[Congressional Record Volume 147, Number 63 (Wednesday, May 9, 2001)]
[Senate]
[Pages S4591-S4612]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mrs. FEINSTEIN (for herself and Mr. Gregg):
S. 848. A bill to amend title 18, United States Code, to limit the
misuse of social security numbers, to establish criminal penalties for
such misuse, and for other purposes; to the Committee on the Judiciary.
Mrs. FEINSTEIN. Mr. President, I am pleased, along with Senator
Gregg, to introduce the ``Social Security Number Misuse Prevention
Act.'' This legislation combats identity theft by making it harder for
criminals to steal another person's Social Security number, our de
facto national identifier.
The United States faces a growing identity theft crisis. The Federal
Bureau of Investigation estimates 350,000 cases of identity theft occur
each year. That's one case every two minutes.
The Federal Trade Commission, FTC, reports that identity theft is the
fastest growing crime in the country. If recent trends continue,
reports of identity theft to the FTC will double between 2000 and 2001,
to over 60,000 cases.
[[Page S4592]]
Fully 40 percent of all consumer fraud complaints received by the FTC
in the first three months of 2001 involved identity theft.
Unfortunately, the State most affected by these complaints is
California. Fully 17 percent of the identity theft complaints the FTC
received this past winter came from my home state.
What is identity theft? Identity theft occurs when one person uses
another person's Social Security number, birth date, driver's license
number, or other identifying information to obtain credit cards, car
loans, phone plans or other services in the victim's name.
Identity thieves can get personal information in a myriad of ways,
stealing wallets and purses containing identification cards, using
personal information found on the Internet, stealing mail, including
pre-approved credit offers and credit statements, fraudulently
obtaining credit reports or getting personnel records at work.
Of all sources of identity theft, the most common trigger of the
crime is the misappropriation of a person's Social Security number.
Reports to the Social Security Administration of the Social Security
number misuse have increased from 7,868 in 1997 to 46,839 in 2000, an
astonishing increase of over 500 percent.
Let me give some examples of victims whose identities were stolen
after a thief got hold of their Social Security number: An identity
theft ring in Riverside County allegedly bilked eight victims of
$700,000. The thieves stole personal information of employees at a
large phone company and drained their on-line stock accounts. One
employee reportedly had $285,000 taken from his account when someone
was able to access his account by supplying the employee's name and
social Security number. Three youths robbed a young woman on a San
Francisco MUNI bus. The thieves stole her driver's license and social
security card. While the victim was traveling over the Christmas
holiday, the thieves represented themselves as her and drained her bank
accounts, applied for cell phones, credit cards and other accounts.
They also redirected her mail to a general delivery post to the
Tenderloin. Amy Boyer, a 20 year-old dental assistant from Maine was
killed in 1999 by a stalker who bought her Social Security number off
the Internet for $45, and then used it to locate her work address.
Michelle Brown of Los Angeles, California, had her Social Security
number stolen in 1999, and it was used to charge $50,000 including a
$32,000 truck, a $5,000 liposuction operation, and a year-long
residential lease. While assuming the victim's name, the perpetrator
also became the object of an arrest warrant for drug smuggling in
Texas.
This bill proposes concrete measures to get Social Security numbers
beyond the reach of criminals.
The bill prohibits anyone from selling or displaying a Social
Security number to the general public without the Social Security
number holder's consent.
No longer will identity thieves or stalkers, like the man who killed
Amy Boyer, be able to log anonymously onto a website and obtain another
person's Social Security number. Information brokers will no longer be
able to sell Social Security numbers to anyone who asks for a nominal
fee.
The bill also requires Federal, State, and local governments to take
affirmative steps to protect Social Security numbers. Before giving out
records such as bankruptcy filings, liens, or birth certificates to the
general public, government entities will need to redact the Social
Security number.
Thus, identity thieves can no longer mine Social Security numbers
from county clerks' offices or state records offices.
In addition, the bill prohibits States from using Social Security
numbers as identifying numbers on drivers licenses or printing Social
Security numbers on checks.
Privacy advocates contend half of all identity theft cases stem from
lost or stolen wallets. Public entities should not put individuals at
risk by requiring them to carry cards which contain Social Security
numbers on them.
In addition, the bill will empower individuals who wish to keep their
Social Security numbers confidential and out of public circulation.
Companies will be prohibited from denying an individual a good or
service if he refuses to give out his Social Security number.
In recognition of the needs of the business community, this
legislation permits businesses to use Social Security numbers with
appropriate safeguards for internal uses or in transactions with other
businesses.
I want to state up front that the business-to-business exception is
an area of significant compromise. As a matter of policy, I believe
that a Social Security number, like other sensitive elements of
personal information, should be under the control of the person to whom
it belongs.
I also understand that many businesses, unfortunately, rely
extensively on Social Security numbers to conduct a range of
transactions. Some of these transactions include checking databases to
ensure the identity of a customer or purchaser.
The cost of changing to other identifiers can be significant. One
California health care company, for example, conducted an internal
study on how much it would cost to switch from Social Security numbers
to another customer identifier. The price tag was over $25 million.
The bill directs the Attorney General to implement rules to permit
legitimate business-to-business transactions, but prevent abuse. The
Attorney general must consider several factors in the rulemaking: (i)
The need for appropriate safeguards so that employees cannot
misappropriate Social Security numbers, and (ii) The need to implement
procedures to prevent identity thieves, stalkers, and others with ill
intent from posing as legitimate businesses to obtain Social Security
numbers.
In drafting the rule, the Attorney General must ensure that any
business-to-businesss exception is consistent with other privacy laws,
including Gramm-Leach-Bliley.
Thus, the bill would be consistent with a district court ruling
issued last week that recognized limits on financial institutions' use
of Social Security numbers. In Individual Reference Services Group v.
Federal Trade Commission, the court held Gramm-Leach-Bliley requires
banks to give consumers the opportunity to opt-out before their Social
Security number is sold. I would like to submit into the record a copy
of a Los Angeles Times article describing the decision.
I would like to thank Senator Gregg for working so hard with me to
draft this legislation. I am pleased to report that this bill has
garnered the support of the Attorney General of California, Bill
Lockyer, Los Angeles County Sheriff Lee Baca, Crimes Victims United of
California, the Los Angeles Coalition of Crime Victim Advocates, and
the Doris Tate Crime Victims Bureau.
Over 350,000 people a year are victims of identity theft, and the
numbers continue to grow. Passing the ``Social Security Number Misuse
Prevention Act'' will help curb this crime by restricting criminal
access to Social Security numbers.
I look forward to working with my colleagues in getting this common-
sense bill enacted into law.
I ask unanimous consent that the text of the bill and the article to
which I referred be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 848
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 ``Social
Security Number Misuse Prevention Act of 2001''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Prohibition of the display, sale, or purchase of social
security numbers.
Sec. 4. No prohibition with respect to public records.
Sec. 5. Rulemaking authority of the Attorney General.
Sec. 6. Treatment of social security numbers on government documents.
Sec. 7. Limits on personal disclosure of a social security number for
consumer transactions.
Sec. 8. Extension of civil monetary penalties for misuse of a social
security number.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) The inappropriate display, sale, or purchase of social
security numbers has contributed to a growing range of
illegal activities,
[[Page S4593]]
including fraud, identity theft, and, in some cases, stalking
and other violent crimes.
(2) While financial institutions, health care providers,
and other entities have often used social security numbers to
confirm the identity of an individual, the general display to
the public, sale, or purchase of these numbers has been used
to commit crimes, and also can result in serious invasions of
individual privacy.
(3) The Federal Government requires virtually every
individual in the United States to obtain and maintain a
social security number in order to pay taxes, to qualify for
social security benefits, or to seek employment. An
unintended consequence of these requirements is that social
security numbers have become tools that can be used to
facilitate crime, fraud, and invasions of the privacy of the
individuals to whom the numbers are assigned. Because the
Federal Government created and maintains this system, and
because the Federal Government does not permit individuals to
exempt themselves from those requirements, it is appropriate
for the Federal Government to take steps to stem the abuse of
this system.
(4) A social security number does not contain, reflect, or
convey any publicly significant information or concern any
public issue. The display, sale, or purchase of such numbers
in no way facilitates uninhibited, robust, and wide-open
public debate, and restrictions on such display, sale, or
purchase would not affect public debate.
(5) No one should seek to profit from the display, sale, or
purchase of social security numbers in circumstances that
create a substantial risk of physical, emotional, or
financial harm to the individuals to whom those numbers are
assigned.
(6) Consequently, this Act offers each individual that has
been assigned a social security number necessary protection
from the display, sale, and purchase of that number in any
circumstance that might facilitate unlawful conduct.
SEC. 3. PROHIBITION OF THE DISPLAY, SALE, OR PURCHASE OF
SOCIAL SECURITY NUMBERS.
(a) Prohibition.--
(1) In general.--Chapter 47 of title 18, United States
Code, is amended by inserting after section 1028 the
following:
``Sec. 1028A. Prohibition of the display, sale, or purchase
of social security numbers
``(a) Definitions.--In this section:
``(1) Display.--The term `display' means to intentionally
communicate or otherwise make available (on the Internet or
in any other manner) to the general public an individual's
social security number.
``(2) Person.--The term `person' means any individual,
partnership, corporation, trust, estate, cooperative,
association, or any other entity.
``(3) Purchase.--The term `purchase' means providing
directly or indirectly, anything of value in exchange for a
social security number.
``(4) Sale.--The term `sale' means obtaining, directly or
indirectly, anything of value in exchange for a social
security number.
``(5) State.--The term `State' means any State of the
United States, the District of Columbia, Puerto Rico, the
Northern Mariana Islands, the United States Virgin Islands,
Guam, American Samoa, and any territory or possession of the
United States.
``(b) Limitation on Display.--Except as provided in section
1028B, no person may display any individual's social security
number to the general public without the affirmatively
expressed consent of the individual.
``(c) Limitation on Sale or Purchase.--Except as otherwise
provided in this section, no person may sell or purchase any
individual's social security number without the affirmatively
expressed consent of the individual.
``(d) Prohibition of Wrongful Use as Personal
Identification Number.--No person may obtain any individual's
social security number for purposes of locating or
identifying an individual with the intent to physically
injure, harm, or use the identity of the individual for any
illegal purpose.
``(e) Prerequisites for Consent.--In order for consent to
exist under subsection (b) or (c), the person displaying or
seeking to display, selling or attempting to sell, or
purchasing or attempting to purchase, an individual's social
security number shall--
``(1) inform the individual of the general purpose for
which the number will be used, the types of persons to whom
the number may be available, and the scope of transactions
permitted by the consent; and
``(2) obtain the affirmatively expressed consent
(electronically or in writing) of the individual.
``(f) Exceptions.--
``(1) In general.--Except as provided in subsection (d),
nothing in this section shall be construed to prohibit or
limit the display, sale, or purchase of a social security
number--
``(A) permitted, required, or excepted, expressly or by
implication, under section 205(c)(2), 1124A(a)(3), or 1141(c)
of the Social Security Act (42 U.S.C. 405(c)(2), 1320a-
3a(a)(3), and 1320b-11(c)), section 7(a)(2) of the Privacy
Act of 1974 (5 U.S.C. 552a note), section 6109(d) of the
Internal Revenue Code of 1986, or section 6(b)(1) of the
Professional Boxing Safety Act of 1996 (15 U.S.C.
6305(b)(1));
``(B) for a public health purpose, including the protection
of the health or safety of an individual in an emergency
situation;
``(C) for a national security purpose;
``(D) for a law enforcement purpose, including the
investigation of fraud, as required under subchapter II of
chapter 53 of title 31, United States Code, and chapter 2 of
title I of Public Law 91-508 (12 U.S.C. 1951-1959), and the
enforcement of a child support obligation;
``(E) if the display, sale, or purchase of the number is
for a business-to-business use, including, but not limited
to--
``(i) the prevention of fraud (including fraud in
protecting an employee's right to employment benefits);
``(ii) the facilitation of credit checks or the
facilitation of background checks of employees, prospective
employees, and volunteers;
``(iii) compliance with any requirement related to the
social security program established under title II of the
Social Security Act (42 U.S.C. 401 et seq.); or
``(iv) the retrieval of other information from, or by,
other businesses, commercial enterprises, or private
nonprofit organizations,
except that, nothing in this subparagraph shall be construed
as permitting a professional or commercial user to display or
sell a social security number to the general public;
``(F) if the transfer of such a number is part of a data
matching program under the Computer Matching and Privacy
Protection Act of 1988 (5 U.S.C. 552a note) or any similar
computer data matching program involving a Federal, State, or
local agency; or
``(G) if such number is required to be submitted as part of
the process for applying for any type of Federal, State, or
local government benefit or program.
``(g) Civil Action in United States District Court;
Damages; Attorney's Fees and Costs.--
``(1) In general.--Any individual aggrieved by any act of
any person in violation of this section may bring a civil
action in a United States district court to recover--
``(A) such preliminary and equitable relief as the court
determines to be appropriate; and
``(B) the greater of--
``(i) actual damages;
``(ii) liquidated damages of $2,500; or
``(iii) in the case of a violation that was willful and
resulted in profit or monetary gain, liquidated damages of
$10,000.
``(2) Statute of limitations.--No action may be commenced
under this subsection more than 3 years after the date on
which the violation was or should reasonably have been
discovered by the aggrieved individual.
``(3) Nonexclusive remedy.--The remedy provided under this
subsection shall be in addition to any other remedy available
to the individual.
``(h) Civil Penalties.--
``(1) In general.--Any person who the Attorney General
determines has violated this section shall be subject, in
addition to any other penalties that may be prescribed by
law--
``(A) to a civil penalty of not more than $5,000 for each
such violation; and
``(B) to a civil penalty of not more than $50,000, if the
violations have occurred with such frequency as to constitute
a general business practice.
``(2) Determination of violations.--Any willful violation
committed contemporaneously with respect to the social
security numbers of 2 or more individuals by means of mail,
telecommunication, or otherwise, shall be treated as a
separate violation with respect to each such individual.
``(3) Enforcement procedures.--The provisions of section
1128A of the Social Security Act (42 U.S.C. 1320a-7a), other
than subsections (a), (b), (f), (h), (i), (j), (m), and (n)
and the first sentence of subsection (c) of such section, and
the provisions of subsections (d) and (e) of section 205 of
such Act (42 U.S.C. 405) shall apply to a civil penalty under
this subsection in the same manner as such provisions apply
to a penalty or proceeding under section 1128A(a) of such Act
(42 U.S.C. 1320a-7a(a)), except that, for purposes of this
paragraph, any reference in section 1128A of such Act (42
U.S.C. 1320a-7a) to the Secretary shall be deemed to be a
reference to the Attorney General.''.
(2) Conforming amendment.--The chapter analysis for chapter
47 of title 18, United States Code, is amended by inserting
after the item relating to section 1028 the following:
``1028A. Prohibition of the display, sale, or purchase of social
security numbers.''.
(b) Criminal Sanctions.--Section 208(a) of the Social
Security Act (42 U.S.C. 408(a)) is amended--
(1) in paragraph (8), by inserting ``or'' after the
semicolon; and
(2) by inserting after paragraph (8) the following new
paragraphs:
``(9) except as provided in paragraph (5) of section
1028A(a) of title 18, United States Code, knowingly and
willfully displays, sells, or purchases (as those terms are
defined in paragraph (1) of such section) any individual's
social security number (as defined in such paragraph) without
the affirmatively expressed consent of that individual after
having met the prerequisites for consent under paragraph (4)
of such section, electronically or in writing, with respect
to that individual; or
``(10) obtains any individual's social security number for
the purpose of locating or identifying the individual with
the intent to injure or to harm that individual, or to use
the identity of that individual for an illegal purpose;''.
[[Page S4594]]
(c) Effective Date.--Section 1028A of title 18, United
States Code (as added by subsection (a)), and section 208 of
the Social Security Act (42 U.S.C. 408) (as amended by
subsection (b)) shall take effect 30 days after the date on
which the final regulations promulgated under section 5(b)
are published in the Federal Register.
SEC. 4. NO PROHIBITION WITH RESPECT TO PUBLIC RECORDS.
(a) Public Records Exception.--
(1) In general.--Chapter 47 of title 18, United States Code
(as amended by section 3(a)(1)), is amended by inserting
after section 1028A the following:
``Sec. 1028B. No prohibition of the display, sale, or
purchase of social security numbers included in public
records
``(a) In General.--Nothing in section 1028A shall be
construed to prohibit or limit the display, sale, or purchase
of any public record which includes a social security number
that--
``(1) is incidentally included in a public record, as
defined in subsection (d);
``(2) is intended to be purchased, sold, or displayed
pursuant to an exception contained in section 1028A(f);
``(3) is intended to be purchased, sold, or displayed
pursuant to the consent provisions of subsections (b), (c),
and (e) of section 1028A; or
``(4) includes a redaction of the nonincidental occurrences
of the social security numbers when sold or displayed to
members of the general public.
``(b) Agency Requirements.--Each agency in possession of
documents that contain social security numbers which are
nonincidental, shall, with respect to such documents--
``(1) ensure that access to such numbers is restricted to
persons who may obtain them in accordance with applicable
law;
``(2) require an individual who is not exempt under section
1028A(f) to provide the social security number of the person
who is the subject of the document before making such
document available; or
``(3) redact the social security number from the document
prior to providing a copy of the requested document to an
individual who is not exempt under section 1028A(f) and who
is unable to provide the social security number of the person
who is the subject of the document.
``(c) Rule of Construction.--Nothing in this section shall
be used as a basis for permitting or requiring a State or
local government entity or other repository of public
documents to expand or to limit access to documents
containing social security numbers to entities covered by the
exception in section 1028A(f).
``(d) Definitions.--In this section:
``(1) Incidental.--The term `incidental' means that the
social security number is not routinely displayed in a
consistent and predictable manner on the public record by a
government entity, such as on the face of a document.
``(2) Public record.--The term `public record' means any
item, collection, or grouping of information about an
individual that is maintained by a Federal, State, or local
government entity and that is made available to the
public.''.
(2) Conforming amendment.--The chapter analysis for chapter
47 of title 18, United States Code (as amended by section
3(a)(2)), is amended by inserting after the item relating to
section 1028A the following:
``1028B. No prohibition of the display, sale, or purchase of social
security numbers included in public records.''.
SEC. 5. RULEMAKING AUTHORITY OF THE ATTORNEY GENERAL.
(a) In General.--Except as provided in subsection (b), the
Attorney General may prescribe such rules and regulations as
the Attorney General deems necessary to carry out the
provisions of section 3.
(b) Business-to-Business Commercial Display, Sale, or
Purchase Rulemaking.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Attorney General, in consultation
with the Commissioner of Social Security, the Federal Trade
Commission, and such other Federal agencies as the Attorney
General determines appropriate, may conduct such rulemaking
procedures in accordance with subchapter II of chapter 5 of
title 5, United States Code, as are necessary to promulgate
regulations to implement and clarify the business-to-business
provisions pertaining to section 1028A(f)(1)(E) of title 18,
United States Code (as added by section 3(a)(1)). The
Attorney General shall consult with other agencies to ensure,
where possible, that these provisions are consistent with
other privacy laws, including title V of the Gramm-Leach-
Bliley Act (15 U.S.C. 6801 et seq.).
(2) Factors to be considered.--In promulgating the
regulations required under paragraph (1), the Attorney
General shall, at a minimum, consider the following factors:
(A) The benefit to a particular business practice and to
the general public of the sale or purchase of an individual's
social security number.
(B) The risk that a particular business practice will
promote the use of the social security number to commit
fraud, deception, or crime.
(C) The presence of adequate safeguards to prevent the
misappropriation of social security numbers by the general
public , while permitting internal business uses of such
numbers.
(D) The implementation of procedures to prevent identity
thieves, stalkers, and others with ill intent from posing as
legitimate businesses to obtain social security numbers.
SEC. 6. TREATMENT OF SOCIAL SECURITY NUMBERS ON GOVERNMENT
DOCUMENTS.
(a) Prohibition of Use of Social Security Account Numbers
on Checks Issued for Payment by Governmental Agencies.--
(1) In general.--Section 205(c)(2)(C) of the Social
Security Act (42 U.S.C. 405(c)(2)(C)) is amended by adding at
the end the following new clause:
``(x) No Federal, State, or local agency may display the
social security account number of any individual, or any
derivative of such number, on any check issued for any
payment by the Federal, State, or local agency.''.
(2) Effective date.--The amendment made by this subsection
shall apply with respect to violations of section
205(c)(2)(C)(x) of the Social Security Act (42 U.S.C.
405(c)(2)(C)(x)), as added by paragraph (1), occurring after
the date that is 3 years after the date of enactment of this
Act.
(b) Prohibition of Appearance of Social Security Account
Numbers on Driver's Licenses or Motor Vehicle Registration.--
(1) In general.--Section 205(c)(2)(C)(vi) of the Social
Security Act (42 U.S.C. 405(c)(2)(C)(vi)) is amended--
(A) by inserting ``(I)'' after ``(vi)''; and
(B) by adding at the end the following new subclause:
``(II)(aa) An agency of a State (or political subdivision
thereof), in the administration of any driver's license or
motor vehicle registration law within its jurisdiction, may
not disclose the social security account numbers issued by
the Commissioner of Social Security, or any derivative of
such numbers, on any driver's license or motor vehicle
registration or any other document issued by such State (or
political subdivision thereof) to an individual for purposes
of identification of such individual.
``(bb) Nothing in this subclause shall be construed as
precluding an agency of a State (or political subdivision
thereof), in the administration of any driver's license or
motor vehicle registration law within its jurisdiction, from
using a social security account number for an internal use or
to link with the database of an agency of another State that
is responsible for the administration of any driver's license
or motor vehicle registration law.''.
(2) Effective date.--The amendment made by this subsection
shall apply with respect to licenses, registrations, and
other documents issued or reissued after the date that is 1
year after the date of enactment of this Act.
(c) Prohibition of Inmate Access to Social Security Account
Numbers.--
(1) In general.--Section 205(c)(2)(C) of the Social
Security Act (42 U.S.C. 405(c)(2)(C)) (as amended by
subsection (b)) is amended by adding at the end the following
new clause:
``(xi) No Federal, State, or local agency may employ, or
enter into a contract for the use or employment of, prisoners
in any capacity that would allow such prisoners access to the
social security account numbers of other individuals. For
purposes of this clause, the term `prisoner' means an
individual confined in a jail, prison, or other penal
institution or correctional facility pursuant to such
individual's conviction of a criminal offense.''.
(2) Effective date.--The amendment made by this subsection
shall apply with respect to employment of prisoners, or entry
into contract with prisoners, after the date that is 1 year
after the date of enactment of this Act.
SEC. 7. LIMITS ON PERSONAL DISCLOSURE OF A SOCIAL SECURITY
NUMBER FOR CONSUMER TRANSACTIONS.
(a) In General.--Part A of title XI of the Social Security
Act (42 U.S.C. 1301 et seq.) is amended by adding at the end
the following new section:
``SEC. 1150A. LIMITS ON PERSONAL DISCLOSURE OF A SOCIAL
SECURITY NUMBER FOR CONSUMER TRANSACTIONS.
``(a) In General.--A commercial entity may not require an
individual to provide the individual's social security number
when purchasing a commercial good or service or deny an
individual the good or service for refusing to provide that
number except--
``(1) for any purpose relating to--
``(A) obtaining a consumer report for any purpose permitted
under the Fair Credit Reporting Act;
``(B) a background check of the individual conducted by a
landlord, lessor, employer, voluntary service agency, or
other entity as determined by the Attorney General;
``(C) law enforcement; or
``(D) a Federal or State law requirement; or
``(2) if the social security number is necessary to verify
identity and to prevent fraud with respect to the specific
transaction requested by the consumer and no other form of
identification can produce comparable information.
``(b) Other Forms of Identification.--Nothing in this
section shall be construed to prohibit a commercial entity
from--
``(1) requiring an individual to provide 2 forms of
identification that do not contain the social security number
of the individual; or
``(2) denying an individual a good or service for refusing
to provide 2 forms of identification that do not contain such
number.
[[Page S4595]]
``(c) Application of Civil Money Penalties.--A violation of
this section shall be deemed to be a violation of section
1129(a)(3)(F).
``(d) Application of Criminal Penalties.--A violation of
this section shall be deemed to be a violation of section
208(a)(8).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to requests to provide a social security number
made on or after the date of enactment of this Act.
SEC. 8. EXTENSION OF CIVIL MONETARY PENALTIES FOR MISUSE OF A
SOCIAL SECURITY NUMBER.
(a) Treatment of Withholding of Material Facts.--
(1) Civil penalties.--The first sentence of section
1129(a)(1) of the Social Security Act (42 U.S.C. 1320a-
8(a)(1)) is amended--
(A) by striking ``who'' and inserting ``who--'';
(B) by striking ``makes'' and all that follows through
``shall be subject to'' and inserting the following:
``(A) makes, or causes to be made, a statement or
representation of a material fact, for use in determining any
initial or continuing right to or the amount of monthly
insurance benefits under title II or benefits or payments
under title VIII or XVI, that the person knows or should know
is false or misleading;
``(B) makes such a statement or representation for such use
with knowing disregard for the truth; or
``(C) omits from a statement or representation for such
use, or otherwise withholds disclosure of, a fact which the
individual knows or should know is material to the
determination of any initial or continuing right to or the
amount of monthly insurance benefits under title II or
benefits or payments under title VIII or XVI and the
individual knows, or should know, that the statement or
representation with such omission is false or misleading or
that the withholding of such disclosure is misleading,
shall be subject to'';
(C) by inserting ``or each receipt of such benefits while
withholding disclosure of such fact'' after ``each such
statement or representation'';
(D) by inserting ``or because of such withholding of
disclosure of a material fact'' after ``because of such
statement or representation''; and
(E) by inserting ``or such a withholding of disclosure''
after ``such a statement or representation''.
(2) Administrative procedure for imposing penalties.--The
first sentence of section 1129A(a) of the Social Security Act
(42 U.S.C. 1320a-8a(a)) is amended--
(A) by striking ``who'' and inserting ``who--''; and
(B) by striking ``makes'' and all that follows through
``shall be subject to'' and inserting the following new
paragraphs:
``(1) makes, or causes to be made, a statement or
representation of a material fact, for use in determining any
initial or continuing right to or the amount of monthly
insurance benefits under title II or benefits or payments
under title VIII or XVI, that the person knows or should know
is false or misleading;
``(2) makes such a statement or representation for such use
with knowing disregard for the truth; or
``(3) omits from a statement or representation for such
use, or otherwise withholds disclosure of, a fact which the
individual knows or should know is material to the
determination of any initial or continuing right to or the
amount of monthly insurance benefits under title II or
benefits or payments under title VIII or XVI and the
individual knows, or should know, that the statement or
representation with such omission is false or misleading or
that the withholding of such disclosure is misleading,
shall be subject to''.
(b) Application of Civil Money Penalties to Elements of
Criminal Violations.--Section 1129(a) of the Social Security
Act (42 U.S.C. 1320a-8(a)), as amended by subsection (a)(1),
is amended--
(1) by redesignating paragraph (2) as paragraph (4);
(2) by redesignating the last sentence of paragraph (1) as
paragraph (2) and inserting such paragraph after paragraph
(1); and
(3) by inserting after paragraph (2) (as so redesignated)
the following new paragraph:
``(3) Any person (including an organization, agency, or
other entity) who--
``(A) uses a social security account number that such
person knows or should know has been assigned by the
Commissioner of Social Security (in an exercise of authority
under section 205(c)(2) to establish and maintain records) on
the basis of false information furnished to the Commissioner
by any person;
``(B) falsely represents a number to be the social security
account number assigned by the Commissioner of Social
Security to any individual, when such person knows or should
know that such number is not the social security account
number assigned by the Commissioner to such individual;
``(C) knowingly alters a social security card issued by the
Commissioner of Social Security, or possesses such a card
with intent to alter it;
``(D) knowingly displays, sells, or purchases a card that
is, or purports to be, a card issued by the Commissioner of
Social Security, or possesses such a card with intent to
display, purchase, or sell it;
``(E) counterfeits a social security card, or possesses a
counterfeit social security card with intent to display,
sell, or purchase it;
``(F) discloses, uses, compels the disclosure of, or
knowingly displays, sells, or purchases the social security
account number of any person in violation of the laws of the
United States;
``(G) with intent to deceive the Commissioner of Social
Security as to such person's true identity (or the true
identity of any other person) furnishes or causes to be
furnished false information to the Commissioner with respect
to any information required by the Commissioner in connection
with the establishment and maintenance of the records
provided for in section 205(c)(2);
``(H) offers, for a fee, to acquire for any individual, or
to assist in acquiring for any individual, an additional
social security account number or a number which purports to
be a social security account number; or
``(I) being an officer or employee of a Federal, State, or
local agency in possession of any individual's social
security account number, willfully acts or fails to act so as
to cause a violation by such agency of clause (vi)(II) or (x)
of section 205(c)(2)(C),
shall be subject to, in addition to any other penalties that
may be prescribed by law, a civil money penalty of not more
than $5,000 for each violation. Such person shall also be
subject to an assessment, in lieu of damages sustained by the
United States resulting from such violation, of not more than
twice the amount of any benefits or payments paid as a result
of such violation.''.
(c) Clarification of Treatment of Recovered Amounts.--
Section 1129(e)(2)(B) of the Social Security Act (42 U.S.C.
1320a-8(e)(2)(B)) is amended by striking ``In the case of
amounts recovered arising out of a determination relating to
title VIII or XVI,'' and inserting ``In the case of any other
amounts recovered under this section,''.
(d) Conforming Amendments.--
(1) Section 1129(b)(3)(A) of the Social Security Act (42
U.S.C. 1320a-8(b)(3)(A)) is amended by striking ``charging
fraud or false statements''.
(2) Section 1129(c)(1) of the Social Security Act (42
U.S.C. 1320a-8(c)(1)) is amended by striking ``and
representations'' and inserting ``, representations, or
actions''.
(3) Section 1129(e)(1)(A) of the Social Security Act (42
U.S.C. 1320a-8(e)(1)(A)) is amended by striking ``statement
or representation referred to in subsection (a) was made''
and inserting ``violation occurred''.
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply with respect to
violations of sections 1129 and 1129A of the Social Security
Act (42 U.S.C. 1320-8 and 1320a-8a), as amended by this
section, committed after the date of enactment of this Act.
(2) Violations by government agents in possession of social
security numbers.--Section 1129(a)(3)(I) of the Social
Security Act (42 U.S.C. 1320a-8(a)(3)(I)), as added by
subsection (b), shall apply with respect to violations of
that section occurring on or after the effective date under
section 3(c).
____
[From the Los Angeles Times, May 8, 2001]
Curb on Sale of Consumer Data Upheld
(By Edmund Sanders)
Washington.--In a victory for privacy advocates, a federal
judge has upheld a proposed government regulation that would
effectively end the long-standing practice by credit bureaus
of selling consumers' names, addresses and Social Security
numbers to marketers, information brokers and others.
Industry groups are likely to appeal the decision by
District Judge Ellen Segal Huvelle, which was disclosed
Monday by the Federal Trade Commission. If the decision is
upheld, the rule--issued by the FTC last year and set to take
effect in July--would work dramatic changes in the way
businesses rely upon the credit bureaus' databases for
everything from updating junk-mail lists to locating debtors.
``It's going to set a higher barrier for the privacy of
this kind of information,'' said Robert Gellman, a privacy
consultant in Washington.
Credit bureaus and information brokers, who filed suit last
year to block the FTC rules, warned that the court decision
may have unintended consequences.
``There are many beneficial uses for this information,''
said Clark Walter, a spokesman for Trans Union, the Chicago-
based credit bureau. He said the databases are used to find
fugitives, parents who owe child support, missing heirs and
runaway children. ``How these particular functions would be
affected remains to be seen,'' Walter said.
At the heart of the dispute is the top portion of consumer
credit reports, known as the credit ``header,'' which is
typically limited to a person's name, address, birth date and
Social Security number. The header does not include financial
information about credit history or bank accounts, which can
be released only to creditors and others with a legal right
to see it.
Because it has been considered less sensitive, credit
header information has been sold for years. Customers include
marketing firms, law enforcement agencies, private
investigators and journalists.
Last year, the FTC issued rules to prohibit credit bureaus
from continuing to sell the information unless consumers had
first been given an opportunity to block the practice. The
agency said the rule was mandated by Congress as part of a
1999 financial modernization law, which called for new
privacy
[[Page S4596]]
protections for consumers' financial information.
The Individual Reference Services Group, a trade group of
information companies, argued that the FTC had misinterpreted
the law. ``We don't think a name and address is `financial
information' under the statute,'' said Ronald Plesser,
attorney for the trade group. The companies also argued that
the rules violated their constitutional right to free speech.
The FTC countered that any personally identifiable
information provided to financial institutions, even if
available from other public sources, should be covered by the
law.
The disclosure of Social Security numbers, in particular,
raised the hackles of privacy advocates, who say the practice
has led to an increase in identity theft and other fraud.
In her 62-page ruling, dated April 30, Huvelle said the
regulations were lawful and constitutional. ``This gives
consumer more control over how their information is used,''
said John Daly, assistant general counsel at the FTC.
The decision marks the latest defeat for credit bureaus and
information brokers, whose operating environment is
increasingly hostile.
A federal appeals court ruled last month that Trans Union
may no longer sell marketing lists based upon certain
financial characteristics, such as consumers with three or
more credit cards, culled from credit reports.
The FTC banned the practice in 1992, saying it violated
federal laws prohibiting the use of credit information for
marketing purposes. The other two major credit bureaus halted
the practice, but Trans Union continued to sell such lists.
If credit bureaus are prohibited from selling credit header
data, businesses will probably turn to other sources, such as
the change-of-address database at the U.S. Postal Service or
voter registration records.
Mr. GREGG. Mr. President, on October 15, 1999, Amy Boyer, a young
woman from Nashua, NH, was killed by a man who went on the Internet,
purchased her social security number for $45, used it to find her place
of work and kill her.
As a result of that tragic event, and countless others I have
subsequently become aware of, it became clear to me that the sale of
social security numbers on the Internet was dangerous and needed to be
stopped.
Last year, I introduced Amy Boyer's law to do just that. The purpose
of that legislation was twofold. First, to ensure that people like Amy
Boyer's killer would not be able to purchase social security numbers
and second, to prevent companies like Dogpile, and Docusearch.com from
being able to sell social security numbers without an individual's
consent.
Amy Boyer's law accomplished both of these objectives but became
mired down in controversy, frankly from both sides, over how to strike
a balance between legitimate business and other lawful uses of the
social security number which are necessary in many instances to prevent
fraud and identity theft and a desire on the part of the privacy
organizations to significantly limit public access to social security
numbers.
Let's face it, like it or not, the Social Security Number has become
a national identifier of sorts and in many instances, is the only way
to ensure accurate identification of people. Health care providers use
the social security number to maintain our health records to ensure we
are receiving the services we need; banks and financial institutions
use them to prevent fraud--a social security number tells them that a
loan applicant is exactly who he says he is. The National Center for
Missing and Exploited Children and the Association for Children for
Enforcement of Support, ACES, use social security numbers to track down
kidnappers and deadbeat dads. Big Brothers/Big Sisters of America use
social security numbers to do background checks on volunteers to make
sure that they are not felons or child molesters. A truly blanket
prohibition that did not include any exceptions whatsoever would close-
out the above uses. In reality, nobody wants this.
Unfortunately, we were unable to reach a suitable compromise before
adjourning last session, but I am pleased today to introduce, with
Senator Feinstein, after many months of very hard work, the Social
Security Number Misuse Prevention Act of 2001.
This is indeed a compromise proposal. Both Senator Feinstein and
myself have had countless meetings with parties interested in this
issue and have produced, what I believe to be, a good product. It is
not a perfect product, but it is a good first step toward balancing
significant diverging interests. We will, of course, continue to work
with interested parties to perfect this legislation, but we have agreed
in concept to certain key principles.
First, the public access to the social security number must be
limited because of the significant risk of invasions of privacy and the
potential for misuse, not the least of which is identity theft. And
second, that there are certain legitimate purposes for which the social
security number is essential--and we must protect those legitimate
uses.
Let me summarize the bill's main provisions:
First, the legislation contains a prohibition against obtaining
social security number with wrongful intent. Persons are prohibited
from obtaining a social security number for the purpose of locating or
identifying an individual with the intent to physically injure, harm,
or use the identity of the individual for any illegal purpose.
Second, the legislation prohibits the display, sale and purchase of
social security numbers to and by the general public without the
individual's consent, except for certain limited purposes. Those
purposes include: For purposes permitted, required or excepted under
the Social Security Act, section 7 (a)(2) of the Privacy Act of 1974,
section 6109(d) of the Internal Revenue Code of 1986 or section 6(b)(1)
of the Professional Boxing Safety Act of 1996: for a public health
purpose, including the protection of the health and safety of an
individual or in an emergency situation; for a national security
purpose; for a law enforcement purpose, including the investigation of
fraud and the enforcement of child support obligations; for business-
to-business use, including, but not limited to the prevention of fraud,
the facilitation of credit checks or background checks of employees,
prospective employees, and volunteers, compliance with any requirement
related to the social security program, or the retrieval of other
information from other businesses or commercial enterprises; except
that no business may sell or display a social security number to the
general public. For data matching programs under the Computer Matching
and Privacy Protection Act of 1988 or any similar data matching program
involving a Federal, State or local agency; or if such number is
required to be submitted as part of the process for applying for any
type of Federal, State, or local government benefit or program.
Third, an individual may not be required to provide their social
security number when purchasing a commercial good or service unless the
social security number is necessary: For purposes relating to the Fair
Credit Reporting Act, for a background check of the individual
conducted by a landlord, lessor, employer, volunteer service agency, or
other entity determined by the Attorney General, for law enforcement,
or pursuant to a Federal or State law requirement; or if the social
security number is necessary to verify identity and prevent fraud with
respect to the specific transaction requested by the consumer and no
other form of identification can produce comparable information.
Fourth, within 3 years after the date of enactment of this
legislation, Social Security numbers may not appear on checks issued
for payment by Federal, State, or local government agencies.
Fifth, within 1 year after the date of enactment of this legislation,
Social Security numbers may not appear on any driver's license, motor
vehicle registration or any other document issued to an individual for
purposes of identification of such individual. However, State
Departments of Motor Vehicles may continue to use social security
numbers internally and for purposes of sharing information about
driving records with other jurisdictions.
Sixth, the legislation prohibits prisoners from gaining access to
social security numbers.
Finally, on the issue of Public Records, which was and remains a very
difficult issue. In fact, last year, it was one of the issues that
resulted in our inability to pass Amy Boyer's Law. Amy Boyer's law
allowed Social Security Numbers to continue to appear in public records
with no limitation on access. It did so in recognition of the fact that
many states, local governments, and other governmental entities use
Social Security Numbers in the same way that many businesses
[[Page S4597]]
do--to ensure accurate identification of individuals who use their
services and to prevent fraud.
Many States require social security numbers to be used in documents
such as marriage licenses, bankruptcy records, real estate and tax
liens, etc. These documents are, under most state laws, a matter of
public record, which means the general public can readily gain access
to them. Were we to make the appearance of social security numbers in
every public record illegal, many states and third party beneficiaries
whose business is based on providing access to public records to law
offices and other subscribers would have to redact social security
numbers from many hundreds of thousands of public documents. This would
be a huge task, and it is unclear whether we would in any significant
way, further reduce the illegal activity we are trying to prevent. In
other words, it is unclear whether the administrative burden and cost
would outweigh the potential benefit. This was a very real concern.
At the same time we recognized the very real harm that could be
caused by unlimited public access to public documents containing social
security numbers--in many cases, right on the face of the document.
Social security numbers in public records can be dangerous if a stalker
knows where to look, and so I made a commitment lasts year to continue
to look at this problem and to address it in a way that was sound and
fair, and consistent with the overall principles and goals of the
legislation.
As with the other provisions in this legislation, Senator Feinstein
and I reached a compromise.
Under our compromise proposal there is no requirement for redaction
of social security numbers that appear incidentally in public records,
(i.e. not on the face of a document or in a document in a consistent
manner). We are trying to limit access to social security numbers for
routinely appear in a public record consistently and predictably, on
the same page, in every document.
For those records, records where the social security number appears
non-incidentally, the number must be redacted before the public
document is sold or displayed to the general public. Individuals
requesting the document who are able to provide the social security
belonging to the person who is the subject of the document before
receiving the document may receive an unrelated copy of the public
document.
I believe that the Feinstein-Gregg Social Security Number Misuse
Prevention Act is a well thought-out, tightly woven piece of
legislation that has effectively recognized and balanced the many
concerns surrounding the uses of Social Security numbers. Passing this
legislation is one of the most important things that Congress can do
this year to reduce identity theft and protect individual privacy while
permitting the continued legitimate and limited uses of the social
security number.
I thank Senator Feinstein and look forward to continuing to work with
her throughout the legislative process.
______
By Mr. BOND:
S. 849. A bill to amend provisions of law enacted by the Small
Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-
121 to ensure full analysis of potential impacts on small entities of
rules proposed by certain agencies, and for other purposes: to the
Committee on Small Business.
Mr. BOND. Mr. President, we are awaiting the imminent arrival of the
budget from the House. We have had many important things going on in
this Chamber. The debate on education is tremendously important. Yet I
think it is necessary that we take a moment and recognize something
that colleagues on both sides of the aisle will find very important,
and I know support; and that is, the fact that this is Small Business
Week.
All of us know, particularly those of us who serve on the Small
Business Committee, that small businesses are the dynamic engine which
keeps the economy of America growing and provides most of the new jobs
that are created. It provides opportunities, for the entrepreneurs and
their families, for people to gain the kind of life they wish. In many
areas, it also provides tremendous innovations that make our economy
more advanced and enhances the livelihoods of not only the workers but
the customers of those small businesses.
This week I have been working with my colleagues on Small Business.
My ranking member, Senator Kerry, and I, and members of the committee
have participated in recognition ceremonies for Outstanding Small
Businesspersons of the Year. There was White House recognition
yesterday.
I say to all my colleagues, there is a Small Businessperson of the
Year from your State. I hope you have had the opportunity to
congratulate them, to thank them for their work, and also to listen to
them on what is important for small business.
Since I took over and had the honor of becoming chairman of the
Committee on Small Business in 1995, we have made it a point for the
committee to be the eyes and ears of small business. We have listened
to what small businesses have had to say, small businesses in Missouri
and Massachusetts and Minnesota and Georgia and all across the Nation.
If you ask them, they will tell you.
We found out a number of things that are of concern to them. They are
concerned about excessive regulation. They are concerned about
taxation. They are concerned about the complexity of taxation. They are
concerned about getting access to the Government contracting business
that is available, unfortunately, too often only to larger businesses.
Last year I hosted a national women's small business summit in Kansas
City, MO, and getting access to defense contracts and other Federal
Government contracts was high on their list. Working together with
members of the Small Business Committee, we pushed to get rid of
bundling and make sure that the small businesses get their fair share
of contracts.
I will be introducing a measure, a mentoring and protege bill, to do
with other agencies of the Federal Government what the Defense
Department has done, and that is to assign an experienced government
contractor to work with small businesses to help them get in line for
the contracts so they can participate in and fulfill those contracts.
I have, with Senator Kerry, introduced a resolution commending Small
Business Week. Somebody has put a hold on it. I really hope to reason
with them and see if we can't get that passed. Almost anything we have
done in small business in this body has been on a bipartisan basis. We
hope to overcome that problem.
There are a number of tax measures that are pending before the Senate
now. I introduced the Small Business Works Act as a tax measure right
after this session of Congress convened. It was based upon the tax
priorities that women business owners had. No. 1 was getting rid of the
alternative minimum tax. You have to figure out two guides of taxes,
and then most small businesses are taxed as individuals. Some 21.2
million of them pay taxes on their personal income tax form. And when
you have an AMT, you find out you lose many of the business deductions,
and the small business person winds up paying a higher tax--certainly a
higher tax, in many instances, than a regular C corporation pays.
In addition, we would move up and make effective now 100-percent
deductibility for health insurance paid for by small businesses. A
proprietor running a small business should have the same opportunities
to get health insurance for herself and her family as a large
corporation does for its employees. That is in there.
On Monday I introduced the Independent Contractor Determination Act.
One of the things women business owners told us was, it is particularly
troubling and has been a longstanding headache for small businesses to
figure out who is an independent contractor and who is not. There is a
20-factor formula. Nobody understands the 20 factors, but the one thing
you do understand is, if an IRS agent comes in 3 or 4 years later and
applies the test, the IRS agent is going to win because nobody knows
how to figure it out. The result is many small businesses have faced
very heavy burdens. Some have been put out of business because somebody
rejiggered them from independent contractor to employee, and this has
been a tremendous problem. The laws ought to be simple enough to
understand. There is a lot of complexity in the law.
[[Page S4598]]
One of the things we must do, as we reform the Tax Code, is make it
simpler. There is no more complex, uninterpretable, undefinable,
unreasonable provision in the law than the current independent
contractor provision. We must change that.
The average small business spends 5 percent of its revenues figuring
out the tax. That is not paying the taxes, that is just figuring out
how much they owe. A nickel out of every dollar goes to calculating
taxes because we have made it too complex. We need to make it simpler.
Today I introduced a measure to build upon the Red Tape Reduction
Act, also known as the Small Business Regulatory Enforcement Fairness
Act. I was very pleased in 1996 to work with my then ranking member,
Senator Bumpers, and we presented a bill unanimously out of the Small
Business Committee to provide some relief for small businesses from
excessive redtape and regulation. We thought we would have all kinds of
problems getting on the floor, but we worked on a bipartisan basis. We
had worked with the agencies of government to make sure their concerns
were expressed.
The only people who came to the floor were people who wished to be
added as cosponsors. It passed unanimously, and it has been having an
impact.
The purpose of the Red Tape Reduction Act was to ensure that small
businesses would be given a voice in the regulatory process at the time
when it could make the difference before the regulation was published.
The act has proven to be a regulatory process more attentive to the
impact on small business and, consequently, is more fair and more
efficient.
I cite my good friend and constituent Dr. Murray Weidenbaum at the
Center for the Study of American Business at Washington University who
told me a couple of years ago that the Red Tape Reduction Act was
perhaps the only--certainly the most--significant regulatory reform
measure passed by Congress in recent history, in the last 20 years or
so.
We have seen the impact of this provision. The Red Tape Reduction
Act, among other things, requires that OSHA and EPA convene panels to
involve small businesses in formulating regulations before the
regulations are proposed. It gives the agencies the unique opportunity
to learn upfront what problems their regulation may cause and to
correct the problems with the least difficulty.
In one case, EPA totally abandoned a regulation when they recognized
that the industry could deal with it much more effectively on its own.
Experience with the panel process has proven to be an unequivocal
success. The former chief counsel for advocacy of the Small Business
Administration, Jere Glover, who worked hard to make sure the act
worked, stated:
Unquestionably, the SBREFA panel process has had a very
salutary impact on the regulatory deliberations of OSHA and
EPA, resulting in major changes to draft regulations. What is
important to note is that these changes were accomplished
without sacrificing the agencies' public policy objectives.
That is what we had in mind. Many times small businesses get run over
if they are left out of the process. We had a hearing just a couple
weeks ago in the Small Business Committee and found out the fisheries
regulations had worked tremendous hardship on small fishermen along the
North Carolina coast when they decided to change the bag limit, the
catch limit, in the fall and wiped out many small businesses. They
forgot to ask how best to implement the fisheries regulation.
Another business in my State was working on a process to replace a
particular chemical that the EPA said it was going to phase out. They
had invested a great deal of time, money, and interest in the process
of getting it developed. EPA changed the rule and the regulation and
the time limit in midprocess and left them completely out in the dark.
These are the kinds of things that Government ought not to be doing.
Government ought not to be running roughshod over people who are trying
to contribute to the economy, provide good employment opportunities,
provide a solid tax base for the community, and provide good wages for
the proprietor and employees and their families.
We think the Red Tape Reduction Act can be expanded and can be of
even greater value. It has demonstrated the value of small business
input in the regulatory process, but still too many agencies are trying
to evade the requirements to conduct regulatory flexibility analyses--
that is the technical term for seeing how it will impact the small
business; ``regulatory flexibility'' analysis is the technical term--to
figure out how it is going to hurt small business.
We now realize that the Internal Revenue Service should also be
required to conduct small business review panels so that their
regulations will impose the least possible burden on a small business
while still achieving the mission of the agency.
I think there is no question we have worked with the new Commissioner
of the IRS, Commissioner Rossotti. We have seen many steps taken by the
IRS to relieve the burdens. I don't know anybody who really likes to
pay taxes. We realize that it is an important part of supporting our
Government and our system. But at least we ought to do so in a way that
is the least confusing and burdensome.
So I think it is important that we provide a mechanism so that
parties will be able to reserve the benefits of their rights to
participate at the earliest stages and have the most impact. We believe
the litigation that is available at the end of the process if an agency
fails to take into account the burden on small business is important
because prior to the Redtape Reduction Act, the law had been on the
books since 1980 that agencies ought to consider the impact on small
business, and it was absolutely, totally ignored by the agencies;
without judicial enforcement, they didn't get anywhere. So we added
judicial enforcement and they started paying attention.
The Agency Accountability Act, which I introduce today, cures a
number of additional problems that we have identified. Let me run
through quickly what it does. No. 1, it requires agencies to publish
the decision to certify a regulation as not having a significant
economic impact on a substantial number of small entities separately in
the Federal Register. That means, in certain circumstances, the agency
doesn't have to consider the impact on small business. That is how most
of the bad regulations get through. EPA was infamous for doing that and
saying it didn't have any impact. The regulation comes down to small
business, which says we are getting killed. Then they have to fight the
battle. Then they go to court and prove that they are impacted and the
EPA didn't pay any attention to them.
This says if you are going to use that escape clause to say the
regulation doesn't have any impact on a small business, you have to set
that out--set out in the Federal Register what you are doing and the
fact that it does not have an impact. So you can perhaps correct the
problems if there are small businesses that can show they are impacted
before the regulation is issued.
Second, the Triple A Act requires the agency to publish a summary of
its economic analysis supporting the certification decision; i.e., if
you say it doesn't have any economic impact, don't just grab it out of
your hip pocket, or hat. You have to have an analysis to show why it
would not. You have to make that available to the public so that
interested parties will be able to see whether, in fact, it was pulled
out of your hat, or whether it is based on sound economic reasoning.
The third thing the Triple A does is it allows small entities to seek
judicial review of this certification decision. They can go to the
agency and say: Agency, you are trying to get out of the regulatory
flexibility requirements--you are trying to get out of the requirement
to see how the impact on small business can be lessened. If they say
they disagree with them, the small entity can go to court and get it
enforced.
When I say ``small entity,'' this is not only available to small
businesses, it is available to local governments, to not-for-profit
organizations, eleemosynary institutions, available for the small
entities in this country that do not have lobbyists or a presence in
Washington. Small entities are entitled to use this Redtape Reduction
Act.
Fourth, the measure directs the Chief Counsel for Advocacy of the
Small
[[Page S4599]]
Business Administration to put out a regulation defining the terms that
the agency has to use in determining whether they can escape an
analysis of how small business will be impacted. These terms are
``significant economic impact,'' and ``substantial number of small
entities.'' We found that a number of agencies like to jack around with
those terms and skew the facts so that they can sneak out the back door
without having to do what the bill requires. This gives the advocacy
counsel the ability to say this is what we mean and this is how you
have to abide by it. If they don't follow that, then they are ducking
their responsibilities under SBREFA and the Regulatory Flexibility Act.
The other thing is, Triple A adds the IRS, U.S. Forest Service,
National Marine Fisheries Service, and the Fish and Wildlife Service to
the list of agencies that must conduct small business review panels
before they can issue proposed regulations.
All Federal agencies are covered by the provisions of the Regulatory
Flexibility Act. If you ignore it, you can get hauled into court and
have your regulation overturned if it has a significant economic impact
on a substantial number of small entities. But this is to say that
based on their track record and problems in the past, we are going to
have you do what OSHA and EPA have been required to do, and that is set
up panels involving small businesses prior to formulating the
regulation. If you ask small business how is this regulation going to
affect you and people like you, you may find out that there are a lot
better ways of doing it. That is what EPA found out in one of the
regulations it considered.
Certainly, an agency is not going to be able to say: Gee, I had no
idea that it would cause such a hardship on you. It is as important as
any part of Government service, and it is too bad we have to write it
into law. We cannot be good Government servants, either as legislators
or bureaucrats, or members of the executive branch if we don't listen
to the voices, the hopes, concerns, and problems of average citizens.
We are just saying under this new measure that there are a couple of
agencies that have to be told by law to listen to the people they are
going to regulate. Pay attention to them. They don't have to like all
the regulations but at least listen to their concerns about how the
regulations affect them and how you may be able to accomplish the
purpose of the law you are seeking to administer, without putting
burdens on small agencies.
Well, Mr. President, this bill grows out of extensive review of how
the Redtape Reduction Act has functioned in the last 5 years. We still
see a lot of frustration by small businesses about how agencies
continue to find ways to avoid including small business input in
rulemakings, and some of the actions that our agencies take confirm the
worst image of agency bureaucrats who are thought to know what is best
for small business throughout the country, and when the small
businesses are actually providing jobs, developing technology and
keeping the economy growing. But somebody here in Washington has a lot
better idea how they ought to be running their business.
We need to have an interaction so that the people out there who are
creating jobs, developing the technology, earning a living for their
families and themselves can have an input into the agency that is going
to regulate.
The General Accounting Office found recently that the EPA missed
1,098 small companies in the 32 SIC codes of industries that will be
affected by their rule lowering the threshold for companies to report
their use of lead. EPA thus concluded that their rule would not have a
significant economic impact on a substantial number of small entities
despite reducing the threshold of lead emissions from 25,000 pounds to
10 pounds--a reduction of 99.96 percent. EPA, instead, relied on an
average revenue compiled from all companies in the manufacturing
industries to determine what threshold would be set to trigger the
small business review panel required by the Redtape Production Act. The
average included companies such as General Motors, General Electric,
3M, and others that skewed the average so that it looked as though the
rule would have no impact on small business.
But I can tell you that a small business with 11 pounds of lead is
absolutely clobbered by this rule.
Although EPA claimed to conduct outreach to find firms that would be
affected, they only contacted nine sources, although some of these
sources allegedly contacted have no record of EPA contacting them. I
think there is no excuse for that type of arrogance and abject
avoidance of their requirements with respect to small business. This
shoddy economic analysis exposes a loophole through which EPA should no
longer be able to drive their trucks, and it will be closed by the
Agency Accountability Act.
I submitted previously, when I introduced the measure this morning,
the GAO testimony presented at the hearing. Now I know there will be
moans and groans by those who claim that this bill will make the
regulatory profess more difficult and force agencies to jump through
hoops and will make it harder to issue new regulations.
Let me respond as follows: Had the agencies agreed to comply with the
intent and spirit of SBREFA, rather than defy SBREFA, the Redtape
Reduction Act, the Agency Accountability Act would not be needed.
Frankly, if it were clear that agencies were doing what Congress
intended for them to do, then this bill would be unnecessary. If they
are doing adequate analysis in reaching out to small business now, then
this act will have no impact on how they promulgate their regulation.
I have very simple views on this subject. I want an agency that
intends to regulate how a business conducts its affairs, to do so
carefully and only after it has listened to the small businesses that
will be affected to see if there are ways in which to lessen the burden
and still achieve the objective.
Unfortunately, as I said, there is overwhelming evidence that
agencies are not treating this obligation seriously, and we must tell
them in forceful terms that we really meant it when we said 5 years
ago: You have to pay attention to small business.
I was very pleased we did so in a tremendous bipartisan, unanimous
vote. I am hoping we can do the same with this agency accountability
bill. Let all agencies know firsthand: If you do your job right, then
this should be no problem. If you are not doing your job this way, you
ought to be because it will cause less headache, less lawsuits, and
less problems in the end.
Had EPA done what it should have done in the lead TRI rulemaking,
there would not be the litigation we are seeing now, and it would have
saved businesses and the Government untold sums of taxpayers' dollars.
This body has said they want to treat small businesses fairly. The
Agency Accountability Act is the next step in doing so.
As I said earlier, I have introduced with bipartisan support a number
of measures that I think are going to be very helpful for small
business. I hope during the course of Small Business Week my colleagues
will look at these and particularly take the time to listen to the men
and women of small business who have come to Washington and continue
the work in their home States to find out what their concerns are.
I will be cosponsoring a measure that my colleague, Senator Kerry,
will be introducing to reauthorize and extend a very important STTR
bill which is a very important act in terms of transferring technology.
It is a small business technology transfer program. I will have a
statement that I will add after Senator Kerry introduces the bill. I
hope this will merit the attention of our colleagues.
I ask unanimous consent that the testimony of Hubert Potter, Tim
Kalinowski, and Victor Rezendes of the General Accounting Office before
the Committee on Small Business and a Summary of Provisions be printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Testimony of Hubert Potter, a Commercial Fisherman From Hobucken, NC,
Before the Senate Small Business Committee, April 24, 2001
Thank you Mr. Chairman and Members of the Committee.
My name is Hubert Potter. I am a 4th generation commercial
fisherman from Hobucken, North Carolina, a fishing community
in Pamlico County. I'll be 67 years old this August, and I've
been commercial fishing for a living since I was 15.
[[Page S4600]]
I am a member of the North Carolina Fisheries Association,
and have been a Board member of that group for several years,
including a stint as Vice-Chairman. As such, I've tried to
stay on top of the political and bureaucratic issues
affecting us.
Just about all of my experience has been aboard a type of
fishing vessel called a trawler. My wife and I have owned 5
trawlers over our lifetime, ranging in size from 32 to 75 ft
in length. We sold our last one this past September.
Like just about everything else, there have been a lot of
things that stay the same in our way of life. Things like the
weather, fish prices, and fish cycles. Just like any red-
blooded American, us fishermen like it when prices are high,
fish are plentiful, and the good Lord provides us with fair
weather. We might like all these things, but we also know
that it just doesn't work that way all the time, or even most
of the time.
Although we can accept whatever bad weather the Lord gives
us, or the natural peaks and valleys of fish cycles put on us
by mother nature, it is hard to accept or even understand the
lack of sensitivity and sometimes the callousness of our own
government. At first it seems funny when we read about that
some of the bureaucrats say about the effects of proposed
regulations. But, Mr. Chairman, after you've had a chance to
sit down and think about what they've said, it can really
hurt your feelings. When you get over that, it just plain
makes you angry that your own government would say that these
regulations will not affect your small business.
Commercial fishing is very dependent upon the weather,
water temperature, currents, and natural fish cycles. Some
years there will be lots of fish in a certain area, and in
other years there will be few or none. The difference may be
due to weather changes, or just because the cycles are
different. That's why diversity is so important to us. For
example, it it's possible to fish for summer flounder, that's
what I would do. Flounder are not available off our coast
year round, so we have to do others things. If I wasn't
fishing for summer flounder, I would be shrimping.
One of the most regulated fisheries on the East Coast is
the summer flounder fishery. Although us fishermen try to
stay on top of all of the regulations, most of us had no idea
what the Regulatory Flexibility Act was until we got involved
with the North Carolina Fisheries Association in a lawsuit
against the National Marine Fisheries Service. That's when we
found out that NMFS didn't think that summer flounder
regulations had any impact on us as small business people.
During one of the hearings held in Norfolk, Virginia, over
100 fishermen from our state attended at the request of the
court. We were all sworn in and I personally took the stand.
Allow me to read from the court order: `The federal
government did consider three possible quotas for the 1997
fishery, but the government failed to do any significant
analysis to support its conclusion that there would be no
significant impact. It is evident to this Court from the some
100 North Carolina fishermen who appeared to testify that
their businesses were significantly affected and that there
was a significant economic impact. . . .''
The Judge also said, ``. . . this Court will not stand by
and allow the Secretary to attempt to achieve a desirable end
by using illegal means. Granted, administrative agencies have
a substantial amount of discretion in determining how they
will follow Congressional mandates. That discretion,
however, does not include rewriting or ignoring
statutes.''
And this quote by Judge Doumar says it all: ``. . . the
Secretary has produced a so-called economic report that
obviously is designed to justify a prior determination''.
Mr. Chairman, although our life has been like a roller
coaster ride over the years, Renona and I have done ok. But
we really fear for the future of our younger fishing families
because of all the regulations and the lack of feeling for
hard working people. There was one year when our summer
flounder fishery was closed in December due to regulations,
when families just didn't have the money for Christmas.
That's because shrimping, crabbing, and other fisheries have
naturally slacked out in December and many of us depended on
the summer flounder fishing for Christmas money. Yet, we find
out that our own government says that the regulations have no
significant impact.
Maybe they think a slack Christmas is not having an impact.
In my wildest dreams, it's hard for me to figure how they
think.
Mr. Chairman, speaking on behalf of commercial fishing
families, I want to thank you for scheduling this hearing.
Our small businesses are so small that we don't have the time
to stay on top of a lot of these kinds of issues. We do know
that we are expected to abide by the laws of our land, and we
expect that our own government should do that also.
It's been discouraging to see our incomes drop as
regulations increase, and read reports by the government that
the regulations will have no significant impact on us.
Although it's hard work, we love what we do, and we would
like to be able to continue providing our country with a
healthy and tasty source of protein.
We really hope that our government wants us to continue
doing that too.
Thank you, and I would be glad to answer any questions from
the Committee.
____
Testimony of Tim Kalinowski
Good Morning and thank you for the opportunity to address
this distinguished committee. My name is Tim Kalinowski and I
am the Vice-President of Operations for Foam Supplies, Inc.
(FSI) located in Earth City, Missouri.
FSI is a typical, small, mid western family owned business.
It is still run by Dave and Karen Keske who founded the
business in 1972. They bought the first facility with the
help of two small business loans and built their current
facility by offering shares in the building and land to their
62 employees, who receive monthly rental income for their
investment.
FSI has always operated in an environmentally responsible
manner and we are proud of our reputation. FSI manufacturers
rigid non-CFC urethane foams and solvent less urethane
dispensing equipment. These products have uses ranging from
flotation foam used in boat building to insulation foam used
in building construction. Our company has always been a
leader in the field. In the 1980's, aware of EPA's plans to
phase out CFCs due to its negative effect on the earth's
ozone layer, FSI worked aggressively to find suitable
substitutes. FSI was the first company to patent an HCFC-22
blown urethane foam, years before the EPA mandated phase-out.
Technology development does not occur overnight and it does
not come cheap. FSI spends a lot of money to develop new
products and is wiling to do so because it is how we compete
against the large companies. FSI is a small company with
tight margins and we can only be innovative if we are able to
spread the costs over time. FSI had the ability to do this in
the CFC rulemaking, because the EPA notified us well in
advance of the phase out and we had the time to properly test
and prepare new formulations.
I am here today to take exception to EPA's actions in the
July 11, 2000 Notice of Proposed Rulemaking regarding the
Significant New Alternatives Policy or SNAP program. The EPA
SNAP program was not designed to accelerate the phase out of
ozone depleting substances. For example, under the plan
developed by EPA and industry in the early 1990's, HCFC-22
may be produced and imported until 2010. Use may continue
after that date until stocks are depleted. In this recent
SNAP proposal EPA has ignored the current production and
manufacturing deadline and has proposed to accelerate the
deadline for not only the manufacture, but also the use of
these substitutes to 2005. This new deadline would hit
small businesses extremely hard because it changes the
rules midstream and gives us less time to develop new
products and also absorb the costs of research and
development. In addition to finding this new deadline
unacceptable, it is our position that this action is not
within the scope of the SNAP program.
While this particular issue is extremely important to my
small business, the concern that I bring before this
committee has more to do with how the EPA approached this
proposed rulemaking. I think everyone would agree that
regulation works best when all concerned parties work
together to consider all the issues. When the regulatory
process is by-passed and rules are broken the resulting
regulation can be both harmful and ineffective. Sadly, EPA
did not follow the rules when it proposed the SNAP program
last year.
In late June, 2000 during an unrelated call to EPA, I was
informed that EPA was about to publish this proposed rule in
the Federal Register. When questioning why the EPA had not
contacted manufacturers or end users that this proposal was
being considered, I was told that they considered it a
success that they were able to keep this proposal quiet,
prior to publication.
This would have been less of a concern if EPA understood
our industry.
In the NPRM the EPA stated that: (1) ``EPA believes that
today's proposal will not result in a significant cost to
appliance manufacturers or consumers''; (2) ``This rule would
not have a significant impact on a substantial number of
small entities because we expect the cost of the SNAP
requirements to be minor''; and (3) ``EPA has determined that
it is not necessary to prepare a regulatory flexibility
analysis in connection with this proposal.''
We take great exception to these remarks.
I am here to tell you that this rule will have an affect on
thousands of small manufacturers across the country. The only
economic study that EPA seems to have done was based on data
from a multi-billion dollar appliance manufacturer. If EPA
was truly interested in knowing what companies would be
impacted by this rule, they only had to make a few phone
calls or pull up a few web sites to identify boatbuilders,
truck body manufacturers, refrigerator equipment
manufacturers, and many other small entities. But they
never did. In fact they overlooked our industry. They did
not know how much this rule would cost my small business
and they did not know how many small businesses would face
similar costs.
The only phone call that I am aware of to an end-user was
made after the rule was proposed. An EPA staff person
contacted the National Marine Manufacturers Association and
informed them that boat builders never had an extension and
were currently violating the law. When the NMMA called me for
a clarification, there was panic in the voice on the other
end of the phone. They believed that by commenting they had
struck
[[Page S4601]]
a hornet's nest. I faxed them a copy of the initial rule,
which clearly stated that boat builders did have an extension
and were not in violation of the law. EPA was eventually
forced to recognize that indeed boat builders did have an
extension and were overlooked in this rulemaking process.
Instead of accusing boat builders of operating illegally,
EPA should have learned from them and tried to find out how
the proposed rule affected them. EPA would have learned that
the Coast Guard requires boats under 20 feet to have
flotation foam injected or poured into the hull of the boat.
EPA would have learned that over 1500 small business boat
builders use these products and would be impacted by this
rule. EPA would have known that it made a big mistake in
overlooking these types of small businesses and that it
needed to go back and look, listen, and learn about these
impacts.
The EPA also stated that ``non-ozone depleting substitutes
are now available for all end-users.'' As evidence they cite
a 1998 United Nations Technical Options Committee Report.
However, one of the authors of that report took exception to
EPA's interpretation of the report and commented that, ``the
proposed rule incorrectly interprets the UNTOC 1998 report.
(Copies of the author's comments are in your handouts)
The bottom line is that this rule will affect many small
businesses that EPA never considered when the proposal was
developed. In addition, it is obvious that the EPA staff did
not do their homework, because the proposed alternatives are
more expensive, unavailable at this time, less effective or
present other VOC or flammability hazards.
This rule will severely jeopardize FSI and it's customers
who cannot possibly pass on the increased chemical and
testing costs to their customers and still hope to be able to
compete with the larger corporations.
Another very important overlooked casualty of this rule
would be the environment itself. Breakthroughs in any
industry are commonly a result of the efforts of the little
guy who has to stay one step ahead of the big corporations
just to stay in business. Our industry is constantly
trying to develop new products, which benefit our
customers and improve the environment. There are products
being tested and developed by FSI and others like us that
would have to be abandoned due to this new deadline. These
products would not only be better for the environment, but
also more cost effective for the small businessman.
Dave and Karen Keske's of FSI and other small business
entrepreneurs want to be able to continue to dedicate their
limited resources to test and develop new products. These are
products that they are confident will be better for their
customers and for the environment. This will only happen if
the issues and concerns of companies directly impacted by the
rules are made aware of these rules before they are proposed.
This was supposed to happen in this rulemaking. The SBREFA
law requires it and in this case the law was ignored. Because
this has happened, EPA has put FSI and many other small
businesses in serious economic jeopardy.
In closing, I would like to make one point very clear, FSI
is not looking for special treatment. We only want to be
treated in accordance with the law. It is our belief that
when the playing field is kept level, FSI and other small
businesses prosper.
Thank you for your attention.
____
Testimony of Victor Rezendes
I am pleased to be here today to discuss the implementation
of the Regulatory Flexibility Act of 1980 (RFA), as amended,
and the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA). As you requested, I will discuss our work on
the implementation of these two statutes in recent years,
with particular emphasis on a report that we prepared for
this committee last year on the implementation of the acts by
the Environmental Protection Agency (EPA).
The RFA requires federal agencies to examine the impact of
their proposed and final rules on ``small entities'' (small
businesses, small governmental jurisdictions, and small
organizations) and to solicit the ideas and comments of such
entities for this purpose. Specifically, whenever agencies
are required to publish a notice of proposed rulemaking, the
RFA requires agencies to prepare an initial and a final
regulatory flexibility analysis. However, the RFA also states
that those analytical requirements do not apply if the head
of the agency certifies that the rule will not have a
``significant economic impact on a substantial number of
small entities,'' or what I will--for the sake of brevity--
term a ``significant impact.'' SBREFA was enacted to
strengthen the RFA's protections for small entities, and some
of the act's requirements are built on this ``significant
impact'' determination. For example, one provision of SBREFA
requires that before publishing a proposed rule that may have
a significant impact, EPA and the Occupational Safety and
Health Administration must convene a small business advocacy
review panel for the draft rule, and collect the advice and
recommendations of representatives of affected small entities
about the potential impact of the draft rule.
We have reviewed the implementation of the RFA and SBREFA
several times during recent years, with topics ranging from
specific provisions in each statute to the overall
implementation of the RFA. Although both of these reform
initiatives have clearly affected how federal agencies
regulate, we believe that their full promise has not been
realized. To achieve that promise, Congress may need to
clarify what it expects the agencies to do with regard to the
statutes' requirements. In particular, Congress may need to
clearly delineate--or have some other organization
delineate--what is meant by the terms ``significant economic
impact'' and ``substantial number of small entities.'' The
RFA does not define what Congress meant by these terms and
does not give any entity the authority or responsibility
to define them governmentwide. As a result, agencies have
had to construct their own definitions, and those
definitions vary. Over the past decade, we have
recommended several times that Congress provide greater
clarity with regard to these terms, but to date Congress
has not acted on our recommendations.
The questions that remain unanswered are numerous and
varied. For example, does Congress believe that the economic
impact of a rule should be measured in terms of compliance
costs as a percentage of businesses' annual revenues or the
percentage of work hours available to the firms? If so, is 3
percent (or 1 percent) of revenues or work hours the
appropriate definition of ``significant?'' Should agencies
take into account the cumulative impact of their rules on
small entities, even within a particular program area? Should
agencies count the impact of the underlying statutes when
determining whether their rules have a significant impact?
What should be considered a ``rule'' for purposes of the
requirement in the RFA that the agencies review rules with a
significant impact within 10 years of their promulgation?
Should agencies review rules that had a significant impact at
the time they were originally published, or only those that
currently have that effect?
These questions are not simply matters of administrative
conjecture within the agencies. They lie at the heart of the
RFA and SBREFA, and the answers to the questions can be a
substantive effect on the amount of regulatory relief
provided through those statutes. Because Congress did not
answer these questions when the statutes were enacted,
agencies have had to developed their own answers. If Congress
does not like the answers that the agencies have developed,
it needs to either amend the underlying statutes and provide
what it believes are the correct answers or give some other
entity the authority to issue guidance on these issues.
proposed epa lead rule
The implications of the current lack of clarity with regard
to the term ``significant impact'' and the discretion that
agencies have to define it were clearly illustrated in a
report that we prepared for this committee last year. One
part of our report focused on a proposed rule that EPA
published in August 1999 that would, upon implementation,
lower certain reporting thresholds for lead and lead
compounds under the Toxics Release Inventory program from as
high as 25,000 pounds to 10 pounds. EPA estimated that
approximately 5,600 small businesses would be affected by the
rule, and that the first-year costs of the rule for each of
these small businesses would be between $5,200 and $7,500.
EPA said that the total cost of the rule in the first year of
implementation would be about $116 million. However, EPA
certified that the rule would not have a significant impact,
and therefore did not trigger certain analytical and
procedural requirements of the RFA.
Mr. Chairman, last year you asked us to review the
methodology that EPA used in the economic analysis for the
proposed lead rule and describe key aspects of that
methodology that may have contributed to the agency's
conclusion that the rule would not have a significant impact.
You also asked us to determine whether additional data or
analysis could have yielded a different conclusion about the
rule's impact on small entities. Finally, you also asked us
to describe and compare the rates at which EPA's major
program offices certified that their substantive proposed
rules would not have a significant impact. We did not examine
whether lead was a persistent bioaccumulative toxic or the
value of the Toxics Release Inventory program in general.
EPA's current guidance on how the RFA should be implemented
gives the agency's program offices substantial discretion
with regard to certification decisions but also provides
numerical guidelines to help define what constitutes a
significant impact. For example, the guidance indicates that
a rule should be presumed eligible for certification as not
having a significant impact if it does not impose annual
compliance costs amounting to 1 percent of estimated annual
revenues on any number of small entities. However, if
those compliance costs amount to 3 percent or more of
revenues on 1,000 or more small entities, the guidance
indicates that the program office should presume that the
rule is ineligible for certification.
These numerical guidelines establish what appears to be a
high threshold for what constitutes a significant impact. For
example, an EPA rule could theoretically impose $10,000 in
compliance costs on 10,000 small businesses, but the
guidelines indicate that the agency can presume that the rule
does not trigger the requirements of the RFA as long as those
costs do not represent at least 1 percent of the affected
businesses' annual revenues. The guidance does not take into
account the profit margins of the businesses involved.
Therefore, if the profit margin in
[[Page S4602]]
the affected businesses is less than 5 percent, the costs
required to implement a rule could conceivably take one-fifth
of that profit and, under EPA's guidelines, still not be
considered to have a significant impact. Neither does the
guidance take into account the cumulative impact of the
agency's rules on small businesses. Therefore, if EPA issued
100 rules, each of which imposed compliance costs amounting
to one-half of 1 percent of annual sales on 10,000
businesses, the agency could certify each of the rules as not
having a significant impact even though the cumulative impact
amounted to 50 percent of the affected businesses' revenues.
Consideration of cumulative regulatory impact is not even
required within a particular area like the Toxics Release
Inventory program. Each toxic substance added to the
approximately 600 substances already listed in the program,
or each change in the reporting threshold for a listed toxin,
constitutes a separate regulatory action under the RFA.
An agency's conclusions about the impact of a rule on small
entities can also be driven by the agency's analytical
approach. In its original economic analysis for the proposed
lead rule, EPA made a number of assumptions that clearly
contributed to its determination that no small entities would
experience significant economic effects. For example, to
estimate the annual revenues of companies expected to file
new Toxics Release Inventory reports for lead, EPA assumed
that (1) the new filers would have employment and economic
characteristics similar to current filers, (2) different
types of manufacturers would experience similar economic
effects, and (3) the revenues of the smallest manufacturers
covered by the proposed rule could be exemplified by the firm
at the 25th percentile of the agency's projected revenue
distribution for small manufacturers. As a result of these
and other assumptions, EPA estimated that the smallest
manufacturers affected by the proposed lead rule had annual
revenues of $4 million. Using that $4 million revenue
estimate and other information, EPA concluded that none of
the 5,600 small businesses would experience first-year
compliance costs of 1 percent or more of their annual
revenues. Therefore, EPA certified that the proposed lead
rule would not have a significant impact.
EPA revised these and other parts of the economic analysis
for the proposed lead rule before submitting it to the Office
of Management and Budget (OMB) for final review in July 2000.
According to a summary of the draft revised economic analysis
that we reviewed, EPA changed several analytic assumptions
and methods, and revised its estimates of the rule's impact
on small businesses. Specifically, the agency said that the
lead rule would affect more than 8,600 small companies (up
from about 5,600 in the original analysis), and as many as
464 of them would experience first-year compliance costs of
at least 1 percent of their annual revenues (up from zero in
the original estimate). Nevertheless, EPA again concluded
that the rule would not have a significant impact. During our
review, we discovered that the agency's revised estimate of
the number of small companies that would experience a 1
percent economic impact was based on only 36 of the 69
industries that the agency said could be affected by the
rule. EPA officials said that the other 33 industries were
not included in the agency's estimate because of lack of
data.
We attempted to provided a more complete picture of how the
lead rule would affect small businesses by estimating how
many companies in these missing 33 industries could
experience a first-year economic impact of at least 1 percent
of annual revenues. We obtained data from the Bureau of the
Census for 32 of these 33 industries and estimated that as
many as 1,098 additional small businesses could experience
this 1-percent effect. If EPA had used this analytic approach
in combination with its own studies, it would have concluded
that as many as 1,500 small businesses would experience
compliance costs amounting to at least 1 percent of annual
revenues. Therefore, using its own guidance, EPA could have
concluded that the rule should not be certified, prepared a
regulatory flexibility analysis, and convened an advocacy
review panel for the rule. However, we ultimately concluded
that the agency's initial and revised analyses and the
conclusions that it based on those studies were within the
broad discretion that the RFA and the EPA guidance provided
in determining what constituted a ``significant economic
impact'' on a ``substantial number of small entities.''
In the final lead rule that EPA published in January 2001,
EPA set the new reporting threshold for lead at 100 pounds--
up from 10 pounds in the proposed rule. However, just as it
did for the proposed rule, EPA concluded that the final rule
would not have a significant impact. EPA said that it reached
this conclusion because it did not believe the rule would
have a significant economic impact (defined as annual costs
between 1 and 3 percent of annual revenues) on more than 250
of the 4,100 small businesses expected to be affected by the
rule. EPA also illustrated what it viewed as nonsignificant
impact in terms of work hours. The agency said that it would
take a first-time filer about 110 hours to fill out the form.
Because the smallest firm that could be affected by the rule
must have at least 20,000 labor hours per year (10 employees
times 50 weeks per year per employee times 40 hours per
week), EPA said that the 110 hours required to fill out the
Toxics Release Inventory form in the first year represents
only about one-half of 1 percent of the total amount of time
the firm has available in that year.
EPA' determination that the proposed lead rule would not
have a significant impact on small entities was not unique.
Its four major program offices certified about 78 percent of
the substantive proposed rules that they published in the
2\1/2\ years before SBREFA took effect in 1996 but certified
96 percent of the proposed rules published in the 2\1/2\
years after the act's implementation. In fact, two of the
program offices--the Office of Prevention, Pesticides and
Toxic Substances and the Office of Solid Waste--certified all
47 of their proposed rules in this post-SBREFA period as not
having a significant impact. The Office of Air and Radiation
certified 97 percent of its proposed rules during this
period, and the Office of Water certified 88 percent. EPA
officials told us that the increased rate of certification
after SBREFA's implementation was caused by a change in the
agency's RFA guidance on what constituted a significant
impact. Prior to SBREFA, EPA's policy was to prepare a
regulatory flexibility analysis for any rule that the agency
expected to have any impact on any small entities. The
officials said that this guidance was changed because the
SBREFA requirement to convene an advocacy review panel for
any proposed rule that was not certified made the
continuation of the agency's more inclusive RFA policy too
costly and impractical.
Previous Reports On the RFA and SBREFA
We have issued several other reports in recent years on the
implementation of the RFA and SBREFA that, in combination,
illustrate both the promise and the problems associated with
the statutes. For example, in 1991, we examined the
implementation of the RFA with regard to small governments
and concluded that each of the four federal agencies we
reviewed had a different interpretation of key RFA
provisions. We said that the act allowed agencies to
interpret when they believed their proposed regulations
affected small government, and recommended that Congress
consider amending the RFA to require the Small Business
Administration (SBA) to develop criteria regarding whether
and how to conduct the required analyses.
In 1994, we noted that the RFA required the SBA Chief
Counsel for Advocacy to monitor agencies' compliance with the
act. However, we also said that one reason for agencies' lack
of compliance with the RFA's requirements was that the act
did not expressly authorize SBA to interpret key provisions
in the statute and did not require SBA to develop criteria
for agencies to follow in reviewing their rules. We said that
if Congress wanted to strengthen the implementation of the
RFA, it should consider amending the act to (1) provide SBA
with clearer authority and responsibility to interpret the
RFA's provisions, and (2) require SBA, in consultation with
OMB, to develop criteria as to whether and how federal
agencies should conduct RFA analyses.
In our 1998 report on the implementation of the small
business advocacy review requirements in SBREFA, we said that
the lack of clarity regarding whether EPA should have
convened panels for two of its proposed rules was traceable
to the lack of agreed-upon governmentwide criteria as to
whether a rule has a significant impact. Nevertheless, we
said that the panels that had been convened were generally
well received by both the agencies and the small business
representatives. We also said that if Congress wished to
clarify and strengthen the implementation of the RFA and
SBREFA, it should consider (1) providing SBA or another
entity with clearer authority and responsibility to interpret
the RFA's provisions and (2) requiring SBA or some other
entity to develop criteria defining a ``significant economic
impact on a substantial number of small entities.'' In 1999,
we noted a similar lack of clarity regarding the RFA's
requirement that agencies review their existing rules that
have a significant impact within 10 years of their
promulgation. We said that if Congress is concerned that this
section of the RFA has been subject to varying
interpretations, it may wish to clarify those provisions. We
also recommended that OMB take certain actions to improve the
administration of these review requirements, some of which
have been implemented.
Last year we convened a meeting at GAO on the rule review
provision of the RFA, focusing on why the required reviews
were not being conducted. Attending that meeting were
representatives from 12 agencies that appeared to issue rules
with an impact on small entities, representatives from
relevant oversight organizations (e.g., OMB and SBA's Office
of Advocacy), and congressional staff from the House and
Senate Committees on Small Business. The meeting revealed
significant differences of opinion regarding key terms in the
statute. For example, some agencies did not consider their
rules to have a significant impact because they believed the
underlying statutes, not the agency-developed regulations,
caused the effect on small entities. There was also confusion
regarding whether the agencies were supposed to review rules
that had a significant impact on small entities at the time
the rule was first published in the Fedeal Register or those
that currently have such an impact. It was not even clear
what should be considered to ``rule'' under RFA's rule review
requirements--the entire section of the Code of Federal
Regulations that was affected by the rule, or just the part
of the existing rule that was being amended. By the end of
the meeting it was clear that, as one congressional
[[Page S4603]]
staff member said, ``determining compliance with (the RFA) is
less obvious that we believed before.''
Mr. Chairman, this concludes my prepared statement. I
reveal would be happy to responded to any questions.
____
Agency Accountability Act--Summary of Provisions
Section 1. Short Title
This act may be cited as the ``Agency Accountability Act of
2001''.
Section 2. Findings and Purposes
Section 3. Ensuring Full Analysis of Potential Impacts on Small
Entities of Rules Proposed by Certain Agencies
This section improves the procedure for the conducting
Small Business Advocacy Review Panels by requiring the agency
to collaborate with the Chief Counsel for Advocacy of the
Small Business Administration in selecting the small entity
representatives. It requires the agency to publish the panel
report in the Federal Register and to distribute the report
to the small entity representatives.
Section 4. Definitions
This section expands the list of agencies required to
conduct Small Business Advocacy Review Panels for regulations
that will have a significant economic impact on a substantial
number of small entities to include the Internal Revenue
Service of the Treasury Department, the National Marine
Fisheries Service of the Commerce Department, the U.S. Forest
Service of the Agriculture Department, and the U.S. Fish and
Wildlife Service of the Interior Department. The section also
allows organizations that primarily represent small entities
to serve as Small Entity Representatives. Finally, this
section directs the Chief Counsel for Advocacy of the Small
Business Administration to promulgate a rule making to
further define the terms ``significant economic impact'' and
``substantial number of small entities'' and to consider the
indirect impacts regulations have on small businesses when
promulgating these regulations.
Section 5. Collection of Information Requirement
This section revises the conditions under which the
Internal Revenue Service must conduct an initial regulatory
flexibility analysis for interpretative regulations. If the
IRS is promulgating a temporary regulation, the IRS may avoid
this requirement but it must inform the Chief Counsel for
Advocacy at the time of the decision and include an
explanation of why the temporary regulation is required
because using a notice and comment procedure would be
impracticable, unnecessary, or contrary to the public
interest, and an explanation of the reasons that
circumstances warrant an exception from the panel review
requirement. This notice and explanation must also be
published in the Federal Register.
Section 6. Initial Regulatory Flexibility Analysis
This sections adds the requirement of conducting a cost/
benefit analysis of the regulation to the requirements of the
Initial Regulatory Flexibility Analysis required under the
Regulatory Flexibility Act. Agencies are also directed to
take into account, to the extent practical, the cumulative
cost of their regulations on small businesses and the
effect of the proposed regulation on those cumulative
costs. Finally, agencies are directed to make an initial
certification that the benefits of the proposed rule
justify the costs of the proposed rule to small entities.
Section 7. Final Regulatory Flexibility Analysis
This section adds cost/benefit analyses to the requirements
of the Final Regulatory Flexibility Analysis called for under
the Regulatory Flexibility Act. It also requires agencies to
make a final certification that the benefits of the
regulation justify the costs of the regulation to the small
entities that will be subject to it. Finally, agencies are
required to describe the comments received on the Initial
Regulatory Flexibility Analysis and a statement of any change
made as a result of those comments.
Section 8. Publication of Decision to Certify a Rule
This section requires agencies to publish separately in the
Federal Register their decision to certify a regulation as
not having a significant economic impact on a substantial
number of small entities instead of the current requirement
of publishing that decision with the proposed rule. This also
requires the agency to publish a summary of the economic
analysis supporting that decision and indicates what must be
in that summary. The complete analysis is to be made
available on the Internet to the extent practicable.
Section 9. Judicial review of Certification Decision
This section makes the agency decision to certify a
regulation as not having a singificant economic impact on a
substantial number of small entities judicially reviewable
and specifies that the remedy shall be voiding of the
certification and requiring the agency to conduct the Initial
Regulatory Flexibility Analysis, Final Regulatory Flexibility
Analysis, and the small business advocacy review panel if
required.
Section 10. Exclusion of Agency Outreach to Small Businesses from
Certain Collection of Information Requirements
This section excludes outreach efforts to small businesses
to determine the impact of regulations from the requirements
for Office of Management and Budget clearance under the
Paperwork Reduction Act.
Section 11. Effective Date
This act shall take effect 90 days after the date of
enactment.
______
By Mr. CHAFEE (for himself, Mr. Graham, Mrs. Lincoln, Mr.
Torricelli, and Mr. Kohl):
S. 850. A bill to expand the Federal tax refund intercept program to
cover children who are not minors; to the Committee on Finance.
Mr. CHAFEE. Mr. President, I am pleased to be joined today by
Senators Graham, Lincoln, Torricelli, and Kohl in introducing the Child
Support Fairness and Tax Refund Interception Act of 2001.
The Child Support Fairness and Tax Refund Interception Act of 2001
closes a loophole in current federal statute by expanding the
eligibility of one of the most effective means of enforcing child
support orders, that of intercepting the federal tax refunds of parents
who are delinquent in paying their court-ordered financial support for
their children.
Under current law, eligibility for the federal tax refund offset
program is limited to cases involving minors, parents on public
assistance, or adult children who are disabled. Custodial parents of
adult, non-disabled children are not assisted under the IRS tax refund
intercept program, and in many cases, they must work multiple jobs in
order to make ends meet. Some of these parents have gone into debt to
put their college-age children through school.
The legislation we are introducing today will address this inequity
by expanding the eligibility of the federal tax refund offset program
to cover parents of all children, regardless of whether the child is
disabled or a minor. This legislation will not create a cause of action
for a custodial parent to seek additional child support. In will merely
assist the custodial parent in removing debt that is owed for a level
of child support that was determined by a court.
Improving our child support enforcement programs is an issue that
should be of concern to us all as it remains a serious problem in the
United States. According to the most recent government statistics,
there are approximately twelve million active cases in which a child
support order requires a noncustodial parent to contribute to the
support of his or her child. Of the $22 billion owed in 1999, only $12
billion has been collected. In 1998, only 23 percent of children
entitled to child support through our public system received some form
of payment, despite federal and state efforts. Similar shortfalls in
previous years bring the combined delinquency total to approximately
$47 billion. We can fix this injustice in our federal tax refund offset
program by helping some of our most needy constituents receive the
financial assistance they are owed.
While previous administrations have been somewhat successful in using
tax refunds as a tool to collect child support payments, more needs to
be done. The IRS tax refund interception program has only collected
one-third of tardy child support payments. The Child Support Fairness
and Tax Refund Interception Act of 2001 will remove the current barrier
to fulfilling an individual's obligation to pay child support, while
helping to provide for the future of our nation's children.
I urge my colleagues to join me in supporting this important
legislation, and 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. 850
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 ``Child Support Fairness and
Tax Refund Interception Act of 2001''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Enforcing child support orders remains a serious
problem in the United States. There are approximately
12,000,000 active cases in which a child support order
requires a noncustodial parent to contribute to the support
of his or her child. Of the $22,000,000,000 owed in 1999
pursuant to such orders, $12,000,000,000, or 54 percent, has
been collected.
(2) It is an injustice for the Federal Government to issue
tax refunds to a deadbeat
[[Page S4604]]
spouse while a custodial parent has to work 2 or 3 jobs to
compensate for the shortfall in providing for their children.
(3) The Internal Revenue Service (IRS) program to intercept
the tax refunds of parents who owe child support arrears has
been successful in collecting a tenth of such arrears.
(4) The Congress has periodically expanded eligibility for
the IRS tax refund intercept program. Initially, the program
was limited to intercepting Federal tax refunds owed to
parents on public assistance. In 1984, the Congress expanded
the program to cover parents not on public assistance.
Finally, the Omnibus Budget Reconciliation Act of 1990 made
the program permanent and expanded the program to cover
parents of adult children who are disabled.
(5) The injustice to the custodial parent is the same
regardless of whether the child is disabled, non-disabled, a
minor, or an adult, so long as the child support obligation
is provided for by a court or administrative order. It is
common for parents to help their adult children finance a
college education, a wedding, or a first home. Some parents
cannot afford to do that because they are recovering from
debt they incurred to cover expenses that would have been
covered if they had been paid the child support owed to them
in a timely manner.
(6) This Act would address this injustice by expanding the
program to cover parents of all adult children, regardless of
whether the child is disabled.
(7) This Act does not create a cause of action for a
custodial parent to seek additional child support. This Act
merely helps the custodial parent recover debt they are owed
for a level of child support that was set by a court after
both sides had the opportunity to present their arguments
about the proper amount of child support.
SEC. 3. USE OF TAX REFUND INTERCEPT PROGRAM TO COLLECT PAST-
DUE CHILD SUPPORT ON BEHALF OF CHILDREN WHO ARE
NOT MINORS.
Section 464 of the Social Security Act (42 U.S.C. 664) is
amended--
(1) in subsection (a)(2)(A), by striking ``(as that term is
defined for purposes of this paragraph under subsection
(c))''; and
(2) in subsection (c)--
(A) in paragraph (1)--
(i) by striking ``(1) Except as provided in paragraph (2),
as used in'' and inserting ``In''; and
(ii) by inserting ``(whether or not a minor)'' after ``a
child'' each place it appears; and
(B) by striking paragraphs (2) and (3).
______
By Mr. THOMPSON (for himself, Mr. Kohl, Mr. Voinovich, Mr. Levin,
Mr. Thurmond, Ms. Collins, and Mr. Fitzgerald):
S. 851. A bill to establish a commission to conduct a study of
government privacy practices, and for other purposes; to the Committee
on Governmental Affairs.
Mr. THOMPSON. Mr. President, I rise today to introduce the
``Citizens' Privacy Commission Act of 2001.'' This legislation will
establish an 11-member commission to examine how Federal, State, and
local governments collect and use our personal information and to make
recommendations to Congress as we consider how to map out government
privacy protections for the future. The Citizens' Privacy Commission,
whose members will include experts with a diversity of experiences,
will look at the spectrum of privacy concerns involving Federal, State,
and local government, from protecting citizens' genetic information, to
guaranteeing the safe use of Social Security numbers, to ensuring
confidentiality to citizens visiting government web sites.
As we all know, Americans are increasingly concerned about the
potential misuse of their personal information. A variety of measures
intended to address the collection, use, and distribution of personal
information by the private sector have been introduced in Congress.
Recent events, however, suggest that government privacy practices
warrant closer scrutiny. For example, details surfaced last summer
about the FBI's new e-mail surveillance system--Carnivore. Civil
libertarians and Internet users alike continue to question the
legitimacy of this ``online wiretapping.''
Also last summer, after the White House Office of National Drug
Control Policy was found to be using ``cookies'' on Internet search
engines, I requested that GAO investigate Federal agencies' use of
these information-collection devices on their own Web sites. GAO only
had time to investigate a small sample of Federal agency sites, but
they found a number of unauthorized ``cookies,'' including one that was
operated by a third-party private company on an agency Web site under
an agreement that gave the private company co-ownership of the data
collected on visitors to the site.
As a follow-up to the GAO investigation, Congressman Jay Inslee and I
worked together on an amendment to require all agency Inspectors
General to report to Congress on each agency's Internet information-
collection practices. Fewer than half of the Inspectors General have
completed their investigations, but the preliminary findings are cause
for concern. In audits performed this past winter, sixteen Inspectors
General identified sixty-four agency Web sites that were violating the
privacy policies established by the last Administration by using
information-collection devices called ``cookies'' without the required
approval.
Last fall, Congressmen Armey and Tauzin released a GAO report that
revealed that 97 percent of the Web sites of Federal agencies,
including the Federal Trade Commission, weren't in compliance with
privacy standards that the FTC was advocating for private sector Web
sites.
On top of all these examples, there is the issue of computer security
at Federal agencies, which has been notoriously lax for years. GAO and
Federal agency Inspectors General report time and time again that
sensitive information on citizens' health and financial records is
vulnerable to hackers. Just this spring, GAO issued a report which
explained how easily their investigators were able to hack into IRS
computers and gain access to citizens' e-filed taxes. Not surprisingly,
a recent poll shows that most Americans perceive government as the
greatest threat to their personal privacy, above both the media and
corporations.
Last year, Senator Kohl and I sponsored the Senate companion bill to
the Hutchinson-Moran Privacy Commission Act. This bill would have
created a commission to study privacy issues in both the government and
the private sector. The House bill failed a suspension vote by a narrow
margin. There was a lack of consensus on whether a commission was
warranted for the private sector issues being deliberated by the
Congress. There was no disagreement, however, on the need for a
commission to study the government's management of citizens' personal
privacy. Many privacy advocates believe that the Privacy Act of 1974
and other laws addressing government privacy practices need to be
updated, but we need a better understanding of the extent of the
problem and of what exactly needs to be done.
Federal, State, and local governments collect, use, and distribute a
large quantity of personal information for legitimate purposes. Yet
because governments operate under different incentives and under a
different legal relationship than the private sector, they may pose
unique privacy problems. Unlike businesses, governments collect
personal information under the force of law. Furthermore, governments
do not face the market incentives that can discourage information
collection or sharing. With the power and authority of government and
the breadth of information it collects comes the potential for mistakes
or abuse. The risk of privacy violations could also threaten to
undermine the public's confidence in e-Government, our effort to make
government more accessible and responsive to citizens through the
Internet. In fact, according to a recent Pew Internet and American Life
report, only 31 percent of Americans say they trust the government to
do the right thing most of the time or all of the time.
The last Federal privacy commission operated over 25 years ago, from
1975 to 1977. Since then, there have been enormous leaps in technology.
Today, a few keystrokes on a computer hooked up to the Internet can
produce a quantity of information that was unimaginable in 1975. The
question we must answer today is the same question Congress addressed
in 1975: ``How can government achieve the correct balance between
protecting personal privacy and allowing appropriate uses of
information?'' The technological advances and other changes that have
occurred since the 1970's, however, demand a reevaluation of the
government privacy protections that we currently have in place. While
we have passed laws laying out a framework for the Federal government,
it is time to reassess the laws designed to safeguard citizens' privacy
in light of the current state of technology.
The Citizens' Privacy Commission will help us find the balance
between protecting the privacy of individuals
[[Page S4605]]
and permitting specific and appropriate uses of personal information
for legitimate and necessary government purposes. The Commission will
be directed to study a wide variety of issues relating to personal
privacy and the government, including the collection, use, and
distribution of personal information by Federal, State, and local
governments, as well as current legislative and regulatory efforts to
respond to privacy problems in the government. In the course of its
examination of these issues, the Commission will also be required to
hold at least three field hearings around the country and to set up a
Web site to facilitate public participation and public comment. After
18 months of study, the Commission will submit a report to Congress on
its findings, including any recommendations for legislation to reform
or augment current laws. The Commission's report will be available for
consideration by the next Congress.
It is my hope that we all can work together to pass the Citizens'
Privacy Commission Act of 2001 to help us make informed and thoughtful
decisions to protect the privacy of the American people. I would like
to thank Senator Kohl, who has worked with me on a privacy commission
bill for some time, as well as Senators Voinovich, Levin, Thurmond,
Collins, and Fitzgerald for joining us as cosponsors. I urge my
colleagues to support this important legislation.
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. 851
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 ``Citizens' Privacy Commission
Act of 2001''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Americans are increasingly concerned about their civil
liberties and the security, collection, use, and distribution
of their personal information by government, including
medical records and genetic information, educational records,
health records, tax records, library records, driver's
license numbers, and other records.
(2) The shift from a paper based government to an
information technology reliant government calls for a
reassessment of the most effective way to balance personal
privacy and information use, keeping in mind the potential
for unintended effects on technology development and privacy
needs.
(3) Concerns have been raised about the adequacy of
existing government privacy laws and the adequacy of their
enforcement in light of new technologies.
SEC. 3. ESTABLISHMENT.
There is established a commission to be known as the
``Citizens' Privacy Commission'' (in this Act referred to as
the ``Commission'').
SEC. 4. DUTIES OF COMMISSION.
(a) Study.--The Commission shall conduct a study of issues
relating to protection of individual privacy and the
appropriate balance to be achieved between protecting
individual privacy and allowing appropriate uses of
information, including the following:
(1) The collection, use, and distribution of personal
information by Federal, State, and local governments.
(2) Current efforts and proposals to address the
collection, use, and distribution of personal information by
Federal and State governments, including--
(A) existing statutes and regulations relating to the
protection of individual privacy, including section 552a of
title 5, United States Code (commonly referred to as the
Privacy Act of 1974) and section 552 of that title (commonly
referred to as the Freedom of Information Act); and
(B) privacy protection efforts undertaken by the Federal
Government, State governments, foreign governments, and
international governing bodies.
(3) The extent to which individuals in the United States
can obtain redress for privacy violations by government.
(b) Field Hearings.--The Commission shall conduct at least
3 field hearings in different geographical regions of the
United States.
(c) Report.--
(1) In general.--Not later than 18 months after the
appointment of all members of the Commission--
(A) a majority of the members of the Commission shall
approve a report; and
(B) the Commission shall submit the approved report to the
Congress and the President.
(2) Contents.--The report shall include a detailed
statement of findings, conclusions, and recommendations
regarding government collection, use and disclosure of
personal information, including the following:
(A) Findings on potential threats posed to individual
privacy.
(B) Analysis of purposes for which sharing of information
is appropriate and beneficial to the public.
(C) Analysis of the effectiveness of existing statutes,
regulations, technology advances, third-party verification,
and market forces in protecting individual privacy.
(D) Recommendations on whether additional legislation or
regulation is necessary, and if so, specific suggestions on
proposals to reform or augment current laws and regulations
relating to citizens' privacy.
(E) Analysis of laws, regulations, or proposals which may
impose unreasonable costs or burdens, raise constitutional
concerns, or cause unintended harm in other policy areas,
such as security, law enforcement, medical research and
treatment, employee benefits, or critical infrastructure
protection.
(F) Cost analysis of legislative or regulatory changes
proposed in the report.
(G) Recommendations on non-legislative solutions to
individual privacy concerns, including new technology,
education, best practices, and third party verification.
(H) Recommendations on alternatives to government
collection of information, including private sector
retention.
(I) Review of the effectiveness and utility of third-party
verification.
(d) Additional Report.--Together with the report under
subsection (c), the Commission shall submit to the Congress
and the President any additional report of dissenting
opinions or minority views by a member of the Commission.
(e) Interim Report.--The Commission may submit to the
Congress and the President an interim report approved by a
majority of the members of the Commission.
SEC. 5. MEMBERSHIP.
(a) Number and Appointment.--The Commission shall be
composed of 11 members appointed as follows:
(1) 2 members appointed by the President.
(2) 2 members appointed by the Majority Leader of the
Senate.
(3) 2 members appointed by the Minority Leader of the
Senate.
(4) 2 members appointed by the Speaker of the House of
Representatives.
(5) 2 members appointed by the Minority Leader of the House
of Representatives.
(6) 1 member, who shall serve as Chairperson of the
Commission, appointed jointly by the President, the Majority
Leader of the Senate, the Minority Leader of the Senate, the
Speaker of the House of Representatives, and the Minority
Leader of the House of Representatives.
(b) Diversity of Views.--The appointing authorities under
subsection (a) shall seek to ensure that the membership of
the Commission has a diversity of experiences and expertise
on the issues to be studied by the Commission, such as views
and experiences of Federal, State, and local governments, the
media, the academic community, consumer groups, public policy
groups and other advocacy organizations, civil liberties
experts, and business and industry (including small business,
the information technology industry, the health care
industry, and the financial services industry).
(c) Date of Appointment.--The appointment of the members of
the Commission shall be made not later than 30 days after the
date of the enactment of this Act.
(d) Terms.--Each member of the Commission shall be
appointed for the life of the Commission.
(e) Vacancies.--A vacancy in the Commission shall be filled
in the same manner in which the original appointment was
made.
(f) Compensation; Travel Expenses.--Members of the
Commission shall serve without pay, but shall receive travel
expenses, including per diem in lieu of subsistence, in
accordance with sections 5702 and 5703 of title 5, United
States Code.
(g) Quorum.--A majority of the members of the Commission
shall constitute a quorum, but a lesser number may hold
hearings.
(h) Meetings.--
(1) In general.--The Commission shall meet at the call of
the Chairperson or a majority of its members.
(2) Initial meeting.--Not later than 45 days after the date
of the enactment of this Act, the Commission shall hold its
initial meeting.
SEC. 6. DIRECTOR; STAFF; EXPERTS AND CONSULTANTS.
(a) Director.--
(1) In general.--Not later than 40 days after the date of
enactment of this Act, the Chairperson of the Commission
shall appoint a Director without regard to the provisions of
title 5, United States Code, governing appointments to the
competitive service.
(2) Pay.--The Director shall be paid at the rate payable
for level III of the Executive Schedule established under
section 5314 of such title.
(b) Staff.--The Director may appoint staff as the Director
determines appropriate.
(c) Applicability of Certain Civil Service Laws.--
(1) In general.--The staff of the Commission shall be
appointed without regard to the provisions of title 5, United
States Code, governing appointments in the competitive
service.
(2) Pay.--The staff of the Commission shall be paid in
accordance with the provisions of chapter 51 and subchapter
III of chapter 53 of that title relating to classification
and General Schedule pay rates, but at rates not in excess of
the maximum rate for grade GS-15 of the General Schedule
under section 5332 of that title.
(d) Experts and Consultants.--The Director may procure
temporary and intermittent
[[Page S4606]]
services under section 3109(b) of title 5, United States
Code.
(e) Staff of Federal Agencies.--
(1) In general.--Upon request of the Director, the head of
any Federal department or agency may detail, on a
reimbursable basis, any of the personnel of that department
or agency to the Commission to assist it in carrying out this
Act.
(2) Notification.--Before making a request under this
subsection, the Director shall give notice of the request to
each member of the Commission.
SEC. 7. POWERS OF COMMISSION.
(a) Hearings and Sessions.--The Commission may, for the
purpose of carrying out this Act, hold hearings, sit and act
at times and places, take testimony, and receive evidence as
the Commission considers appropriate. The Commission may
administer oaths or affirmations to witnesses appearing
before it.
(b) Powers of Members and Agents.--Any member or agent of
the Commission may, if authorized by the Commission, take any
action which the Commission is authorized to take by this
section.
(c) Obtaining Official Information.--
(1) In general.--Except as provided in paragraph (2), if
the Chairperson of the Commission submits a request to a
Federal department or agency for information necessary to
enable the Commission to carry out this Act, the head of that
department or agency shall furnish that information to the
Commission.
(2) Exception for national security.--If the head of that
department or agency determines that it is necessary to guard
that information from disclosure to protect the national
security interests of the United States, the head shall not
furnish that information to the Commission.
(d) Website.--The Commission shall establish a website to
facilitate public participation and the submission of public
comments.
(e) Mails.--The Commission may use the United States mails
in the same manner and under the same conditions as other
departments and agencies of the United States.
(f) Administrative Support Services.--Upon the request of
the Director, the Administrator of General Services shall
provide to the Commission, on a reimbursable basis, the
administrative support services necessary for the Commission
to carry out this Act.
(g) Gifts and Donations.--The Commission may accept, use,
and dispose of gifts or donations of services or property to
carry out this Act, but only to the extent or in the amounts
provided in advance in appropriation Acts.
(h) Contracts.--The Commission may contract with and
compensate persons and government agencies for supplies and
services, without regard to section 3709 of the Revised
Statutes (41 U.S.C. 5).
(i) Subpoena Power.--
(1) In general.--The Commission may issue subpoenas
requiring the attendance and testimony of witnesses and the
production of any evidence relating to any matter that the
Commission is empowered to investigate by section 4. The
attendance of witnesses and the production of evidence may be
required by such subpoena from any place within the United
States and at any specified place of hearing within the
United States.
(2) Failure to obey a subpoena.--If a person refuses to
obey a subpoena issued under paragraph (1), the Commission
may apply to a United States district court for an order
requiring that person to appear before the Commission to give
testimony, produce evidence, or both, relating to the matter
under investigation. The application may be made within the
judicial district where the hearing is conducted or where
that person is found, resides, or transacts business. Any
failure to obey the order of the court may be punished by the
court as civil contempt.
(3) Service of subpoenas.--The subpoenas of the Commission
shall be served in the manner provided for subpoenas issued
by a United States district court under the Federal Rules of
Civil Procedure for the United States district courts.
(4) Service of process.--All process of any court to which
application is made under paragraph (2) may be served in the
judicial district in which the person required to be served
resides or may be found.
SEC. 8. PRIVACY PROTECTIONS.
(a) Destruction or Return of Information Required.--Upon
the conclusion of the matter or need for which individually
identifiable information was disclosed to the Commission, the
Commission shall either destroy the individually identifiable
information or return it to the person or entity from which
it was obtained, unless the individual that is the subject of
the individually identifiable information has authorized its
disclosure.
(b) Disclosure of Information Prohibited.--The Commission--
(1) shall protect individually identifiable information
from improper use; and
(2) may not disclose such information to any person,
including the Congress or the President, unless the
individual that is the subject of the information has
authorized such a disclosure.
(c) Proprietary Business Information and Financial
Information.--The Commission shall protect from improper use,
and may not disclose to any person, proprietary business
information and proprietary financial information that may be
viewed or obtained by the Commission in the course of
carrying out its duties under this Act.
(d) Individually Identifiable Information Defined.--In this
section, the term ``individually identifiable information''
means any information, whether oral or recorded in any form
or medium, that identifies an individual, or with respect to
which there is a reasonable basis to believe that the
information can be used to identify an individual.
SEC. 9. BUDGET ACT COMPLIANCE.
Any new contract authority authorized by this Act shall be
effective only to the extent or in the amounts provided in
advance in appropriation Acts.
SEC. 10. TERMINATION.
The Commission shall terminate 30 days after submitting a
report under section 4(c).
SEC. 11. AUTHORIZATION OF APPROPRIATIONS.
(a) In General.--There are authorized to be appropriated to
the Commission $3,000,000 to carry out this Act.
(b) Availability.--Any sums appropriated pursuant to the
authorization in subsection (a) shall remain available until
expended.
Mr. KOHL. Mr. President, I rise today to introduce the ``Citizens'
Privacy Commission Act'' with my colleague, Senator Fred Thompson.
Privacy has become an issue of paramount importance in this era of
electronic commerce, advanced communications, and far-reaching business
conglomerates. Our challenge is to clearly define privacy concerns and
decide how best to protect privacy as technology and the economy move
forward. However, even as we consider privacy guidelines for the
private sector, the government should follow the highest privacy
standards and demonstrate not only that they are preferable, but that
they work.
The measure we introduce today would create a Commission to examine
how the various levels of government collect, use and share information
about citizens. Although the recent privacy debate has been focused on
online privacy and how the private sector collects and sells personally
identifiable information, the government should not be overlooked. All
levels of government have their own websites that are as capable of
collecting sensitive information. There is also concern that the
Privacy Act of 1974, which regulates how the government can collect,
use and share personal information, is not being enforced or properly
adhered to by federal government agencies. Furthermore, there is
evidence that some government websites continue to collect information
through the use of ``cookies'' in direct violation of former President
Clinton's June 2000 executive order forbidding them to do so absent a
``compelling reason'' to do so.
Our proposal is simple, and its goals are modest and meaningful.
Specifically, our measure creates an 11 member, bipartisan panel to
study data collection practices, privacy protection standards, and
existing privacy laws that apply to government collection and use of
personal information. We also ask the Commission to examine pending
privacy initiatives before Congress. Furthermore, we ask the Commission
to determine if federal legislation is needed, and what impact new
privacy laws would be. Finally, we direct the Commission to detail its
findings and recommendations in a Final Report to be issued 18 months
after enactment.
There is ample precedent for this Commission. In the mid-1970's, the
privacy debate focused on government collection and misuse of personal
data. Ultimately, Congress enacted the Freedom of Information Act, the
Privacy Act, and the Privacy Study Commission. Since that time,
however, very little attention has been paid to genuine concerns about
government use of sensitive personal information. Having passed
critical legislation in the 1970s, many people felt satisfied that the
issue was taken care of. Unfortunately, we have grown lax about
policing ourselves in this area. This bill will right the course and
change that. In fact, this legislation provides us with the opportunity
to establish a model of privacy protection. The intellectual capital
created by the work of this Commission will help us set a responsible
example for the private sector.
Privacy protection is a unique struggle, cutting across the public
and private sector and involving virtually every sector of our nation's
economy. Perhaps there is no possibility of a universal principle
defining necessary privacy protections. But the federal government has
an unparalleled opportunity to try to craft a set of guidelines for
privacy protection that can serve as a model. We believe the time
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has come for Congress to enact reasonable and thoughtful privacy
legislation. This legislation is a sensible first step in that process.
In closing, let me be clear that this bill is neither a ploy to
prevent the enactment of more specific privacy proposals, nor a
stalling tactic to suspend discussion of privacy protection until the
Commission publishes its final report. Rather, this legislation is a
both a genuine effort to gather information on this increasingly
complex topic and a plan to accomplish something positive in this
field. This is legislation that can and should be passed by the
Congress. Therefore, I truly hope we can move quickly to enact this
measure into law, so that the Commission can get to work as soon as
possible.
______
By Mrs. FEINSTEIN (for herself, Mr. Thomas, Mr. Leahy, Mr.
Jeffords, Mr. Lieberman, Mr. Levin, Mr. Wellstone, Mrs. Boxer,
Mr. Akaka, Mr. Feingold, Mr. Kennedy, Mrs. Murray, and Mr.
Torricelli):
S. 852. A bill to support the aspirations of the Tibetan people to
safeguard their distinct identity; to the Committee on Foreign
Relations.
Mrs. FEINSTEIN. Mr. President, I rise today to address the tragedy
that is unfolding in Tibet and, alongside Senators Thomas, Leahy,
Jeffords, Lieberman, Levin, Wellstone, Boxer, Akaka, Feingold, Kennedy,
Murray, and Toricelli introduce the Tibetan Policy Act of 2001.
This legislation is intended to safeguard the legitimate aspirations
of the Tibetan people in their struggle to preserve their cultural and
religious identity, and to encourage dialogue between the Dalai Lama or
his representative and the Government of the People's Republic of China
about the future of Tibet.
As many of my colleagues are aware, I have worked for well over a
decade, since before I came to the Senate, to find the right balance
for establishing a lasting, constructive dialogue between Chinese and
Tibetan leaders. I have tried to do so with the best interests of both
sides in mind. For years, I have tried to build trust and improve
communication between Chinese and Tibetan leaders.
For me this is very personal. I first met the Dalai Lama in 1978. I
have watched him, I have seen him, I have talked with him many, many
times.
The Dalai Lama has pledged, over and over again, that what he wants
is ``one-country, two systems'' approach, whereby Tibetans could live
their life, practice their religion, educate their children, and
maintain their language with dignity and respect among the Han Chinese
people.
I have had the opportunity to speak, at great length, with the
President of China and other senior members of the Chinese leadership
about Tibet.
For years, I believed compromise, good will, and moderation were the
right tools for tearing down obstacles and building cooperation between
the peoples of China and Tibet.
I have even carried messages between the Dalai Lama and the President
of China seeking to bring the two together.
In 1997, for example, I carried a letter from the Dalai Lama to
President Jiang which, in part, stated that ``I have, for my part,
openly and in confidence conveyed to you that I am not demanding
independence for Tibet, which I believe is fundamental to the Chinese
government.'' The letter also suggested that the Dalai Lama and
President Jiang meet to discuss relations between the Tibetans and the
Chinese government, and the ``maintenance and enhancement of those
cultural, civic, and religious institutions that are so important to
the Tibetan people and others throughout the world.''
What I got back was essentially that the Dalai Lama was just a
splittist and that his word was not good.
I, for one, believe he is sincere, in his non-violence, in his
dedication to being a monk, in his concern for the Tibetan people,
heritage, and religion.
Yet Beijing has consistently ignored promises to preserve indigenous
Tibetan political, cultural and religious systems. Indeed, Beijing has
not kept its commitments made twice by China's paramount leaders--Deng
Xiaoping in 1979 and Jiang Zemin in 1997.
I believe that the time has come for the United States government to
increase our attention to enhanced Tibetan cultural and religious
autonomy.
And I feel that I can no longer, in conscience, sit quietly and allow
the situation in Tibet, the wiping away of Tibetan culture from the
Tibetan Plateau, in fact, to deteriorate further.
In many ways, introducing this legislation, especially now, is a very
difficult step for me. I have a strong, abiding interest in good
relations between the United States and China, and I am fully aware
that in the current environment there will be many in China who would
rather dismiss this legislation out of hand than work together to
address the underlying issues.
But, the many reasonable overtures made by me, many of my colleagues
in Congress, and other individuals and organizations throughout the
world to work together with China over the past several years to
address this issue have thus far failed to persuade Beijing to
reconsider its approach to Tibet.
And there does not appear to be a ``good time'' in U.S.-China
relations to introduce this legislation.
So I would say this to my friends in China that as they consider this
legislation and its intent: I take this action now because I and many
of my colleagues are at the point where we feel that this legislation
is necessary to open Beijing's eyes to a simple truth: honoring the
basic rights of minorities in China is not a threat to China's
sovereignty, and running roughshod over its own citizens is not in
China's best interest.
I say this because many senior Chinese leaders, including Mao Zedong,
Zhou En Lai, Deng Xiaoping, Hu Yaobang, and Jiang Zemin have
acknowledged as much in the past.
And I say this because the aspirations of the Tibetan people are not
for independence, but for autonomy and respect for their cultural and
religious institutions. As both the letter I conveyed to President
Jiang in 1997 and the Dalai Lama's statement on the 41st Anniversary of
the Tibetan National Uprising stated, ``my approach envisages that
Tibet enjoy genuine autonomy within the framework of the People's
Republic of China . . . such a mutually beneficial solution would
contribute to the stability and unity of China, their two most
important priorities, while at the same time the Tibetans would be
ensured of their basic right to preserve their own civilization and to
protect the delicate environment of the Tibetan plateau.''
And I say this because I recognize that China is a rising great
nation, with a rich culture and long history. Careful reading of its
history shows that China, like the United States, draws real strength
from its diversity, from its cultural, religious, and ethnic
multiplicity.
But, I am now convinced China's leadership will not modify its
behavior in Tibet until it becomes crystal clear that China's behavior
risks tarnishing its international image and burdening China with
tangible costs.
Unfortnately, the situation in Tibet today is dreadful, and promises
only to get worse. Beijing is pursuing policies that threaten the
Tibetan people's very existence and distinct identity, and Chinese
security forces hold the region in an iron grip.
As Secretary Powell stated in his confirmation hearing before the
Foreign Relations Committee. ``It is a very difficult situation right
now with the Chinese sending more and more Han Chinese in to settle
Tibet.'' Chinese settlers are flooding into Tibet, displacing ethnic
Tibetans, guiding development in ways that clash with traditional
Tibetan needs and values, and monopolizing local resources.
I do not want to debate the complex historical interactions that
characterize the history of relations between China and Tibet. I am not
interested in arguing about events in the past. What I am interested in
is the quality of life and the right to exist as these concepts apply
to Tibetans and Chinese today.
And, without question, a strong case can be made that Tibet has fared
poorly under Chinese stewardship during the past fifty years: Beijing
has consistently ignored promises to preserve indigenous Tibetan
political, cultural and religious systems and institutions, despite
having formally guaranteed these rights in the 1951 Seventeen
[[Page S4608]]
Point Agreement that incorporated Tibet into China. And, as I stated
earlier, Beijing has never seriously moved itself to carry through on
promises to find solutions to the Tibet problem, promises made at least
twice by China's paramount leaders, Deng Xiaoping in 1979 and Jiang
Zemin in 1997. Tibet has been the scene of many grassroots movements
protesting unwelcome Chinese intrusions and policies since 1956, when
Beijing first began seriously disrupting Tibetan society by forcefully
imposing so-called ``democratic reforms'' in the region. China's
response to Tibetan protests has typically been violent, excessive, and
unrestrained. In 1959, Beijing viciously and bloodily suppressed the
massive popular protest known as the Lhasa Uprising. Indeed, it is
estimated that nearly 1.2 million Tibetans died at the hands of Chinese
forces during the worst years of violence, between 1956 and 1976.
International commissions and third-party courts of opinion, most
notably the International Commission of Jurists and numerous United
Nations resolutions, consistently pointed fingers at China as a
violator in Tibet of fundamental human rights and of the basic
principles of international law.
According to the 2000 State Department Country Report on Human Rights
Practices: Chinese Government authorities continued to commit numerous
serious human rights abuses in Tibet, including instances of torture,
arbitrary arrest, detention without public trial, and lengthy detention
of Tibetan nationalists for peacefully expressing political or
religious views. Tight controls on religion and on other fundamental
freedoms continued and intensified during the year.
And, as Human Rights Watch/Asia reports, China's activities are
targeting not just the present, but Tibet's future as well: Children in
the Tibetan capital, Lhasa, are being discouraged from expressing
religious faith and practicing devotional activities as part of the
authorities' campaign in middle schools and some primary schools.
Children aged between seven and thirteen in schools targeted by the
campaign are being told that Tibetan Buddhist practice is `backward
behavior' and an obstacle to progress. In some schools, children are
given detention of forced to pay fines when they fail to observe a ban
on wearing traditional Buddhist ``protection cords.''
Corrupt officials. Oppressive police tactics and midnight arrests.
Seizure and imprisonment without formal charges. Beatings and
unexplained deaths while in custody. The steady grinding down of
Tibetan cultural and religious institutions. The list of abuses in
Tibet goes on and on. There is no need for me to repeat them here.
I say all this as one who wants to work with China's leadership to
help find a solution to this, and other, problems, and see a positive
relationship between the U.S. and China, and between the people of
China and the people of Tibet.
I want to be a positive force for bringing Tibetan and Chinese
leaders to the table for face-to-face dialogue.
It is not my intention with this legislation to merely point fingers
and lay blame. My intent in introducing the Tibetan Policy Act of 2001
is not to stigmatize or chastise China.
My intent in introducing the Tibetan Policy Act of 2001 is to place
the full faith of the United States government behind efforts to
preserve the distinct cultural, religious and ethnic autonomy of the
Tibetan people.
Specifically, the Tibetan Policy Act of 2001: Outlines Tibet's unique
historical, cultural and religious heritage and describes the efforts
by the United States, the Dalai Lama, and others to initiate dialogue
with China on the status of Tibet. Codifies the position of Special
Coordinator for Tibetan Issues at the Department of State, assures that
relevant U.S. government reports will list Tibet as a separate section
under China and that the Congressional-Executive Commission on the
People's Republic of China will hold Beijing to acceptable standards of
behavior in Tibet. Authorizes $2.75 million for humanitarian assistance
for Tibetan refugees, scholarships for Tibetan exiles, and human rights
activities by Tibetan non-governmental organizations. Establishes U.S.
policy goals for international economic assistance to and in Tibet to
ensure that ethnic Tibetans benefit from development policies in Tibet.
Calls on the Secretary of State to make best efforts to establish an
office in Lhasa, the Capital of Tibet. Provides U.S. support for
consideration of Tibet at the United Nations. Ensures that Tibetan
language training is available for foreign service officers. Highlights
concerns about the lack of religious freedom in Tibet by calling on
China to cease activities which attack the fundamental characteristics
of religious freedom in Tibet.
In addition, the Tibet Policy Act expresses the Sense of the Congress
that: The President and the Secretary of State should initiate steps to
encourage China to enter into negotiations with the Dalai Lama or his
representatives on the question of Tibet and the cultural and religious
autonomy of the Tibetan people. That the President and the Secretary of
State should request the immediate and unconditional release of
political or religious prisoners in Tibet; seek access for
international humanitarian organizations to prisons in Tibet; and seek
the immediate medical parole of Ngawang Choephel and other Tibetan
prisoners known to be in ill-health. The United States will seek ways
to support economic development, cultural preservation, health care,
and education and environmental sustainability for Tibetans inside
Tibet.
The Tibetan Policy Act does not aim to punish anyone. I do not
believe that threats or force will sway Beijing from its present
course.
But, I am convinced that we must send a clear message.
I am under no illusion that passing the Tibetan Policy Act of 2001
will immediately change the situation in Tibet.
Nor am I under any illusion that changing current conditions in Tibet
will be an easy process. It will be a long and difficult process
requiring patience and perseverance.
But I am hopeful that better, more effective efforts on our part and
better coordination with like-minded members of the international
community will encourage China to change its thinking and modify its
behavior towards Tibet.
To paraphrase an old Chinese proverb: you have to take a first step
to start any journey. This legislation, I hope, is a first step in
bringing together the Dalai Lama or his representative and the Chinese
government to discuss the future of Tibet and to take action to
safeguard the distinct cultural, religious, and social identity of the
Tibetan people.
I urge my colleagues here in the Senate, as well as my friends in
China, to join with me in taking it.
______
By Mrs. BOXER:
S. 855. A bill to protect children and other vulnerable
subpopulations from exposure to environmental pollutants, to protect
children from exposure to pesticides in schools, and to provide parents
with information concerning toxic chemicals that pose risks to
children, and for other purposes; to the Committee on Environment and
Publc Works.
Mrs. BOXER. Mr. President, today I am reintroducing a bill to protect
children from the dangers posed by pollution and toxic chemicals in our
environment. The Children's Environmental Protection Act, (CEPA), is
based on the fact that children are not small adults. Children eat more
food, drink more water, and breathe more air as a percentage of their
body weight than adults. Children also grow rapidly, and therefore are
physiologically more vulnerable to toxic substances than adults. This
makes them more susceptible to the dangers posed by those substances.
How is this understanding that children suffer higher risks from the
dangers posed by toxic and harmful substances taken into account in our
environmental and public health standards? Do we gather and consider
data that specifically evaluates how those substances affect children?
If that data is lacking, do we apply extra caution when we determine
the amount of toxics that can be released into the air and water, the
level of harmful contaminants that may be present in our drinking
water, or the amount of pesticides that may be present in our food?
In most cases, the answer to all of these questions is ``no.'' In
fact, most of these standards are designed to protect adults rather
than children. In
[[Page S4609]]
most cases, we do not even have the data that would allow us to measure
how those substances specifically affect children. And, in the face of
that uncertainty, we generally assume that what we don't know about the
dangers toxic and harmful substances pose to our children won't hurt
them. We generally don't apply extra caution to take account of that
uncertainty.
CEPA would change the answers to those questions from ``no'' to
``yes.'' It would childproof our environmental laws. CEPA is based on
the premise that what we don't know about the dangers toxic and harmful
substances pose to our children may very well hurt them.
CEPA would require the Environmental Protection Agency (EPA) to set
environmental and public health standards to protect children. It would
require EPA to explicitly consider the dangers that toxic and harmful
substances pose to children when setting those standards. Finally, if
EPA discovers that it does not have specific data that would allow it
to measure those dangers, EPA would be required to apply an additional
safety factor, an additional measure of caution, to account for that
lack of information. The Safe Drinking Water Act Amendments of 1996
included my amendment to require EPA to set drinking water standards at
safe levels for children. All of our environmental laws should reflect
the special needs of children. CEPA would ensure that children's health
risks are properly taken into account.
This process would, I acknowledge, take some time. So, while EPA is
in the process of updating the standards, CEPA would provide parents
and teachers with a number of tools to immediately protect their
children from toxic and harmful substances.
First, CEPA would require EPA to provide all schools and day care
centers that receive federal funding a copy of EPA's guide to help
schools adopt a least toxic pest management policy. CEPA would also
prohibit the use of dangerous pesticides--those containing known or
probably carcinogens, reproductive toxins, acute nerve toxins and
endocrine disrupters--in those areas. Under CEPA, parents would also
receive advance notification before pesticides are applied on school or
day care center grounds.
Second, CEPA would expand the federal Toxics Release Inventory (TRI)
to require the reporting of toxic chemical releases that may pose
special risks to children. In particular, CEPA provides that releases
of small amounts of lead, mercury, dioxin, cadmium and chromium be
reported under TRI. These chemicals are either highly toxic, persist in
the environment or can accumulate in the human body over many years--
all features that render them particularly dangerous to children. Lead,
for example, will seriously affect a child's development, but is still
released into the environment through lead smelting and waste
incineration. CEPA would then require EPA to identify other toxic
chemicals that may present special risks to children, and to provide
that releases of those chemicals be reported under TRI.
Third, CEPA would direct EPA to create a list of recommended safer-
for-children products that minimize potential risks to children.
Finally, CEPA would require EPA to create a family right-to-know
information kit that would include practical suggestions to help
parents reduce their children's exposure to toxic and harmful
substances in the environment.
My CEPA bill is based on the premise that what we don't know about
the dangers that toxic and harmful substances pose to our children may
very well hurt them. It would require EPA to apply caution in the face
of that uncertainty. And, ultimately, it would childproof our
environmental laws to ensure that those laws protect the most
vulnerable among us--our children.
I encourage my colleagues to support this bill.
______
By Mr. KERRY (for himself, Mr. Bond, Mr. Cleland, Ms. Landrieu,
Mr. Bennett, Mr. Levin, Mr. Lieberman, Mr. Harkin, Mr.
Bingaman, Mr. Enzi, and Ms. Cantwell):
S. 856. A bill to reauthorize the Small Business Technology Transfer
Program, and for other purposes; to the Committee on Small Business.
Mr. KERRY. Mr. President, today I rise to introduce legislation to
reauthorize the Small Business Administration's Small Business
Technology Transfer, STTR, Program.
The STTR program funds cooperative R&D projects between small
companies and research institutions as an incentive to advance the
nation's technological progress. For those of us who were here when
Congress created this program in 1992, we will remember that we were
looking for ways to move research from the laboratories to market. What
could we do to keep promising research from stagnating in Federal labs
and research universities? Our research in this country is world
renowned, so it wasn't a question of good science and engineering. We,
without a doubt, have one of the finest university systems in the
world, and we have outstanding research institutions. What we needed
was more development, development of innovative technology. We needed a
system that would take this research and find ways it could be applied
to everyday life and national priorities. One such company is Sterling
Semiconductor. Sterling, in conjunction with the University of
Colorado, has developed silicon carbide wafers for use in
semiconductors that can withstand extreme temperatures and conditions.
In addition to defense applications, these wafers can be used for
everything from traffic lights to automobile dashboards and
communications equipment.
With technology transfer, it was not just the issue of the tenured
professor who risked security if he or she left to try and
commercialize their research; it was also an issue of creating
businesses and jobs that maximized the contributions of our scientists
and engineers once they graduated. There simply weren't enough
opportunities at universities and labs for these bright individuals to
do research and development. The answer was to encourage the creation
of small businesses dedicated to research, its development, and
ultimately moving that research out of the lab and finding a commercial
application.
We knew that the SBA's existing Small Business Innovation Research,
SBIR, program had proven to be extremely successful over the previous
ten years, so we established what is now known as the Small Business
Technology Transfer program. The STTR program complements the SBIR
program. Whereas the SBIR program funds R&D projects at small
companies, STTR funds cooperative R&D projects between a small company
and a research institution, such as a university or Federally funded
R&D lab. The STTR program fosters development and commercialization of
ideas that either originate at a research institution or require
significant research institution involvement, such as expertise or
facilities, for their successful development.
This has been a very successful program. One company, Cambridge
Research Instruments of Woburn, Massachusetts, has been working on an
STTR project with the Marine Biological Lab in Woods Hole. They have
developed a liquid crystal-based polarized light microscope for
structural imaging. While that is a mouthful, I'm told that it helps in
manufacturing flat screen computer monitors, and even helps improve the
in vitro fertilization procedure. Together this company and the lab
expect to have sales in excess of $1 million dollars next year from
this STTR project.
As this example illustrates, the STTR program serves an important
purpose for this country's research and development, our small
businesses, our economy, and our nation. The program is set to expire
at midnight on Sunday, September 30th. By the way, we absolutely have
no intention of letting reauthorization get down to the wire, which was
the unfortunate fate of the reauthorization of the SBIR program last
year. I have worked in partnership with Senator Bond to develop this
legislation, and as part of the process we have consulted with and
listened to our friends in the House, both on the Small Business
Committee and the Science Committee. We do not see this legislation as
contentious, and we have every intention of seeing this bill signed
into law well before September.
Shaping this legislation has gone beyond policy makers; we have
reached out to small companies that conduct
[[Page S4610]]
the STTR projects and research universities and Federal labs. On my
part, I sponsored two meetings in Massachusetts on March 16th to
discuss the STTR program. At my office in Boston, there was a very
helpful discussion with six of Massachusetts' research universities
expressing what they like and dislike about the program, and why they
use it, or don't use it more. The meeting included the licensing
managers from Boston University, Harvard, MIT, Northeastern University,
and the University of Massachusetts. They said they need to hear more
about the STTR program and have more outreach to their scientists and
engineers so that they understand when and how to apply for the
program. Based on their suggestions, we've included an outreach mandate
in our bill. In addition, we're trying to provide SBA with more
resources in its Office of Technology to be responsive to the concerns
of STTR institutions and small businesses.
Later that day, my office was part of a meeting in Newton at
Innovative Training Systems in which about 20 leaders and
representatives of small high-tech companies talked about the SBIR and
STTR programs. They make a tremendous contribution to the economy and
state of Massachusetts. They said that the Phase II award for STTR
should be raised form $500,000 to $750,000 to be consistent with the
SBIR program. Otherwise, since a minimum of 30 percent of the award
goes to the university partner, it was too little money to really
develop the research.
As I said, we listened to them. And we also listened to what the
program managers of the participating agencies had to say. Agencies
participate in this program if their extramural R&D budget is greater
than $1 billion. Consequently, there are five eligible agencies: the
Department of Defense, the Department of Energy, the National
Aeronautics and Space Administration, the Department of Health and
Human Services, and the National Science Foundation. For the STTR
projects, they set aside .15 percent of their extramural R&D budget.
The comes to about $65 million per year invested in these
collaborations between small business and research institutions.
Combining all the suggestions for improvement, the STTR Program
Reauthorization Act of 2001 does the following:
1. It reauthorizes the program for nine years, setting the expiration
date for September 30th, 2010.
2. Starting in two years, FY2003, it raises in small increments the
percentage that Departments and Agencies set aside for STTR R&D. In
FY2004, the percentage increases from .15 percent to .3 percent. After
three years, in FY2007, the bill raises the percentage from .3 percent
to .5 percent;
3. Starting in two years, FY2003, the legislation raises the Phase II
grant award amount from $500,000 to $750,000;
4. It requires the participating agencies to implement an outreach
program to research institutions in conjunction with any such outreach
done with the SBIR program;
5. As last year's legislation did for the SBIR program, this bill
strengthens the data collection requirements regarding awards and the
data rights for companies and research institutions that conduct STTR
projects. The goal is to collect better information about the companies
doing the projects, as well as the research and development, so that we
can measure success and track technologies.
While I believe that these changes reflect common sense and are
reasonable, I would like to discuss two of the proposed changes.
First, I would like to talk about reauthorizing the program for nine
years. The STTR program was a pilot program when it was first enacted
in 1992. Upon review in 1997, the results of the program were generally
good and the program was reauthorized that year. A more recent review
and study of the program shows that the program has become more
successful as it has had more time to develop. Specifically, the
commercialization rate of the research is higher than for most research
and development expenditures. Further, universities and research is
higher than for most research and development expenditures. Further,
universities and research institutions have developed excellent working
relationships with small businesses, and the program has also had good
geographic diversity, involving small companies and research
institutions throughout the country. The nine-year reauthorization will
allow the agencies, small businesses and universities to gradually ramp
up to the higher percentage in a predictable and orderly manner.
Second, I would like to talk about the gradual, incremental increases
in the percentages reserved for STTR contracts and the increase in the
Phase II awards. When we reached out to the small businesses and the
research institutions that conduct STTR projects, and the program
managers of the five agencies that participate in the STTR program, we
heard two recurring themes: one, raise the amount of the Phase II
awards; and two, increase the amount of the percentage reserved for
STTR projects.
Speaking to the first issue, we heard that the Phase II awards of
$500,000 generally are not sufficient for the research and development
projects and should be increased to $750,000, the same as the SBIR
Phase II awards, to make the awards worth applying for the small
businesses and research institutions.
As for the second issue, we were told that the percentage of .15
reserved for STTR awards needed to be increased in order to better meet
the needs of the agencies. Last year, that .15 percent of the five
agencies' extramural research and development budgets amounted to a
total $65 million dollars available for small businesses and research
institutions to further develop research and transfer technology from
the lab to market through the STTR program. Less than a quarter of one
percent to help strengthen this country's technological progress is not
extravagant; in fact, it is not adequate support for this important
segment of the economy.
Nevertheless, we are very conscientious about the needs of the
departments and agencies to meet their missions for the nation and have
proposed gradual increases that take into full consideration the
realities of implementing the changes for the agencies and departments
that participate in the program. Consequently, the legislation does not
increase the percentage for STTR awards until two full years after the
program has been reauthorized.
We are also conscientious about the fact that we want more research,
not less, so we have timed the increase of the Phase II awards to
coincide with the initial percentage increase reserved for STTR
projects.
Overall, we believe this gradual increase will help encourage more
innovation and greater cooperation between research institutions and
small businesses. As the program requires, at least 30 percent of these
additional funds will go to university and research institutions. Not
only do the universities and research institutions that collaborate
with small businesses get 30 percent of the STTR award money for each
contract, they also benefit in that they often receive license fees and
royalties. We are also conscientious about being fiscally responsible,
the percentage increases will have no budget implication since it does
not increase the amount of the money spent. Rather, it ultimately,
after six years, redirects one half of one percent to this very
successful program which benefits the economy overall.
This bill will ensure that this successful program is continued and
increased. It will also provide Congress with important information and
data on the program and encourage more outreach to small businesses and
research institutions.
I want to encourage my colleagues to learn about this program, to
find out the benefits to their state's hi-tech small businesses and
research universities and labs, and to join me in passing this
legislation in the Senate as soon as possible. To my friend from
Missouri, Senator Bond, I want to thank you and your staff for working
with me and my staff to build this country's technological progress. I
also want to thank all of the cosponsors: Senators Cleland, Landrieu,
Bennett, Levin, Lieberman, Harkin, bingaman, Enzi, and Cantwell.
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:
[[Page S4611]]
S. 856
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 ``Small Business Technology
Transfer Program Reauthorization Act of 2001''.
SEC. 2. EXTENSION OF PROGRAM AND EXPENDITURE AMOUNTS.
(a) In General.--Section 9(n)(1) of the Small Business Act
(15 U.S.C. 638(n)(1)) is amended to read as follows:
``(1) Required expenditure amounts.--
``(A) In general.--With respect to each fiscal year through
fiscal year 2010, each Federal agency that has an extramural
budget for research, or research and development, in excess
of $1,000,000,000 for that fiscal year, shall expend with
small business concerns not less than the percentage of that
extramural budget specified in subparagraph (B), specifically
in connection with STTR programs that meet the requirements
of this section and any policy directives and regulations
issued under this section.
``(B) Expenditure amounts.--The percentage of the
extramural budget required to be expended by an agency in
accordance with subparagraph (A) shall be--
``(i) 0.15 percent for each fiscal year through fiscal year
2003;
``(ii) 0.3 percent for each of fiscal years 2004 through
2006; and
``(iii) 0.5 percent for fiscal year 2007 and each fiscal
year thereafter.
(b) Conforming Amendment.--Section 9 of the Small Business
Act (15 U.S.C. 638) is amended in subsections (b)(4) and
(e)(6), by striking ``pilot'' each place it appears.
SEC. 3. INCREASE IN AUTHORIZED PHASE II AWARDS.
(a) In General.--Section 9(p)(2)(B)(ix) of the Small
Business Act (15 U.S.C. 638(p)(2)(B)(ix)) is amended--
(1) by striking ``$500,000'' and inserting ``$750,000'';
and
(2) by inserting before the semicolon at the end the
following: ``, and shorter or longer periods of time to be
approved at the discretion of the awarding agency where
appropriate for a particular project''.
(b) Effective Date.--The amendments made by subsection (a)
shall be effective beginning in fiscal year 2004.
SEC. 4. AGENCY OUTREACH.
Section 9(o) of the Small Business Act (15 U.S.C. 638(o))
is amended--
(1) in paragraph (12), by striking ``and'' at the end;
(2) in paragraph (13), by striking the period at the end
and inserting a semicolon; and
(3) by adding at the end the following:
``(14) implement an outreach program to research
institutions and small business concerns for the purpose of
enhancing its STTR program, in conjunction with any such
outreach done for purposes of the SBIR program; and''.
SEC. 5. POLICY DIRECTIVE MODIFICATIONS.
Section 9(p) of the Small Business Act (15 U.S.C. 638(p))
is amended by adding at the end the following:
``(3) Modifications.--Not later than 120 days after the
date of enactment of this paragraph, the Administrator shall
modify the policy directive issued pursuant to this
subsection to clarify that the rights provided for under
paragraph (2)(B)(v) apply to all Federal funding awards under
this section, including the first phase (as described in
subsection (e)(6)(A)), the second phase (as described in
subsection (e)(6)(B)), and the third phase (as described in
subsection (e)(6)(C)).''.
SEC. 6. STTR PROGRAM DATA COLLECTION.
(a) In General.--Section 9(o) of the Small Business Act (15
U.S.C. 638(o)), as amended by this Act, is amended by adding
at the end the following:
``(15) collect, and maintain in a common format in
accordance with subsection (v), such information from
awardees as is necessary to assess the STTR program,
including information necessary to maintain the database
described in subsection (k).''.
(b) Database.--Section 9(k) of the Small Business Act (15
U.S.C. 638(k)) is amended--
(1) in paragraph (1)--
(A) by inserting ``or STTR'' after ``SBIR'' each place it
appears;
(B) in subparagraph (C), by striking ``and'' at the end;
(C) in subparagraph (D), by striking the period at the end
and inserting ``; and''; and
(D) by adding at the end the following:
``(E) with respect to assistance under the STTR program
only--
``(i) whether the small business concern or the research
institution initiated their collaboration on each assisted
STTR project;
``(ii) whether the small business concern or the research
institution originated any technology relating to the
assisted STTR project;
``(iii) the length of time it took to negotiate any
licensing agreement between the small business concern and
the research institution under each assisted STTR project;
and
``(iv) how the proceeds from commercialization, marketing,
or sale of technology resulting from each assisted STTR
project were allocated (by percentage) between the small
business concern and the research institution.''; and
(2) in paragraph (2)--
(A) by inserting ``or an STTR program under subsection
(n)(1)'' after ``(f)(1)'';
(B) in subparagraph (A)(iii), by inserting ``and STTR''
after ``SBIR''; and
(C) in subparagraph (D), by inserting ``or STTR'' after
``SBIR''.
(c) Simplified Reporting Requirements.--Section 9(v) of the
Small Business Act (15 U.S.C. 638(v)) is amended by inserting
``or STTR'' after ``SBIR'' each place it appears.
(d) Reports to Congress.--Section 9(b)(7) of the Small
Business Act (15 U.S.C. 638(b)(7)) is amended by striking
``and (o)(9)'' and inserting ``, (o)(9), and (o)(15)''.
Mr. BOND. Mr. President, I am pleased to join with Senator John
Kerry, my colleague and ranking member on the Small Business Committee,
in sponsoring legislation to reauthorize the Small Business Technology
Transfer, STTR, Program. This program has proven itself to be highly
effective. The bill we are introducing today acknowledges the success
of the STTR Program by expanding it during the length of the
reauthorization so that its benefits will increase in the coming years.
The STTR Program was created in 1992 to stimulate technology transfer
from research institutions to small firms while, at the same time,
accomplishing the Federal government's research and development goals.
The program is designed to convert the billions of dollars invested in
research and development at our nation's universities, federal
laboratories and nonprofit research institutions into new commercial
technologies. It does this by joining the ideas and resources of
research institutions with the commercialization experience of small
companies.
Each agency with an extramural research and development budget of
more than $1 billion participates in the program. Currently, the
Department of Defense, the National Institutes of Health, the National
Aeronautics and Space Administration, NASA, the National Science
Foundation, NSF, and the Department of Energy, DOE, have STTR Programs.
To receive an award under the STTR Program, a research institution
and a small firm jointly submit a proposal to conduct research on a
topic that reflects an agency's mission and research and development
needs. The proposals are then peer-reviewed and judged on their
scientific, technical and commercial merit. Similar to the Small
Business Innovation Research Program, awards are provided in three
phases. Phase one awards are designed to determine the scientific and
technical merit and feasibility of a proposed research idea, with
funding for individual awards limited to $100,000. Phase two awards
further develop research from phase one and emphasize the idea's
commercialization potential, with individual awards up to $500,000.
Phase three awards consist of non-Federal funds for the commercial
application of the technology, non-STTR Federal funds for the
commercialization of products or services intended for procurement by
the Federal government, or non-STTR Federal funds for continued
research and development of the technology.
The benefits of fostering collaboration between research institutions
and small firms are numerous. Small firms have shown themselves to be
excellent at commercializing research when they are provided the
opportunity to take advantage of the expertise and resources that
reside in our nation's universities. A recent Small Business
Administration Office of Advocacy report reviewed the rate of return
for research and development by large and small firms both with and
without university partners. When these firms do not have university
partners, their rate of return is 14 percent. When a collaboration is
formed between universities and small firms, however, the rate of
return jumps to 44 percent. By contrast, the rate of return only
increases to 30 percent when large firms and universities collaborate.
Moreover, partnerships between small firms and universities have led
to world-class high-technology economic development. Numerous studies
cite the emergence of Silicon Valley and the Route 128 corridor in
Massachusetts as directly resulting from the partnerships and
technology transfer that occurred, and are still occurring, among small
firms, Stanford University and the Massachusetts Institute of
Technology. The cooperation between industry and these universities has
strengthened considerably our economic competitiveness in the world.
The STTR Program seeks to foster this same type of economic development
in the hundreds of communities around the country that contain
universities
[[Page S4612]]
and federal laboratories. And, the STTR Program has proven to be
immensely successful at growing small firms from these types of
partnerships.
The Committee on Small Business has recently received data on the
commercial success of small firms that received STTR awards between
1995 and 1997. The results are truly outstanding. Of the 102 projects
surveyed in that time-frame, 53 percent had either resulted in sales or
the companies involved in the projects had received follow-on
developmental funding for the technology. To date, these projects had
resulted in $132 million from sales and $53 million in additional
developmental funding. Moreover, the Committee has learned that the
companies who had received these STTR awards are projecting an
additional $186 million in sales in 2001 and an estimated additional
$900 million in sales by 2005. These numbers are even more remarkable
when one considers that it typically takes between 7 to 10 years to
successfully commercialize new technologies.
In addition to proving to be an amazing commercial success, the STTR
Program has also provided high-quality research to the Federal
Government. In the most recent published report of the General
Accounting Office on the STTR Program, Federal agencies rated highly
the technical quality of the proposals. The DOE, as an example, rated
the quality of the proposed research in the top ten percent of all
research funded by the Department.
A good example of the benefits that the STTR Program provides to
small firms and universities is the experience of Engineering Software
Research and Development, Inc. in St. Louis, MO. Engineering Software,
in partnership with Washington University in St. Louis, received a
phase two award from the Air Force to develop an innovative method of
analyzing the stresses placed on composite materials. While this
technology is currently being used in the aeronautics industry, it has
many other practical applications.
The STTR Program permitted Dr. Barna Szabo, who had originated an
algorithm he developed at Washington University, to transfer the
technology to Engineering Software, which had the software
infrastructure to transition the technology from an academic to a
practical commercial application. According to Dr. Szabo, Engineering
Software has received to date at an estimated $1.25 million in sales
and follow-on developmental funding resulting from the technology
funded by the STTR award and that the STTR Program was of great
assistance in transferring the technology from the academic environment
to actual use and application.
Based on the proven success of the STTR Program to date, this
legislation increases the funds allocated for the program. This
increase is phased-in through the length of the reauthorization. When a
program is working as well as the STTR Program, it would be a mistake
if Congress did not build on its success.
This is especially true for Federal investment in small business
research and development. Despite report after report demonstrating
that small businesses innovate at a greater rate than large firms,
small businesses only receive less than four percent of all Federal
research and development dollars. This number has remained essentially
unchanged for the past 22 years. Increasing funds for the STTR Program
sends a strong message that the Federal Government acknowledges the
contributions that small businesses have made and will continue to make
to government research and development efforts and to our nation's
economy.
I am pleased that my colleague Senator Kerry and I have worked
together on this bi-partisan legislation. It is a good bill for the
small business high-technology community and will ensure that our
Federal research and development needs are well met in the next decade.
When this bill is debated by the full Senate, I trust that it will
receive the support of all of our colleagues.
Ms. CANTWELL. Mr. President, research and development has been a
fundamental driver of the growth of our economy. It is critical that we
continue significant investment in R&D and improve commercialization of
the research undertaken at our non-profit institutions.
I thank the Small Business Committee ranking member John Kerry and
Chairman Christopher Bond for taking a leadership role in reauthorizing
the Small Business Technology Transfer program. The program is a
companion to the very successful Small Business Innovation Research
(SBIR) program which funds R&D projects undertaken by small businesses.
Under the STTR program, the U.S. Departments of Defense, Energy, and
Health and Human Services, the National Aeronautics and Space
Administration, and the National Science Foundation must set-aside .15
percent of their research dollars for award to small high technology
firms that partner with non-profit research institutions.
The STTR program is scheduled to expire on September 30, 2001. The
Kerry-Bond bill, entitled the Small Business Technology Transfer
Program Reauthorization Act of 2001, extends the program until 2010. In
addition to extending the STTR program it gradually increases the
percentage of Federal R&D funding going to the program from .15 percent
to .5 percent over 9 years. There is also a provision to encourage
agencies to increase outreach to small business and universities to
promote the STTR Program.
Many of our most successful businesses in the changing economy were
only recently small businesses. Going back only 25 years, one of my
State's largest employers, Microsoft, was a small business. Even today,
many of the innovators driving the rapid industrial evolution work in
small businesses. But the risk and expense of conducting serious R&D
efforts can be beyond the means of many of these businesses.
On the other side of the equation, the commercial value of non-profit
research often remains unrealized because there are not adequate
opportunities to bring researchers together with those who could best
make the research into a marketable product.
This program fills a very important need by bringing together the
capabilities of our non-profit research institutions with the
entrepreneurial spirit of our small businesses. The program holds great
promise as one way to meet the scientific and technological challenges
of our changing economy. And this program has already been successful
throughout the United States. In my state alone over the past 5 years,
52 grants have been awarded for work in biotechnology, medicine, fluid
mechanics, chemistry, electronics and computer technologies. I am very
pleased to be able to lend my support to this program and look forward
to this bill moving rapidly into law.
____________________