item in the
table contained in paragraph (1) shall be applied by
substituting `53%' for `50%'.''.
(b) Repeal of Phaseout of Graduated Rates.--Subsection (c)
of section 2001 of the Internal Revenue Code of 1986 is
amended by striking paragraph (2) and redesignating paragraph
(3), as added by subsection (a), as paragraph (2).
(c) Additional Reductions of Rates of Tax.--Subsection (c)
of section 2001 of the Internal Revenue Code of 1986, as so
amended, is amended by adding at the end the following new
paragraph:
``(3) Phasedown of tax.--In the case of estates of
decedents dying, and gifts made, during any calendar year
after 2003 and before 2011--
``(A) In general.--Except as provided in subparagraph (C),
the tentative tax under this subsection shall be determined
by using a table prescribed by the Secretary (in lieu of
using the table contained in paragraph (1)) which is the same
as such table; except that--
``(i) each of the rates of tax shall be reduced by the
number of percentage points determined under subparagraph
(B), and
``(ii) the amounts setting forth the tax shall be adjusted
to the extent necessary to reflect the adjustments under
clause (i).
``(B) Percentage points of reduction.--
The number of
``For calendar year: percentage points is:
2004.........................................................1.0
2005.........................................................2.0
2006.........................................................3.0
2007.........................................................4.0
2008.........................................................5.5
2009.........................................................7.5
2010.........................................................9.5.
``(C) Coordination with income tax rates.--The reductions
under subparagraph (A)--
``(i) shall not reduce any rate under paragraph (1) below
the lowest rate in section 1(c), and
``(ii) shall not reduce the highest rate under paragraph
(1) below the highest rate in section 1(c).
``(D) Coordination with credit for state death taxes.--
Rules similar to the rules of subparagraph (A) shall apply to
the table contained in section 2011(b) except that the
Secretary shall prescribe percentage point reductions which
maintain the proportionate relationship (as in effect before
any reduction under this paragraph) between the credit under
section 2011 and the tax rates under subsection (c).''.
(d) Effective Dates.--
(1) Subsections (a) and (b).--The amendments made by
subsections (a) and (b) shall apply to estates of decedents
dying, and gifts made, after December 31, 2001.
(2) Subsection (c).--The amendment made by subsection (c)
shall apply to estates of decedents dying, and gifts made,
after December 31, 2003.
SEC. 115. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES
REPLACED WITH UNIFIED EXEMPTION AMOUNT.
(a) In General.--
(1) Estate tax.--Subsection (b) of section 2001 of the
Internal Revenue Code of 1986 (relating to computation of
tax) is amended to read as follows:
``(b) Computation of Tax.--
``(1) In general.--The tax imposed by this section shall be
the amount equal to the excess (if any) of--
``(A) the tentative tax determined under paragraph (2),
over
``(B) the aggregate amount of tax which would have been
payable under chapter 12 with respect to gifts made by the
decedent after December 31, 1976, if the provisions of
subsection (c) (as in effect at the decedent's death) had
been applicable at the time of such gifts.
``(2) Tentative tax.--For purposes of paragraph (1), the
tentative tax determined under this paragraph is a tax
computed under subsection (c) on the excess of--
``(A) the sum of--
``(i) the amount of the taxable estate, and
``(ii) the amount of the adjusted taxable gifts, over
``(B) the exemption amount for the calendar year in which
the decedent died.
``(3) Exemption amount.--For purposes of paragraph (2), the
term `exemption amount' means the amount determined in
accordance with the following table:
``IThe exemption
caleamount is:
2001......................................................$675,000
2002 and 2003.............................................$700,000
2003......................................................$850,000
2005......................................................$950,000
2006 or thereafter......................................$1,000,000.
``(4) Adjusted taxable gifts.--For purposes of paragraph
(2), the term `adjusted taxable gifts' means the total amount
of the taxable gifts (within the meaning of section 2503)
made by the decedent after December 31, 1976, other than
gifts which are includible in the gross estate of the
decedent.''.
(2) Gift tax.--Subsection (a) of section 2502 of such Code
(relating to computation of tax) is amended to read as
follows:
``(a) Computation of Tax.--
``(1) In general.--The tax imposed by section 2501 for each
calendar year shall be the amount equal to the excess (if
any) of--
``(A) the tentative tax determined under paragraph (2),
over
``(B) the tax paid under this section for all prior
calendar periods.
``(2) Tentative tax.--For purposes of paragraph (1), the
tentative tax determined under this paragraph for a calendar
year is a tax computed under section 2001(c) on the excess
of--
``(A) the aggregate sum of the taxable gifts for such
calendar year and for each of the preceding calendar periods,
over
``(B) the exemption amount under section 2001(b)(3) for
such calendar year.''.
(b) Repeal of Unified Credits.--
(1) Section 2010 of the Internal Revenue Code of 1986
(relating to unified credit against estate tax) is hereby
repealed.
(2) Section 2505 of such Code (relating to unified credit
against gift tax) is hereby repealed.
(c) Conforming Amendments.--
(1)(A) Subsection (b) of section 2011 of the Internal
Revenue Code of 1986 is amended--
(i) by striking ``adjusted'' in the table; and
(ii) by striking the last sentence.
(B) Subsection (f) of section 2011 of such Code is amended
by striking ``, reduced by the amount of the unified credit
provided by section 2010''.
(2) Subsection (a) of section 2012 of such Code is amended
by striking ``and the unified credit provided by section
2010''.
(3) Subparagraph (A) of section 2013(c)(1) of such Code is
amended by striking ``2010,''.
[[Page S1410]]
(4) Paragraph (2) of section 2014(b) of such Code is
amended by striking ``2010, 2011,'' and inserting ``2011''.
(5) Clause (ii) of section 2056A(b)(12)(C) of such Code is
amended to read as follows:
``(ii) to treat any reduction in the tax imposed by
paragraph (1)(A) by reason of the credit allowable under
section 2010 (as in effect on the day before the date of
enactment of the Rural America Prosperity Act of 2001) or the
exemption amount allowable under section 2001(b) with respect
to the decedent as a credit under section 2505 (as so in
effect) or exemption under section 2521 (as the case may be)
allowable to such surviving spouse for purposes of
determining the amount of the exemption allowable under
section 2521 with respect to taxable gifts made by the
surviving spouse during the year in which the spouse becomes
a citizen or any subsequent year,''.
(6) Subsection (a) of section 2057 of such Code is amended
by striking paragraphs (2) and (3) and inserting the
following new paragraph:
``(2) Maximum deduction.--The deduction allowed by this
section shall not exceed the excess of $1,300,000 over the
exemption amount (as defined in section 2001(b)(3)).''.
(7)(A) Subsection (b) of section 2101 of such Code is
amended to read as follows:
``(b) Computation of Tax.--
``(1) In general.--The tax imposed by this section shall be
the amount equal to the excess (if any) of--
``(A) the tentative tax determined under paragraph (2),
over
``(B) a tentative tax computed under section 2001(c) on the
amount of the adjusted taxable gifts.
``(2) Tentative tax.--For purposes of paragraph (1), the
tentative tax determined under this paragraph is a tax
computed under section 2001(c) on the excess of--
``(A) the sum of--
``(i) the amount of the taxable estate, and
``(ii) the amount of the adjusted taxable gifts, over
``(B) the exemption amount for the calendar year in which
the decedent died.
``(3) Exemption amount.--
``(A) In general.--The term `exemption amount' means
$60,000.
``(B) Residents of possessions of the united states.--In
the case of a decedent who is considered to be a nonresident
not a citizen of the United States under section 2209, the
exemption amount under this paragraph shall be the greater
of--
``(i) $60,000, or
``(ii) that proportion of $175,000 which the value of that
part of the decedent's gross estate which at the time of his
death is situated in the United States bears to the value of
his entire gross estate wherever situated.
``(C) Special rules.--
``(i) Coordination with treaties.--To the extent required
under any treaty obligation of the United States, the
exemption amount allowed under this paragraph shall be equal
to the amount which bears the same ratio to the exemption
amount under section 2001(b)(3) (for the calendar year in
which the decedent died) as the value of the part of the
decedent's gross estate which at the time of his death is
situated in the United States bears to the value of his
entire gross estate wherever situated. For purposes of the
preceding sentence, property shall not be treated as situated
in the United States if such property is exempt from the
tax imposed by this subchapter under any treaty obligation
of the United States.
``(ii) Coordination with gift tax exemption and unified
credit.--If an exemption has been allowed under section 2521
(or a credit has been allowed under section 2505 as in effect
on the day before the date of enactment of the Rural America
Prosperity Act of 2001) with respect to any gift made by the
decedent, each dollar amount contained in subparagraph (A) or
(B) or the exemption amount applicable under clause (i) of
this subparagraph (whichever applies) shall be reduced by the
exemption so allowed under section 2521 (or, in the case of
such a credit, by the amount of the gift for which the credit
was so allowed).''.
(8) Section 2102 of such Code is amended by striking
subsection (c).
(9)(A) Subsection (a) of section 2107 of such Code is
amended by adding at the end the following new paragraph:
``(3) Limitation on exemption amount.--Subparagraphs (B)
and (C) of section 2101(b)(3) shall not apply in applying
section 2101 for purposes of this section.''.
(B) Subsection (c) of section 2107 of such Code is
amended--
(i) by striking paragraph (1) and by redesignating
paragraphs (2) and (3) as paragraphs (1) and (2),
respectively, and
(ii) by striking the second sentence of paragraph (2) (as
so redesignated).
(10) Paragraph (1) of section 6018(a) of such Code is
amended by striking ``the applicable exclusion amount in
effect under section 2010(c)'' and inserting ``the exemption
amount under section 2001(b)(3)''.
(11) Subparagraph (A) of section 6601(j)(2) of such Code is
amended to read as follows:
``(A) the amount of the tentative tax which would be
determined under the rate schedule set forth in section
2001(c) if the amount with respect to which such tentative
tax is to be computed were $1,000,000, or''.
(12) The table of sections for part II of subchapter A of
chapter 11 of such Code is amended by striking the item
relating to section 2010.
(13) The table of sections for subchapter A of chapter 12
of such Code is amended by striking the item relating to
section 2505.
(d) Effective Date.--The amendments made by this section--
(1) insofar as they relate to the tax imposed by chapter 11
of the Internal Revenue Code of 1986, shall apply to estates
of decedents dying after December 31, 2001, and
(2) insofar as they relate to the tax imposed by chapter 12
of such Code, shall apply to gifts made after December 31,
2001.
SEC. 116. DEEMED ALLOCATION OF GST EXEMPTION TO LIFETIME
TRANSFERS TO TRUSTS; RETROACTIVE ALLOCATIONS.
(a) In General.--Section 2632 of the Internal Revenue Code
of 1986 (relating to special rules for allocation of GST
exemption) is amended by redesignating subsection (c) as
subsection (e) and by inserting after subsection (b) the
following new subsections:
``(c) Deemed Allocation to Certain Lifetime Transfers to
GST Trusts.--
``(1) In general.--If any individual makes an indirect skip
during such individual's lifetime, any unused portion of such
individual's GST exemption shall be allocated to the property
transferred to the extent necessary to make the inclusion
ratio for such property zero. If the amount of the indirect
skip exceeds such unused portion, the entire unused portion
shall be allocated to the property transferred.
``(2) Unused portion.--For purposes of paragraph (1), the
unused portion of an individual's GST exemption is that
portion of such exemption which has not previously been--
``(A) allocated by such individual,
``(B) treated as allocated under subsection (b) with
respect to a direct skip occurring during or before the
calendar year in which the indirect skip is made, or
``(C) treated as allocated under paragraph (1) with respect
to a prior indirect skip.
``(3) Definitions.--
``(A) Indirect skip.--For purposes of this subsection, the
term `indirect skip' means any transfer of property (other
than a direct skip) subject to the tax imposed by chapter 12
made to a GST trust.
``(B) GST trust.--The term `GST trust' means a trust that
could have a generation-skipping transfer with respect to the
transferor unless--
``(i) the trust instrument provides that more than 25
percent of the trust corpus must be distributed to or may be
withdrawn by one or more individuals who are non-skip
persons--
``(I) before the date that the individual attains age 46,
``(II) on or before one or more dates specified in the
trust instrument that will occur before the date that such
individual attains age 46, or
``(III) upon the occurrence of an event that, in accordance
with regulations prescribed by the Secretary, may reasonably
be expected to occur before the date that such individual
attains age 46;
``(ii) the trust instrument provides that more than 25
percent of the trust corpus must be distributed to or may be
withdrawn by one or more individuals who are non-skip persons
and who are living on the date of death of another person
identified in the instrument (by name or by class) who is
more than 10 years older than such individuals;
``(iii) the trust instrument provides that, if one or more
individuals who are non-skip persons die on or before a date
or event described in clause (i) or (ii), more than 25
percent of the trust corpus either must be distributed to the
estate or estates of one or more of such individuals or is
subject to a general power of appointment exercisable by one
or more of such individuals;
``(iv) the trust is a trust any portion of which would be
included in the gross estate of a non-skip person (other than
the transferor) if such person died immediately after the
transfer;
``(v) the trust is a charitable lead annuity trust (within
the meaning of section 2642(e)(3)(A)) or a charitable
remainder annuity trust or a charitable remainder unitrust
(within the meaning of section 664(d)); or
``(vi) the trust is a trust with respect to which a
deduction was allowed under section 2522 for the amount of an
interest in the form of the right to receive annual payments
of a fixed percentage of the net fair market value of the
trust property (determined yearly) and which is required to
pay principal to a non-skip person if such person is alive
when the yearly payments for which the deduction was allowed
terminate.
For purposes of this subparagraph, the value of transferred
property shall not be considered to be includible in the
gross estate of a non-skip person or subject to a right of
withdrawal by reason of such person holding a right to
withdraw so much of such property as does not exceed the
amount referred to in section 2503(b) with respect to any
transferor, and it shall be assumed that powers of
appointment held by non-skip persons will not be exercised.
``(4) Automatic allocations to certain gst trusts.--For
purposes of this subsection, an indirect skip to which
section 2642(f) applies shall be deemed to have been made
only at the close of the estate tax inclusion period. The
fair market value of such transfer shall be the fair market
value of the trust property at the close of the estate tax
inclusion period.
``(5) Applicability and effect.--
``(A) In general.--An individual--
``(i) may elect to have this subsection not apply to--
[[Page S1411]]
``(I) an indirect skip, or
``(II) any or all transfers made by such individual to a
particular trust, and
``(ii) may elect to treat any trust as a GST trust for
purposes of this subsection with respect to any or all
transfers made by such individual to such trust.
``(B) Elections.--
``(i) Elections with respect to indirect skips.--An
election under subparagraph (A)(i)(I) shall be deemed to be
timely if filed on a timely filed gift tax return for the
calendar year in which the transfer was made or deemed to
have been made pursuant to paragraph (4) or on such later
date or dates as may be prescribed by the Secretary.
``(ii) Other elections.--An election under clause (i)(II)
or (ii) of subparagraph (A) may be made on a timely filed
gift tax return for the calendar year for which the election
is to become effective.
``(d) Retroactive Allocations.--
``(1) In general.--If--
``(A) a non-skip person has an interest or a future
interest in a trust to which any transfer has been made,
``(B) such person--
``(i) is a lineal descendant of a grandparent of the
transferor or of a grandparent of the transferor's spouse or
former spouse, and
``(ii) is assigned to a generation below the generation
assignment of the transferor, and
``(C) such person predeceases the transferor,
then the transferor may make an allocation of any of such
transferor's unused GST exemption to any previous transfer or
transfers to the trust on a chronological basis.
``(2) Special rules.--If the allocation under paragraph (1)
by the transferor is made on a gift tax return filed on or
before the date prescribed by section 6075(b) for gifts made
within the calendar year within which the non-skip person's
death occurred--
``(A) the value of such transfer or transfers for purposes
of section 2642(a) shall be determined as if such allocation
had been made on a timely filed gift tax return for each
calendar year within which each transfer was made,
``(B) such allocation shall be effective immediately before
such death, and
``(C) the amount of the transferor's unused GST exemption
available to be allocated shall be determined immediately
before such death.
``(3) Future interest.--For purposes of this subsection, a
person has a future interest in a trust if the trust may
permit income or corpus to be paid to such person on a date
or dates in the future.''.
(b) Conforming Amendment.--Paragraph (2) of section 2632(b)
of the Internal Revenue Code of 1986 is amended by striking
``with respect to a direct skip'' and inserting ``or
subsection (c)(1)''.
(c) Effective Dates.--
(1) Deemed allocation.--Section 2632(c) of the Internal
Revenue Code of 1986 (as added by subsection (a)), and the
amendment made by subsection (b), shall apply to transfers
subject to chapter 11 or 12 made after December 31, 2000, and
to estate tax inclusion periods ending after December 31,
2000.
(2) Retroactive allocations.--Section 2632(d) of the
Internal Revenue Code of 1986 (as added by subsection (a))
shall apply to deaths of non-skip persons occurring after
December 31, 2000.
SEC. 117. SEVERING OF TRUSTS.
(a) In General.--Subsection (a) of section 2642 of the
Internal Revenue Code of 1986 (relating to inclusion ratio)
is amended by adding at the end the following new paragraph:
``(3) Severing of trusts.--
``(A) In general.--If a trust is severed in a qualified
severance, the trusts resulting from such severance shall be
treated as separate trusts thereafter for purposes of this
chapter.
``(B) Qualified severance.--For purposes of subparagraph
(A)--
``(i) In general.--The term `qualified severance' means the
division of a single trust and the creation (by any means
available under the governing instrument or under local law)
of two or more trusts if--
``(I) the single trust was divided on a fractional basis,
and
``(II) the terms of the new trusts, in the aggregate,
provide for the same succession of interests of beneficiaries
as are provided in the original trust.
``(ii) Trusts with inclusion ratio greater than zero.--If a
trust has an inclusion ratio of greater than zero and less
than 1, a severance is a qualified severance only if the
single trust is divided into two trusts, one of which
receives a fractional share of the total value of all trust
assets equal to the applicable fraction of the single trust
immediately before the severance. In such case, the trust
receiving such fractional share shall have an inclusion ratio
of zero and the other trust shall have an inclusion ratio of
1.
``(iii) Regulations.--The term `qualified severance'
includes any other severance permitted under regulations
prescribed by the Secretary.
``(C) Timing and manner of severances.--A severance
pursuant to this paragraph may be made at any time. The
Secretary shall prescribe by forms or regulations the manner
in which the qualified severance shall be reported to the
Secretary.''.
(b) Effective Date.--The amendment made by this section
shall apply to severances after December 31, 2000.
SEC. 118. MODIFICATION OF CERTAIN VALUATION RULES.
(a) Gifts for Which Gift Tax Return Filed or Deemed
Allocation Made.--Paragraph (1) of section 2642(b) of the
Internal Revenue Code of 1986 (relating to valuation rules,
etc.) is amended to read as follows:
``(1) Gifts for which gift tax return filed or deemed
allocation made.--If the allocation of the GST exemption to
any transfers of property is made on a gift tax return filed
on or before the date prescribed by section 6075(b) for
such transfer or is deemed to be made under section 2632
(b)(1) or (c)(1)--
``(A) the value of such property for purposes of subsection
(a) shall be its value as finally determined for purposes of
chapter 12 (within the meaning of section 2001(f)(2)), or, in
the case of an allocation deemed to have been made at the
close of an estate tax inclusion period, its value at the
time of the close of the estate tax inclusion period, and
``(B) such allocation shall be effective on and after the
date of such transfer, or, in the case of an allocation
deemed to have been made at the close of an estate tax
inclusion period, on and after the close of such estate tax
inclusion period.''.
(b) Transfers at Death.--Subparagraph (A) of section
2642(b)(2) of the Internal Revenue Code of 1986 is amended to
read as follows:
``(A) Transfers at death.--If property is transferred as a
result of the death of the transferor, the value of such
property for purposes of subsection (a) shall be its value as
finally determined for purposes of chapter 11; except that,
if the requirements prescribed by the Secretary respecting
allocation of post-death changes in value are not met, the
value of such property shall be determined as of the time of
the distribution concerned.''.
(c) Effective Date.--The amendments made by this section
shall apply to transfers subject to chapter 11 or 12 of the
Internal Revenue Code of 1986 made after December 31, 2000.
SEC. 119. RELIEF PROVISIONS.
(a) In General.--Section 2642 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(g) Relief Provisions.--
``(1) Relief from late elections.--
``(A) In general.--The Secretary shall by regulation
prescribe such circumstances and procedures under which
extensions of time will be granted to make--
``(i) an allocation of GST exemption described in paragraph
(1) or (2) of subsection (b), and
``(ii) an election under subsection (b)(3) or (c)(5) of
section 2632.
Such regulations shall include procedures for requesting
comparable relief with respect to transfers made before the
date of enactment of this paragraph.
``(B) Basis for determinations.--In determining whether to
grant relief under this paragraph, the Secretary shall take
into account all relevant circumstances, including evidence
of intent contained in the trust instrument or instrument of
transfer and such other factors as the Secretary deems
relevant. For purposes of determining whether to grant relief
under this paragraph, the time for making the allocation (or
election) shall be treated as if not expressly prescribed by
statute.
``(2) Substantial compliance.--An allocation of GST
exemption under section 2632 that demonstrates an intent to
have the lowest possible inclusion ratio with respect to a
transfer or a trust shall be deemed to be an allocation of so
much of the transferor's unused GST exemption as produces the
lowest possible inclusion ratio. In determining whether there
has been substantial compliance, all relevant circumstances
shall be taken into account, including evidence of intent
contained in the trust instrument or instrument of transfer
and such other factors as the Secretary deems relevant.''.
(b) Effective Dates.--
(1) Relief from late elections.--Section 2642(g)(1) of the
Internal Revenue Code of 1986 (as added by subsection (a))
shall apply to requests pending on, or filed after, December
31, 2000.
(2) Substantial compliance.--Section 2642(g)(2) of such
Code (as so added) shall apply to transfers subject to
chapter 11 or 12 of the Internal Revenue Code of 1986 made
after December 31, 2000. No implication is intended with
respect to the availability of relief from late elections or
the application of a rule of substantial compliance on or
before such date.
SEC. 120. EXPANSION OF ESTATE TAX RULE FOR CONSERVATION
EASEMENTS.
(a) Where Land Is Located.--
(1) In general.--Clause (i) of section 2031(c)(8)(A) of the
Internal Revenue Code of 1986 (defining land subject to a
conservation easement) is amended--
(A) by striking ``25 miles'' both places it appears and
inserting ``50 miles''; and
(B) striking ``10 miles'' and inserting ``25 miles''.
(2) Effective date.--The amendments made by this subsection
shall apply to estates of decedents dying after December 31,
2000.
(b) Clarification of Date for Determining Value of Land and
Easement.--
(1) In general.--Section 2031(c)(2) of the Internal Revenue
Code of 1986 (defining applicable percentage) is amended by
adding at the end the following new sentence: ``The values
taken into account under the preceding sentence shall be such
values as of the date of the contribution referred to in
paragraph (8)(B).''.
[[Page S1412]]
(2) Effective date.--The amendment made by this subsection
shall apply to estates of decedents dying after December 31,
1997.
TITLE II--STUDY OF COSTS OF REGULATIONS ON FARMERS, RANCHERS, AND
FORESTERS
SEC. 201. COMPTROLLER GENERAL STUDY OF REGULATIONS.
(a) Data Review and Collection.--The Comptroller General of
the United States shall--
(1) conduct a review of existing Federal and non-Federal
studies and data regarding the cost to farmers, ranchers, and
foresters of complying with existing or proposed Federal
regulations directly affecting farmers, ranchers, and
foresters; and
(2) as necessary, obtain and analyze new data concerning
the costs to farmers, ranchers, and foresters of complying
with Federal regulations proposed as of February 1, 2001,
directly affecting farmers, ranchers, and foresters.
(b) Use of Data.--Using the studies and data reviewed and
collected under subsection (a), the Comptroller General
shall--
(1) assess the overall costs to farmers, ranchers, and
foresters of complying with existing and proposed Federal
regulations directly affecting farmers, ranchers, and
foresters; and
(2) identify and recommend reasonable alternatives to those
regulations that will achieve the objectives of the
regulations at less cost to farmers, ranchers, and foresters.
(c) Submission of Results.--Not later than February 1,
2002, the Comptroller General shall submit to the Secretary
of Agriculture, the Committee on Agriculture, Nutrition, and
Forestry of the Senate, and the Committee on Agriculture of
the House of Representatives the results of the assessment
conducted under subsection (b)(1) and the recommendations
prepared under subsection (b)(2).
SEC. 202. RESPONSE OF SECRETARY OF AGRICULTURE.
Not later than April 1, 2002, the Secretary of Agriculture
shall submit to the Committee on Agriculture, Nutrition, and
Forestry of the Senate, and the Committee on Agriculture of
the House of Representatives a report responding to the
recommendations of the Comptroller General under section 202
regarding reasonable alternatives that could achieve the
objectives of Federal regulations at less cost to farmers,
ranchers, and foresters.
TITLE III--EXTENSION OF TRADE AUTHORITIES PROCEDURES FOR RECIPROCAL
TRADE AGREEMENTS
SEC. 301. SHORT TITLE.
This title may be cited as the ``Reciprocal Trade Agreement
Authorities Act of 2001''.
SEC. 302. TRADE NEGOTIATING OBJECTIVES.
(a) Overall Trade Negotiating Objectives.--The overall
trade negotiating objectives of the United States for
agreements subject to the provisions of section 303 are--
(1) to obtain more open, equitable, and reciprocal market
access;
(2) to obtain the reduction or elimination of barriers and
distortions that are directly related to trade and that
decrease market opportunities for United States exports or
otherwise distort United States trade;
(3) to further strengthen the system of international
trading disciplines and procedures, including dispute
settlement; and
(4) to foster economic growth, raise living standards, and
promote full employment in the United States and to enhance
the global economy.
(b) Principal Trade Negotiating Objectives.--
(1) Trade barriers and distortions.--The principal
negotiating objectives of the United States regarding trade
barriers and other trade distortions are--
(A) to expand competitive market opportunities for United
States exports and to obtain fairer and more open conditions
of trade by reducing or eliminating tariff and nontariff
barriers and policies and practices of foreign governments
directly related to trade that decrease market opportunities
for United States exports or otherwise distort United States
trade; and
(B) to obtain reciprocal tariff and nontariff barrier
elimination agreements, with particular attention to those
tariff categories covered in section 111(b) of the Uruguay
Round Agreements Act (19 U.S.C. 3521(b)).
(2) Trade in services.--The principal negotiating objective
of the United States regarding trade in services is to reduce
or eliminate barriers to international trade in services,
including regulatory and other barriers that deny national
treatment or unreasonably restrict the establishment or
operations of service suppliers.
(3) Foreign investment.--The principal negotiating
objective of the United States regarding foreign investment
is to reduce or eliminate artificial or trade-distorting
barriers to trade related foreign investment by--
(A) reducing or eliminating exceptions to the principle of
national treatment;
(B) freeing the transfer of funds relating to investments;
(C) reducing or eliminating performance requirements and
other unreasonable barriers to the establishment and
operation of investments;
(D) seeking to establish standards for expropriation and
compensation for expropriation, consistent with United States
legal principles and practice; and
(E) providing meaningful procedures for resolving
investment disputes.
(4) Intellectual property.--The principal negotiating
objectives of the United States regarding trade-related
intellectual property are--
(A) to further promote adequate and effective protection of
intellectual property rights, including through--
(i)(I) ensuring accelerated and full implementation of the
Agreement on Trade-Related Aspects of Intellectual Property
Rights referred to in section 101(d)(15) of the Uruguay Round
Agreements Act (19 U.S.C. 3511(d)(15)), particularly with
respect to United States industries whose products are
subject to the lengthiest transition periods for full
compliance by developing countries with that Agreement, and
(II) ensuring that the provisions of any multilateral or
bilateral trade agreement entered into by the United States
provide protection at least as strong as the protection
afforded by chapter 17 of the North American Free Trade
Agreement and the annexes thereto;
(ii) providing strong protection for new and emerging
technologies and new methods of transmitting and distributing
products embodying intellectual property;
(iii) preventing or eliminating discrimination with respect
to matters affecting the availability, acquisition, scope,
maintenance, use, and enforcement of intellectual property
rights; and
(iv) providing strong enforcement of intellectual property
rights, including through accessible, expeditious, and
effective civil, administrative, and criminal enforcement
mechanisms; and
(B) to secure fair, equitable, and nondiscriminatory market
access opportunities for United States persons that rely upon
intellectual property protection.
(5) Transparency.--The principal negotiating objective of
the United States with respect to transparency is to obtain
broader application of the principle of transparency
through--
(A) increased and more timely public access to information
regarding trade issues and the activities of international
trade institutions; and
(B) increased openness of dispute settlement proceedings,
including under the World Trade Organization.
(6) Reciprocal trade in agriculture.--The principal
negotiating objective of the United States with respect to
agriculture is to obtain competitive opportunities for United
States exports in foreign markets substantially equivalent to
the competitive opportunities afforded foreign exports in
United States markets and to achieve fairer and more open
conditions of trade in bulk and value-added commodities by--
(A) reducing or eliminating, by a date certain, tariffs or
other charges that decrease market opportunities for United
States exports--
(i) giving priority to those products that are subject to
significantly higher tariffs or subsidy regimes of major
producing countries; and
(ii) providing reasonable adjustment periods for United
States import-sensitive products, in close consultation with
the Congress on such products before initiating tariff
reduction negotiations;
(B) reducing or eliminating subsidies that decrease market
opportunities for United States exports or unfairly distort
agriculture markets to the detriment of the United States;
(C) developing, strengthening, and clarifying rules and
effective dispute settlement mechanisms to eliminate
practices that unfairly decrease United States market access
opportunities or distort agricultural markets to the
detriment of the United States, including--
(i) unfair or trade-distorting activities of export state
trading enterprises and other administrative mechanisms, with
emphasis on requiring price transparency in the operation of
export state trading enterprises and such other mechanisms;
(ii) unjustified trade restrictions or commercial
requirements affecting new technologies, including
biotechnology;
(iii) unjustified sanitary or phytosanitary restrictions,
including those not based on scientific principles in
contravention of the Uruguay Round Agreements;
(iv) other unjustified technical barriers to trade; and
(v) restrictive rules in the administration of tariff-rate
quotas;
(D) improving import relief mechanisms to recognize the
unique characteristics of perishable agriculture;
(E) taking into account whether a party to the negotiations
has failed to adhere to the provisions of already existing
trade agreements with the United States or has circumvented
obligations under those agreements;
(F) taking into account whether a product is subject to
market distortions by reason of a failure of a major
producing country to adhere to the provisions of already
existing trade agreements with the United States or by the
circumvention by that country of its obligations under those
agreements; and
(G) otherwise ensuring that countries that accede to the
World Trade Organization have made meaningful market
liberalization commitments in agriculture.
(7) Labor, environment, and other matters.--The principal
negotiating objective of the United States regarding labor,
environment, and other matters is to address the
[[Page S1413]]
following aspects of foreign government policies and
practices regarding labor, environment, and other matters
that are directly related to trade:
(A) To ensure that foreign labor, environmental, health, or
safety policies and practices do not arbitrarily or
unjustifiably discriminate or serve as disguised barriers to
trade.
(B) To ensure that foreign governments do not derogate from
or waive existing domestic environmental, health, safety, or
labor measures, including measures that deter exploitative
child labor, as an encouragement to gain competitive
advantage in international trade or investment. Nothing in
this subparagraph is intended to address changes to a
country's laws that are consistent with sound macroeconomic
development.
(8) WTO extended negotiations.--The principal negotiating
objectives of the United States regarding trade in financial
services are those set forth in section 135(a) of the Uruguay
Round Agreements Act (19 U.S.C. 3555(a)), regarding trade in
civil aircraft are those set forth in section 135(c) of that
Act, and regarding rules of origin are the conclusion of an
agreement described in section 132 of that Act (19 U.S.C.
3552).
(c) International Economic Policy Objectives.--
(1) In general.--The President should take into account the
relationship between trade agreements and other important
priorities of the United States and seek to ensure that the
trade agreements entered into by the United States complement
and reinforce other policy goals. The United States
priorities in this area include--
(A) seeking to ensure that trade and environmental policies
are mutually supportive;
(B) seeking to protect and preserve the environment and
enhance the international means for doing so, while
optimizing the use of the world's resources;
(C) promoting respect for worker rights and the rights of
children and an understanding of the relationship between
trade and worker rights, particularly by working with the
International Labor Organization to encourage the observance
and enforcement of core labor standards, including the
prohibition on exploitative child labor; and
(D) supplementing and strengthening standards for
protection of intellectual property under conventions
administered by international organizations other than the
World Trade Organization, expanding these conventions to
cover new and emerging technologies, and eliminating
discrimination and unreasonable exceptions or preconditions
to such protection.
(2) Applicability of trade authorities procedures.--Nothing
in this subsection shall be construed to authorize the use of
the trade authorities procedures described in section 303 to
modify United States law.
(d) Guidance for Negotiators.--
(1) Domestic objectives.--In pursuing the negotiating
objectives described in subsection (b), the negotiators on
behalf of the United States shall take into account United
States domestic objectives, including the protection of
health and safety, essential security, environmental,
consumer, and employment opportunity interests, and the law
and regulations related thereto.
(2) Consultations with congressional advisers and
enforcement of the trade laws.--In the course of negotiations
conducted under this title, the United States Trade
Representative shall--
(A) consult closely and on a timely basis with, and keep
fully apprised of the negotiations, the congressional
advisers on trade policy and negotiations appointed under
section 161 of the Trade Act of 1974; and
(B) preserve the ability of the United States to enforce
rigorously its trade laws, including the antidumping and
countervailing duty laws, and avoid agreements which lessen
the effectiveness of domestic and international disciplines
on unfair trade, especially dumping and subsidies, in order
to ensure that United States workers, agricultural producers,
and firms can compete fully on fair terms and enjoy the
benefits of reciprocal trade concessions.
(e) Adherence to Obligations Under Uruguay Round
Agreements.--In determining whether to enter into
negotiations with a particular country, the President shall
take into account the extent to which that country has
implemented, or has accelerated the implementation of, its
obligations under the Uruguay Round Agreements.
SEC. 303. TRADE AGREEMENTS AUTHORITY.
(a) Agreements Regarding Tariff Barriers.--
(1) In general.--Whenever the President determines that one
or more existing duties or other import restrictions of any
foreign country or the United States are unduly burdening and
restricting the foreign trade of the United States and that
the purposes, policies, and objectives of this title will be
promoted thereby, the President--
(A) may enter into trade agreements with foreign countries
before--
(i) October 1, 2003, or
(ii) October 1, 2007, if trade authorities procedures are
extended under subsection (c), and
(B) may, subject to paragraphs (2) and (3), proclaim--
(i) such modification or continuance of any existing duty,
(ii) such continuance of existing duty-free or excise
treatment, or
(iii) such additional duties,
as the President determines to be required or appropriate to
carry out any such trade agreement. The President shall
notify the Congress of the President's intention to enter
into an agreement under this subsection.
(2) Limitations.--No proclamation may be made under
paragraph (1) that--
(A) reduces any rate of duty (other than a rate of duty
that does not exceed 5 percent ad valorem on the date of
enactment of this Act) to a rate of duty that is less than 50
percent of the rate of the duty that applies on such date of
enactment;
(B) reduces the rate of duty on an article to take effect
on a date that is more than 10 years after the first
reduction that is proclaimed to carry out a trade agreement
with respect to such article; or
(C) increases any rate of duty above the rate that applied
on January 1, 2001.
(3) Aggregate reduction; exemption from staging.--
(A) Aggregate reduction.--Except as provided in
subparagraph (B), the aggregate reduction in the rate of duty
on any article which is in effect on any day pursuant to a
trade agreement entered into under paragraph (1) shall not
exceed the aggregate reduction which would have been in
effect on such day if--
(i) a reduction of 3 percent ad valorem or a reduction of
one-tenth of the total reduction, whichever is greater, had
taken effect on the effective date of the first reduction
proclaimed under paragraph (1) to carry out such agreement
with respect to such article; and
(ii) a reduction equal to the amount applicable under
clause (i) had taken effect at 1-year intervals after the
effective date of such first reduction.
(B) Exemption from staging.--No staging is required under
subparagraph (A) with respect to a duty reduction that is
proclaimed under paragraph (1) for an article of a kind that
is not produced in the United States. The United States
International Trade Commission shall advise the President of
the identity of articles that may be exempted from staging
under this subparagraph.
(4) Rounding.--If the President determines that such action
will simplify the computation of reductions under paragraph
(3), the President may round an annual reduction by an amount
equal to the lesser of--
(A) the difference between the reduction without regard to
this paragraph and the next lower whole number; or
(B) one-half of 1 percent ad valorem.
(5) Other limitations.--A rate of duty reduction that may
not be proclaimed by reason of paragraph (2) may take effect
only if a provision authorizing such reduction is included
within an implementing bill provided for under section 305
and that bill is enacted into law.
(6) Other tariff modifications.--Notwithstanding paragraphs
(1)(B) and (2) through (5), and subject to the consultation
and layover requirements of section 115 of the Uruguay Round
Agreements Act, the President may proclaim the modification
of any duty or staged rate reduction of any duty set forth in
Schedule XX, as defined in section 2(5) of that Act, if the
United States agrees to such modification or staged rate
reduction in a negotiation for the reciprocal elimination or
harmonization of duties under the auspices of the World Trade
Organization or as part of an interim agreement leading to
the formation of a regional free-trade area.
(7) Authority under uruguay round agreements act not
affected.--Nothing in this subsection shall limit the
authority provided to the President under section 111(b) of
the Uruguay Round Agreements Act (19 U.S.C. 3521(b)).
(b) Agreements Regarding Tariff and Nontariff Barriers.--
(1) In general.--(A) Whenever the President determines
that--
(i) one or more existing duties or any other import
restriction of any foreign country or the United States or
any other barrier to, or other distortion of, international
trade unduly burdens or restricts the foreign trade of the
United States or adversely affects the United States economy,
or
(ii) the imposition of any such barrier or distortion is
likely to result in such a burden, restriction, or effect,
and that the purposes, policies, and objectives of this title
will be promoted thereby, the President may enter into a
trade agreement described in subparagraph (B) during the
period described in subparagraph (C).
(B) The President may enter into a trade agreement under
subparagraph (A) with foreign countries providing for--
(i) the reduction or elimination of a duty, restriction,
barrier, or other distortion described in subparagraph (A),
or
(ii) the prohibition of, or limitation on the imposition
of, such barrier or other distortion.
(C) The President may enter into a trade agreement under
this paragraph before--
(i) October 1, 2003, or
(ii) October 1, 2007, if trade authorities procedures are
extended under subsection (c).
(2) Conditions.--A trade agreement may be entered into
under this subsection only if such agreement makes progress
in meeting the applicable objectives described in section 302
and the President satisfies the conditions set forth in
section 304.
(3) Bills qualifying for trade authorities procedures.--The
provisions of section 151 of the Trade Act of 1974 (in this
title referred to as ``trade authorities procedures'')
[[Page S1414]]
apply to a bill of either House of Congress consisting only
of--
(A) a provision approving a trade agreement entered into
under this subsection and approving the statement of
administrative action, if any, proposed to implement such
trade agreement,
(B) provisions directly related to the principal trade
negotiating objectives set forth in section 302(b) achieved
in such trade agreement, if those provisions are necessary
for the operation or implementation of United States rights
or obligations under such trade agreement,
(C) provisions that define and clarify, or provisions that
are related to, the operation or effect of the provisions of
the trade agreement,
(D) provisions to provide adjustment assistance to workers
and firms adversely affected by trade, and
(E) provisions necessary for purposes of complying with
section 252 of the Balanced Budget and Emergency Deficit
Control Act of 1985 in implementing the trade agreement,
to the same extent as such section 151 applies to
implementing bills under that section. A bill to which this
subparagraph applies shall hereafter in this title be
referred to as an ``implementing bill''.
(c) Extension Disapproval Process for Congressional Trade
Authorities Procedures.--
(1) In general.--Except as provided in section 305(b)--
(A) the trade authorities procedures apply to implementing
bills submitted with respect to trade agreements entered into
under subsection (b) before October 1, 2003; and
(B) the trade authorities procedures shall be extended to
implementing bills submitted with respect to trade agreements
entered into under subsection (b) after September 30, 2003,
and before October 1, 2007, if (and only if)--
(i) the President requests such extension under paragraph
(2); and
(ii) neither House of the Congress adopts an extension
disapproval resolution under paragraph (5) before October 1,
2003.
(2) Report to congress by the president.--If the President
is of the opinion that the trade authorities procedures
should be extended to implementing bills described in
paragraph (1)(B), the President shall submit to the Congress,
not later than July 1, 2003, a written report that contains a
request for such extension, together with--
(A) a description of all trade agreements that have been
negotiated under subsection (b) and the anticipated schedule
for submitting such agreements to the Congress for approval;
(B) a description of the progress that has been made in
negotiations to achieve the purposes, policies, and
objectives of this title, and a statement that such progress
justifies the continuation of negotiations; and
(C) a statement of the reasons why the extension is needed
to complete the negotiations.
(3) Report to congress by the advisory committee.--The
President shall promptly inform the Advisory Committee for
Trade Policy and Negotiations established under section 135
of the Trade Act of 1974 (19 U.S.C. 2155) of the President's
decision to submit a report to the Congress under paragraph
(2). The Advisory Committee shall submit to the Congress as
soon as practicable, but not later than August 1, 2003, a
written report that contains--
(A) its views regarding the progress that has been made in
negotiations to achieve the purposes, policies, and
objectives of this title; and
(B) a statement of its views, and the reasons therefor,
regarding whether the extension requested under paragraph (2)
should be approved or disapproved.
(4) Reports may be classified.--The reports submitted to
the Congress under paragraphs (2) and (3), or any portion of
such reports, may be classified to the extent the President
determines appropriate.
(5) Extension disapproval resolution.--(A) For purposes of
paragraph (1), the term ``extension disapproval resolution''
means a resolution of either House of the Congress, the sole
matter after the resolving clause of which is as follows:
``That the ____ disapproves the request of the President for
the extension, under section 303(c)(1)(B)(i) of the
Reciprocal Trade Agreement Authorities Act of 2001, of the
provisions of section 151 of the Trade Act of 1974 to any
implementing bill submitted with respect to any trade
agreement entered into under section 303(b) of the Reciprocal
Trade Agreement Authorities Act of 2001 after September 30,
2003.'', with the blank space being filled with the name of
the resolving House of the Congress.
(B) An extension disapproval resolution--
(i) may be introduced in either House of the Congress by
any member of such House; and
(ii) shall be referred, in the House of Representatives, to
the Committee on Ways and Means and to the Committee on
Rules.
(C) The provisions of sections 152(d) and (e) of the Trade
Act of 1974 (19 U.S.C. 2192(d) and (e)) (relating to the
floor consideration of certain resolutions in the House and
Senate) apply to an extension disapproval resolution.
(D) It is not in order for--
(i) the Senate to consider any extension disapproval
resolution not reported by the Committee on Finance;
(ii) the House of Representatives to consider any extension
disapproval resolution not reported by the Committee on Ways
and Means and by the Committee on Rules; or
(iii) either House of the Congress to consider an extension
disapproval resolution after September 30, 2003.
SEC. 304. CONSULTATIONS.
(a) Notice and Consultation Before Negotiation.--
(1) In general.--The President, with respect to any
agreement that is subject to the provisions of section
303(b), shall--
(A) provide, at least 90 calendar days before initiating
negotiations, written notice to the Congress of the
President's intention to enter into the negotiations and set
forth therein the date the President intends to initiate such
negotiations, the specific United States objectives for the
negotiations, and whether the President intends to seek an
agreement, or changes to an existing agreement; and
(B) before and after submission of the notice, consult
regarding the negotiations with the Committee on Finance of
the Senate and the Committee on Ways and Means of the House
of Representatives and such other committees of the House and
Senate as the President deems appropriate.
(2) Consultations regarding negotiations on certain
objectives.--
(A) Consultation.--In addition to the requirements set
forth in paragraph (1), before initiating negotiations with
respect to a trade agreement subject to section 303(b) where
the subject matter of such negotiations is directly related
to the principal trade negotiating objectives set forth in
section 302(b)(1) or section 302(b)(7), the President shall
consult with the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate
and with the appropriate advisory groups established under
section 135 of the Trade Act of 1974 with respect to such
negotiations.
(B) Scope.--The consultations described in subparagraph (A)
shall concern the manner in which the negotiation will
address the objective of reducing or eliminating a specific
tariff or nontariff barrier or foreign government policy or
practice directly related to trade that decreases market
opportunities for United States exports or otherwise distorts
United States trade.
(3) Negotiations regarding agriculture.--Before initiating
negotiations the subject matter of which is directly related
to the subject matter under section 302(b)(6)(A) with any
country, the President shall assess whether United States
tariffs on agriculture products that were bound under the
Uruguay Round Agreements are lower than the tariffs bound by
that country. In addition, the President shall consider
whether the tariff levels bound and applied throughout the
world with respect to imports from the United States are
higher than United States tariffs and whether the negotiation
provides an opportunity to address any such disparity. The
President shall consult with the Committee on Ways and Means
and the Committee on Agriculture of the House of
Representatives and the Committee on Finance and the
Committee on Agriculture, Nutrition, and Forestry of the
Senate concerning the results of the assessment, whether it
is appropriate for the United States to agree to further
tariff reductions based on the conclusions reached in the
assessment, and how all applicable negotiating objectives
will be met.
(b) Consultation With Congress Before Agreements Entered
Into.--
(1) Consultation.--Before entering into any trade agreement
under section 303(b), the President shall consult with--
(A) the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate;
and
(B) each other committee of the House and the Senate, and
each joint committee of the Congress, which has jurisdiction
over legislation involving subject matters which would be
affected by the trade agreement.
(2) Scope.--The consultation described in paragraph (1)
shall include consultation with respect to--
(A) the nature of the agreement;
(B) how and to what extent the agreement will achieve the
applicable purposes, policies, and objectives of this title;
and
(C) the implementation of the agreement under section 305,
including the general effect of the agreement on existing
laws.
(c) Advisory Committee Reports.--The report required under
section 135(e)(1) of the Trade Act of 1974 regarding any
trade agreement entered into under section 303(a) or (b) of
this Act shall be provided to the President, the Congress,
and the United States Trade Representative not later than 30
days after the date on which the President notifies the
Congress under section 303(a)(1) or 305(a)(1)(A) of the
President's intention to enter into the agreement.
SEC. 305. IMPLEMENTATION OF TRADE AGREEMENTS.
(a) In General.--
(1) Notification and submission.--Any agreement entered
into under section 303(b) shall enter into force with respect
to the United States if (and only if)--
(A) the President, at least 90 calendar days before the day
on which the President enters into the trade agreement,
notifies the House of Representatives and the Senate of the
President's intention to enter into the agreement, and
promptly thereafter publishes notice of such intention in the
Federal Register;
(B) within 60 days after entering into the agreement, the
President submits to the Congress a description of those
changes to
[[Page S1415]]
existing laws that the President considers would be required
in order to bring the United States into compliance with the
agreement;
(C) after entering into the agreement, the President
submits a copy of the final legal text of the agreement,
together with--
(i) a draft of an implementing bill described in section
303(b)(3);
(ii) a statement of any administrative action proposed to
implement the trade agreement; and
(iii) the supporting information described in paragraph
(2); and
(D) the implementing bill is enacted into law.
(2) Supporting information.--The supporting information
required under paragraph (1)(C)(iii) consists of--
(A) an explanation as to how the implementing bill and
proposed administrative action will change or affect existing
law; and
(B) a statement--
(i) asserting that the agreement makes progress in
achieving the applicable purposes, policies, and objectives
of this title;
(ii) setting forth the reasons of the President regarding--
(I) how and to what extent the agreement makes progress in
achieving the applicable purposes, policies, and objectives
referred to in clause (i);
(II) whether and how the agreement changes provisions of an
agreement previously negotiated;
(III) how the agreement serves the interests of United
States commerce; and
(IV) how the implementing bill meets the standards set
forth in section 303(b)(3).
(3) Reciprocal benefits.--In order to ensure that a foreign
country that is not a party to a trade agreement entered into
under section 303(b) does not receive benefits under the
agreement unless the country is also subject to the
obligations under the agreement, the implementing bill
submitted with respect to the agreement shall provide that
the benefits and obligations under the agreement apply only
to the parties to the agreement, if such application is
consistent with the terms of the agreement. The implementing
bill may also provide that the benefits and obligations under
the agreement do not apply uniformly to all parties to the
agreement, if such application is consistent with the terms
of the agreement.
(b) Limitations on Trade Authorities Procedures.--
(1) For lack of consultations.--
(A) In general.--The trade authorities procedures shall not
apply to any implementing bill submitted with respect to a
trade agreement entered into under section 303(b) if during
the 60-day period beginning on the date that one House of
Congress agrees to a procedural disapproval resolution for
lack of notice or consultations with respect to that trade
agreement, the other House separately agrees to a procedural
disapproval resolution with respect to that agreement.
(B) Procedural disapproval resolution.--For purposes of
this paragraph, the term ``procedural disapproval
resolution'' means a resolution of either House of Congress,
the sole matter after the resolving clause of which is as
follows: ``That the President has failed or refused to notify
or consult (as the case may be) with Congress in accordance
with section 304 or 305 of the Reciprocal Trade Agreement
Authorities Act of 2001 on negotiations with respect to, or
entering into, a trade agreement to which section 303(b) of
that Act applies and, therefore, the provisions of section
151 of the Trade Act of 1974 shall not apply to any
implementing bill submitted with respect to that trade
agreement.''.
(2) Procedures for considering resolution.--(A) A
procedural disapproval resolution--
(i) in the House of Representatives--
(I) shall be introduced by the chairman or ranking minority
member of the Committee on Ways and Means or the chairman or
ranking minority member of the Committee on Rules;
(II) shall be referred to the Committee on Ways and Means
and to the Committee on Rules; and
(III) may not be amended by either Committee; and
(ii) in the Senate shall be an original resolution of the
Committee on Finance.
(B) The provisions of section 152(d) and (e) of the Trade
Act of 1974 (19 U.S.C. 2192(d) and (e)) (relating to the
floor consideration of certain resolutions in the House and
Senate) apply to a procedural disapproval resolution.
(C) It is not in order for the House of Representatives to
consider any procedural disapproval resolution not reported
by the Committee on Ways and Means and by the Committee on
Rules.
(c) Rules of House of Representatives and Senate.--
Subsection (b) of this section and section 303(c) are enacted
by the Congress--
(1) as an exercise of the rulemaking power of the House of
Representatives and the Senate, respectively, and as such are
deemed a part of the rules of each House, respectively, and
such procedures supersede other rules only to the extent that
they are inconsistent with such other rules; and
(2) with the full recognition of the constitutional right
of either House to change the rules (so far as relating to
the procedures of that House) at any time, in the same
manner, and to the same extent as any other rule of that
House.
SEC. 306. TREATMENT OF CERTAIN TRADE AGREEMENTS.
(a) Certain Agreements.--Notwithstanding section 303(b)(2),
if an agreement to which section 303(b) applies--
(1) is entered into under the auspices of the World Trade
Organization regarding trade in information technology
products,
(2) is entered into under the auspices of the World Trade
Organization regarding extended negotiations on financial
services as described in section 135(a) of the Uruguay Round
Agreements Act (19 U.S.C. 3555(a)),
(3) is entered into under the auspices of the World Trade
Organization regarding the rules of origin work program
described in Article 9 of the Agreement on Rules of Origin
referred to in section 101(d)(10) of the Uruguay Round
Agreements Act (19 U.S.C. 3511(d)(10)), or
(4) is entered into with Chile,
and results from negotiations that were commenced before the
date of enactment of this Act, subsection (b) shall apply.
(b) Treatment of Agreements.--In the case of any agreement
to which subsection (a) applies--
(1) the applicability of the trade authorities procedures
to implementing bills shall be determined without regard to
the requirements of section 304(a), and any procedural
disapproval resolution under section 305(b)(1)(B) shall not
be in order on the basis of a failure or refusal to comply
with the provisions of section 304(a); and
(2) the President shall consult regarding the negotiations
described in subsection (a) with the committees described in
section 304(a)(1)(B) as soon as feasible after the enactment
of this Act.
SEC. 307. CONFORMING AMENDMENTS.
(a) In General.--Title I of the Trade Act of 1974 (19
U.S.C. 2111 et seq.) is amended as follows:
(1) Implementing bill.--
(A) Section 151(b)(1) (19 U.S.C. 2191(b)(1)) is amended by
striking ``section 1103(a)(1) of the Omnibus Trade and
Competitiveness Act of 1988, or section 282 of the Uruguay
Round Agreements Act'' and inserting ``section 282 of the
Uruguay Round Agreements Act, or section 305(a)(1) of the
Reciprocal Trade Agreement Authorities Act of 2001''.
(B) Section 151(c)(1) (19 U.S.C. 2191(c)(1)) is amended by
striking ``or section 282 of the Uruguay Round Agreements
Act'' and inserting ``, section 282 of the Uruguay Round
Agreements Act, or section 305(a)(1) of the Reciprocal Trade
Agreement Authorities Act of 2001''.
(2) Advice from international trade commission.--Section
131 (19 U.S.C. 2151) is amended--
(A) in subsection (a)--
(i) in paragraph (1), by striking ``section 123 of this Act
or section 1102 (a) or (c) of the Omnibus Trade and
Competitiveness Act of 1988,'' and inserting ``section 123 of
this Act or section 303(a) or (b) of the Reciprocal Trade
Agreement Authorities Act of 2001,''; and
(ii) in paragraph (2), by striking ``section 1102 (b) or
(c) of the Omnibus Trade and Competitiveness Act of 1988''
and inserting ``section 303(b) of the Reciprocal Trade
Agreement Authorities Act of 2001'';
(B) in subsection (b), by striking ``section
1102(a)(3)(A)'' and inserting ``section 303(a)(3)(A) of the
Reciprocal Trade Agreement Authorities Act of 2001'' before
the end period; and
(C) in subsection (c), by striking ``section 1102 of the
Omnibus Trade and Competitiveness Act of 1988,'' and
inserting ``section 303 of the Reciprocal Trade Agreement
Authorities Act of 2001,''.
(3) Hearings and advice.--Sections 132, 133(a), and 134(a)
(19 U.S.C. 2152, 2153(a), and 2154(a)) are each amended by
striking ``section 1102 of the Omnibus Trade and
Competitiveness Act of 1988,'' each place it appears and
inserting ``section 303 of the Reciprocal Trade Agreement
Authorities Act of 2001,''.
(4) Prerequisites for offers.--Section 134(b) (19 U.S.C.
2154(b)) is amended by striking ``section 1102 of the Omnibus
Trade and Competitiveness Act of 1988'' and inserting
``section 303 of the Reciprocal Trade Agreement Authorities
Act of 2001''.
(5) Advice from private and public sectors.--Section 135
(19 U.S.C. 2155) is amended--
(A) in subsection (a)(1)(A), by striking ``section 1102 of
the Omnibus Trade and Competitiveness Act of 1988'' and
inserting ``section 303 of the Reciprocal Trade Agreement
Authorities Act of 2001'';
(B) in subsection (e)(1)--
(i) by striking ``section 1102 of the Omnibus Trade and
Competitiveness Act of 1988'' each place it appears and
inserting ``section 303 of the Reciprocal Trade Agreement
Authorities Act of 2001''; and
(ii) by striking ``section 1103(a)(1)(A) of such Act of
1988'' and inserting ``section 305(a)(1)(A) of the Reciprocal
Trade Agreement Authorities Act of 2001''; and
(C) in subsection (e)(2), by striking ``section 1101 of the
Omnibus Trade and Competitiveness Act of 1988'' and inserting
``section 302 of the Reciprocal Trade Agreement Authorities
Act of 2001''.
(6) Transmission of agreements to congress.--Section 162(a)
(19 U.S.C. 2212(a)) is amended by striking ``or under section
1102 of the Omnibus Trade and Competitiveness Act of 1988''
and inserting ``or under section 303 of the Reciprocal Trade
Agreement Authorities Act of 2001''.
(b) Application of Certain Provisions.--For purposes of
applying sections 125, 126,
[[Page S1416]]
and 127 of the Trade Act of 1974 (19 U.S.C. 2135, 2136(a),
and 2137)--
(1) any trade agreement entered into under section 303
shall be treated as an agreement entered into under section
101 or 102, as appropriate, of the Trade Act of 1974 (19
U.S.C. 2111 or 2112); and
(2) any proclamation or Executive order issued pursuant to
a trade agreement entered into under section 303 shall be
treated as a proclamation or Executive order issued pursuant
to a trade agreement entered into under section 102 of the
Trade Act of 1974.
SEC. 308. DEFINITIONS.
In this title:
(1) United states person.--The term ``United States
person'' means--
(A) a United States citizen;
(B) a partnership, corporation, or other legal entity
organized under the laws of the United States; and
(C) a partnership, corporation, or other legal entity that
is organized under the laws of a foreign country and is
controlled by entities described in subparagraph (B) or
United States citizens, or both.
(2) Uruguay round agreements.--The term ``Uruguay Round
Agreements'' has the meaning given that term in section 2(7)
of the Uruguay Round Agreements Act (19 U.S.C. 3501(7)).
(3) World trade organization.--The term ``World Trade
Organization'' means the organization established pursuant to
the WTO Agreement.
(4) WTO agreement.--The term ``WTO Agreement'' means the
Agreement Establishing the World Trade Organization entered
into on April 15, 1994.
TITLE IV--AGRICULTURAL TRADE FREEDOM
SEC. 401. SHORT TITLE.
This title may be cited as the ``Agricultural Trade Freedom
Act''.
SEC. 402. DEFINITIONS.
In this title, the terms ``agricultural commodity'' and
``United States agricultural commodity'' have the meanings
given the terms in section 102 of the Agricultural Trade Act
of 1978 (7 U.S.C. 5602).
SEC. 403. AGRICULTURAL COMMODITIES, LIVESTOCK, AND PRODUCTS
EXEMPT FROM UNILATERAL AGRICULTURAL SANCTIONS.
Subtitle B of title IV of the Agricultural Trade Act of
1978 (7 U.S.C. 5661 et seq.) is amended by adding at the end
the following:
``SEC. 418. AGRICULTURAL COMMODITIES, LIVESTOCK, AND PRODUCTS
EXEMPT FROM UNILATERAL AGRICULTURAL SANCTIONS.
``(a) Definitions.--In this section:
``(1) Current sanction.--The term `current sanction' means
a unilateral agricultural sanction that is in effect on the
date of enactment of the Agricultural Trade Freedom Act.
``(2) New sanction.--The term `new sanction' means a
unilateral agricultural sanction that becomes effective after
the date of enactment of that Act.
``(3) Unilateral agricultural sanction.--The term
`unilateral agricultural sanction' means any prohibition,
restriction, or condition that is imposed on the export of an
agricultural commodity to a foreign country or foreign entity
and that is imposed by the United States for reasons of the
national interest, except in a case in which the United
States imposes the measure pursuant to a multilateral regime
and the other members of that regime have agreed to impose
substantially equivalent measures.
``(b) Exemption.--
``(1) In general.--Subject to paragraphs (2) and (3) and
notwithstanding any other provision of law, agricultural
commodities made available as a result of commercial sales
shall be exempt from a unilateral agricultural sanction
imposed by the United States on another country.
``(2) Exclusions.--Paragraph (1) shall not apply to
agricultural commodities made available as a result of
programs carried out under--
``(A) the Agricultural Trade Development and Assistance Act
of 1954 (7 U.S.C. 1691 et seq.);
``(B) section 416 of the Agricultural Act of 1949 (7 U.S.C.
1431);
``(C) the Food for Progress Act of 1985 (7 U.S.C. 1736o);
``(D) the Agricultural Trade Act of 1978 (7 U.S.C. 5601 et
seq.); or
``(E) section 153 of the Food Security Act of 1985 (15
U.S.C. 713a-14).
``(3) Determination by president.--The President may
include agricultural commodities made available as a result
of the activities described in paragraph (1) in the
unilateral agricultural sanction imposed on a foreign country
or foreign entity if--
``(A) a declaration of war by Congress is in effect with
respect to the foreign country or foreign entity; or
``(B)(i) the President determines that inclusion of the
agricultural commodities is in the national interest;
``(ii) the President submits the report required under
subsection (d); and
``(iii) Congress has not approved a joint resolution
stating the disapproval of Congress of the report submitted
under subsection (d).
``(4) Effect on agricultural trade.--Nothing in this
subsection requires the imposition of a unilateral
agricultural sanction with respect to an agricultural
commodity, whether exported in connection with a commercial
sale or a program described in paragraph (2).
``(c) Current Sanctions.--
``(1) In general.--Subject to paragraph (2), the exemption
under subsection (b)(1) shall apply to a current sanction.
``(2) Presidential review.--Not later than 90 days after
the date of enactment of the Agricultural Trade Freedom Act,
the President shall review each current sanction to determine
whether the exemption under subsection (b)(1) should apply to
the current sanction.
``(3) Application.--The exemption under subsection (b)(1)
shall apply to a current sanction beginning on the date that
is 180 days after the date of enactment of the Agricultural
Trade Freedom Act unless the President determines that the
exemption should not apply to the current sanction for
reasons of the national interest.
``(d) Report.--
``(1) In general.--If the President determines under
subsection (b)(3)(B)(i) or (c)(3) that the exemption should
not apply to a unilateral agricultural sanction, the
President shall submit a report to Congress not later than 15
days after the date of the determination.
``(2) Contents of report.--The report shall contain--
``(A) an explanation of--
``(i) the economic activity that is proposed to be
prohibited, restricted, or conditioned by the unilateral
agricultural sanction; and
``(ii) the national interest for which the exemption should
not apply to the unilateral agricultural sanction; and
``(B) an assessment by the Secretary--
``(i) regarding export sales--
``(I) in the case of a current sanction, whether markets in
the sanctioned country or countries present a substantial
trade opportunity for export sales of a United States
agricultural commodity; or
``(II) in the case of a new sanction, the extent to which
any country or countries to be sanctioned or likely to be
sanctioned are markets that accounted for, during the
preceding calendar year, more than 3 percent of export sales
of a United States agricultural commodity;
``(ii) regarding the effect on United States agricultural
commodities--
``(I) in the case of a current sanction, the potential for
export sales of United States agricultural commodities in the
sanctioned country or countries; and
``(II) in the case of a new sanction, the likelihood that
exports of United States agricultural commodities will be
affected by the new sanction or by retaliation by any country
to be sanctioned or likely to be sanctioned, including a
description of specific United States agricultural
commodities that are most likely to be affected;
``(iii) regarding the income of agricultural producers--
``(I) in the case of a current sanction, the potential for
increasing the income of producers of the United States
agricultural commodities involved; and
``(II) in the case of a new sanction, the likely effect on
incomes of producers of the agricultural commodities
involved;
``(iv) regarding displacement of United States suppliers--
``(I) in the case of a current sanction, the potential for
increased competition for United States suppliers of the
agricultural commodity in countries that are not subject to
the current sanction because of uncertainty about the
reliability of the United States suppliers; and
``(II) in the case of a new sanction, the extent to which
the new sanction would permit foreign suppliers to replace
United States suppliers; and
``(v) regarding the reputation of United States
agricultural producers as reliable suppliers--
``(I) in the case of a current sanction, whether removing
the sanction would improve the reputation of United States
producers as reliable suppliers of agricultural commodities
in general, and of specific agricultural commodities
identified by the Secretary; and
``(II) in the case of a new sanction, the likely effect of
the proposed sanction on the reputation of United States
producers as reliable suppliers of agricultural commodities
in general, and of specific agricultural commodities
identified by the Secretary.
``(e) Congressional Priority Procedures.--
``(1) Joint resolution.--In this subsection, the term
`joint resolution' means only a joint resolution introduced
within 10 session days of Congress after the date on which
the report of the President under subsection (d) is received
by Congress, the matter after the resolving clause of which
is as follows: `That Congress disapproves the report of the
President pursuant to section 418(d) of the Agricultural
Trade Act of 1978, transmitted on ______________.', with the
blank completed with the appropriate date.
``(2) Referral of report.--The report described in
subsection (d) shall be referred to the appropriate committee
or committees of the House of Representatives and to the
appropriate committee or committees of the Senate.
``(3) Referral of joint resolution.--
``(A) In general.--A joint resolution shall be referred to
the committees in each House of Congress with jurisdiction.
``(B) Reporting date.--A joint resolution referred to in
subparagraph (A) may not be reported before the eighth
session day of Congress after the introduction of the joint
resolution.
[[Page S1417]]
``(4) Discharge of committee.--If the committee to which is
referred a joint resolution has not reported the joint
resolution (or an identical joint resolution) at the end of
30 session days of Congress after the date of introduction of
the joint resolution--
``(A) the committee shall be discharged from further
consideration of the joint resolution; and
``(B) the joint resolution shall be placed on the
appropriate calendar of the House concerned.
``(5) Floor consideration.--
``(A) Motion to proceed.--
``(i) In general.--When the committee to which a joint
resolution is referred has reported, or when a committee is
discharged under paragraph (4) from further consideration of,
a joint resolution--
``(I) it shall be at any time thereafter in order (even
though a previous motion to the same effect has been
disagreed to) for any member of the House concerned to move
to proceed to the consideration of the joint resolution; and
``(II) all points of order against the joint resolution
(and against consideration of the joint resolution) are
waived.
``(ii) Privilege.--The motion to proceed to the
consideration of the joint resolution--
``(I) shall be highly privileged in the House of
Representatives and privileged in the Senate; and
``(II) shall not be debatable.
``(iii) Amendments and motions not in order.--The motion to
proceed to the consideration of the joint resolution shall
not be subject to--
``(I) amendment;
``(II) a motion to postpone; or
``(III) a motion to proceed to the consideration of other
business.
``(iv) Motion to reconsider not in order.--A motion to
reconsider the vote by which the motion is agreed to or
disagreed to shall not be in order.
``(v) Business until disposition.--If a motion to proceed
to the consideration of the joint resolution is agreed to,
the joint resolution shall remain the unfinished business of
the House concerned until disposed of.
``(B) Limitations on debate.--
``(i) In general.--Debate on the joint resolution, and on
all debatable motions and appeals in connection with the
joint resolution, shall be limited to not more than 10 hours,
which shall be divided equally between those favoring and
those opposing the joint resolution.
``(ii) Further debate limitations.--A motion to limit
debate shall be in order and shall not be debatable.
``(iii) Amendments and motions not in order.--An amendment
to, a motion to postpone, a motion to proceed to the
consideration of other business, a motion to recommit the
joint resolution, or a motion to reconsider the vote by which
the joint resolution is agreed to or disagreed to shall not
be in order.
``(C) Vote on final passage.--Immediately following the
conclusion of the debate on a joint resolution, and a single
quorum call at the conclusion of the debate if requested in
accordance with the rules of the House concerned, the vote on
final passage of the joint resolution shall occur.
``(D) Rulings of the chair on procedure.--An appeal from a
decision of the Chair relating to the application of the
rules of the Senate or House of Representatives, as the case
may be, to the procedure relating to a joint resolution shall
be decided without debate.
``(6) Coordination with action by other house.--If, before
the passage by 1 House of a joint resolution of that House,
that House receives from the other House a joint resolution,
the following procedures shall apply:
``(A) No committee referral.--The joint resolution of the
other House shall not be referred to a committee.
``(B) Floor procedure.--With respect to a joint resolution
of the House receiving the joint resolution--
``(i) the procedure in that House shall be the same as if
no joint resolution had been received from the other House;
but
``(ii) the vote on final passage shall be on the joint
resolution of the other House.
``(C) Disposition of joint resolutions of receiving
house.--On disposition of the joint resolution received from
the other House, it shall no longer be in order to consider
the joint resolution originated in the receiving House.
``(7) Procedures after action by both the house and
senate.--If a House receives a joint resolution from the
other House after the receiving House has disposed of a joint
resolution originated in that House, the action of the
receiving House with regard to the disposition of the joint
resolution originated in that House shall be deemed to be the
action of the receiving House with regard to the joint
resolution originated in the other House.
``(8) Rulemaking power.--This subsection is enacted by
Congress--
``(A) as an exercise of the rulemaking power of the Senate
and House of Representatives, respectively, and as such this
subsection--
``(i) is deemed to be a part of the rules of each House,
respectively, but applicable only with respect to the
procedure to be followed in that House in the case of a joint
resolution; and
``(ii) supersedes other rules only to the extent that this
subsection is inconsistent with those rules; and
``(B) with full recognition of the constitutional right of
either House to change the rules (so far as the rules relate
to the procedure of that House) at any time, in the same
manner and to the same extent as in the case of any other
rule of that House.''.
SEC. 404. SALE OR BARTER OF FOOD ASSISTANCE.
It is the sense of Congress that the amendments to section
203 of the Agricultural Trade Development and Assistance Act
of 1954 (7 U.S.C. 1723) made by section 208 of the Federal
Agriculture Improvement and Reform Act of 1996 (Public Law
104-127; 110 Stat. 954) were intended to allow the sale or
barter of United States agricultural commodities in
connection with United States food assistance only within the
recipient country or countries adjacent to the recipient
country, unless--
(1) the sale or barter within the recipient country or
adjacent countries is not practicable; and
(2) the sale or barter within countries other than the
recipient country or adjacent countries will not disrupt
commercial markets for the agricultural commodity involved.
______
By Mr. McConnell (for himself, Mr. Graham, Mr. Bunning, Mr.
DeWine, Mr. Warner, and Mr. Lugar):
S. 335. A bill to amend the Internal Revenue Code of 1986 to provide
an exclusion from gross income for distributions from qualified State
tuition programs which are used to pay education expenses, and for
other purposes; to the Committee on Finance.
Mr. McCONNELL. Mr. President, today I am once again honored to
introduce a bill which focuses on an important issue facing American
families today--paying for the education of their children. I have long
believed that we need to make college education more affordable, and my
legislation, the Setting Aside for a Valuable Education, or SAVE, Act,
will do that by making savings in qualified tuition savings plans
entirely tax-free. I am pleased to be joined in this endeavor by the
bill's original co-sponsors, Senators Graham, Bunning, DeWine, Warner,
and Lugar.
I have worked for the past six years to make saving for college
easier for American families by providing ways to help them keep pace
with the rising cost of a college education through tax incentives. In
1994, I introduced the first bill to make education savings in state
tuition plans exempt from taxation. Since that time, Congress has made
significant progress toward achieving this important goal.
In 1996, I was able to include a provision in the Small Business Job
Protection Act that clarified the tax treatment of state-sponsored
savings plans and the participants' investment. This measure
established that account earnings on the savings plans are to be
included in gross income when distributions to attend school are made.
This was an important change because it removed the tax uncertainty
that was hindering the plans' effectiveness and helped families who are
trying to save for their children's future education needs. Before this
clarification, it appeared that account earnings may be taxed annually,
which would have deterred saving for education expenses. Also, my
language shifted the tax burden upon distribution of the funds from the
parent to the student, who is generally taxed at a lower rate.
The following year, the Taxpayer Relief Act of 1997 included several
important legislative initiatives that maximized flexibility to
families with investments in long-term education savings plans. Through
this vehicle, I was pleased to be able to expand the definition of
``eligible education expenses'' to include room and board costs so that
these expenses--often as much as one-half the entire cost of college--
also received the deferred tax treatment. Secondly, I was able to
include a provision which expanded the definition of ``eligible
institutions'' to include all schools, including certain proprietary
schools, which are eligible under the Department of Education's student
aid program. Finally, I was pleased that the Taxpayer Relief Act
included a more detailed definition of the term ``member of family'' to
allow tax-free transfers of credits or account balances in a qualified
tuition program to additional family members in the event that the
named beneficiary does not attend college.
However, while I am proud of these initial success stories, I will
continue to press to make education savings entirely tax free. While
the end is in
[[Page S1418]]
sight, we cannot claim victory until we achieve this goal. In fact, the
need for education savings tax relief is more acute then ever as recent
studies demonstrate that we must continue to encourage parents to adopt
a long-term savings approach for their children's future education.
According to the College Board, during the 2000-2001 academic school
year, the average tuition at four-year public colleges rose between 4.4
and 5.2 percent. It is important to note that this increase was higher
than the 1999 tuition increase of 3.4 percent. In addition, the College
Board estimates that room and board charges will increase between 4 and
5 percent for next year. What is most frustrating is that despite the
recent economic boom, the cost of a college education continues to rise
at a rate faster than many families can afford. According to the
College Board, since 1980 the price of a college education has been
rising between two and three times the Consumer Price Index. In fact,
tuition and fees for a four year college education has risen 115
percent over inflation since the 1980-81 school year, while median
household income has risen only 20 percent. Over the past decade,
tuition has increased between 32 and 49 percent, while family income
over the same period has increased just 4 percent.
As a result, more and more families are forced to rely on financial
aid to meet tuition costs. In fact, a majority of all college students
utilize some amount of financial assistance. The amount of financial
aid available to students and their families for the 1999-2000 school
year topped $68 billion, more than 4% above than the previous year.
However, there has been a marked trend from grant-based assistance
programs to loan-based assistance programs, and today many students are
forced to borrow in order to attend college. This shift toward loans
increases the financial burden of attending college because students
and families must then assume interest costs that can add thousands to
the total cost of tuition.
We must not forget that compounded interest cuts both ways. For those
students who must borrow, compounded interest is a burden, for those
students and families who save, it is a blessing. By saving,
participants can keep pace, or even ahead of, tuition increases. By
borrowing, students bear additional interest costs that add thousands
to the total cost of tuition. Savings have a positive impact by
reducing the need for students to borrow tens of thousands of dollars
in student loans. This will help make need-based grants, which target
low-income families, better meet the demands of those who are in most
need.
Mr. President, the need for rewarding long-term saving for college is
clear. My legislation will recognize and award savings while allowing
students and families that are participating in these state-sponsored
plans to be exempt from federal income tax when the funds are used for
qualified educational purposes. This bill will finish what I started in
1994.
Mr. President, as a result of our actions over the last several
years, a majority of the states have implemented tuition savings plans
for their residents. In the mid-1980s, states first began to recognize
the difficulty that families faced in keeping pace with the rising cost
of education. States like Kentucky, Florida, Ohio, and Michigan were
among the first to start programs aimed at helping families save for
their children's college education. Other states have since followed
suit, and currently 48 states have some form of tuition savings plans.
Today, there are nearly one million savers who have contributed over
$2 billion in education savings. In the Commonwealth of Kentucky alone,
3,250 beneficiaries have active accounts and have accumulated $13
million in savings. With average monthly contributions as low as $110,
and nearly 60% of the participating families earning a household income
of under $60,000 annually, state-sponsored tuition plans clearly
benefit middle-class families--the exact Americans who deserve and need
such relief.
In addition to accomplishing my long-sought goal of making savings in
tuition savings plans entirely tax-free, the SAVE Act, includes several
other new provisions. It allows private institutions to establish their
own qualified prepaid tuition programs, and at the same time includes
important consumer protections to ensure that these new plans operate
in a fiscally responsible manner. The SAVE Act also modifies the cap on
room and board expenses to more accurately reflect the cost of
attending an institution of higher learning. The final important change
made in the SAVE Act is a provision allowing for one annual rollover
between Section 529 plans to meet the needs of our increasingly mobile
society.
I have worked closely with state plan administrators over the years
seeking both their advice and support. When I introduce the SAVE Act
this afternoon, I will be honored once again to have the endorsement of
the National Association of State Treasurers and the College Savings
Plans Network (CSPN). I ask unanimous consent that CSPN's letter of
support be included in the record. They have worked tirelessly in
support of this legislation because they know it is in the best
interests of plan participants--families who care about their
children's education. In addition, state-sponsored tuition savings
plans have recently been touted as one of the best ways to save for a
college education by such influential magazines as Money, Fortune, and
Business Week.
This overwhelming support for these programs underscores my belief
that we have a real opportunity to go even further toward making
college affordable for American families. It is in our national
interest to maintain a quality and affordable education system for all
families--not merely those fortunate to have the resources. My
legislation rewards parents who are serious about their children's
future and who are committed over the long-term to the education of
their children by providing a significant tax break for all savers
nationwide. This will reduce the cost of education and will not
unnecessarily burden future generations with thousands of dollars in
loans.
College is a lifelong investment. We must take steps to ensure that
higher education is within the reach of every child so that they are
prepared to meet the challenges they will face in our increasingly
competitive world. We must make it easier for families to save for
college, and we can do so this year by providing total tax freedom for
education savings. My bill will make these tuition savings plans
entirely tax-free when the money is drawn out to pay for college, and I
believe that my legislation is the best approach to ensuring that our
children can obtain a higher education without mortgaging their
futures.
Mr. President, I appreciate the opportunity to speak to the Senate on
this legislation and I look forward to working with the bill's co-
sponsors and the Bush Administration to enact it into law.
I ask unanimous consent that the bill and a letter be printed in the
Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 335
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 ``Setting Aside for a Valuable
Education (SAVE) Act''.
SEC. 2. EXCLUSION FROM GROSS INCOME OF EDUCATION
DISTRIBUTIONS FROM QUALIFIED STATE TUITION
PROGRAMS.
(a) In General.--Subparagraph (B) of section 529(c)(3) of
the Internal Revenue Code of 1986 (relating to distributions)
is amended to read as follows:
``(B) Distributions for qualified higher education
expenses.--For purposes of this paragraph--
``(i) In-kind distributions.--No amount shall be includible
in gross income under subparagraph (A) by reason of a
distribution which consists of providing a benefit to the
distributee which, if paid for by the distributee, would
constitute payment of a qualified higher education expense.
``(ii) Cash distributions.--In the case of distributions
not described in clause (i), if--
``(I) such distributions do not exceed the qualified higher
education expenses (reduced by expenses described in clause
(i)), no amount shall be includible in gross income, and
``(II) in any other case, the amount otherwise includible
in gross income shall be reduced by an amount which bears the
same ratio to such amount as such expenses bear to such
distributions.
``(iii) Exception for institutional programs.--In the case
of any taxable year beginning before January 1, 2004, clauses
(i)
[[Page S1419]]
and (ii) shall not apply with respect to any distribution
during such taxable year under a qualified State tuition
program established and maintained by 1 or more eligible
educational institutions.
``(iv) Treatment as distributions.--Any benefit furnished
to a designated beneficiary under a qualified State tuition
program shall be treated as a distribution to the beneficiary
for purposes of this paragraph.
``(v) Coordination with hope and lifetime learning
credits.--The total amount of qualified higher education
expenses with respect to an individual for the taxable year
shall be reduced--
``(I) as provided in section 25A(g)(2), and
``(II) by the amount of such expenses which were taken into
account in determining the credit allowed to the taxpayer or
any other person under section 25A.
``(vi) Coordination with education savings accounts.--If,
with respect to an individual for any taxable year--
``(I) the aggregate distributions to which clauses (i) and
(ii) and section 530(d)(2)(A) apply, exceed
``(II) the total amount of qualified higher education
expenses otherwise taken into account under clauses (i) and
(ii) (after the application of clause (iv)) for such year,
the taxpayer shall allocate such expenses among such
distributions for purposes of determining the amount of the
exclusion under clauses (i) and (ii) and section
530(d)(2)(A).''.
(b) Conforming Amendments.--
(1) Section 135(d)(2)(B) of the Internal Revenue Code of
1986 is amended by striking ``section 530(d)(2)'' and
inserting ``sections 529(c)(3)(B)(i) and 530(d)(2)''.
(2) Section 221(e)(2)(A) of such Code is amended by
inserting ``529,'' after ``135,''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
SEC. 3. ELIGIBLE EDUCATIONAL INSTITUTIONS PERMITTED TO
MAINTAIN QUALIFIED TUITION PROGRAMS.
(a) In General.--Section 529(b)(1) of the Internal Revenue
Code of 1986 (defining qualified State tuition program) is
amended by inserting ``or by 1 or more eligible educational
institutions'' after ``maintained by a State or agency or
instrumentality thereof''.
(b) Private Qualified Tuition Programs Limited To Benefit
Plans.--Clause (ii) of section 529(b)(1)(A) of the Internal
Revenue Code of 1986 is amended by inserting ``in the case of
a program established and maintained by a State or agency or
instrumentality thereof,'' before ``may make''.
(c) Additional Requirements for Certain Private Qualified
Tuition Programs.--Section 529(b) of the Internal Revenue
Code of 1986 is amended by adding at the end the following
new paragraph:
``(8) Additional requirements for certain private qualified
tuition programs.--A program established and maintained by 1
or more eligible educational institutions and described in
paragraph (1)(A)(ii) shall not be treated as a qualified
tuition program unless--
``(A) under such program a trust is created or organized
for the sole purpose of paying the qualified higher education
expenses of the designated beneficiary of the account,
``(B) the written governing instrument creating the trust
of which the account is a part provides safeguards to ensure
that contributions made on behalf of a designated beneficiary
remain available to provide for the qualified higher
education expenses of the designated beneficiary, and
``(C) the trust meets the following requirements:
``(i) Any trustee or person who may under contract operate
or manage the trust demonstrates to the satisfaction of the
Secretary that the manner in which that trustee or person
will administer the trust will be consistent with the
requirements of this section.
``(ii) The assets of the trust are not commingled with
other property except in a common trust fund or common
investment fund.
``(iii) The trust annually prepares and makes available the
reports and accountings required by this section. The annual
report, at a minimum, includes information on the financial
condition of the trust and the investment policy of the
trust.
``(iv) Before entering into contracts or otherwise
accepting contributions on behalf of a designated
beneficiary, the trust obtains an appropriate actuarial
report to establish, maintain, and certify that the trust
shall have sufficient assets to defray the obligations of the
trust and annually makes the actuarial report available to
account contributors and designated beneficiaries.
``(v) The trust secures a favorable ruling or opinion
issued by the Internal Revenue Service that the trust is in
compliance with the requirements of this section.
``(vi) Before entering into contracts or otherwise
accepting contributions on behalf of a designated
beneficiary, the trust solicits answers to appropriate ruling
requests from the Securities and Exchange Commission
regarding the application of Federal securities laws to the
trust.''.
(d) Application of Federal Securities Laws to Private
Qualified Tuition Programs.--Section 529(e) of the Internal
Revenue Code of 1986 (relating to other definitions and
special rules) is amended by adding at the end the following
new paragraph:
``(6) Application of federal securities laws to private
qualified tuition programs.--Nothing in this section shall be
construed to exempt any qualified tuition program that is not
established and maintained by a State or agency or
instrumentality thereof from any of the requirements of the
Securities Act of 1933 (15 U.S.C 77a et seq.) or the
Investment Company Act of 1940 (15 U.S.C 80a-1 et seq.).''.
(e) Conforming Amendments.--
(1) Sections 72(e)(9), 135(c)(2)(C), 135(d)(1)(D), 529,
530(b)(2)(B), 4973(e), and 6693(a)(2)(C) of the Internal
Revenue Code of 1986 are each amended by striking ``qualified
State tuition'' each place it appears and inserting
``qualified tuition''.
(2) The headings for sections 72(e)(9) and 135(c)(2)(C) of
such Code are each amended by striking ``qualified state
tuition'' and inserting ``qualified tuition''.
(3) The headings for sections 529(b) and 530(b)(2)(B) of
such Code are each amended by striking ``Qualified state
tuition'' and inserting ``Qualified tuition''.
(4) The heading for section 529 of such Code is amended by
striking ``state''.
(5) The item relating to section 529 of such Code in the
table of sections for part VIII of subchapter F of chapter 1
is amended by striking ``State''.
(f) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
SEC. 4. OTHER MODIFICATIONS TO QUALIFIED TUITION PROGRAMS.
(a) Rollover to Different Program for Benefit of Same
Designated Beneficiary.--Section 529(c)(3)(C) of the Internal
Revenue Code of 1986 (relating to change in beneficiaries) is
amended--
(1) by striking ``transferred to the credit'' in clause (i)
and inserting ``transferred--
``(I) to another qualified tuition program for the benefit
of the designated beneficiary, or
``(II) to the credit'',
(2) by adding at the end the following new clause:
``(iii) Limitation on certain rollovers.--Clause (i)(I)
shall only apply to 1 transfer with respect to a designated
beneficiary in any year.'', and
(3) by inserting ``or programs'' after ``beneficiaries'' in
the heading.
(b) Member of Family Includes First Cousin.--Section
529(e)(2) of the Internal Revenue Code of 1986 (defining
member of family) is amended by striking ``and'' at the end
of subparagraph (B), by striking the period at the end of
subparagraph (C) and by inserting ``; and'', and by adding at
the end the following new subparagraph:
``(D) any first cousin of such beneficiary.''.
(c) Adjustment of Limitation on Room and Board
Distributions.--Section 529(e)(3)(B)(ii) of the Internal
Revenue Code of 1986 is amended to read as follows:
``(ii) Limitation.--The amount treated as qualified higher
education expenses by reason of clause (i) shall not exceed
the greater of--
``(I) the amount (applicable to the student) included for
room and board for such period in the cost of attendance (as
defined in section 472 of the Higher Education Act of 1965
(20 U.S.C. 1087ll), as in effect on the date of the enactment
of the Setting Aside for a Valuable Education (SAVE) Act) for
the eligible educational institution for such period, or
``(II) the actual invoice amount the student residing in
housing owned or operated by the eligible educational
institution is charged by such institution for room and board
costs for such period.''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
____
College Savings Plans Network,
Lexington, KY, February 13, 2001.
Re College Savings Plans Network's Support of the SAVE Act
Hon. Mitch McConnell,
U.S. Senate, Russell Senate Office Building, Washington, DC.
Dear Senator McConnell: Thank you for your continued
support of legislation to encourage college savings through
state-sponsored college savings programs. Your leadership in
helping families plan for their children's college education
is truly commendable; your foresight and knowledge have
enhanced the ability of all families to save. Section 529
programs now represent over 1.4 million families who have
invested more than $8 billion for their children's future
higher education. The College Savings Plans Network
represents all 50 states that are currently operating or
developing Sec. 529 college savings programs.
In our continuing efforts to make a college education more
accessible and affordable for American families, we are very
appreciative of your sponsorship of the ``Setting Aside for a
Valuable Education (SAVE) Act,'' which would provide an
exclusion from gross income for earnings on Sec. 529
accounts, as well as several technical amendments that would
make these college savings programs more user-friendly.
The college Savings Plans Network strongly supports an
exclusion from gross income for earnings on Sec. 529
accounts. This tax treatment would be less burdensome to
administer than current tax provisions, and would result in
better compliance and less cost to college savings programs
and their participants. More importantly, an exclusion from
gross income would provide a powerful additional incentive
for families to save early for college expenses. Section 529
of the Internal Revenue Code already contains restrictions
and penalties to prevent any potential abuse of these
programs.
[[Page S1420]]
Please do not hesitate to contact me should you need any
additional information or have any questions. Thank you again
for your continued interest in and support of Sec. 529
programs and the hundreds of thousands of children for whom
college is now an affordable reality.
Sincerely,
George Thomas,
Chair, College Savings Plans Network and New Hampshire
State Treasurer.
Mr. GRAHAM. Mr. President, I am proud to join Senator McConnell and
my other Senate colleagues in launching an initiative to increase
Americans' access to college education. Today, we are introducing the
Setting Aside for a Valuable Education Act. This bill extends tax-free
treatment to all state sponsored prepaid tuition plans and state
savings plans. This legislation also gives prepaid tuition plans
established by private colleges and universities tax-exempt status.
Prepaid college tuition and savings programs have flourished at the
state level in the face of spiraling college costs. According to the
College Board, between 1980 and 2000, the cost of going to a four-year
college has increased 115 percent above the rate of inflation. The
cause of this dramatic increase in tuition is the subject of
significant debate. But whether these increases are attributable to
increased costs to the universities, reductions in state funding for
public universities, or the increased value of a college degree, the
fact remains that financing a college education has become increasingly
difficult.
In response to higher college costs the states have engineered
innovative ways to help its families afford college. Michigan
implemented the first prepaid tuition plan in 1986. Florida followed in
1988. Today 49 states have either implemented or are in the process of
implementing prepaid tuition plans or state education savings plans.
Prepaid college tuition plans allow parents to pay prospectively for
their children's higher education at participating universities. States
pool these funds and invest them in a manner that will match or exceed
the pace of educational inflation. This ``locks in'' current tuition
and guarantees financial access to a future college education. In 1996,
Congress acted to ensure that the tax on the earnings in these state-
sponsored programs is tax-deferred.
Senator McConnell and I believe the 107th Congress must move to make
these programs completely tax free. Students should be able to enroll
in college without the fear of incurring a significant tax liability
just because they went to school. The legislation extends this same tax
treatment to private college prepaid programs.
We believe that these programs should be tax free for numerous
reasons. First, prepaid tuition and savings programs help middle income
families afford a college education. Florida's experience shows that it
is not higher income families who take most advantage of these plans.
It is middle income families who want the discipline of monthly
payments. They know that they would have a difficult time coming up
with funds necessary to pay for college if they waited until their
child enrolled. In Florida, more than 70 percent of participants in the
state tuition program have family income of less than $50,000. Second,
Congress should make these programs tax free in order to encourage
savings and college attendance. Finally, for most families, these plans
simply represent the purchase of a service to be provided in the
future. The accounts are not liquid, and the funds are transferred from
the state directly to the college or university. The imposition of a
tax liability on earnings represents a substantial burden, because the
student is required to find other means of generating the funds to pay
the tax.
I am pleased to have this opportunity to join my colleagues in
introducing this bill which makes a college education easier to obtain.
______
By Mr. BOND:
S. 336. A bill to amend the Internal Revenue Code of 1986 to allow
use of cash accounting method for certain small businesses; to the
Committee on Finance.
Mr. BOND. Mr. President, I rise today to introduce a bill that
addresses an issue of growing concern to small businesses across the
nation--tax accounting methods. I am pleased to be working with our
colleague in the other body, Congressman Wally Herger, who is
introducing the companion to this legislation.
While this topic may lack the notoriety of some other tax issues
currently in the spotlight like tax-rate reductions, estate-tax repeal,
or elimination of the alternative minimum tax, it goes to the heart of
a business' daily operations--reflecting its income and expenses. And
because it is such a fundamental issue, one may ask: ``What's the big
deal? Hasn't this been settled long ago?'' Regrettably, efforts by the
Treasury Department and Internal Revenue Service (IRS) over the past
couple of years have muddied what many small business owners have long
seen as a settled issue.
To many small business owners, tax accounting simply means that they
record gross receipts when they receive cash and expenses when they
write a check for the various costs associated with operating a
business. The difference is income, which is subject to taxes. In its
simplest form, this is known as the ``cash receipts and disbursements''
method of accounting--or the ``cash method'' for short. It is easy to
understand, it is simple to undertake in daily business operations, and
for the vast majority of small enterprises, it matches their income
with the related expenses in a given year. Coincidentally, it's also
the method of accounting used by the Federal government to keep track
of the nearly $2 trillion in tax revenues it collects each year as well
as all of its expenditures for salaries and expenses, procurement, and
the cost of various government programs.
Unfortunately, what's good for the Federal government apparently is
not good enough for small businesses. In recent years, the IRS has
taken a different view with respect to small businesses on the cash
method. In too many cases, the IRS has asserted that a small business
should report its income when all events have occurred to establish the
business' right to receipt and the amount can reasonably be determined.
Similar principles are applied to determine when a business may
recognize an expense. This method of accounting is known as ``accrual
accounting.'' The reality of accrual accounting for a small business is
that it may be deemed to have income well before the cash is actually
received and an expense long after the cash is actually paid. As a
result, accrual accounting can create taxable income for a small
business that has yet to receive the cash necessary to pay the taxes.
While the IRS argues that the accrual method of accounting produces a
more accurate reflection of ``economic income,'' it also produces a
major headache for small enterprise. Few entrepreneurs have the time or
experience to undertake accrual accounting, which forces them to hire
costly accountants and tax preparers. By some estimates, accounting
fees can increase as much as 50 percent when accrual accounting is
required, excluding the cost of high-tech computerized accounting
systems that some businesses must install. For the brave few that try
to handle the accounting on their own, the accrual method often leads
to major mistakes, resulting in tax audits and additional costs for
professional help to sort the whole mess out--not to mention the
interest and penalties that the IRS may impose as a result of the
mistake.
To make matters even worse, the IRS focused on small service
providers who use some merchandise in the performance of their service.
In an e-mail sent to practitioners in my State of Missouri and in
Kansas on March 22, 1999, the IRS'' local district office took special
aim at the construction industry asserting that ``[t]axpayers in the
construction industry who are on the cash method of accounting may be
using an improper method. The cash method is permissible only if
materials are not an income producing factor.'' For those lucky service
providers, the IRS has asserted that the use of merchandise requires
the business to undertake an additional and even more onerous form of
bookkeeping--inventory accounting.
Let's be clear about the kind of taxpayer at issue here. It's the
home builder who by necessity must purchase wood, nails, dry wall, and
host of other items to provide the service of constructing a house.
Similarly, it's a painting contractor who will often purchase the paint
when he renders the
[[Page S1421]]
service of painting the interior of a house. These service providers
generally purchase materials to undertake a specific project and at its
end, little or no merchandise remains. They may even arrange for the
products to be delivered directly to their client.
Mr. President, if we thought that accrual accounting is complicated
and burdensome, imaging having to keep track of all the boards, nails,
and paint used in the home builder's and painter's jobs each year. And
it doesn't always stop at inventory accounting for these service
providers. Instead, the IRS has used it as the first step to imposing
overall accrual accounting--a one-two punch for the small service
provider when it comes to compliance burdens.
Even more troubling is the cost of an audit for these unsuspecting
service providers who have never known they were required to use
inventories or accrual accounting. According to a survey of
practitioners by the Padgett Business Services Foundation, audits of
businesses on the issue of merchandise used in the performance of
services resulted in tax deficiencies from $2,000 to $14,000, with an
average of $7,200. That's a steep price to pay for an accounting method
error that the IRS for years has never enforced.
The bill I'm introducing today--the Cash Accounting for Small
Business Act of 2001--addresses both of these issues and builds on the
legislation that I introduced in the 106th Congress. First, the bill
establishes a clear threshold for when small businesses may use the
cash method of accounting. Simply put, if a business has an average of
$5 million in annual gross receipts or less during the preceding three
years, it may use the cash method. Plain and simple--no complicated
formula; no guessing if you made the right assumptions and arrived at
the right answer. If the business exceeds the threshold, it may still
seek to establish, as under current law, that the cash method clearly
reflects its income.
Some may argue that this provision is unnecessary because section
448(b) and (c) of the Internal Revenue Code already provide a $5
million gross receipts test with respect to accrual accounting. That's
a reasonable position since many in Congress back in 1986 intended
section 448 to provide relief for small business taxpayers using the
cash method. Unfortunately, the IRS has twisted this section to support
its quest to force as many small businesses as possible into costly
accrual accounting. The IRS has construed section 448 to be merely a $5
million ceiling above which a business can never use the cash method.
My bill corrects this misinterpretation once and for all--if a business
has average gross receipts of $5 million or less, it is free to use
cash accounting.
Additionally, the bill indexes the $5 million threshold for inflation
so it will keep pace with price increases. As a result, small
businesses will not be forced into the accrual method merely because
their gross receipts increased due to inflation.
Second, for small service providers, the Cash Accounting for Small
Business Act exempts these taxpayers from inventory accounting if they
meet the general $5 million threshold. These businesses will be able to
deduct the expenses for such inventory that are actually consumed and
used in the operation of the business during that particular taxable
year. While the small service provider will still have to keep some
minimal records as to the merchandise used during the year, it will be
vastly more simple than having to comply with the onerous inventory
accounting rules currently in place in the tax code.
The $5 million threshold set forth in my bill is a common-sense
solution to an increasing burden for small businesses in this country,
which was recently highlighted by the IRS National Taxpayer Advocate.
In his 2001 Report to Congress, the Advocate noted that ``Small
business taxpayers may be burdened by having to maintain an accrual
method of accounting for no other purpose than tax reporting. Because
these taxpayers can be relatively unsophisticated about tax and
inventory accounting issues, they are likely to hire advisors to help
them comply with their tax obligations.'' Unfortunately, these higher
costs of recordkeeping and tax preparation take valuable capital away
from the business and hinder its ability to grow and produce jobs. The
Cash Accounting for Small Business Act takes a big step toward easing
those burdens and allowing small business owners to dedicate their time
and money to running successful enterprises--instead of filling out
government paperwork.
In addition, it sends a clear signal to the IRS: stop wasting scarce
resources forcing small businesses to adopt complex and costly
accounting methods when the benefit to the Treasury is simply a matter
of timing. Whether a small business uses the cash or accrual method or
inventory accounting or not, in the end, the government will still
collect the same amount of taxes--maybe not all this year, but very
likely early in the next year. What small business can go very long
without collecting what it is owed or paying its bills?
Last year, the Treasury Department's answer was to propose a $1
million threshold under which a small business could escape accrual
accounting and presumably inventories. While it is a step in the right
direction, it simply doesn't go far enough. Even ignoring inflation, if
a million dollar threshold were sufficient, why would Congress have
tried to enact a $5 million threshold 14 years ago? My bill completes
the job that the Clinton Treasury Department was unable or unwilling to
do.
More recently, the IRS issued a notice announcing that the agency has
temporarily changed its litigation position concerning the requirement
that certain taxpayers must use inventory and accrual accounting. Based
on losses in several court cases, the IRS has decided to back off on
taxpayers in construction businesses similar to those addressed by the
courts. For those taxpayers, the agency has turned down the fire, and I
applaud the IRS for its decision. The new litigation position, however,
does not solve the underlying statutory issues that led the IRS to
pursue these taxpayers in the first place, nor is it any assurance that
the litigation position will not be changed again once the IRS'' Chief
Counsel has completed its study of these issues. The Cash Accounting
for Small Businesses resolves this matter once and for all small
businesses giving them clear rules and certainty as they struggle to
keep their businesses running.
The legislation I introduce today is the companion to the bill that
Congressman Herger is introducing in the other body. Together with
Congressman Herger and the small business community, I expect to
continue the momentum that we started last year and achieve some much
needed relief from unnecessary compliance burdens and costs for
America's small businesses.
The call for tax simplification has been growing increasingly loud in
recent years, and this bill provides an excellent opportunity for us to
advance the ball well down the field. This is not a partisan issue;
it's a small business issue. And I urge my colleagues on both sides of
the aisle to join me in this common-sense legislation for the benefit
of America's small enterprises, which contribute so greatly to this
country's economic engine.
Mr. President, I ask unanimous consent to have printed in the Record,
the text of the bill and a description of its provisions.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 336
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 ``Cash Accounting for Small
Business Act of 2001''.
SEC. 2. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL
BUSINESS.
(a) Cash Accounting Permitted.--Section 446 of the Internal
Revenue Code of 1986 (relating to general rule for methods of
accounting) is amended by adding at the end the following new
subsection:
``(g) Small Business Taxpayers Permitted to Use Cash
Accounting Method Without Limitation.--
``(1) In general.--Notwithstanding any other provision of
this title, an eligible taxpayer shall not be required to use
an accrual method of accounting for any taxable year.
``(2) Eligible taxpayer.--For purposes of this subsection--
``(A) In general.--A taxpayer is an eligible taxpayer with
respect to any taxable year if--
[[Page S1422]]
``(i) for all prior taxable years beginning after December
31, 1999, the taxpayer (or any predecessor) met the gross
receipts test of subparagraph (B), and
``(ii) the taxpayer is not a tax shelter (as defined in
section 448(d)(3)).
``(B) Gross receipts test.--A taxpayer meets the gross
receipts test of this subparagraph for any prior taxable year
if the average annual gross receipts of the taxpayer (or any
predecessor) for the 3-taxable-year period ending with such
prior taxable year does not exceed $5,000,000. The rules of
paragraphs (2) and (3) of section 448(c) shall apply for
purposes of the preceding sentence.
``(C) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2001, the dollar
amount contained in subparagraph (B) shall be increased by an
amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting ``calendar year 2000'' for
``calendar year 1992'' in subparagraph (B) thereof.
If any amount as adjusted under this subparagraph is not a
multiple of $100,000, such amount shall be rounded to the
nearest multiple of $100,000.''.
(b) Clarification of Inventory Rules for Small Business.--
Section 471 of the Internal Revenue Code of 1986 (relating to
general rule for inventories) is amended by redesignating
subsection (c) as subsection (d) and by inserting after
subsection (b) the following new subsection:
``(c) Small Business Taxpayers Not Required to Use
Inventories.--
``(1) In general.--An eligible taxpayer shall not be
required to use inventories under this section for a taxable
year.
``(2) Treatment of taxpayers not using inventories.--If an
eligible taxpayer does not use inventories with respect to
any property for any taxable year beginning after December
31, 2000, such property shall be treated as a material or
supply which is not incidental.
``(3) Eligible taxpayer.--For purposes of this subsection,
the term `eligible taxpayer' has the meaning given such term
by section 446(g)(2).''.
(c) Indexing of Gross Receipts Test.--Section 448(c) of the
Internal Revenue Code of 1986 (relating to $5,000,000 gross
receipts test) is amended by adding at the end the following
new paragraph:
``(4) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2001, the dollar
amount contained in paragraph (1) shall be increased by an
amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, by substituting ``calendar year 2000'' for
``calendar year 1992'' in subparagraph (B) thereof.
If any amount as adjusted under this paragraph is not a
multiple of $100,000, such amount shall be rounded to the
nearest multiple of $100,000.''.
(d) Effective Date and Special Rules.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2000.
(2) Change in method of accounting.--In the case of any
taxpayer changing the taxpayer's method of accounting for any
taxable year under the amendments made by this section--
(A) such change shall be treated as initiated by the
taxpayer;
(B) such change shall be treated as made with the consent
of the Secretary of the Treasury; and
(C) the net amount of the adjustments required to be taken
into account by the taxpayer under section 481 of the
Internal Revenue Code of 1986 shall be taken into account
over a period (not greater than 4 taxable years) beginning
with such taxable year.
____
Cash Accounting for Small Business Act of 2001--Description of
Provisions
The bill amends section 446 of the Internal revenue Code to
provide a clear threshold for small businesses to use the
cash receipts and disbursements method of accounting, instead
of accrual accounting. To qualify, the business must have $5
million or less in average annual gross receipts based on the
preceding three years. Thus, even if the production,
purchase, or sale of merchandise is an income-producing
factor in the taxpayer's business, the taxpayer will not be
required to use an accrual method of accounting if the
taxpayer meets the average annual gross receipts test.
In addition, the bill provides that a taxpayer meeting the
average annual gross receipts test is not required to account
for inventories under section 471. The taxpayer will be
required to treat such inventory in the same manner as
materials or supplies that are not incidental. Accordingly,
the taxpayer may deduct the expenses for such inventory that
are actually consumed and used in the operation of the
business during that particular taxable year.
The bill indexes the $5 million average annual gross
receipts threshold for inflation. The cash-accounting safe
harbor will be effective for taxable years beginning after
December 31, 2000.
______
By Mr. DOMENICI:
S. 337. A bill to amend the Elementary and Secondary Education act of
1965 to assist State and local educational agencies in establishing
teacher recruitment centers, teacher internship programs, and mobile
professional development teams, and for other purposes; to the
Committee on Health, Education, Labor, and Pensions.
Mr. DOMENICI. Mr. President, I rise today with great pleasure to
introduce the Teacher Recruitment, Development, and Retention Act of
2001.
I want to begin with a quotation I recently came across that captures
the essence of teaching:
The mediocre teacher tells. The good teacher explains. the
superior teacher demonstrates. The great teacher inspires.
The point is simple, for our children to succeed we must ensure they
are taught by well-educated, competent, and qualified teachers.
I say this because it is a simple fact that in the future the
individuals who will succeed will be those who can read, write, and do
math. I firmly believe that a good education will help ensure a ticket
to the economic security of the middle class because almost no one
doubts the link between education and an individual's prospects.
However, one of the fundamental keys to providing our children with
the tools to succeed is the presence of qualified teachers. Nothing can
have a more positive impact on a child's learning than a knowledgeable
and skillful teacher. Thus, we must ensure there are not only enough
teachers, but enough teachers that possess the tools required to make
that positive impact on our children.
Teachers must not only be prepared when they are hired, but they must
remain armed with the latest technology and teaching tools for the
duration of their careers. Just think of the constant training and
testing doctors, police officers, and lawyers must endure throughout
their careers.
Before I touch upon the Teacher Recruitment, Development, and
Retention Act of 2001 in greater detail I would like to make a few
brief comments about K-12 education in New Mexico. New Mexico is a very
large and rural state with almost 20,000 teachers and nearly 330,000
public school students.
New Mexico's 89 school districts come in all shapes and sizes, for
instance, Albuquerque has over 85,000 students and Corona has only 92
students. However, each of these districts, large and small must all
have qualified teachers.
The Teacher Recruitment, Development, and Retention Act of 2001 seeks
to create several optional programs for states to facilitate teacher
recruitment development, and retention through grants awarded by the
Secretary of Education.
The first option would be the creation of Teacher Recruitment
Centers. These centers would serve as job banks/statewide
clearinghouses for the recruitment and placement of K-12 teachers. The
centers would also be responsible for creating programs to further
teacher recruitment and retention within the state.
The second option would encourage states to implement teacher
internships where newly hired teachers would participate in a teacher
internship in addition to any state or district student teaching
requirement. The internship would last one year and during that time
the teacher would be assigned a mentor/senior teacher for guidance and
support.
Finally, states would have the option of creating mobile professional
development teams. These teams would alleviate the need for teachers
and administrators that often have to travel great distances to attend
professional development programs by bringing these activities directly
to the local district or a centrally located regional site through
mobile professional development teams.
I believe the primary beneficiaries of mobile professional
development teams would be rural areas and the programs offered would
focus on any state or local requirements for licensure of teachers and
administrators, including certification and recertification.
Under the Teacher Recruitment, Development, and Retention Act of 2001
each program would be authorized at $50 million for fiscal year 2002
and such sums as may be necessary for each of the four succeeding
fiscal years.
In conclusion, I want to again say how pleased I am to introduce the
[[Page S1423]]
Teacher Recruitment, Development, and Retention Act of 2001 and I look
forward to working with my colleagues as we reauthorize the Elementary
and Secondary Education Act.
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. 337
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 ``Teacher Recruitment,
Development, and Retention Act of 2001''.
SEC. 2. TEACHER RECRUITMENT CENTERS.
Title II of the Elementary and Secondary Education Act of
1965 (20 U.S.C. 6601 et seq.) is amended--
(1) by redesignating part E as part H;
(2) by redesignating sections 2401 and 2402 as sections
2701 and 2702, respectively; and
(3) by inserting after part D the following:
``PART E--TEACHER RECRUITMENT CENTERS
``SEC. 2401. GRANTS.
``(a) In General.--The Secretary may make grants to State
educational agencies to establish and operate State teacher
recruitment centers.
``(b) Use of Funds.--An agency that receives a grant under
subsection (a) shall use the funds made available through the
grant to establish and operate a center that--
``(1) serves as a statewide clearinghouse for the
recruitment and placement of kindergarten, elementary school,
and secondary school teachers; and
``(2) establishes and carries out programs to improve
teacher recruitment and retention within the State.
``(c) Application.--To be eligible to receive a grant under
subsection (a), an agency shall submit an application to the
Secretary at such time, in such manner, and containing such
information as the Secretary may require.
``(d) Authorization of Appropriations.--There are
authorized to be appropriated to carry out this part
$50,000,000 for fiscal year 2002 and such sums as may be
necessary for each of fiscal years 2003 through 2006.''.
SEC. 3. TEACHER INTERNSHIPS.
Title II of the Elementary and Secondary Education Act of
1965 (20 U.S.C. 6601 et seq.), as amended by section 2, is
further amended by inserting after part E the following:
``PART F--TEACHER INTERNSHIPS
``SEC. 2501. GRANTS.
``(a) In General.--The Secretary may make grants to State
educational agencies and local educational agencies to
establish teacher internship programs.
``(b) Use of Funds.--An agency that receives a grant under
subsection (a) shall use the funds made available through the
grant to establish teacher internship programs in which a new
teacher employed in the State or district involved--
``(1) is hired on a probationary basis for a 1-year period;
and
``(2) is required to participate in an internship during
that year, under the supervision of a mentor teacher, in
addition to meeting any State or local requirement concerning
student teaching.
``(c) Application.--To be eligible to receive a grant under
subsection (a), an agency shall submit an application to the
Secretary at such time, in such manner, and containing such
information as the Secretary may require.
``(d) Authorization of Appropriations.--There are
authorized to be appropriated to carry out this part
$50,000,000 for fiscal year 2002 and such sums as may be
necessary for each of fiscal years 2003 through 2006.''.
SEC. 4. MOBILE PROFESSIONAL DEVELOPMENT TEAMS.
Title II of the Elementary and Secondary Education Act of
1965 (20 U.S.C. 6601 et seq.), as amended by section 3, is
further amended by inserting after part F the following:
``PART G--MOBILE PROFESSIONAL DEVELOPMENT TEAMS
``SEC. 2601. GRANTS.
``(a) In General.--The Secretary may make grants to State
educational agencies to carry out professional development
activities through mobile professional development teams.
``(b) Use of Funds.--An agency that receives a grant under
subsection (a) shall use the funds made available through the
grant to carry out, directly or by grant or contract with
entities approved by the agency, activities that--
``(1) at a minimum, provide professional development with
respect to State licensing and certification (including
recertification) requirements of teachers and administrators;
and
``(2) are provided by mobile professional development
teams, in the school district in which the teachers and
administrators are employed, or at a centrally located
regional site.
``(c) Application.--To be eligible to receive a grant under
subsection (a), an agency shall submit an application to the
Secretary at such time, in such manner, and containing such
information as the Secretary may require.
``(d) Priority.--In awarding grants under this section, the
Secretary shall give priority to agencies proposing to carry
out professional development activities through mobile
professional development teams that will primarily operate in
rural areas.
``(e) Authorization of Appropriations.--There are
authorized to be appropriated to carry out this part
$50,000,000 for fiscal year 2002 and such sums as may be
necessary for each of fiscal years 2003 through 2006.''.
______
By Mr. ENSIGN (for himself and Mr. Reid):
S. 338. A bill to protect amateur athletics and combat illegal sports
gambling; to the Committee on the Judiciary.
Mr. REID. Mr. President, today I join my colleague from Nevada,
Senator Ensign, in introducing bipartisan legislation aimed at
curtailing illegal gambling in college sports. The bill we are
introducing will have a direct and immediate impact on the growing
national problem of illegal gambling in college sports.
Illegal gambling in college sports is a growing phenomenon. It is a
problem not only in our college campuses and dorm rooms but is
spreading throughout the country. While we have laws on our books
prohibiting this activity, they seem to be having little impact.
Last year there were several legislative efforts aimed at addressing
this problem. I was fortunate last year to work on a similar bill which
had the support of Senators Torricelli, Baucus, and Lincoln and former
Senators Bryan and Robb. Some suggested enacting a prohibition on all
forms of sports wagering--even in States where it is legal and
regulated. Such a proposal is an affront to States' rights and more
importantly, does not address the real problem--illegal gambling.
Indeed, it is like shutting down the Bank of America in order to
eliminate loan sharking. I have a pretty good understanding of the many
issues involving gaming. Prior to my service in the Senate I chaired
the Nevada Gaming Commission. The Commission was responsible for
regulating all forms of Nevada's legal gaming industry. Gaming succeeds
in Nevada not despite regulation but because of regulation.
It is an all-cash industry. Absent regulation, it invites mischief
and criminal wrongdoing. The National gambling Impact Study Commission
estimates that as much as $380 billion is wagered illegally every year.
By contrast, all sports wagers in Nevada were less than 1 percent of
illegal wagers, with college wagers only one-third of the State total.
While there has been disagreement over the appropriate policy
response to illegal gambling on college sports, there is agreement that
something must be done. The Ensign-Reid bill we are introducing today
takes affirmative steps to immediately address illegal gambling on
college sports. It establishes a task force on illegal wagering on
collegiate sporting events at the Department of Justice.
The task force is directed to enforce Federal laws prohibiting
gambling related to college sports and to report to Congress annually
on the number of prosecutions and convictions obtained. It doubles the
penalties for illegal sports gambling. Our bill also addresses the
growing trend of gambling by minors by directing the National Institute
of Justice to conduct a study on this disturbing trend.
It requires the Attorney General to conduct a study of illegal
college sports gambling. Our legislation answers a concern raised by
the NCAA regarding illegal gambling on college campuses. The National
Gambling Impact Study Commission's final report found widespread
illegal gambling by student athletes despite NCAA regulations
prohibiting such activities. The commission urged the NCAA to do more.
The NCAA has failed to take any action so our bill does.
Just as schools now report on incidents of drug and alcohol abuse on
their campuses they will now provide similar data on illegal wagering.
Schools will be required to coordinate their anti-gambling programs and
submit an annual report to the Secretary of Education. In addition to
reporting on incidents of illegal gambling activity on their campuses,
schools will be required to provide a statement of policy regarding
illegal gambling.
Finally, our bill includes a section on personal responsibility.
Students receiving athletic-related aid shall be deemed ineligible for
such aid if it is
[[Page S1424]]
determined that that student engaged in illegal gambling activity.
While this is a taught measure, if the NCAA is serious about addressing
this problem, we would hope they could join us in supporting a real
solution. Schools will be required to coordinate their efforts to
reduce illegal gambling on campuses.
I believe the problems of illegal gambling on college sporting events
is very real. I believe it is growing. No one knows the real extent of
this problem. No one knows what is being done to combat this at the
Federal level or by our Nation's institutions of higher learning. The
NCAA has chosen not to address this problem. To date, their combined
strategy of finger pointing, use of red herring and outright denial has
left us with little to show in terms of addressing this problem. Our
nation's students and schools are being ill-served by this beleaguered
association that at times seems more interested in signing billion
dollar broadcasting contracts than ensuring the integrity of the
sporting events they sanction.
Our bipartisan legislation takes significant and meaningful steps
toward cleaning up the state of affairs with collegiate sports. I urge
my colleagues join us in committing to address the problem of illegal
gambling in college sports.
______
By Mr. WYDEN (for himself, Mr. Frist, Mr. Sessions, Mr. Breaux,
Ms. Landrieu, and Mr. Bayh):
S. 339. A bill to provide for improved educational opportunities in
rural schools and districts, and for other purposes; to the Committee
on Health, Education, Labor, and Pensions.
Mr. WYDEN. Mr. President, if you are one of the millions of rural
school children who ride buses 2.9 billion miles every year, if you
attend school in one of the thousands of rural schools that have no
school library or no classroom computers, if one of the buildings at
your school is in serious disrepair, or if you are sharing a few 30
year-old textbooks with the other students in your class, then you
probably feel like you are going to school in an education sacrifice
zone.
Our country spends less than a quarter of our Nation's education
dollars to educate approximately half of our nation's students. You
don't have to be a math whiz to know that the numbers just don't add
up. The students who are short-changed often live in rural areas.
Thousands of rural and small schools across our nation face the
daunting mission of educating almost half of America's children.
Increasingly, these schools are underfunded, overwhelmed, and
overlooked. While half of the nation's students are educated in rural
and small public schools, they only receive 23 percent of Federal
education dollars; 25 percent of State education dollars; and 19
percent of local education dollars.
We all grew up thinking that the ``three R's'' were Reading, Writing,
and Arithmetic. Unfortunately for our rural school children, the
``three R's'' are too often run-down classrooms, insufficient
resources, and really over-worked teachers.
The bill I am introducing with Senators Frist and Sessions, the Rural
Education Development Initiative, REDI, would provide funding to 5,400
rural school districts that serve 6.5 million students--a short-term
infusion of funds that will allow rural schools and their students to
make substantial strides forward.
Local education agencies would be eligible for REDI funding if they
are either ``rural'', school locale code of 6, 7, or 8, and have a
school-age population, ages 5-17, with 15 percent or more of the kids
are from families with incomes below the poverty line; or ``small''--
student population of 800 or less and a student population, ages 5-17,
with 15 percent or more of the kids are from families with incomes
below the poverty line. In Oregon, among the schools eligible for REDI
funding would be Jewell High School in Seaside, Burnt River Elementary
in Unity, Gaston High School in Gaston, and Mari-Lynn Elementary School
in Lyons, Oregon.
Like the Education Flexibility Act of 1999, Ed-Flex, I authored with
Senator Frist last Congress, REDI is voluntary--states and school
districts could choose to participate in the program. Both Ed-Flex and
REDI are designed to provide states and districts with flexibility they
need so they can target their local priorities.
Rural school districts and schools also find it more difficult to
attract and retain qualified teachers, especially in Special Education,
Math, and Science. Consequently, teachers in rural schools are almost
twice as likely to provide instruction in two or more subjects than
their urban counterparts. The History teacher may be teaching Math and
Science without any formal training or experience. Rural teachers also
tend to be younger, less experienced, and receive less pay than their
urban and suburban counterparts. Worse yet, rural school teachers are
less likely to have the high quality professional development
opportunities that current research strongly suggests all teachers
desperately need.
Limited resources also mean fewer course offerings for students in
rural and small schools. Consequently, courses are designed for the
kids in the middle. So, students at either end of the academic spectrum
miss out. Additionally, fewer rural students who dropout ever return to
complete high school, and fewer rural higher school graduates go on to
college.
On another note, recent research on brain development clearly shows
the critical nature of early childhood education, yet rural schools are
less likely to offer even kindergarten classes, let alone earlier
educational opportunities.
To make matters worse, many of our rural areas are also plagued by
persistent poverty, and, as we know, high-poverty schools have a much
tougher time preparing their students to reach high standards of
performance on state and national assessments. Data from the National
Assessment of Educational Progress consistently show large gaps between
the achievement of students in high-poverty schools and students in
low-poverty schools.
Our legislation will provide rural students with greater learning
opportunities by putting more computers in classrooms, expanding
distance learning opportunities, providing academic help to students
who have fallen behind, and making sure that every class is taught by a
highly qualified teacher. I've heard it said that this will be the
Education Congress, but we have much to do before we earn that title.
It's time to show that we when it comes to education, we won't leave
anyone behind, and REDI will give children from rural and small
communities more of the educational opportunities they deserve.
I ask unanimous consent that my bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 339
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 ``Rural Education Development
Initiative for the 21st Century Act.''
SEC. 2. PURPOSE.
The purpose of this Act is to provide rural school students
in the United States with increased learning opportunities.
SEC. 3. FINDINGS.
Congress makes the following findings:
(1) While there are rural education initiatives identified
at the State and local level, no Federal education policy
focuses on the specific needs of rural school districts and
schools, especially those that serve poor students.
(2) The National Center for Educational Statistics (NCES)
reports that while 46 percent of our Nation's public schools
serve rural areas, they only receive 22 percent of the
nation's education funds annually.
(3) A critical problem for rural school districts involves
the hiring and retention of qualified administrators and
certified teachers (especially in Special Education, Science,
and Mathematics). Consequently, teachers in rural schools are
almost twice as likely to provide instruction in two or more
subjects than teachers in urban schools. Rural schools also
face other tough challenges, such as shrinking local tax
bases, high transportation costs, aging buildings, limited
course offerings, and limited resources.
(4) Data from the National Assessment of Educational
Progress (NAEP) consistently shows large gaps between the
achievement of students in high-poverty schools and those in
other schools. High-poverty schools will face special
challenges in preparing their students to reach high
standards of performance on State and national assessments.
SEC. 4. DEFINITIONS.
In this Act:
(1) Elementary school; local educational agency; secondary
school; state
[[Page S1425]]
educational agency.--The terms ``elementary school'', ``local
educational agency,'' ``secondary school'', 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) Eligible local educational agency.--The term ``eligible
local educational agency'' means a local educational agency
that serves--
(A) a school age population 15 percent or more of whom are
from families with incomes below the poverty line; and
(B)(i) a school locale code of 6, 7, 8; or
(ii) a school age population of 800 or fewer students.
(3) Rural area.--The term ``rural area'' includes the area
defined by the Department of Education using school local
codes 6, 7, and 8.
(4) Poverty line.--The term ``poverty line'' means the
poverty line (as defined by the Office of Management and
Budget, and revised annually in accordance with section
673(2) of the Community Services Block Grant Act (42 U.S.C.
9902(2))) applicable to a family of the size involved.
(5) School locale code.--The term ``school locale code''
has the meaning as defined by the Department of Education.
(6) School age population.--The term ``School age
population'' means the number of students aged 5 through 17.
(7) Secretary.--The term ``Secretary'' means the Secretary
of Education.
SEC. 5. PROGRAM AUTHORIZED.
(a) Reservation.--From amounts appropriated under section 9
for a fiscal year the Secretary shall reserve 0.5 percent to
make awards to elementary or secondary schools operated or
supported by the Bureau of Indian Affairs to carry out the
purpose of this Act.
(b) Grants to States.--
(1) In general.--From amounts appropriated under section 9
that are not reserved under subsection (a) for a fiscal year,
the Secretary shall award grants to State educational
agencies that have applications approved under section 7 to
enable the State educational agencies to award grants to
eligible local educational agencies for local authorized
activities described in subsection (c).
(2) Formula.--
(A) In general.--Each State educational agency shall
receive a grant under this section in an amount that bears
the same relation to the amount of funds appropriated under
section 9 that are not reserved under subsection (a) for a
fiscal year as the school age population served by eligible
local educational agencies in the State bears to the school
age population served by eligible local educational agencies
in all States.
(B) Data.--In determining the school age population under
subparagraph (A) the Secretary shall use the most recent date
available from the Bureau of the Census.
(3) Direct awards to local educational agencies.--If a
State educational agency elects not to participate in the
program under this Act or does not have an application
approved under section 7, the Secretary may award, on a
competitive basis, the amount the State educational agency is
eligible to receive under paragraph (2) directly to eligible
local educational agencies in the State.
(4) Matching requirement.--Each eligible local educational
agency that receives a grant under this Act shall contribute
resources with respect to the local authorized activities to
be assisted, in cash or in kind, from non-Federal sources, in
an amount equal to the Federal funds awarded under the grant.
(c) Local Authorized Activities.--Grant funds awarded to
local educational agencies under this Act shall be used for--
(1) for local educational technology efforts as established
under section 6844 of Title 20, United States Code;
(2) for professional development activities designed to
prepare those teachers teaching out of their primary subject
area;
(3) for academic enrichment programs established under
section 10204 of Title 20 in United States Code;
(4) innovative academic enrichment programs related to the
educational needs of students at-risk of academic failure,
including remedial instruction in one or more of the core
subject areas of English, Mathematics, Science, and History;
or
(4) activities to recruit and retain qualified teachers in
Special Education, Math, and Science.
(d) Relation to Other Federal Funding.--Funds received
under this Act by a State educational agency or an eligible
local educational agency shall not be taken into
consideration in determining the eligibility for, or amount
of, any other Federal funding awarded to the agency.
SEC. 6. STATE DISTRIBUTION OF FUNDS.
(a) Award Basis.--A State educational agency shall award
grants to eligible local educational agencies according to a
formula or competitive grant program developed by the State
educational agency and approved by the Secretary.
(b) First Year.--For the first year that a State
educational agency receives a grant under this Act, the State
educational agency--
(1) shall use not less than 99 percent of the grant funds
to award grants to eligible local educational agencies in the
State; and
(2) may use not more than 1 percent for State activities
and administrative costs and technical assistance related to
the program.
(c) Succeeding Years.--For the second and each succeeding
year that a State educational agency receives a grant under
this Act, the State educational agency--
(1) shall use not less than 99.5 percent of the grant funds
to award grants to eligible local educational agencies in the
State; and
(2) may use not more than 0.5 percent of the grant funds
for State activities and administrative costs related to the
program.
SEC. 7. APPLICATIONS.
Each State educational agency, or local educational agency
eligible for a grant under section 5(b)(3), that desires a
grant under this Act shall submit an application to the
Secretary at such time, in such manner, and accompanied by
such information as the Secretary may require.
SEC. 8. REPORTS; ACCOUNTABILITY; STUDY.
(a) State Reports.--
(1) Contents.--Each State educational agency that receives
a grant under this Act shall provide an annual report to the
Secretary. The report shall describe--
(A) the method the State education agency used to award
grants to eligible local educational agencies under this Act;
(B) how eligible local educational agencies used funds
provided under this Act;
(C) how the State educational agency provided technical
assistance for an eligible local educational agency that did
not meet the goals and objectives described in subsection
(c)(3); and
(D) how the State educational agency took action against an
eligible local educational agency if the local educational
agency failed, for 2 consecutive years, to meet the goals and
objectives described in subsection (c)(3).
(2) Availability.--The Secretary shall make the annual
State reports received under paragraph (1) available for
dissemination to Congress, interested parties (including
educators, parents, students, and advocacy and civil rights
organizations), and the public.
(b) Local Educational Agency Reports.--Each eligible local
educational agency that receives a grant under section
5(b)93) shall provide an annual report to the Secretary. The
report shall describe how the local educational agency used
funds provided under this Act and how the local educational
agency coordinated funds received under this Act with other
Federal, State, and local funds.
(c) Report to Congress.--The Secretary shall prepare and
submit to Congress an annual report. The report shall
describe--
(1) the methods the State educational agencies used to
award grants to eligible local educational agencies under
this Act;
(2) how eligible local educational agencies used funds
provided under this Act; and
(3) the progress made by State educational agencies and
eligible local educational agencies receiving assistance
under this Act in meeting specific, annual, measurable
performance goals and objectives established by such agencies
for activities assisted under this Act.
(d) Accountability.--The Secretary, at the end of the third
year that a State educational agency participates in the
program assisted under this Act, shall permit only those
State educational agencies that met their performance goals
and objectives, for two consecutive years, to continue to
participate in the program.
(e) Study.--The Comptroller General of the United States
shall conduct a study regarding the impact of assistance
provided under this Act on student achievement. The
Controller General shall report the results of the study to
Congress.
SEC. 9. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this
Act $300,000,000 for each of the fiscal years 2002 through
2005.
____________________