[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.

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