[Congressional Record Volume 147, Number 71 (Tuesday, May 22, 2001)]
[Senate]
[Pages S5441-S5469]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. BIDEN (for himself, Mr. Akaka, Mr. Baucus, Mr. Bayh, Mr. 
        Bingaman, Mrs. Boxer, Mr. Breaux, Mr. Byrd, Ms. Cantwell, Mrs. 
        Carnahan, Mr. Carper, Mr. Cleland, Mrs. Clinton, Ms. Collins, 
        Mr. Corzine, Mr. Daschle, Mr. Dayton, Mr. Dodd, Mr. Dorgan, Mr. 
        Durbin, Mr. Edwards, Mrs. Feinstein, Mr. Graham, Mr. Harkin, 
        Mr. Hollings, Mr. Inouye, Mr. Jeffords, Mr. Johnson, Mr. 
        Kennedy, Mr. Kerry, Mr. Kohl, Ms. Landrieu, Mr. Leahy, Mr. 
        Levin, Mr. Lieberman, Mrs. Lincoln, Ms. Mikulski, Mrs. Murray, 
        Mr. Nelson of Florida, Mr. Nelson of Nebraska, Mr. Reed, Mr. 
        Reid, Mr. Rockefeller, Mr. Sarbanes, Mr. Schumer, Ms. Snowe, 
        Mr. Specter, Ms. Stabenow, Mr. Torricelli, and Mr. Wellstone):
  S. 924. A bill to provide reliable officers, technology, education, 
community prosecutors, and training in our neighborhoods; to the 
Committee on the Judiciary.
  Mr. BIDEN. Mr. President, authority for the community policing 
program has expired, and I rise today to introduce legislation to 
extend that hugely successful program for another six years.
  We created this program in 1994 as part of that year's crime bill. 
The COPS program has worked better than any of us could have hoped. 
Crime has gone down every year since the program has been in existence. 
We have invested over $7.5 billion to make our streets safer. 115,000 
officers will be funded by the end of this fiscal year. 73,600 of those 
officers are on the beat today, over 200 of them in my own state of 
Delaware. Grants have been issued to more than 12,400 law enforcement 
agencies. Big cities and small towns have benefitted, and more than 82 
percent of all COPS grants have gone to departments serving populations 
of 50,000 or less.
  Community policing methods are taking hold across the country. A 
recent Justice Department study revealed that the number of community 
police officers nationwide increased by 400 percent between 1997 and 
1999. Schools are benefitting: by the end of this fiscal year COPS will 
have funded almost 5,000 school resource officers. These are specially 
trained officers who work in schools to prevent crimes before they 
occur, mentor students, and assist school administrators in creating a 
safe learning environment. Since COPS started funding school resource 
officers, their numbers across

[[Page S5442]]

the country have shot up more than 40 percent.
  When we passed the crime bill in 1994, we set a goal of funding 
100,000 officers by 2000. That goal has been met. But the need for more 
officers, for technology to help those officers do their job more 
efficiently, and for more prosecutors so the cases investigated by the 
police can effectively be brought, continues unabated. The Justice 
Department reports that in the last two fiscal years, demand for new 
police hiring grants has outstripped available funds by a factor of 
almost three to one. To meet this need, the legislation I introduce 
today authorizes $600 million per year over the next 6 years, enough to 
hire up to 50,00 more officer. We have made this portion of the program 
more flexible: up to half of these hiring dollars can be use to help 
police departments retain those community police officers currently on 
payroll. In another change from current law, portion of these funds can 
be used for officer training and education.
  The legislation also provides funding for new technologies, so law 
enforcement can have access to the latest high-tech crime fighting 
equipment to keep pace with today's sophisticated criminals. Also 
included are funds to help local district attorneys hire more community 
prosecutors. These prosecutors will expand the community justice 
concept and engage the entire community in preventing and fighting 
crime. The statistics we have on community prosecutions are quite 
promising, and we should increase the funds available to local 
prosecutors, a piece of our criminal justice puzzle that has too often 
gone overlooked.
  We need to pass this bill. Already the administration has announced 
its intention to end the police hiring program, to dramatically scale 
back the community prosecution program, and to cut other critical state 
and local law enforcement programs. That is not the right approach. 
Crime is down, but it will not stay down. Preliminary FBI crime reports 
for 2000 indicate that we may be reaching the end of our eight straight 
years of decreasing crime. Last December, the FBI reported that crime 
was down in most big cities, but up in cities of less than 50,000 
people. It was up 1.2 percent in the South, the nation's most populous 
region. Several of our largest cities have reported increases in their 
murder rates. Crime will not stay down, unless we dedicate the 
resources necessary for state and local law enforcement to do their job 
effectively.
  This bill has the support of every major law enforcement organization 
in the country. Fifty senators are original cosponsors of the 
legislation, including five Republicans. I want to pay a special 
tribute to my friends on the other side of the aisle and thank them for 
listening to their mayors, police chiefs, and officers who told them 
this is the right thing to do. We should not play politics with public 
safety, and I hope we can pursue common-sense crime-fighting proposals 
without regard to party.
  I would like to thank the men and women of law enforcement for their 
service and heroism in bringing about the longest lasting decrease in 
crime in this nation's history. Let's build on that success, and let's 
continue to give them the support they deserve, by reauthorizing the 
COPS program.
  I ask unanimous consent that the text of the bill, as well as several 
letters supporting its introduction, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 924

       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 ``Providing Reliable Officers, 
     Technology, Education, Community Prosecutors, and Training In 
     Our Neighborhoods Act of 2001'' or ``PROTECTION Act''.

     SEC. 2. PROVIDING RELIABLE OFFICERS, TECHNOLOGY, EDUCATION, 
                   COMMUNITY PROSECUTORS, AND TRAINING IN OUR 
                   NEIGHBORHOOD INITIATIVE.

       (a) COPS Program.--Section 1701(a) of title I of the 
     Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 
     3796dd(a)) is amended by--
       (1) inserting ``and prosecutor'' after ``increase police''; 
     and
       (2) inserting ``to enhance law enforcement access to new 
     technologies, and'' after ``presence,''.
       (b) Hiring and Redeployment Grant Projects.--Section 
     1701(b) of title I of the Omnibus Crime Control and Safe 
     Streets Act of 1968 (42 U.S.C. 3796dd(b)) is amended--
       (1) in paragraph (1)--
       (A) in subparagraph (B)--
       (i) by inserting after ``Nation'' the following: ``, or pay 
     overtime to existing career law enforcement officers to the 
     extent that such overtime is devoted to community policing 
     efforts''; and
       (ii) by striking ``and'' at the end;
       (B) in subparagraph (C), by--
       (i) striking ``or pay overtime''; and
       (ii) striking the period at the end and inserting ``; 
     and''; and
       (C) by adding at the end the following:
       ``(D) promote higher education among in-service State and 
     local law enforcement officers by reimbursing them for the 
     costs associated with seeking a college or graduate school 
     education.''; and
       (2) in paragraph (2) by striking all that follows Support 
     Systems.--'' and inserting ``Grants pursuant to--
       ``(A) paragraph (1)(B) for overtime may not exceed 25 
     percent of the funds available for grants pursuant to this 
     subsection for any fiscal year;
       ``(B) paragraph (1)(C) may not exceed 20 percent of the 
     funds available for grants pursuant to this subsection in any 
     fiscal year; and
       ``(C) paragraph (1)(D) may not exceed 5 percent of the 
     funds available for grants pursuant to this subsection for 
     any fiscal year.''.
       (c) Additional Grant Projects.--Section 1701(d) of title I 
     of the Omnibus Crime Control and Safe Streets Act of 1968 (42 
     U.S.C. 3796dd(d)) is amended--
       (1) in paragraph (2)--
       (A) by inserting ``integrity and ethics'' after 
     ``specialized''; and
       (B) by inserting ``and'' after ``enforcement officers'';
       (2) in paragraph (7) by inserting ``school officials, 
     religiously-affiliated organizations,'' after ``enforcement 
     officers'';
       (3) by striking paragraph (8) and inserting the following:
     ``(8) establish school-based partnerships between local law 
     enforcement agencies and local school systems, by using 
     school resource officers who operate in and around elementary 
     and secondary schools to serve as a law enforcement liaison 
     with other Federal, State, and local law enforcement and 
     regulatory agencies, combat school-related crime and disorder 
     problems, gang membership and criminal activity, firearms and 
     explosives-related incidents, illegal use and possession of 
     alcohol, and the illegal possession, use, and distribution of 
     drugs;'';
       (4) in paragraph (10) by striking ``and'' at the end;
       (5) in paragraph (11) by striking the period that appears 
     at the end and inserting ``; and''; and
       (6) by adding at the end the following:
       ``(12) develop and implement innovative programs (such as 
     the TRIAD program) that bring together a community's sheriff, 
     chief of police, and elderly residents to address the public 
     safety concerns of older citizens.''.
       (d) Technical Assistance.--Section 1701(f) of title I of 
     the Omnibus Crime Control and Safe Streets Act of 1968 (42 
     U.S.C. 3796dd(f)) is amended--
       (1) in paragraph (1)--
       (A) by inserting ``use up to 5 percent of the funds 
     appropriated under subsection (a) to'' after ``The Attorney 
     General may'';
       (B) by inserting at the end the following: ``In addition, 
     the Attorney General may use up to 5 percent of the funds 
     appropriated under subsections (d), (e), and (f) for 
     technical assistance and training to States, units of local 
     government, Indian tribal governments, and to other public 
     and private entities for those respective purposes.'';
       (2) in paragraph (2) by inserting ``under subsection (a)'' 
     after ``the Attorney General''; and
       (3) in paragraph (3)--
       (A) by striking ``the Attorney General may'' and inserting 
     ``the Attorney General shall'';
       (B) by inserting ``regional community policing institutes'' 
     after ``operation of''; and
       (C) by inserting ``representatives of police labor and 
     management organizations, community residents,'' after 
     ``supervisors,''.
       (e) Technology and Prosecution Programs.--Section 1701 of 
     title I of the Omnibus Crime Control and Safe Streets Act of 
     1968 (42 U.S.C. 3796dd) is amended by--
       (1) striking subsection (k);
       (2) redesignating subsections (f) through (j) as 
     subsections (g) through (k); and
       (3) striking subsection (e) and inserting the following:
       ``(e) Law Enforcement Technology Program.--Grants made 
     under subsection (a) may be used to assist police 
     departments, in employing professional, scientific, and 
     technological advancements that will help them--
       ``(1) improve police communications through the use of 
     wireless communications, computers, software, videocams, 
     databases and other hardware and software that allow law 
     enforcement agencies to communicate more effectively across 
     jurisdictional boundaries and effectuate interoperability;
       ``(2) develop and improve access to crime solving 
     technologies, including DNA analysis, photo enhancement, 
     voice recognition, and other forensic capabilities; and
       ``(3) promote comprehensive crime analysis by utilizing new 
     techniques and technologies, such as crime mapping, that 
     allow law enforcement agencies to use real-time

[[Page S5443]]

     crime and arrest data and other related information--
     including non-criminal justice data--to improve their ability 
     to analyze, predict, and respond pro-actively to local crime 
     and disorder problems, as well as to engage in regional crime 
     analysis.
       ``(f) Community-Based Prosecution Program.--Grants made 
     under subsection (a) may be used to assist State, local or 
     tribal prosecutors' offices in the implementation of 
     community-based prosecution programs that build on local 
     community policing efforts. Funds made available under this 
     subsection may be used to--
       ``(1) hire additional prosecutors who will be assigned to 
     community prosecution programs, including programs that 
     assign prosecutors to handle cases from specific geographic 
     areas, to address specific violent crime and other local 
     crime problems (including intensive illegal gang, gun and 
     drug enforcement projects and quality of life initiatives), 
     and to address localized violent and other crime problems 
     based on needs identified by local law enforcement agencies, 
     community organizations, and others;
       ``(2) redeploy existing prosecutors to community 
     prosecution programs as described in paragraph (1) of this 
     section by hiring victim and witness coordinators, 
     paralegals, community outreach, and other such personnel; and
       ``(3) establish programs to assist local prosecutors' 
     offices in the implementation of programs that help them 
     identify and respond to priority crime problems in a 
     community with specifically tailored solutions.
       At least 75 percent of the funds made available under this 
     subsection shall be reserved for grants under paragraphs (1) 
     and (2) and of those amounts no more than 10 percent may be 
     used for grants under paragraph (2) and at least 25 percent 
     of the funds shall be reserved for grants under paragraphs 
     (1) and (2) to units of local government with a population of 
     less than 50,000.''.
       (f) Retention Grants.--Section 1703 of title I of the 
     Omnibus Crime Control and Safe Streets Act of 1968 (42 U.S.C. 
     3796dd-2) is amended by inserting at the end the following:
       ``(d) Retention Grants.--The Attorney General may use no 
     more than 50 percent of the funds under subsection (a) to 
     award grants targeted specifically for retention of police 
     officers to grantees in good standing, with preference to 
     those that demonstrate financial hardship or severe budget 
     constraint that impacts the entire local budget and may 
     result in the termination of employment for police officers 
     funded under subsection (b)(1).''.
       (g) Definitions.--
       (1) Career law enforcement officer.--Section 1709(1) of 
     title I of the Omnibus Crime Control and Safe Streets Act of 
     1968 (42 U.S.C. 3796dd-8) is amended by inserting after 
     ``criminal laws'' the following: ``including sheriffs 
     deputies charged with supervising offenders who are released 
     into the community but also engaged in local community 
     policing efforts.''.
       (2) School resource officer.--Section 1709(4) of title I of 
     the Omnibus Crime Control and Safe Streets Act of 1968 (42 
     U.S.C. 3796dd-8) is amended--
       (A) by striking subparagraph (A) and inserting the 
     following:

       ``(A) to serve as a law enforcement liaison with other 
     Federal, State, and local law enforcement and regulatory 
     agencies, to address and document crime and disorder problems 
     including gangs and drug activities, firearms and explosives-
     related incidents, and the illegal use and possession of 
     alcohol affecting or occurring in or around an elementary or 
     secondary school;
       (B) by striking subparagraph (E) and inserting the 
     following:

       ``(E) to train students in conflict resolution, restorative 
     justice, and crime awareness, and to provide assistance to 
     and coordinate with other officers, mental health 
     professionals, and youth counselors who are responsible for 
     the implementation of prevention/intervention programs within 
     the schools;''; and
       (C) by adding at the end the following:
       ``(H) to work with school administrators, members of the 
     local parent teacher associations, community organizers, law 
     enforcement, fire departments, and emergency medical 
     personnel in the creation, review, and implementation of a 
     school violence prevention plan;
       ``(I) to assist in documenting the full description of all 
     firearms found or taken into custody on school property and 
     to initiate a firearms trace and ballistics examination for 
     each firearm with the local office of the Bureau of Alcohol, 
     Tobacco, and Firearms;
       ``(J) to document the full description of all explosives or 
     explosive devices found or taken into custody on school 
     property and report to the local office of the Bureau of 
     Alcohol, Tobacco, and Firearms; and
       ``(K) to assist school administrators with the preparation 
     of the Department of Education, Annual Report on State 
     Implementation of the Gun-Free Schools Act which tracks the 
     number of students expelled per year for bringing a weapon, 
     firearm, or explosive to school.''.
       (h) Authorization of Appropriations.--Section 1001(a)(11) 
     of title I of the Omnibus Crime Control and Safe Streets Act 
     of 1968 (42 U.S.C. 3793(a)(11)) is amended--
       (1) by amending subparagraph (A) to read as follows:
       ``(A) There are authorized to be appropriated to carry out 
     part Q, to remain available until expended--
       ``(i) $1,150,000,000 for fiscal year 2002;
       ``(ii) $1,150,000,000 for fiscal year 2003;
       ``(iii) $1,150,000,000 for fiscal year 2004;
       ``(iv) $1,150,000,000 for fiscal year 2005;
       ``(v) $1,150,000,000 for fiscal year 2006; and
       ``(vi) $1,150,000,000 for fiscal year 2007.''; and
       (2) in subparagraph (B)--
       (A) by striking ``3 percent'' and inserting ``5 percent'';
       (B) by striking ``1701(f)'' and inserting ``1701(g)'';
       (C) by striking the second sentence and inserting ``Of the 
     remaining funds, if there is a demand for 50 percent of 
     appropriated hiring funds, as determined by eligible hiring 
     applications from law enforcement agencies having 
     jurisdiction over areas with populations exceeding 150,000, 
     no less than 50 percent shall be allocated for grants 
     pursuant to applications submitted by units of local 
     government or law enforcement agencies having jurisdiction 
     over areas with populations exceeding 150,000 or by public 
     and private entities that serve areas with populations 
     exceeding 150,000, and no less than 50 percent shall be 
     allocated for grants pursuant to applications submitted by 
     units of local government or law enforcement agencies having 
     jurisdiction over areas with populations less than 150,000 or 
     by public and private entities that serve areas with 
     populations less than 150,000.'';
       (D) by striking ``85 percent'' and inserting 
     ``$600,000,000''; and
       (E) by striking ``1701(b),'' and all that follows through 
     ``of part Q'' and inserting the following: ``1701 (b) and 
     (c), $350,000,000 to grants for the purposes specified in 
     section 1701(e), and $200,000,000 to grants for the purposes 
     specified in section 1701(f).''.
                                  ____



                              Police Executive Research Forum,

                                     Washington, DC, May 17, 2001.
     Hon. Joseph Biden, Jr.,
     U.S. Senate,
     Washington, DC.
       Dear Joe: On behalf of the members of the Police Executive 
     Research Forum (PERF), a national organization of police 
     professionals who serve more than 50 percent of our nation's 
     population, I wish to express our continued support of your 
     plans to adequately fund and reauthorize the COPS Office and 
     its many critical programs.
       The COPS program has been a highly successful crime-
     fighting initiative. The vast majority of COPS grant 
     recipients have put those funds to unprecedented good use. 
     With COPS funding, PERF members have hired more officers, 
     purchased critical technology, implemented innovative 
     problem-solving programs, and received valuable training and 
     technical assistance, all of which have played an important 
     role in advancing community policing across the country. But 
     the COPS Office's work is far from over.
       Providing the citizens in our jurisdictions with safe 
     communities requires resources beyond local reach. The COPS 
     program's sole mission is to respond to the needs of local 
     law enforcement and it has delivered much-needed resources in 
     the fight against crime. Through this partnership with the 
     federal government, we have made tremendous advances in 
     community policing. We have always called for multi-year 
     reauthorization and full funding for this critical program.
       PERF would welcome the opportunity to work with you to 
     increase the flexibility of COPS hiring funds and otherwise 
     ensure the COPS programs' long-term success. We thank you for 
     your tireless support of law enforcement.
           Sincerely,
                                                     Chuck Wexler,
     Executive Director.
                                  ____

                                    National Association of Police


                                          Organizations, Inc.,

                                      Washington, DC, May 3, 2001.
     Hon. Joseph R. Biden, Jr.,
     U.S. Senate,
     Washington, DC.
       Dear Joe: Please be advised that the National Association 
     of Police Organizations (NAPO) will be strongly supporting 
     your reintroduction of S. 1760, the ``PROTECTION Act.'' NAPO, 
     representing 4,000 unions and associations and 230,000 sworn 
     law enforcement officers, truly appreciates your effort to 
     reauthorize and continue the success of the COPS program.
       As you know, NAPO strongly supported the passage of the 
     1994 Crime bill creating the COPS program. Since its 
     inception the COPS program has funded grants for over 110,000 
     community police officers. Most law enforcement officials and 
     the public recognize the benefits of putting more cops on the 
     street. The steady decline of violent crime over the last few 
     years is evidence of the success of this program.
       We support your legislation that will extend the COPS 
     program for another six years and put up to 50,000 more 
     police officers on our streets and in our neighborhoods to 
     continue the success of community policing. We also strongly 
     support the funding of educational scholarships for active 
     law enforcement officers and new technology to help fight 
     crime.
       NAPO is cognizant of the fact that we must not become 
     complacent with our past success. There is still a lot of 
     work to be done and we will continue to fight with you for 
     the resources needed to serve our communities adequately. 
     NAPO's position is that the declining crime rate is not an 
     excuse to disband the COPS program, but an opportunity to 
     hire more officers to further fight

[[Page S5444]]

     and decrease violent crime that still permeates many of 
     America's communities.
       If I can be of assistance on this or any other matter, 
     please have your staff contact me at (202) 842-4420.
           Sincerely,
                                                 Robert T. Scully,
     Executive Director.
                                  ____

                                      International Brotherhood of


                                              Police Officers,

                                      Alexandria, VA, May 4, 2001.
     Hon. Joe Biden,
     U.S. Senate,
     Washington, DC.
       Dear Senator Biden: On behalf of the entire membership of 
     the International Brotherhood of Police Officers (IBPO), I 
     want to thank you for introducing legislation to reauthorize 
     the Community Oriented Policing Services (COPS) program.
       As the author of the 1994 Crime Bill you understand the 
     significance of the COPS program. Every crime statistic 
     available shows that America is a safer place to live since 
     we implemented the COPS program. The COPS program enables 
     communities to combat crime in the most effective way 
     possible--by putting more officers on the street.
       I understand that they are opponents to the COPS program. I 
     urge them to talk to police officers in their states. The 
     IBPO believes that public safety is far too important to be 
     caught up in political debate. It would be a tragedy to cut 
     back on any efforts to fight crime at this critical juncture.
       As the largest police union in the AFL-CIO, we have first 
     hand knowledge of what a success the COPS program is. We look 
     forward to working with you on this most important piece of 
     legislation.
           Sincerely,
                                                 Kenneth T. Lyons,
     National President.
                                  ____



                               National Sheriffs' Association,

                                     Alexandria, VA, May 21, 2001.
     Hon. Joseph Biden,
     U.S. Senate,
     Washington, DC.
       Dear Senator Biden: I am writing to you regarding the 
     Community Oriented Policing Services (COPS) program and your 
     bill, the Protection Act. We at the National Sheriffs' 
     Association (NSA) support COPS and we appreciate the 
     commitment made to law enforcement by Congress.
       As you may know, sheriffs around the nation depend on the 
     COPS program to supplement their law enforcement 
     capabilities. Sheriffs need the additional funding provided 
     so that they can better protect and serve their communities. 
     The COPS program has been an overwhelming success and has had 
     a tangible and positive impact on crime reduction. Nearly 
     two-thirds of the sheriffs offices in the Nation have 
     benefited from grant funding from this program and the added 
     funding has made a significant difference in how we enforce 
     the law. A sheriff with a COPS grant can fight and control 
     crime while a sheriff without a grant is at the mercy of the 
     criminal. With the added capability that a COPS grant 
     provides, we have reduced crime, streets are safer and honest 
     law-abiding people feel secure in their communities.
       NSA supports a flexible COPS program that allows sheriffs 
     to determine their own needs and apply for funds accordingly. 
     Sheriffs have overwhelming technology needs that can be 
     addressed through the COPS technology grant programs. These 
     programs have helped sheriffs purchase state-of-the-art 
     computer technology and communications equipment. In this 
     information age, it is more important than ever that we 
     strive to achieve telecommunications and systems 
     compatibility among criminal justice agencies, improve our 
     forensic sciences capability at the state and local level and 
     encourage the use of technologies to predict and prevent 
     crime. All of these will give law enforcement the advantage 
     over criminals. The total package of law enforcement support 
     that COPS provides is an integral part of crime control in 
     America.
       In our view, COPS is a program that is vital to effective 
     law enforcement and to sheriffs in both rural and urban 
     jurisdictions. Without COPS, I firmly believe our communities 
     would be a little less safe and a little more dangerous. 
     Thank you again for your commitment to reducing crime. Know 
     that NSA will do our part in the fight against crime and 
     given the proper resources, we can truly make a difference.
           Sincerely,
                                         Jerry ``Peanuts'' Gaines,
                                                        President.
                                 ______
                                 
      By Mr. WELLSTONE:
  S. 925. A bill to amend the title XVIII of the Social Security Act to 
provide a prescription benefit program for all medicare beneficiaries; 
to the Committee on Finance.
  Mr. WELLSTONE. Mr. President, I rise to introduce long overdue 
legislation that will bring affordable prescription drugs to all 
Medicare beneficiaries. This legislation is the Medicare Extension of 
Drugs to Seniors, MEDS, Act of 2001.
  For a good period of the time that I have been a Senator, the Federal 
Government has operated with budget deficits. The goal during that 
period was deficit reduction, while protecting the programs that are 
important for people. I had hoped that when the economy began to do 
better, and we began to see surpluses, that finally, as a Senator from 
Minnesota, I would be able to do really well for people. It would not 
just be stopping the worst, it would be doing the better.
  Unfortunately, what we have this year in Washington instead is a 
choice. Either you are in favor of Robin-Hood-in-reverse tax cuts, with 
as much as 40 percent of the benefits going to the top 1 percent of 
earners. Or you are in favor of making an investment above and beyond 
reducing the debt and protecting Social Security and Medicare. I am one 
who favors making investments in people, for making sure that there is 
opportunity for all, quality education for all our children and young 
people, quality and affordable housing, that we honor our commitments 
to our veterans, that we reform mental health and achieve parity for 
mental health and addiction treatment services, that we help women out 
of domestic violence. And that we make sure that the senior citizens 
who built this country are able to afford prescription drugs.
  Everyone in Congress knows there is a need for more affordable 
prescription drugs. Everyone in Congress knows that the surplus is 
large enough to afford both a fair tax cut and better prescription drug 
coverage for seniors. The surplus is largely thanks to sound budget 
decisions made in the early 1990s, which promoted economic growth and 
greatly expanded tax revenues. Those surpluses now make it not only 
possible, but imperative that we address the prescription drug cost 
crisis. We must remember that Congress also made mistakes during the 
1990s. The Balanced Budget Act of 1997 brought cuts in Medicare 
spending, cuts that I opposed and that will total over $600 billion. It 
is only fair, now that there is a surplus, to return those cuts in 
health care spending back into the health care system where there is 
need. And I don't have to tell colleagues about the need. We all know 
it from our own families and our constituents.
  When Medicare was first enacted in 1965 the program ``mimicked'' 
typical private insurance which often did not include outpatient 
prescription drugs. Times have changed, but in that regard Medicare has 
not. Virtually all employment based insurance now includes outpatient 
prescription drug coverage. Fully 99 percent of state and local 
government employees have this coverage. The federal employees program 
requires all plans to cover out patient prescription drugs, and 
Medicaid in every state does the same. Its time to bring Medicare up to 
date with a prescription drug plan available to all beneficiaries.
  You don't have to tell people that prescription drugs are the largest 
out-of-pocket health care cost for seniors. They know. Over 85 percent 
of Medicare beneficiaries take at least one prescription medicine, and 
the average senior citizen fills eighteen prescriptions per year. 
Nationally, more than half of the cost of these drugs comes directly 
out of seniors' pockets. In Minnesota the number is even higher. 
Seniors who cannot afford drug coverage often do not take the drugs 
their doctors prescribe. One of every eight senior citizens at some 
time is forced to choose between buying food and buying medicine. 
That's not right.
  Charles Van Guilder, a Minnesota senior, was faced with the 
devastating option of having to divorce his wife in order to protect 
their assets which might be stripped away by high-rising Medicare HMO 
costs. Struggling with Parkinson's Disease, she was faced with an $850 
monthly charge for prescription drugs and home health premiums.
  Rose Grigsby was faced with a choice of living in Arizona where 
because of disparities in Medicare + Choice reimbursements she payed 
$17.50 a month for her healthcare including prescription drugs and even 
a health club membership and moving back home to Minnesota where she 
would have to pay $270 a month for 80 percent drug coverage. Despite 
wanting to be with family, she couldn't afford to move. Where's the 
fairness in that? It is time we add prescription drug coverage to 
Medicare so it is available on an equal basis to every senior in every 
state.
  The drug industry America's most profitable has never wanted a 
prescription drug benefit included in Medicare.

[[Page S5445]]

The industry is interested in protecting its very large profits. The 
most recent annual Fortune 500 report on American business showed once 
again as it has in each of the last 19 years that the pharmaceutical 
industry ranks first in profits. In the words of the editors of Fortune 
Magazine, ``Whether you gauge profitability by median return on 
revenues, assets or equity, pharmaceuticals had a Viagra kind of 
year.''
  Where the average Fortune 500 industry in the United States returned 
5 percent profits as a percentage of revenue, the pharmaceutical 
industry returned 18.6 percent. Where the average Fortune 500 industry 
returned 3.8 percent profits as a percentage of their assets, the 
pharmaceutical industry returned 16.5 percent. Where the average 
Fortune 500 industry returned 15 percent profits as a percentage of 
shareholders equity, the pharmaceutical industry returned 36 percent.
  The richest pharmaceutical company, Merck, pulled in nearly $6 
billion in profits, more than the entire Fortune 500 airline industry 
and registered twice the profits of the engineering construction 
industry. The 12 major companies of the pharmaceutical industry made 
$10 Billion more in total profits than the 24 companies of the motor 
vehicle and parts industry, including Ford, GM and others.
  Those record profits are no surprise to America's senior citizens. 
Medicare beneficiaries without prescription drug coverage are being 
gouged every day of the week by a pharmaceutical industry that charges 
higher prices in the United States than in any other country of the 
world. So, America's seniors know where those record profits come 
from--they come from their own pocketbooks.

  Year after year, the pharmaceutical industry rakes in record profits, 
much at the expense of America's most vulnerable citizens: the elderly, 
frail and ill. The high price of drugs forces seniors to chose between 
food and life preserving medications. Last year, when a Medicare 
prescription drug benefit available to all Senior Citizens seemed 
within reach, the pharmaceutical industry dipped into its coffers and 
forked over millions of dollars to fund a stealth campaign to defeat 
any such proposal.
  Nowhere in its campaign against a Medicare prescription drug benefit 
did the pharmaceutical industry tell people that it was the 
prescription-drug companies that were paying for the campaign. The 
industry's front organization is called Citizens for Better Medicare. 
That is like Foxes for Better Chickens. A more accurate description 
would be Pharmaceutical Companies for Higher Profits. But drug 
companies would rather hide behind a false shield, count their profits 
and count the ways they can continue to extract high profits from the 
American public, especially from the elderly.
  Indeed, according to a report from the Boston University School of 
Public Health, the pharmaceutical industry has encouraged the spread of 
seven interlocking myths that have ``permeated, paralyzed and 
poisoned'' public discourse of prescription drug policy. Let me just 
share 2 of those myths:
  Myth #1: High prices and profits are bestowed on the drug industry by 
a legitimate and bountiful free market. In reality, little of a free 
market is present in the world of patented prescription drugs. Today's 
prices and profits are therefore not justified by a legitimate free 
market.
  Myth #2: If government interferes with today's high price and 
profits, ``The lights go out in the labs, and there is no R&D,'' 
according to PhRMA, the drug industry's lobbying arm. As the Boston 
University researchers noted, that is like saying ``give us all of your 
money or we'll let you die.'' The researchers call that PhRMA's Fog of 
Fear. But the reality is the drug makers' profit-maximization is not to 
increase research. The facts are: Analysis of 1999 data shows that the 
six major drug makers spent 11 percent of their revenue on research and 
development, while 16 percent went to profits and 31 percent went to 
marketing and administration. These data closely parallel those 
collected in earlier years. Looking at the main task of drug company 
employees, as of June 1998: Fully 35 percent of drug makers' employees 
were engaged in marketing, with an additional 13 percent in 
administration. Producing and developing drugs each occupied only about 
one-quarter of employees. Looking at changes in employment of PhRMA 
members, from 1995 to 1999: The number of production workers fell, 
research workers rose slightly, while marketing employment rose by one-
third.
  The fact is there is plenty of room for the pharmaceutical industry 
to make a good profit without gouging the American consumer.
  The fact also is that with each passing year, the need for Medicare 
prescription drug coverage has become more acute. The reasons are well 
known.
  First, the cost of prescription drugs has skyrocketed in recent 
years. Direct to consumer advertising has increased demand, and drug 
companies have responded by raising prices and putting life saving 
drugs even further out of reach of the average senior citizen. Last 
year alone drug prices increased an estimated 17 percent. And there is 
no relief in sight. This year drug costs will increase another 18 
percent.
  Second, these increases hit seniors disproportionately: A 1998 study 
by the minority staff of the House Government Reform Committee found 
that older Americans without prescription drug insurance pay on average 
twice as much as the discounted prices drug companies offer large scale 
purchasers like HMOs and government agencies. The PRIME Institute, 
headed by Steve Schondelmeyer, at the University of Minnesota found 
what Minnesota seniors already know, that pharmaceutical prices 
overseas are far less then we pay in the United States. Statistics say 
that for every dollar we spend in the United States, Canadians spend on 
average just 64 cents; Italians spend just 51 cents; the English 65 
cents and Swedes 68 cents. They say statistics often lie. Well, from 
what I have seen and heard, the drugs seniors need most are even more 
expensive in the United States than those statistics tell us. Even more 
astounding than the average figures are some specific comparisons: 
Synthroid for thyroid disease costs seniors 14 times the discounted 
price to favored customers; and Micronase for diabetes costs over 3\1/
2\ times as much. So not only are seniors forced the pay out of pocket 
for these drugs, but the price they are charged is a national disgrace.
  Furthermore, prescription drug spending accounts for 19 percent of 
the out of pocket costs for senior citizens and is the largest spending 
category after premium payments. Beneficiaries were projected to spend 
an average of $480 out-of-pocket on prescription drugs in 2000. Average 
out-of-pocket prescription drug spending is even higher for 
beneficiaries in poor health, $685, those without drug coverage, $715, 
and those who are severely limited in their activities of daily living, 
$725.
  The high cost of drugs puts Americans in all income groups at risk. 
Of those seniors with incomes below 250 percent of poverty about 38 
percent, 7.6 million, lack Rx drug coverage. Of those with higher 
incomes 28 percent, 5.4 million, have no drug coverage.
  The increase in drugs cost and utilization is far outpacing the 
overall increase in the cost of living. A national study by Brandeis 
University and PCS Health Systems published in May 2000 found that 
prescription drug expenditure trends were even higher than previously 
estimated. They found that: Prescription drug costs grew at an annual 
rate of 24.8 percent per year from 1996 to 1999. Prescriptions per 
enrollee grew 14 percent per year. And not surprisingly, the number of 
prescriptions per person is rising fastest in the 65+ age group, from 
an average of 16 prescriptions in 1996 to an average of 23 by 1999.
  Rural Americans are hardest hit of all. In June 2000 the National 
Economic Council published a report on prescription drug coverage for 
rural Medicare beneficiaries. Among its findings: Rural beneficiaries 
are over 60 percent more likely to fail to get needed prescription 
drugs due to cost. A greater proportion of rural elderly spend a 
greater percent of their income on prescription drugs. Rural 
beneficiaries use nearly 10 percent more prescriptions. Rural 
beneficiaries pay over 25 percent more out-of-pocket for prescription 
drugs than urban beneficiaries but they are 50 percent less likely to 
have any prescription drug coverage.

[[Page S5446]]

  For Minnesotans, the lack of a Medicare prescription drug benefit 
hits especially hard because there are few alternatives. Only 19 
percent of Minnesota firms offer retiree health insurance and the 
number has been dropping. Medicare's HMO reimbursement in Minnesota is 
so low that no basic Medicare Managed Care Plans can include Rx Drug 
coverage. Even with the increased Medicare + Choice capitation payment 
floor we voted in last year, it is not enough for these plans to offer 
prescription drug coverage. When a comprehensive benefit without a cap 
is available, the costs become prohibitive--up to $130 per month, just 
for the pharmacy benefit. The cost of prescription drug coverage under 
the average Medigap policy in Minnesota is $90 per month, and that is 
only for limited benefits. Because of this, in Minnesota, 65 percent of 
seniors have no prescription drug coverage. That's twice the national 
average. But the fact is over half of the Seniors in the United States 
have either no prescription drug coverage or totally inadequate 
coverage.
  Both the high cost of drugs and lack of coverage have severe 
consequences. People discontinue their medications against medical 
advice, thereby placing themselves at risk for problems like heart 
attacks, cancer recurrence, depression and complications of diabetes. 
People lower the dose they take to make their prescriptions last 
longer. When I was in Duluth, Minnesota, meeting with seniors to 
discuss this very issue, one of my constituents told me about a 
neighbor who cut his pills in quarters because he couldn't afford to 
refill the prescription and wound up with an unnecessary 
hospitalization. People take their medicines as prescribed but then 
skimp on food and other necessities. Ray Erlandson, a retired steel 
worker from West Duluth was at that meeting in Duluth. Ray was spending 
about $300 a month for prescription drugs for he and his wife. He had 
nearly run out of savings. What does Ray say? ``People have to choose 
between food and buying their drugs. That shouldn't happen in this 
country. It's a dirty rotten shame. I'd like to ask the VIPs of the 
drug companies, Do you go to church? Do you know what you are doing to 
the elderly people?''
  How can the richest country on earth force its senior citizens to 
choose between the medicines they need to survive and the foods they 
need to stay healthy? We shouldn't allow it. The answer is to provide a 
prescription drug benefit for all seniors that includes a pricing 
policy that keeps costs affordable.
  In the 1960s when barely half the nation's senior citizens could 
afford health insurance, and far more were at risk for the loss of 
their life savings, we as a country responded and created Medicare.
  Today, at the beginning of a new century, when only half the nation's 
seniors--at best--have close to adequate prescription drug coverage, we 
are again called upon as a nation to respond. The beauty of it all is 
that we have a surplus that allows us to respond with a prescription 
drug program that we can all be proud of. The tragedy of it all is that 
we are not doing it. We have an administration that is more concerned 
with giving huge tax cuts to the wealthiest 1 percent of Americans than 
it is with providing the life sustaining medications our seniors need. 
We have a pharmaceutical industry that is more concerned with 
maximizing profits and making campaign contributions than it is with 
maximizing access to life saving medications and making prescription 
drugs affordable.
  The administration's prescription drug proposal is a clear 
demonstration of just where their priorities are. Republicans want to 
give $550 billion in tax cuts just to the wealthiest 1 percent of 
American families, leaving a pittance for Medicare prescription drugs. 
And the effect of those priorities will be seen in their as yet 
undisclosed plan: high premiums for beneficiaries; high deductibles, up 
to $2000; high co-pay; or a benefit available to only a fraction of the 
seniors who need it. In short, a benefit that isn't worth much. 
Millions of seniors will be left still holding the bag. You can't 
provide the kind of Medicare Rx Drug benefit that everyone on Medicare 
deserves with a tin-cup budget.

  Any meaningful prescription drug benefit passed by this Congress 
should reflect key principles: universality; low cost to beneficiaries; 
and serious efforts to reduce the price of prescription drugs. To 
remedy the high cost of prescription drugs and to provide comprehensive 
coverage, I am proud to introduce the Medicare Extension of Drugs to 
Seniors, MEDS, Act of 2001.
  Specifically, under this proposal, seniors and the disabled would 
have a 20-percent co-pay on all prescription drugs and a small, $24 
monthly premium. Every person would receive the same voluntary benefit, 
regardless of income or geographical location. Under the MEDS plan, no 
beneficiary would ever have to spend more than $2,000 out-of-pocket on 
their medications. Low-income beneficiaries would have no out-of-pocket 
expense. By contrast, other plans that have been proposed would have 
seniors paying up to $6,000 a year. Still, they would not necessarily 
cover everyone currently eligible for Medicare
  How can the MEDS plan provide such a strong benefit without busting 
the budget? By including provisions which seriously address the 
outrageously high prices that Americans are forced to pay for 
prescription drugs.
  First, the MEDS plan includes strong, loophole-free language to allow 
American pharmacists, wholesalers and distributors to purchase FDA-
approved prescription drugs at the lower prices charged abroad. Last 
year, a version of this legislation passed both Houses of Congress with 
solid bipartisan majorities. Unfortunately, at the last minute, the 
pharmaceutical industry was successful in adding loopholes to the bill 
that essentially make it unworkable. With strong reimportation language 
like that included in the MEDS plan, Americans would save 30-50 percent 
on the price of prescription drugs without any government subsidy.
  Second, the MEDS plan includes a provision, originally proposed by 
Representative Tom Allen, that would permit Medicare beneficiaries to 
purchase their prescription drugs at the same price other government 
agencies such as the VA does. MEDS also creates a so-called ``global 
budget'' which would allow Medicare to negotiate on behalf of all 
Medicare beneficiaries and work to restrain costs in the long term.
  Finally, the MEDS plan would ensure that when taxpayers foot the bill 
for research and development of a prescription drug, the pharmaceutical 
industry must offer that drug at a fair and reasonable price. Today, 
the federal government spends billions of dollars a year on research 
and development of medicines. Most often, this R&D is then given over 
to the pharmaceutical industry, which charges Americans any price they 
want for the final product. If we change this absurd system, we would 
ensure that new medicines would be affordable in the years ahead.
  You can expect the pharmaceutical industry to protest loudly. And you 
can expect the industry to increase its campaign contributions, which 
totaled $19 million last year alone, its lobbying spending, which 
reached $91 million in 1999, and its advertising budget.
  It is interesting. One pharmaceutical company executive recently said 
that no senior citizen should be forced to choose between his or her 
prescription and other vital needs. But the high prices his company 
charges and the high-priced lobbyists who do its bidding on Capitol 
Hill are forcing that very choice on many senior citizens. While paying 
lip service to seniors, according to a published news story, that same 
executive was earning over $6 million in salary, plus stock options 
worth more than $10 million.
  The drug companies will say that reductions in price will dry up 
research. I believe that is nonsense. Drug companies put billions more 
dollars into profits, marketing and administration than they do into 
research, based on information in their own annual reports. Just how 
hard would this most profitable of American industries be hit if we 
enacted a universal Medicare prescription drug benefit that required 
the drug companies to offer seniors the best price they now offer other 
Federal government programs? According to Merrill Lynch, only by about 
3 percent.
  In a June 23, 1999 report entitled A Medicare Drug Benefit: May Not 
Be So Bad, Merrill Lynch debunked the notion that a Medicare 
prescription drug benefit would seriously damage the

[[Page S5447]]

pharmaceutical industry's profitability. Merrill Lynch's analysis 
concludes that the toughest proposal on the table in Washington, the 
Prescription Drug Fairness for Seniors Act, (The Allen Bill), the 
provisions of which are included in this bill, and which provides a 40 
percent discount on drug costs for all 39 million Medicare 
beneficiaries, would cut just 3.3 percent from total pharmaceutical 
industry revenues because volume increases would offset much of the 
lost revenue due to the lower prices. According to Merrill Lynch: 
Volume is more important than price in driving pharmaceutical company 
sales growth. Between 1994 and 1998, the impact of volume on sales 
growth outpaced price by better than a 4-to-1 ratio. Medicare 
beneficiaries who either lack or have inadequate drug coverage 
underutilize prescription drugs because they cannot afford them. With a 
40-percent price discount, the one-third of beneficiaries who lack any 
drug coverage would increase their consumption by 45 percent, and the 
two-thirds with some coverage would see a 10-percent increase in drug 
purchases. This increased utilization reduces the lost revenue that 
would otherwise result from a 40-percent price discount for Medicare 
beneficiaries by almost one-half. Without adjusting for volume 
increases, a 40-percent price discount for Medicare beneficiaries would 
reduce total pharmaceutical industry revenues by 5.9 percent. But after 
adjusting for increased utilization, the net drop in sales is just 3.3 
percent. And that is from just a reduction in price, not an increase in 
coverage. If you factor in the coverage provided by the MEDS Act which 
all Seniors will have, drug company revenues will increase.
  It is time to get our priorities straight. Millions of hard-working 
Americans go to work every day and pay their taxes so that when they 
hit 65, they can retire in a country they can be proud of, a country 
that offers basic security for all an even better life for their 
children. Each day they read in the paper about scientific 
breakthroughs: the genome project and new advances in the treatment of 
cancer, heart disease, and diabetes, all being carried out at the 
National Institutes of Health, one of our nation's jewels. They turn on 
the television and see drug company advertisements that extol new and 
expensive medications. But what good is that medical research and those 
expensive drugs if they are unaffordable and out of reach of millions 
of Americans. That is the situation we have today. And it is 
unacceptable!
  The time has come to support a comprehensive, affordable, 20-percent 
co-pay, $2000-cap, prescription drug benefit for all seniors, a plan 
that does not favor the health insurance or pharmaceutical industries 
over our own parents and grandparents. The MEDS Act provides such a 
benefit, and I ask my colleagues to join me in supporting this 
legislation.
  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. 925

       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 ``Medicare 
     Extension of Drugs to Seniors (MEDS) Act of 2001''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Prescription medicine benefit program.

   ``Part D--Prescription Medicine Benefit for the Aged and Disabled

``Sec. 1860. Establishment of prescription medicine benefit program for 
              the aged and disabled.
``Sec. 1860A. Scope of benefits.
``Sec. 1860B. Payment of benefits; benefit limits.
``Sec. 1860C. Eligibility and enrollment.
``Sec. 1860D. Premiums.
``Sec. 1860E. Special eligibility, enrollment, and copayment rules for 
              low-income individuals.
``Sec. 1860F. Prescription Medicine Insurance Account.
``Sec. 1860G. Administration of benefits.
``Sec. 1860H. Employer incentive program for employment-based retiree 
              medicine coverage.
``Sec. 1860I. Promotion of pharmaceutical research on break-through 
              medicines while providing program cost containment.
``Sec. 1860J. Appropriations to cover Government contributions.
``Sec. 1860K. Prescription medicine defined.''.
Sec. 4. Substantial reductions in the price of prescription drugs for 
              medicare beneficiaries.
Sec. 5. Amendments to program for importation of certain prescription 
              drugs by pharmacists and wholesalers.
Sec. 6. Reasonable price agreement for federally funded research.
Sec. 7. GAO ongoing studies and reports on program; miscellaneous 
              reports.
Sec. 8. Medigap transition provisions.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Prescription medicine coverage was not a standard part 
     of health insurance when the medicare program under title 
     XVIII of the Social Security Act was enacted in 1965. Since 
     1965, however, medicine coverage has become a key component 
     of most private and public health insurance coverage, except 
     for the medicare program.
       (2) At least \2/3\ of medicare beneficiaries have 
     unreliable, inadequate, or no medicine coverage at all.
       (3) Seniors who do not have medicine coverage typically 
     pay, at a minimum, 15 percent more than people with coverage.
       (4) Medicare beneficiaries at all income levels lack 
     prescription medicine coverage, with more than \1/2\ of such 
     beneficiaries having incomes greater than 150 percent of the 
     poverty line.
       (5) The number of private firms offering retiree health 
     coverage is declining.
       (6) Medigap premiums for medicines are too expensive for 
     most beneficiaries and are highest for older senior citizens, 
     who need prescription medicine coverage the most and 
     typically have the lowest incomes.
       (7) All medicare beneficiaries should have access to a 
     voluntary, reliable, affordable, and defined outpatient 
     medicine benefit as part of the medicare program that assists 
     with the high cost of prescription medicines and protects 
     them against excessive out-of-pocket costs.

     SEC. 3. PRESCRIPTION MEDICINE BENEFIT PROGRAM.

       (a) In General.--Title XVIII of the Social Security Act (42 
     U.S.C. 1395 et seq.) is amended--
       (1) by redesignating part D as part E; and
       (2) by inserting after part C the following new part:

   ``Part D--Prescription Medicine Benefit for the Aged and Disabled


 ``establishment of prescription medicine benefit program for the aged 
                              and disabled

       ``Sec. 1860. There is established a voluntary insurance 
     program to provide prescription medicine benefits, including 
     pharmacy services, in accordance with the provisions of this 
     part for individuals who are aged or disabled or have end-
     stage renal disease and who elect to enroll under such 
     program, to be financed from premium payments by enrollees 
     together with contributions from funds appropriated by the 
     Federal Government.


                          ``scope of benefits

       ``Sec. 1860A. (a) In General.--The benefits provided to an 
     individual enrolled in the insurance program under this part 
     shall consist of--
       ``(1) payments made, in accordance with the provisions of 
     this part, for covered prescription medicines (as specified 
     in subsection (b)) dispensed by any pharmacy participating in 
     the program under this part (and, in circumstances designated 
     by the Secretary, by a nonparticipating pharmacy), including 
     any specifically named medicine prescribed for the individual 
     by a qualified health care professional regardless of whether 
     the medicine is included in any formulary established under 
     this part if such medicine is certified as medically 
     necessary by such health care professional (except that the 
     Secretary shall encourage to the maximum extent possible the 
     substitution and use of lower-cost generics), up to the 
     benefit limits specified in section 1860B; and
       ``(2) charging by pharmacies of the negotiated price--
       ``(A) for all covered prescription medicines, without 
     regard to such benefit limit; and
       ``(B) established with respect to any drugs or classes of 
     drugs described in subparagraphs (A), (B), (D), (E), or (F) 
     of section 1927(d)(2) that are available to individuals 
     receiving benefits under this title.
       ``(b) Covered Prescription Medicines.--
       ``(1) In general.--Covered prescription medicines, for 
     purposes of this part, include all prescription medicines (as 
     defined in section 1860K(1)), including smoking cessation 
     agents, except as otherwise provided in this subsection.
       ``(2) Exclusions from coverage.--Covered prescription 
     medicines shall not include drugs or classes of drugs 
     described in subparagraphs (A) through (D) and (F) through 
     (H) of section 1927(d)(2) unless--
       ``(A) specifically provided otherwise by the Secretary with 
     respect to a drug in any of such classes; or
       ``(B) a drug in any of such classes is certified to be 
     medically necessary by a health care professional.
       ``(3) Exclusion of prescription medicines to the extent 
     covered under part a or b.--

[[Page S5448]]

     A medicine prescribed for an individual that would otherwise 
     be a covered prescription medicine under this part shall not 
     be so considered to the extent that payment for such medicine 
     is available under part A or B, including all injectable 
     drugs and biologicals for which payment was made or should 
     have been made by a carrier under section 1861(s)(2) (A) or 
     (B) as of the date of enactment of the Medicare Extension of 
     Drugs to Seniors (MEDS) Act of 2001. Medicines otherwise 
     covered under part A or B shall be covered under this part to 
     the extent that benefits under part A or B are exhausted.
       ``(4) Study on inclusion of home infusion therapy 
     services.--Not later than 1 year after the date of enactment 
     of the Medicare Extension of Drugs to Seniors (MEDS) Act of 
     2001, the Secretary shall submit to Congress a legislative 
     proposal for the delivery of home infusion therapy services 
     under this title and for a system of payment for such a 
     benefit that coordinates items and services furnished under 
     part B and under this part.


                 ``payment of benefits; benefit limits

       ``Sec. 1860B. (a) Payment of Benefits.--
       ``(1) In general.--There shall be paid from the 
     Prescription Medicine Insurance Account within the 
     Supplementary Medical Insurance Trust Fund, in the case of 
     each individual who is enrolled in the insurance program 
     under this part and who purchases covered prescription 
     medicines in a calendar year--
       ``(A) with respect to costs incurred for covered 
     prescription medicine furnished during a year, before the 
     individual has incurred out-of-pocket expenses under this 
     subsection equal to the catastrophic out-of-pocket limit 
     specified in subsection (b), an amount equal to the 
     applicable percentage (specified in paragraph (2)) of the 
     negotiated price for each such covered prescription medicine 
     or such higher percentage as is proposed under section 
     1860G(b)(7); and
       ``(B) with respect to costs incurred for covered 
     prescription medicine furnished during a year, after the 
     individual has incurred out-of-pocket expenses under this 
     subsection equal to the catastrophic out-of-pocket limit 
     specified in subsection (b), an amount equal to 100 percent 
     of the negotiated price for each such covered prescription 
     medicine.
       ``(2) Applicable percentage.--The applicable percentage 
     specified in this paragraph is 80 percent or such higher 
     percentage as is proposed under section 1860G(b)(7), if the 
     Secretary finds that such higher percentage will not increase 
     aggregate costs to the Prescription Medicine Insurance 
     Account.
       ``(b) Catastrophic Limit on Out-of-Pocket Expenses.--
       ``(1) In general.--The catastrophic limit on out-of-pocket 
     expenses specified in this subsection for--
       ``(A) for each of calendar years 2003 and 2004, $2,000; and
       ``(B) subject to paragraph (2), for calendar year 2005 and 
     each subsequent calendar year is equal to the limit for the 
     preceding year under this paragraph adjusted by the 
     sustainable growth rate percentage (determined under section 
     1861I(b)) for the year involved.
       ``(2) Rounding.--Any amount determined under paragraph 
     (1)(E) that is not a multiple of $10 shall be rounded to the 
     nearest multiple of $10.


                      ``eligibility and enrollment

       ``Sec. 1860C. (a) Eligibility.--Every individual who, in or 
     after 2003, is entitled to hospital insurance benefits under 
     part A or enrolled in the medical insurance program under 
     part B is eligible to enroll, in accordance with the 
     provisions of this section, in the insurance program under 
     this part, during an enrollment period prescribed in or under 
     this section, in such manner and form as may be prescribed by 
     regulations.
       ``(b) Enrollment.--
       ``(1) In general.--Each individual who satisfies subsection 
     (a) shall be enrolled (or eligible to enroll) in the program 
     under this part in accordance with the provisions of section 
     1837, as if that section applied to this part, except as 
     otherwise explicitly provided in this part.
       ``(2) Single enrollment period.--Except as provided in 
     section 1837(i) (as such section applies to this part), 
     1860E, or 1860H(e), or as otherwise explicitly provided, no 
     individual shall be entitled to enroll in the program under 
     this part at any time after the initial enrollment period 
     without penalty, and in the case of all other late 
     enrollments, the Secretary shall develop a late enrollment 
     penalty for the individual that fully recovers the 
     additional actuarial risk involved providing coverage for 
     the individual.
       ``(3) Special enrollment period for 2003.--
       ``(A) In general.--An individual who first satisfies 
     subsection (a) in 2003 may, at any time on or before December 
     31, 2003--
       ``(i) enroll in the program under this part; and
       ``(ii) enroll or reenroll in such program after having 
     previously declined or terminated enrollment in such program.
       ``(B) Effective date of coverage.--An individual who 
     enrolls under the program under this part pursuant to 
     subparagraph (A) shall be entitled to benefits under this 
     part beginning on the first day of the month following the 
     month in which such enrollment occurs.
       ``(c) Period of Coverage.--
       ``(1) In general.--Except as otherwise provided in this 
     part, an individual's coverage under the program under this 
     part shall be effective for the period provided in section 
     1838, as if that section applied to the program under this 
     part.
       ``(2) Part d coverage terminated by termination of coverage 
     under parts a and b.--In addition to the causes of 
     termination specified in section 1838, an individual's 
     coverage under this part shall be terminated when the 
     individual retains coverage under neither the program under 
     part A nor the program under part B, effective on the 
     effective date of termination of coverage under part A or (if 
     later) under part B.


                               ``premiums

       ``Sec. 1860D. (a) Annual Establishment of Monthly Premium 
     Rates.--
       ``(1) In general.--The Secretary shall, during September of 
     2002 and of each succeeding year, determine and promulgate a 
     monthly premium rate for the succeeding year in accordance 
     with the provisions of this subsection.
       ``(2) Initial premiums.--For months in 2003, the monthly 
     premium rate under this subsection shall be--
       ``(A) $24, in the case of premiums paid by an individual 
     enrolled in the program under this part; and
       ``(B) $32, in the case of premiums paid for such an 
     individual by a former employer (as defined in section 
     1860H(f)(2)).
       ``(3) Subsequent years.--
       ``(A) In general.--For months in a year after 2003, the 
     monthly premium under this subsection shall be (subject to 
     subparagraph (B)) the monthly premium (computed under this 
     subsection without regard to subparagraph (B)) for the 
     previous year increased by the annual percentage increase in 
     average per capita aggregate expenditures for covered 
     outpatient medicines in the United States for medicare 
     beneficiaries, as estimated and published by the Secretary in 
     September before the year and for the year involved.
       ``(B) Rounding.--The monthly premium determined under 
     subparagraph (A) shall be rounded to the nearest multiple of 
     10 cents if it is not a multiple of 10 cents.
       ``(C) Publication of assumptions.--The Secretary shall 
     publish, together with the promulgation of the monthly 
     premium rates under this paragraph, a statement setting forth 
     the actuarial assumptions and bases employed in arriving at 
     the monthly premium under subparagraph (A).
       ``(b) Payment of Premiums.--
       ``(1) Payments by deduction from social security, railroad 
     retirement benefits, or benefits administered by opm.--
       ``(A) Deduction from benefits.--In the case of an 
     individual who is entitled to or receiving benefits as 
     described in subsection (a), (b), or (d) of section 1840, 
     premiums payable under this part shall be collected by 
     deduction from such benefits at the same time and in the same 
     manner as premiums payable under part B are collected 
     pursuant to section 1840.
       ``(B) Transfers to prescription medicine insurance 
     account.--The Secretary of the Treasury shall, from time to 
     time, but not less often than quarterly, transfer premiums 
     collected pursuant to subparagraph (A) to the Prescription 
     Medicine Insurance Account from the appropriate funds and 
     accounts described in subsections (a)(2), (b)(2), and (d)(2) 
     of section 1840, on the basis of the certifications described 
     in such subsections. The amounts of such transfers shall be 
     appropriately adjusted to the extent that prior transfers 
     were too great or too small.
       ``(2) Direct payments to secretary.--
       ``(A) Additional payment by enrollee.--An individual to 
     whom paragraph (1) applies (other than an individual 
     receiving benefits as described in section 1840(d)) and who 
     estimates that the amount that will be available for 
     deduction under such paragraph for any premium payment period 
     will be less than the amount of the monthly premiums for such 
     period may (under regulations) pay to the Secretary the 
     estimated balance, or such greater portion of the monthly 
     premium as the individual chooses.
       ``(B) Payments by other enrollees.--An individual enrolled 
     in the insurance program under this part with respect to whom 
     none of the preceding provisions of this subsection applies 
     (or to whom section 1840(c) applies) shall pay premiums to 
     the Secretary at such times and in such manner as the 
     Secretary shall by regulations prescribe.
       ``(C) Deposit of premiums.--Amounts paid to the Secretary 
     under this paragraph shall be deposited in the Treasury to 
     the credit of the Prescription Medicine Insurance Account 
     in the Supplementary Medical Insurance Trust Fund.
       ``(c) Certain Low-Income Individuals.--For rules concerning 
     premiums for certain low-income individuals, see section 
     1860E.


 ``special eligibility, enrollment, and copayment rules for low-income 
                              individuals

       ``Sec. 1860E. (a) State Agreements for Coverage.--
       ``(1) In general.--The Secretary shall, at the request of a 
     State, enter into an agreement with the State under which all 
     individuals described in paragraph (2) are enrolled in the 
     program under this part, without regard to whether any such 
     individual has previously declined the opportunity to enroll 
     in such program.
       ``(2) Eligibility groups.--The individuals described in 
     this paragraph, for purposes of paragraph (1), are 
     individuals who satisfy section 1860C(a) and who are--
       ``(A)(i) eligible individuals within the meaning of section 
     1843; and

[[Page S5449]]

       ``(ii) in a coverage group or groups permitted under 
     section 1843 (as selected by the State and specified in the 
     agreement); or
       ``(B) qualified medicare medicine beneficiaries (as defined 
     in subsection (e)(1)).
       ``(3) Coverage period.--The period of coverage under this 
     part of an individual enrolled under an agreement under this 
     subsection shall be as follows:
       ``(A) Individuals eligible (at state option) for part b 
     buy-in.--In the case of an individual described in subsection 
     (a)(2)(A), the coverage period shall be the same period that 
     applies (or would apply) pursuant to section 1843(d).
       ``(B) Qualified medicare medicine beneficiaries.--In the 
     case of an individual described in subsection (a)(2)(B)--
       ``(i) the coverage period shall begin on the latest of--

       ``(I) January 1, 2003;
       ``(II) the first day of the third month following the month 
     in which the State agreement is entered into; or
       ``(III) the first day of the first month following the 
     month in which the individual satisfies section 1860C(a); and

       ``(ii) the coverage period shall end on the last day of the 
     month in which the individual is determined by the State to 
     have become ineligible for medicare medicine cost-sharing.
       ``(4) Alternative enrollment methods.--In the process of 
     enrolling low-income individuals under this part, the 
     Secretary shall use the system provided under section 154 of 
     the Social Security Act Amendments of 1994 for newly eligible 
     medicare beneficiaries and shall apply a similar system for 
     other medicare beneficiaries. Such system shall use existing 
     Federal Government databases to identify eligibility. Such 
     system shall not require that beneficiaries apply for, or 
     enroll through, State medicaid systems in order to obtain 
     low-income assistance described in this section.
       ``(b) Special Part D Enrollment Opportunity for Individuals 
     Losing Medicaid Eligibility.--In the case of an individual 
     who--
       ``(1) satisfies section 1860C(a); and
       ``(2) loses eligibility for benefits under the State plan 
     under title XIX after having been enrolled under such plan or 
     having been determined eligible for such benefits;

     the Secretary shall provide an opportunity for enrollment 
     under the program under this part during the period that 
     begins on the date that such individual loses such 
     eligibility and ends on the date specified by the Secretary.
       ``(c) State Option To Buy-In Dually Eligible Individuals.--
       ``(1) Coverage of premiums as medical assistance.--For 
     purposes of applying the second sentence of section 1905(a), 
     any reference to premiums under part B shall be considered to 
     include a reference to premiums under this part.
       ``(2) State commitment to continue participation in part d 
     after benefit limit reached.--As a condition of additional 
     funding to a State under subsection (d), the State, in its 
     State plan under title XIX, shall provide that in the case of 
     any individual whose eligibility for medical assistance under 
     title XIX is not limited to medicare cost-sharing and for 
     whom the State elects to pay premiums under this part 
     pursuant to this section, the State will purchase all 
     prescription medicines for such individual in accordance with 
     the provisions of this part without regard to whether the 
     benefit limit for such individual under section 1860B(b) 
     has been reached.
       ``(3) Medicare cost-sharing required for qualified medicare 
     beneficiaries.--In applying title XIX, the term `medicare 
     cost-sharing' (as defined in section 1905(p)(3)) is deemed to 
     include--
       ``(A) premiums under section 1860D; and
       ``(B) the difference between the amount that is paid under 
     section 1860B and the amount that would be paid under such 
     section if any reference to `80 percent' in subsection (a)(2) 
     of such section were deemed a reference to `100 percent' (or, 
     if the Secretary approves a higher percentage under such 
     section, if such percentage were deemed to be 100 percent).
       ``(d) Payment to States for Coverage of Certain Medicare 
     Cost-Sharing.--
       ``(1) In general.--The Secretary shall provide for payment 
     under this subsection to each State that provides for--
       ``(A) medicare cost-sharing described in section 
     1905(p)(3)(A)(ii) for individuals who would be qualified 
     medicare beneficiaries described in section 1905(p)(1) but 
     for the fact that their income exceeds the income level 
     established by the State under section 1905(p)(2) and is at 
     least 120 percent, but less than 135 percent, of the official 
     poverty line (referred to in such section) for a family of 
     the size involved and who are not otherwise eligible for 
     medical assistance under the State plan; and
       ``(B) medicare medicine cost-sharing (as defined in 
     subsection (e)(2)) for qualified medicare medicine 
     beneficiaries described in subsection (e)(1).
       ``(2) Amount of payment.--The amount of payment under 
     paragraph (1) shall equal 100 percent of the cost-sharing 
     described in such paragraph, except that, in the case of an 
     individual whose eligibility for medical assistance under 
     title XIX is not limited to medicare cost-sharing or medicare 
     medicine cost-sharing, the amount of payment under paragraph 
     (1)(B) shall be equal to the Federal medical assistance 
     percentage described in section 1905(b)) of amounts as 
     expended for such cost-sharing.
       ``(3) Method of payment; relation to other payments.--
     Amounts shall be paid to States under this subsection in a 
     manner similar to that provided under section 1903(d). 
     Payments under this subsection shall be made in lieu of any 
     payments that otherwise may be made for medical assistance 
     provided under section 1902(a)(10)(E)(iv).
       ``(4) Treatment of territories.--
       ``(A) In general.--Subject to subparagraph (B), this 
     subsection shall not apply to States other than the 50 States 
     and the District of Columbia.
       ``(B) Payments.--In the case of a State (other than the 50 
     States and the District of Columbia) that develops and 
     implements a plan of assistance for pharmaceuticals provided 
     to low-income medicare beneficiaries, the Secretary shall 
     provide for payment to the State in an amount that is 
     reasonable in relation to the payment levels provided to 
     other States under paragraph (2).
       ``(e) Definitions; Special Rules.--For purposes of this 
     section:
       ``(1) Qualified medicare medicine beneficiary.--The term 
     `qualified medicare medicine beneficiary' means an 
     individual--
       ``(A) who is entitled to hospital insurance benefits under 
     part A (including an individual entitled to such benefits 
     pursuant to an enrollment under section 1818, but not 
     including an individual entitled to such benefits only 
     pursuant to an enrollment under section 1818A);
       ``(B) whose income (as determined under section 1612 for 
     purposes of the supplemental security income program, except 
     as provided in section 1905(p)(2)(D)) is above 100 percent 
     but below 150 percent of the official poverty line (as 
     defined by the Office of Management and Budget, and revised 
     annually in accordance with section 673(2) of the Omnibus 
     Budget Reconciliation Act of 1981) applicable to a family of 
     the size involved; and
       ``(C) whose resources (as determined under section 1613 for 
     purposes of the supplemental security income program) do not 
     exceed twice the maximum amount of resources that an 
     individual may have and obtain benefits under that program.
       ``(2) Medicare medicine cost-sharing.--The term `medicare 
     medicine cost-sharing' means the following costs incurred 
     with respect to a qualified medicare medicine beneficiary, 
     without regard to whether the costs incurred were for items 
     and services for which medical assistance is otherwise 
     available under a State plan under title XIX:
       ``(A) In the case of a qualified medicare medicine 
     beneficiary whose income (as determined under paragraph (1)) 
     is less than 135 percent of the official poverty line--
       ``(i) premiums under section 1860D; and
       ``(ii) the difference between the amount that is paid under 
     section 1860B and the amount that would be paid under such 
     section if any reference to `50 percent' therein were deemed 
     a reference to `100 percent' (or, if the Secretary approves a 
     higher percentage under such section, if such percentage were 
     deemed to be 100 percent).
       ``(B) In the case of a qualified medicare medicine 
     beneficiary whose income (as determined under paragraph (1)) 
     is at least 135 percent but less than 150 percent of the 
     official poverty line, a percentage of premiums under section 
     1860D, determined on a linear sliding scale ranging from 100 
     percent for individuals with incomes at 135 percent of 
     such line to 0 percent for individuals with incomes at 150 
     percent of such line.
       ``(3) State.--The term `State' has the meaning given such 
     term under section 1101(a) for purposes of title XIX.
       ``(4) Treatment of drugs purchased.--The provisions of 
     section 1927 shall not apply to prescription drugs purchased 
     under this part pursuant to an agreement with the Secretary 
     under this section (including any drugs so purchased after 
     the limit under section 1860B(b) has been exceeded).


               ``prescription medicine insurance account

       ``Sec. 1860F. (a) Establishment.--There is created within 
     the Federal Supplemental Medical Insurance Trust Fund 
     established by section 1841 an account to be known as the 
     `Prescription Medicine Insurance Account' (in this section 
     referred to as the `Account').
       ``(b) Amounts in Account.--
       ``(1) In general.--The Account shall consist of--
       ``(A) such amounts as may be deposited in, or appropriated 
     to, such fund as provided in this part; and
       ``(B) such gifts and bequests as may be made as provided in 
     section 201(i)(1).
       ``(2) Separation of funds.--Funds provided under this part 
     to the Account shall be kept separate from all other funds 
     within the Federal Supplemental Medical Insurance Trust Fund.
       ``(c) Payments From Account.--The Managing Trustee shall 
     pay from time to time from the Account such amounts as the 
     Secretary certifies are necessary to make the payments 
     provided for by this part, and the payments with respect to 
     administrative expenses in accordance with section 201(g).


                      ``administration of benefits

       ``Sec. 1860G. (a) Through HCFA.--The Secretary shall 
     provide for administration of the benefits under this part 
     through the Health Care Financing Administration in 
     accordance with the provisions of this section. The 
     Administrator of such Administration may enter into contracts 
     with carriers to administer this part in the same manner as 
     the Administrator enters into such contracts to administer 
     part B. Any such contract shall

[[Page S5450]]

     be separate from any contract under section 1842.
       ``(b) Administration Functions.--In carrying out this part, 
     the Administrator (or a carrier under a contract with the 
     Administrator) shall (or in the case of the function 
     described in paragraph (9), may) perform the following 
     functions:
       ``(1) Participation agreements, prices, and fees.--
       ``(A) Negotiated prices.--Establish, through negotiations 
     with medicine manufacturers and wholesalers and pharmacies, a 
     schedule of prices for covered prescription medicines.
       ``(B) Agreements with pharmacies.--Enter into participation 
     agreements under subsection (c) with pharmacies, that include 
     terms that--
       ``(i) secure the participation of sufficient numbers of 
     pharmacies to ensure convenient access (including adequate 
     emergency access);
       ``(ii) permit the participation of any pharmacy in the 
     service area that meets the participation requirements 
     described in subsection (c); and
       ``(iii) allow for reasonable dispensing and consultation 
     fees for pharmacies.
       ``(C) Lists of prices and participating pharmacies.--Ensure 
     that the negotiated prices established under subparagraph (A) 
     and the list of pharmacies with agreements under subsection 
     (c) are regularly updated and readily available to health 
     care professionals authorized to prescribe medicines, 
     participating pharmacies, and enrolled individuals.
       ``(2) Tracking of covered enrolled individuals.--Maintain 
     accurate, updated records of all enrolled individuals (other 
     than individuals enrolled in a plan under part C).
       ``(3) Payment and coordination of benefits.--
       ``(A) Payment.--
       ``(i) Administer claims for payment of benefits under this 
     part and encourage, to the maximum extent possible, use of 
     electronic means for the submissions of claims.
       ``(ii) Determine amounts of benefit payments to be made.
       ``(iii) Receive, disburse, and account for funds used in 
     making such payments, including through the activities 
     specified in the provisions of this paragraph.
       ``(B) Coordination.--Coordinate with other private benefit 
     providers, pharmacies, and other relevant entities as 
     necessary to ensure appropriate coordination of benefits with 
     respect to enrolled individuals, including coordination of 
     access to and payment for covered prescription medicines 
     according to an individual's in-service area plan provisions, 
     when such individual is traveling outside the home service 
     area, and under such other circumstances as the Secretary may 
     specify.
       ``(C) Explanation of benefits.--Furnish to enrolled 
     individuals an explanation of benefits in accordance with 
     section 1806(a), and a notice of the balance of benefits 
     remaining for the current year, whenever prescription 
     medicine benefits are provided under this part (except that 
     such notice need not be provided more often than monthly).
       ``(4) Rules relating to provision of benefits.--
       ``(A) In general.--In providing benefits under this part, 
     the Secretary (directly or through contracts) shall employ 
     mechanisms to provide benefits economically, including the 
     use of--
       ``(i) formularies (consistent with subparagraph (B));
       ``(ii) automatic generic medicine substitution (unless the 
     physician specifies otherwise, in which case a 30-day 
     prescription may be dispensed pending a consultation with the 
     physician on whether a generic substitute can be dispensed in 
     the future);
       ``(iii) tiered copayments (which may include copayments at 
     a rate lower than 20 percent) to encourage the use of the 
     lowest cost, on-formulary product in cases where there is no 
     restrictive prescription (described in subparagraph (D)(i)); 
     and
       ``(iv) therapeutic interchange.
       ``(B) Requirements with respect to formularies.--If a 
     formulary is used to contain costs under this part--
       ``(i) use an advisory committee (or a therapeutics 
     committee) comprised of licensed practicing physicians, 
     pharmacists, and other health care practitioners to develop 
     and manage the formulary;
       ``(ii) include in the formulary at least 1 medicine from 
     each therapeutic class and, if available, a generic 
     equivalent thereof; and
       ``(iii) disclose to current and prospective enrollees and 
     to participating providers and pharmacies, the nature of the 
     formulary restrictions, including information regarding the 
     medicines included in the formulary and any difference in 
     cost-sharing amounts.
       ``(C) Construction.--Nothing in this subsection shall be 
     construed to prevent the Secretary (directly or through 
     contracts) from using incentives (including a lower 
     beneficiary coinsurance) to encourage enrollees to select 
     generic or other cost-effective medicines, so long as--
       ``(i) such incentives are designed not to result in any 
     increase in the aggregate expenditures under the Federal 
     Medicare Prescription Medicine Trust Fund;
       ``(ii) the average coinsurance charged to all beneficiaries 
     by the Secretary (directly or through contractors) shall seek 
     to approximate (but in no case exceed) 20 percent for on-
     formulary medicines;
       ``(iii) a beneficiary's coinsurance shall be no greater 
     than 20 percent if the prescription is a restrictive 
     prescription; and
       ``(iv) the reimbursement for a prescribed nonformulary 
     medicine without a restrictive prescription in no case shall 
     be more than the lowest reimbursement for a formulary 
     medicine in the therapeutic class of the prescribed medicine.
       ``(D) Restrictive prescription.--For purposes of this 
     section:
       ``(i) Written prescriptions.--In the case of a written 
     prescription for a medicine, it is a restrictive prescription 
     only if the prescription indicates, in the writing of the 
     physician or other qualified person prescribing the medicine 
     and with an appropriate phrase (such as `brand medically 
     necessary') recognized by the Secretary, that a particular 
     medicine product must be dispensed based upon a belief by the 
     physician or person prescribing the medicine that the 
     particular medicine will provide even marginally superior 
     therapeutic benefits to the individual for whom the medicine 
     is prescribed or would have marginally fewer adverse 
     reactions with respect to such individual.
       ``(ii) Telephone prescriptions.--In the case of a 
     prescription issued by telephone for a medicine, it is a 
     restrictive prescription only if the prescription cannot be 
     longer than 30 days and the physician or other qualified 
     person prescribing the medicine (through use of such an 
     appropriate phrase) states that a particular medicine product 
     must be dispensed, and the physician or other qualified 
     person submits to the pharmacy involved, within 30 days after 
     the date of the telephone prescription, a written 
     confirmation from the physician or other qualified person 
     prescribing the medicine and which indicates with such 
     appropriate phrase that the particular medicine product was 
     required to have been dispensed based upon a belief by the 
     physician or person prescribing the medicine that the 
     particular medicine will provide even marginally superior 
     therapeutic benefits to the individual for whom the medicine 
     is prescribed or would have marginally fewer adverse 
     reactions with respect to such individual. Such written 
     confirmation is required to refill the prescription.
       ``(iii) Review of restrictive prescriptions.--The advisory 
     committee (established under subparagraph (B)(i)) may decide 
     to review a restrictive prescription and, if so, it may 
     approve or disapprove such restrictive prescription. It may 
     not disapprove such restrictive prescription unless it finds 
     that there is no clinical evidence or peer reviewed medical 
     literature that supports a determination that the particular 
     medicine provides even marginally superior therapeutic 
     benefits to the individual for whom the medicine is 
     prescribed or would have marginally fewer adverse reactions 
     with respect to such individual. If it disapproves, upon 
     request of the prescribing physician or the enrollee, the 
     committee must provide for a review by an independent 
     contractor of such decision within 48 hours of the time of 
     submission of the prescription, to determine whether the 
     prescription is an eligible benefit under this part. The 
     Secretary shall ensure that independent contractors so 
     used are completely independent of the contractor or its 
     advisory committee.
       ``(5) Cost and utilization management; quality assurance.--
     Have in place effective cost and utilization management, drug 
     utilization review, quality assurance measures, and systems 
     to reduce medical errors, including at least the following, 
     together with such additional measures as the Administrator 
     may specify:
       ``(A) Drug utilization review.--A drug utilization review 
     program conforming to the standards provided in section 
     1927(g)(2) (with such modifications as the Administrator 
     finds appropriate).
       ``(B) Fraud and abuse control.--Activities to control 
     fraud, abuse, and waste, including prevention of diversion of 
     pharmaceuticals to the illegal market.
       ``(C) Medication therapy management.--
       ``(i) In general.--A program of medicine therapy management 
     and medication administration that is designed to assure that 
     covered outpatient medicines are appropriately used to 
     achieve therapeutic goals and reduce the risk of adverse 
     events, including adverse drug interactions.
       ``(ii) Elements.--Such program may include--

       ``(I) enhanced beneficiary understanding of such 
     appropriate use through beneficiary education, counseling, 
     and other appropriate means; and
       ``(II) increased beneficiary adherence with prescription 
     medication regimens through medication refill reminders, 
     special packaging, and other appropriate means.

       ``(iii) Development of program in cooperation with licensed 
     pharmacists.--The program shall be developed in cooperation 
     with licensed pharmacists and physicians.
       ``(iv) Considerations in pharmacy fees.--There shall be 
     taken into account, in establishing fees for pharmacists and 
     others providing services under the medication therapy 
     management program, the resources and time used in 
     implementing the program.
       ``(6) Education and information activities.--Have in place 
     mechanisms for disseminating educational and informational 
     materials to enrolled individuals and health care providers 
     designed to encourage effective and cost-effective use of 
     prescription medicine benefits and to ensure that enrolled 
     individuals understand their rights and obligations under the 
     program.
       ``(7) Beneficiary protections.--

[[Page S5451]]

       ``(A) Confidentiality of health information.--Have in 
     effect systems to safeguard the confidentiality of health 
     care information on enrolled individuals, which comply with 
     section 1106 and with section 552a of title 5, United States 
     Code, and meet such additional standards as the Administrator 
     may prescribe.
       ``(B) Grievance and appeal procedures.--Have in place such 
     procedures as the Administrator may specify for hearing and 
     resolving grievances and appeals, including expedited 
     appeals, brought by enrolled individuals against the 
     Administrator or a pharmacy concerning benefits under this 
     part, which shall include procedures equivalent to those 
     specified in subsections (f) and (g) of section 1852.
       ``(8) Records, reports, and audits.--
       ``(A) Records and audits.--Maintain adequate records, and 
     afford the Administrator access to such records (including 
     for audit purposes).
       ``(B) Reports.--Make such reports and submissions of 
     financial and utilization data as the Administrator may 
     require taking into account standard commercial practices.
       ``(9) Proposal for alternative coinsurance amount.--
       ``(A) Submission.--The Administrator may provide for 
     increased Government cost-sharing for generic prescription 
     medicines, prescription medicines on a formulary, or 
     prescription medicines obtained through mail order 
     pharmacies.
       ``(B) Contents.--The proposal submitted under subparagraph 
     (A) shall contain evidence that such increased cost-sharing 
     would not result in an increase in aggregate costs to the 
     Account, including an analysis of differences in projected 
     drug utilization patterns by beneficiaries whose cost-sharing 
     would be reduced under the proposal and those making the 
     cost-sharing payments that would otherwise apply.
       ``(10) Other requirements.--Meet such other requirements as 
     the Secretary may specify.

     The Administrator shall negotiate a schedule of prices under 
     paragraph (1)(A), except that nothing in this sentence shall 
     prevent a carrier under a contract with the Administrator 
     from negotiating a lower schedule of prices for covered 
     prescription medicines.
       ``(c) Pharmacy Participation Agreements.--
       ``(1) In general.--A pharmacy that meets the requirements 
     of this subsection shall be eligible to enter an agreement 
     with the Administrator to furnish covered prescription 
     medicines and pharmacists' services to enrolled individuals.
       ``(2) Terms of agreement.--An agreement under this 
     subsection shall include the following terms and 
     requirements:
       ``(A) Licensing.--The pharmacy and pharmacists shall meet 
     (and throughout the contract period will continue to meet) 
     all applicable State and local licensing requirements.
       ``(B) Limitation on charges.--Pharmacies participating 
     under this part shall not charge an enrolled individual more 
     than the negotiated price for an individual medicine as 
     established under subsection (b)(1), regardless of whether 
     such individual has attained the benefit limit under section 
     1860B(b), and shall not charge an enrolled individual more 
     than the individual's share of the negotiated price as 
     determined under the provisions of this part.
       ``(C) Performance standards.--The pharmacy and the 
     pharmacist shall comply with performance standards relating 
     to--
       ``(i) measures for quality assurance, reduction of medical 
     errors, and participation in the drug utilization review 
     program described in subsection (b)(3)(A);
       ``(ii) systems to ensure compliance with the 
     confidentiality standards applicable under subsection 
     (b)(5)(A); and
       ``(iii) other requirements as the Secretary may impose to 
     ensure integrity, efficiency, and the quality of the program.
       ``(D) Disclosure of price of generic medicine.--A pharmacy 
     participating under this part shall inform an enrollee of the 
     difference in price between generic and nongeneric 
     equivalents.
       ``(d) Special Attention to Rural and Hard-To-Serve Areas.--
       ``(1) In general.--The Secretary shall ensure that all 
     beneficiaries have access to the full range of 
     pharmaceuticals under this part, and shall give special 
     attention to access, pharmacist counseling, and delivery in 
     rural and hard-to-serve areas (as the Secretary may define by 
     regulation).
       ``(2) Special attention defined.--For purposes of paragraph 
     (1), the term `special attention' may include bonus payments 
     to retail pharmacists in rural areas and any other actions 
     the Secretary determines are necessary to ensure full access 
     to rural and hard-to-serve beneficiaries.
       ``(3) GAO report.--Not later than 2 years after the 
     implementation of this part the Comptroller General of the 
     United States shall submit to Congress a report on the access 
     of medicare beneficiaries to pharmaceuticals and pharmacists' 
     services in rural and hard-to-serve areas under this part 
     together with any recommendations of the Comptroller General 
     regarding any additional steps the Secretary may need to take 
     to ensure the access of medicare beneficiaries to 
     pharmaceuticals and pharmacists' services in such areas under 
     this part.
       ``(e) Incentives for Cost and Utilization Management and 
     Quality Improvement.--The Secretary is authorized to include 
     in a contract awarded under subsection (b) with a carrier 
     such incentives for cost and utilization management and 
     quality improvement as the Secretary may deem appropriate, 
     including--
       ``(1) bonus and penalty incentives to encourage 
     administrative efficiency;
       ``(2) incentives under which carriers share in any benefit 
     savings achieved;
       ``(3) risk-sharing arrangements related to initiatives to 
     encourage savings in benefit payments;
       ``(4) financial incentives under which savings derived from 
     the substitution of generic medicines in lieu of nongeneric 
     medicines are made available to carriers, pharmacies, and the 
     Prescription Medicine Insurance Account; and
       ``(5) any other incentive that the Secretary deems 
     appropriate and likely to be effective in managing costs or 
     utilization.


  ``employer incentive program for employment-based retiree medicine 
                                coverage

       ``Sec. 1860H. (a) Program Authority.--The Secretary shall 
     develop and implement a program under this section called the 
     `Employer Incentive Program' that encourages employers and 
     other sponsors of employment-based health care coverage to 
     provide adequate prescription medicine benefits to retired 
     individuals and to maintain such existing benefit programs, 
     by subsidizing, in part, the sponsor's cost of providing 
     coverage under qualifying plans.
       ``(b) Sponsor Requirements.--In order to be eligible to 
     receive an incentive payment under this section with respect 
     to coverage of an individual under a qualified retiree 
     prescription medicine plan (as defined in subsection (f)(3)), 
     a sponsor shall meet the following requirements:
       ``(1) Assurances.--The sponsor shall--
       ``(A) annually attest, and provide such assurances as the 
     Secretary may require, that the coverage offered by the 
     sponsor is a qualified retiree prescription medicine plan, 
     and will remain such a plan for the duration of the 
     sponsor's participation in the program under this section; 
     and
       ``(B) guarantee that it will give notice to the Secretary 
     and covered retirees--
       ``(i) at least 120 days before terminating its plan; and
       ``(ii) immediately upon determining that the actuarial 
     value of the prescription medicine benefit under the plan 
     falls below the actuarial value of the insurance benefit 
     under this part.
       ``(2) Other requirements.--The sponsor shall provide such 
     information, and comply with such requirements, including 
     information requirements to ensure the integrity of the 
     program, as the Secretary may find necessary to administer 
     the program under this section.
       ``(c) Incentive Payment.--
       ``(1) In general.--A sponsor that meets the requirements of 
     subsection (b) with respect to a quarter in a calendar year 
     shall have payment made by the Secretary on a quarterly basis 
     (to the sponsor or, at the sponsor's direction, to the 
     appropriate employment-based health plan) of an incentive 
     payment, in the amount determined as described in paragraph 
     (2), for each retired individual (or spouse) who--
       ``(A) was covered under the sponsor's qualified retiree 
     prescription medicine plan during such quarter; and
       ``(B) was eligible for but was not enrolled in the 
     insurance program under this part.
       ``(2) Amount of incentive.--The payment under this section 
     with respect to each individual described in paragraph (1) 
     for a month shall be equal to \2/3\ of the monthly premium 
     amount payable from the Prescription Medicine Insurance 
     Account for an enrolled individual, as set for the calendar 
     year pursuant to section 1860D(a)(2).
       ``(3) Payment date.--The incentive under this section with 
     respect to a calendar quarter shall be payable as of the end 
     of the next succeeding calendar quarter.
       ``(d) Civil Money Penalties.--A sponsor, health plan, or 
     other entity that the Secretary determines has, directly or 
     through its agent, provided information in connection with a 
     request for an incentive payment under this section that the 
     entity knew or should have known to be false shall be subject 
     to a civil monetary penalty in an amount equal to $2,000 for 
     each false representation plus an amount not to exceed 3 
     times the total incentive amounts under subsection (c) that 
     were paid (or would have been payable) on the basis of such 
     information.
       ``(e) Part D Enrollment for Certain Individuals Covered by 
     Employment-Based Retiree Health Coverage Plans.--
       ``(1) Eligible individuals.--An individual shall be given 
     the opportunity to enroll in the program under this part 
     during the period specified in paragraph (2) if--
       ``(A) the individual declined enrollment in the program 
     under this part at the time the individual first satisfied 
     section 1860C(a);
       ``(B) at that time, the individual was covered under a 
     qualified retiree prescription medicine plan for which an 
     incentive payment was paid under this section; and
       ``(C)(i) the sponsor subsequently ceased to offer such 
     plan; or
       ``(ii) the value of prescription medicine coverage under 
     such plan is reduced below the value of the coverage provided 
     at the time the individual first became eligible to 
     participate in the program under this part.
       ``(2) Special enrollment period.--An individual described 
     in paragraph (1) shall be eligible to enroll in the program 
     under this

[[Page S5452]]

     part during the 6-month period beginning on the first day of 
     the month in which--
       ``(A) the individual receives a notice that coverage under 
     such plan has terminated (in the circumstance described in 
     paragraph (1)(C)(i)) or notice that a claim has been denied 
     because of such a termination; or
       ``(B) the individual received notice of the change in 
     benefits (in the circumstance described in paragraph 
     (1)(C)(ii)).
       ``(f) Definitions.--In this section:
       ``(1) Employment-based retiree health coverage.--The term 
     `employment-based retiree health coverage' means health 
     insurance or other coverage of health care costs for retired 
     individuals (or for such individuals and their spouses and 
     dependents) based on their status as former employees or 
     labor union members.
       ``(2) Employer.--The term `employer' has the meaning given 
     to such term by section 3(5) of the Employee Retirement 
     Income Security Act of 1974 (except that such term shall 
     include only employers of 2 or more employees).
       ``(3) Qualified retiree prescription medicine plan.--The 
     term `qualified retiree prescription medicine plan' means 
     health insurance coverage included in employment-based 
     retiree health coverage that--
       ``(A) provides coverage of the cost of prescription 
     medicines whose actuarial value to each retired beneficiary 
     equals or exceeds the actuarial value of the benefits 
     provided to an individual enrolled in the program under this 
     part; and
       ``(B) does not deny, limit, or condition the coverage or 
     provision of prescription medicine benefits for retired 
     individuals based on age or any health status-related factor 
     described in section 2702(a)(1) of the Public Health Service 
     Act.
       ``(4) Sponsor.--The term `sponsor' has the meaning given 
     the term `plan sponsor' by section 3(16)(B) of the Employee 
     Retirement Income Security Act of 1974.


``promotion of pharmaceutical research on break-through medicines while 
                   providing program cost containment

       ``Sec. 1860I. (a) Monitoring Expenditures.--The Secretary 
     shall monitor expenditures under this part. On October 1, 
     2003, the Secretary shall estimate total expenditures under 
     this part for 2003.
       ``(b) Establishment of Sustainable Growth Rate.--
       ``(1) In general.--The Secretary shall establish a 
     sustainable growth rate prescription medicine target system 
     for expenditures under this part for each year after 2003.
       ``(2) Initial computation.--Such target shall equal the 
     amount of total expenditures estimated for 2003 adjusted by 
     the Secretary's estimate of a sustainable growth rate (in 
     this section referred to as an `SGR') percentage between 2003 
     and 2004. Such SGR shall be estimated based on the following:
       ``(A) Reasonable changes in the cost of production or price 
     of covered pharmaceuticals, but in no event more than the 
     rate of increase in the Consumer Price Index for all urban 
     consumers for the period involved.
       ``(B) Population enrolled in this part, both in numbers and 
     in average age and severity of chronic and acute illnesses.
       ``(C) Appropriate changes in utilization of 
     pharmaceuticals, as determined by the Drug Review Board 
     (established under subsection (c)(3)) and based on best 
     estimates of utilization change if there were no direct-to-
     consumer advertising or promotions to providers.
       ``(D) Productivity index of manufacturers and distributors.
       ``(E) Percentage of products with patent and market 
     exclusivity protection versus products without patent 
     protection and changes in the availability of generic 
     substitutes.
       ``(F) Such other factors as the Secretary may determine are 
     appropriate.

     In no event may the sustainable growth rate exceed 120 
     percent of the estimated per capita growth in total spending 
     under this title.
       ``(3) Computation for subsequent years.--In October of 2004 
     and each year thereafter, for purposes of setting the SGRs 
     for the succeeding year, the Secretary shall adjust each 
     current year's estimated expenditures by the estimated SGR 
     for the succeeding year, further adjusted for corrections in 
     earlier estimates and the receipt of additional data on 
     previous years spending as follows:
       ``(A) Error estimates.--An adjustment (up or down) for 
     errors in the estimate of total expenditures under this part 
     for the previous year.
       ``(B) Costs.--An adjustment (up or down) for corrections in 
     the cost of production of prescriptions covered under this 
     part between the current calendar year and the previous year.
       ``(C) Target.--An adjustment for any amount (over or under) 
     that expenditures in the current year under this part are 
     estimated to differ from the target amount set for the year. 
     If expenditures in the current year are estimated to be--
       ``(i) less than the target amount, future target amounts 
     will be adjusted downward; or
       ``(ii) more than the target amount, the Secretary shall 
     notify all pharmaceutical manufacturers with sales of 
     pharmaceutical prescription medicine products to medicare 
     beneficiaries under this part, of a rebate requirement 
     (except as provided in this subparagraph) to be deposited in 
     the Federal Medicare Prescription Medicine Trust Fund.
       ``(D) Rebate determination.--The amount of the rebate 
     described in subparagraph (C)(ii) may vary among 
     manufacturers and shall be based on the manufacturer's 
     estimated contribution to the expenditure above the target 
     amount, taking into consideration such factors as--
       ``(i) above average increases in the cost of the 
     manufacturer's product;
       ``(ii) increases in utilization due to promotion activities 
     of the manufacturer, wholesaler, or retailer;
       ``(iii) launch prices of new drugs at the same or higher 
     prices as similar drugs already in the marketplace (so-called 
     `me too' or `copy-cat' drugs);
       ``(iv) the role of the manufacturer in delaying the entry 
     of generic products into the market; and
       ``(v) such other actions by the manufacturer that the 
     Secretary may determine has contributed to the failure to 
     meet the SGR target.

     The rebates shall be established under such subparagraph so 
     that the total amount of the rebates is estimated to ensure 
     that the amount the target for the current year is estimated 
     to be exceeded is recovered in lower spending in the 
     subsequent year; except that, no rebate shall be made in any 
     manufacturer's product which the Food and Drug Administration 
     has determined is a breakthrough medicine (as determined 
     under subsection (c)) or an orphan medicine.
       ``(c) Breakthrough Medicines.--
       ``(1) Determination.--For purposes of this section, a 
     medicine is a `breakthrough medicine' if the Drug Review 
     Board (established under paragraph (3)) determines--
       ``(A) it is a new product that will make a significant and 
     major improvement by reducing physical or mental illness, 
     reducing mortality, or reducing disability; and
       ``(B) that no other product is available to beneficiaries 
     that achieves similar results for the same condition at a 
     lower cost.
       ``(2) Condition.--An exemption from rebates under 
     subsection (b)(3) for a breakthrough medicine shall continue 
     as long as the medicine is certified as a breakthrough 
     medicine but shall be limited to 7 calendar years from 2003 
     or 7 calendar years from the date of the initial 
     determination under paragraph (1), whichever is later.
       ``(3) Drug review board.--The Drug Review Board under this 
     paragraph shall consist of the Commissioner of Food and 
     Drugs, the Directors of the National Institutes of Health, 
     the Director of the National Science Foundation, and 10 
     experts in pharmaceuticals, medical research, and clinical 
     care, selected by the Commissioner of Food and Drugs from the 
     faculty of academic medical centers, except that no person 
     who has (or who has an immediate family member that has) any 
     conflict of interest with any pharmaceutical manufacturer 
     shall serve on the Board.
       ``(d) No Review.--The Secretary's determination of the 
     rebate amounts under this section, and the Drug Review 
     Board's determination of what is a breakthrough drug, are not 
     subject to administrative or judicial review.


           ``appropriations to cover government contributions

       ``Sec. 1860J. (a) In General.--There are authorized to be 
     appropriated from time to time, out of any moneys in the 
     Treasury not otherwise appropriated, to the Prescription 
     Medicine Insurance Account, a Government contribution equal 
     to--
       ``(1) the aggregate premiums payable for a month pursuant 
     to section 1860D(a)(2) by individuals enrolled in the program 
     under this part; plus
       ``(2) one-half the aggregate premiums payable for a month 
     pursuant to such section for such individuals by former 
     employers; plus
       ``(3) the benefits payable by reason of the application of 
     paragraph (2) of section 1860B(a) (relating to catastrophic 
     benefits).
       ``(b) Appropriations To Cover Incentives for Employment-
     Based Retiree Medicine Coverage.--There are authorized to be 
     appropriated to the Prescription Medicine Insurance Account 
     from time to time, out of any moneys in the Treasury not 
     otherwise appropriated, such sums as may be necessary for 
     payment of incentive payments under section 1860H(c).


                    ``prescription medicine defined

       ``Sec. 1860K. As used in this part, the term `prescription 
     medicine' means--
       ``(1) a drug that may be dispensed only upon a 
     prescription, and that is described in subparagraph (A)(i), 
     (A)(ii), or (B) of section 1927(k)(2); and
       ``(2) insulin certified under section 506 of the Federal 
     Food, Drug, and Cosmetic Act, and needles, syringes, and 
     disposable pumps for the administration of such insulin.''.
       (b) Conforming Amendments.--
       (1) Amendments to federal supplementary health insurance 
     trust fund.--Section 1841 of the Social Security Act (42 
     U.S.C. 1395t) is amended--
       (A) in the last sentence of subsection (a)--
       (i) by striking ``and'' after ``section 201(i)(1)''; and
       (ii) by inserting before the period the following: ``, and 
     such amounts as may be deposited in, or appropriated to, the 
     Prescription Medicine Insurance Account established by 
     section 1860F'';
       (B) in subsection (g), by inserting after ``by this part,'' 
     the following: ``the payments provided for under part D (in 
     which case the payments shall come from the Prescription 
     Medicine Insurance Account in the Supplementary Medical 
     Insurance Trust Fund),'';

[[Page S5453]]

       (C) in the first sentence of subsection (h), by inserting 
     before the period the following: ``and section 1860D(b)(4) 
     (in which case the payments shall come from the Prescription 
     Medicine Insurance Account in the Supplementary Medical 
     Insurance Trust Fund)''; and
       (D) in the first sentence of subsection (i)--
       (i) by striking ``and'' after ``section 1840(b)(1)''; and
       (ii) by inserting before the period the following: ``, 
     section 1860D(b)(2) (in which case the payments shall come 
     from the Prescription Medicine Insurance Account in the 
     Supplementary Medical Insurance Trust Fund)''.
       (2) Prescription medicine option under medicare+choice 
     plans.--
       (A) Eligibility, election, and enrollment.--Section 1851 of 
     the Social Security Act (42 U.S.C. 1395w-21) is amended--
       (i) in subsection (a)(1)(A), by striking ``parts A and B'' 
     and inserting ``parts A, B, and D''; and
       (ii) in subsection (i)(1), by striking ``parts A and B'' 
     and inserting ``parts A, B, and D''.
       (B) Voluntary beneficiary enrollment for medicine 
     coverage.--Section 1852(a)(1)(A) of such Act (42 U.S.C. 
     1395w-22(a)(1)(A)) is amended by inserting ``(and under part 
     D to individuals also enrolled under that part)'' after 
     ``parts A and B''.
       (C) Access to services.--Section 1852(d)(1) of such Act (42 
     U.S.C. 1395w-22(d)(1)) is amended--
       (i) in subparagraph (D), by striking ``and'' at the end;
       (ii) in subparagraph (E), by striking the period at the end 
     and inserting ``; and''; and
       (iii) by adding at the end the following new subparagraph:
       ``(F) the plan for prescription medicine benefits under 
     part D guarantees coverage of any specifically named covered 
     prescription medicine for an enrollee, when prescribed by a 
     physician in accordance with the provisions of such part, 
     regardless of whether such medicine would otherwise be 
     covered under an applicable formulary or discount 
     arrangement.''.
       (D) Payments to organizations.--Section 1853(a)(1)(A) of 
     such Act (42 U.S.C. 1395w-23(a)(1)(A)) is amended--
       (i) by inserting ``determined separately for benefits under 
     parts A and B and under part D (for individuals enrolled 
     under that part)'' after ``as calculated under subsection 
     (c)'';
       (ii) by striking ``that area, adjusted for such risk 
     factors'' and inserting ``that area. In the case of payment 
     for benefits under parts A and B, such payment shall be 
     adjusted for such risk factors as''; and
       (iii) by inserting before the last sentence the following: 
     ``In the case of the payments for benefits under part D, such 
     payment shall initially be adjusted for the risk factors of 
     each enrollee as the Secretary determines to be feasible and 
     appropriate. By 2006, the adjustments would be for the same 
     risk factors applicable for benefits under parts A and B.''.
       (E) Calculation of annual medicare +choice capitation 
     rates.--Section 1853(c) of such Act (42 U.S.C. 1395w-23(c)) 
     is amended--
       (i) in paragraph (1), in the matter preceding subparagraph 
     (A), by inserting ``for benefits under parts A and B'' after 
     ``capitation rate'';
       (ii) in paragraph (6)(A), by striking ``rate of growth in 
     expenditures under this title'' and inserting ``rate of 
     growth in expenditures for benefits available under parts A 
     and B''; and
       (iii) by adding at the end the following new paragraph:
       ``(8) Payment for prescription medicines.--The Secretary 
     shall determine a capitation rate for prescription 
     medicines--
       ``(A) dispensed in 2003, which is based on the projected 
     national per capita costs for prescription medicine benefits 
     under part D and associated claims processing costs for 
     beneficiaries under the original medicare fee-for-service 
     program; and
       ``(B) dispensed in each subsequent year, which shall be 
     equal to the rate for the previous year updated by the 
     Secretary's estimate of the projected per capita rate of 
     growth in expenditures under this title for an individual 
     enrolled under part D.''.
       (F) Limitation on enrollee liability.--Section 1854(e) of 
     such Act (42 U.S.C. 1395w-24(e)) is amended by adding at the 
     end the following new paragraph:
       ``(5) Special rule for provision of part d benefits.--In no 
     event may a Medicare+Choice organization include as part of a 
     plan for prescription medicine benefits under part D a 
     requirement that an enrollee pay a deductible, or a 
     coinsurance percentage that exceeds 20 percent.''.
       (G) Requirement for additional benefits.--Section 
     1854(f)(1) of such Act (42 U.S.C. 1395w-24(f)(1)) is amended 
     by adding at the end the following new sentence: ``Such 
     determination shall be made separately for benefits under 
     parts A and B and for prescription medicine benefits under 
     part D.''.
       (3) Exclusions from coverage.--
       (A) Application to part d.--Section 1862(a) of the Social 
     Security Act (42 U.S.C. 1395y(a)) is amended in the matter 
     preceding paragraph (1) by striking ``part A or part B'' and 
     inserting ``part A, B, or D''.
       (B) Prescription medicines not excluded from coverage if 
     appropriately prescribed.--Section 1862(a)(1) of such Act (42 
     U.S.C. 1395y(a)(1)) is amended--
       (i) in subparagraph (H), by striking ``and'' at the end;
       (ii) in subparagraph (I), by striking the semicolon at the 
     end and inserting ``, and''; and
       (iii) by adding at the end the following new subparagraph:
       ``(J) in the case of prescription medicines covered under 
     part D, which are not prescribed in accordance with such 
     part;''.

     SEC. 4. SUBSTANTIAL REDUCTIONS IN THE PRICE OF PRESCRIPTION 
                   DRUGS FOR MEDICARE BENEFICIARIES.

       (a) Participating Manufacturers.--
       (1) In general.--Each participating manufacturer of a 
     covered outpatient drug shall make available for purchase by 
     each pharmacy such covered outpatient drug in the amount 
     described in paragraph (2) at the price described in 
     paragraph (3).
       (2) Description of amount of drugs.--The amount of a 
     covered outpatient drug that a participating manufacturer 
     shall make available for purchase by a pharmacy is an amount 
     equal to the aggregate amount of the covered outpatient drug 
     sold or distributed by the pharmacy to medicare 
     beneficiaries.
       (3) Description of price.--The price at which a 
     participating manufacturer shall make a covered outpatient 
     drug available for purchase by a pharmacy is the price equal 
     to the lowest of the following:
       (A) The lowest price paid for the covered outpatient drug 
     by any agency or department of the United States.
       (B) The manufacturer's best price for the covered 
     outpatient drug, as defined in section 1927(c)(1)(C) of the 
     Social Security Act (42 U.S.C. 1396r-8(c)(1)(C)).
       (C) The lowest price at which the drug is available (as 
     determined by the Secretary) through importation consistent 
     with the provisions of section 804 of the Federal Food, Drug, 
     and Cosmetic Act.
       (b) Special Provision With Respect to Hospice Programs.--
     For purposes of determining the amount of a covered 
     outpatient drug that a participating manufacturer shall make 
     available for purchase by a pharmacy under subsection (a), 
     there shall be included in the calculation of such amount the 
     amount of the covered outpatient drug sold or distributed by 
     a pharmacy to a hospice program. In calculating such amount, 
     only amounts of the covered outpatient drug furnished to a 
     medicare beneficiary enrolled in the hospice program shall be 
     included.
       (c) Administration.--The Secretary shall issue such 
     regulations as may be necessary to implement this section.
       (d) Reports to Congress Regarding Effectiveness of 
     Section.--
       (1) In general.--Not later than 2 years after the date of 
     enactment of this Act, and annually thereafter, the Secretary 
     shall report to Congress regarding the effectiveness of this 
     section in--
       (A) protecting medicare beneficiaries from discriminatory 
     pricing by drug manufacturers; and
       (B) making prescription drugs available to medicare 
     beneficiaries at substantially reduced prices.
       (2) Consultation.--In preparing such reports, the Secretary 
     shall consult with public health experts, affected 
     industries, organizations representing consumers and older 
     Americans, and other interested persons.
       (3) Recommendations.--The Secretary shall include in such 
     reports any recommendations they consider appropriate for 
     changes in this section to further reduce the cost of covered 
     outpatient drugs to medicare beneficiaries.
       (e) Definitions.--For purposes of this section:
       (1) Participating manufacturer.--The term ``participating 
     manufacturer'' means any manufacturer of drugs or biologicals 
     that, on or after the date of enactment of this Act, enters 
     into a contract or agreement with the United States for the 
     sale or distribution of covered outpatient drugs to the 
     United States.
       (2) Covered outpatient drug.--The term ``covered outpatient 
     drug'' has the meaning given that term in section 1927(k)(2) 
     of the Social Security Act (42 U.S.C. 1396r-8(k)(2)).
       (3) Medicare beneficiary.--The term ``medicare 
     beneficiary'' means an individual entitled to benefits under 
     part A of title XVIII of the Social Security Act or enrolled 
     under part B of such title, or both.
       (4) Hospice program.--The term ``hospice program'' has the 
     meaning given that term under section 1861(dd)(2) of the 
     Social Security Act (42 U.S.C. 1395x(dd)(2)).
       (5) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (f) Effective Date.--The Secretary shall implement this 
     section as expeditiously as practicable and in a manner 
     consistent with the obligations of the United States.

     SEC. 5. AMENDMENTS TO PROGRAM FOR IMPORTATION OF CERTAIN 
                   PRESCRIPTION DRUGS BY PHARMACISTS AND 
                   WHOLESALERS.

       Section 804 of the Federal Food, Drug, and Cosmetic Act (as 
     added by section 745(c)(2) of Public Law 106-387) is 
     amended--
       (1) by striking subsections (e) and (f) and inserting the 
     following subsections:
       ``(e) Testing; Approved Labeling.--
       ``(1) Testing.--Regulations under subsection (a)--
       ``(A) shall require that testing referred to in paragraphs 
     (6) through (8) of subsection (d) be conducted by the 
     importer of the covered product pursuant to subsection (a), 
     or the manufacturer of the product;
       ``(B) shall require that, if such tests are conducted by 
     the importer, information needed to authenticate the product 
     being tested be supplied by the manufacturer of such product 
     to the importer; and

[[Page S5454]]

       ``(C) shall provide for the protection of any information 
     supplied by the manufacturer under subparagraph (B) that is a 
     trade secret or commercial or financial information that is 
     privileged or confidential.
       ``(2) Approved labeling.--For purposes of importing a 
     covered product pursuant to subsection (a), the importer 
     involved may use the labeling approved for the product under 
     section 505, notwithstanding any other provision of law.
       ``(f) Discretion of Secretary Regarding Testing.--The 
     Secretary may waive or modify testing requirements described 
     in subsection (d) if, with respect to specific countries or 
     specific distribution chains, the Secretary has entered into 
     agreements or otherwise approved arrangements that the 
     Secretary determines ensure that the covered products 
     involved are not adulterated or in violation of section 
     505.'';
       (2) by striking subsections (h) and (i) and inserting the 
     following subsections:
       ``(h) Prohibited Agreements; Nondiscrimination.--
       ``(1) Prohibited agreements.--No manufacturer of a covered 
     product may enter into a contract or agreement that includes 
     a provision to prevent the sale or distribution of covered 
     products imported pursuant to subsection (a).
       ``(2) Nondiscrimination.--No manufacturer of a covered 
     product may take actions that discriminate against, or cause 
     other persons to discriminate against, United States 
     pharmacists, wholesalers, or consumers regarding the sale or 
     distribution of covered products.
       ``(i) Study and Report.--
       ``(1) Study.--The Comptroller General of the United States 
     shall conduct a study on the imports permitted under this 
     section, taking into consideration the information received 
     under subsection (a). In conducting such study, the 
     Comptroller General shall--
       ``(A) evaluate importers' compliance with regulations, 
     determine the number of shipments, if any, permitted under 
     this section that have been determined to be counterfeit, 
     misbranded, or adulterated; and
       ``(B) consult with the United States Trade Representative 
     and United States Patent and Trademark Office to evaluate the 
     effect of importations permitted under this section on trade 
     and patent rights under Federal law.
       ``(2) Report.--Not later than 5 years after the effective 
     date of final regulations issued pursuant to this section, 
     the Comptroller General of the United States shall prepare 
     and submit to Congress a report containing the study 
     described in paragraph (1).'';
       (3) in subsection (k)(2)--
       (A) by redesignating subparagraphs (A) through (E) as 
     subparagraphs (B) through (F), respectively; and
       (B) by inserting before subparagraph (B) (as so 
     redesignated) the following subparagraph:
       ``(A) The term `discrimination' includes a contract 
     provision, a limitation on supply, or other measure which has 
     the effect of providing United States pharmacists, 
     wholesalers, or consumers access to covered products on terms 
     or conditions that are less favorable than the terms or 
     conditions provided to any foreign purchaser of such 
     products.'';
       (4) by striking subsection (m); and
       (5) by inserting after subsection (l) the following 
     subsection:
       ``(m) Funding.--For the purpose of carrying out this 
     section, there are authorized to be appropriated such sums as 
     may be necessary for fiscal year 2002 and each subsequent 
     fiscal year.''.

     SEC. 6. REASONABLE PRICE AGREEMENT FOR FEDERALLY FUNDED 
                   RESEARCH.

       (a) In General.--If any Federal agency or any non-profit 
     entity undertakes federally funded health care research and 
     development and is to convey or provide a patent or other 
     exclusive right to use such research and development for a 
     drug or other health care technology, such agency or entity 
     shall not make such conveyance or provide such patent or 
     other right until the person who will receive such conveyance 
     or patent or other right first agrees to a reasonable pricing 
     agreement with the Secretary of Health and Human Services or 
     the Secretary makes a determination that the public interest 
     is served by a waiver of the reasonable pricing agreement 
     provided in accordance with subsection (c).
       (b) Consideration of Competitive Bidding.--In cases where 
     the Federal Government conveys or licenses exclusive rights 
     to federally funded research under subsection (a), 
     consideration shall be given to mechanisms for determining 
     reasonable prices which are based upon a competitive bidding 
     process. When appropriate, the mechanisms should be 
     considered where--
       (1) qualified bidders compete on the basis of the lowest 
     prices that will be charged to consumers;
       (2) qualified bidders compete on the basis of the least 
     sales revenues before prices are adjusted in accordance with 
     a cost-based reasonable pricing formula;
       (3) qualified bidders compete on the basis of the least 
     period of time before prices are adjusted in accordance with 
     a cost-based reasonable pricing formula;
       (4) qualified bidders compete on the basis of the shortest 
     period of exclusivity; or
       (5) qualified bidders compete under other competitive 
     bidding systems.

     Such competitive bidding process may incorporate requirements 
     for minimum levels of expenditures on research, marketing, 
     maximum price, or other factors.
       (c) Waiver.--No waiver shall take effect under subsection 
     (a) before the public is given notice of the proposed waiver 
     and provided a reasonable opportunity to comment on the 
     proposed waiver. A decision to grant a waiver shall set out 
     the Secretary's finding that such a waiver is in the public 
     interest.

     SEC. 7. GAO ONGOING STUDIES AND REPORTS ON PROGRAM; 
                   MISCELLANEOUS REPORTS.

       (a) Ongoing Study.--The Comptroller General of the United 
     States shall conduct an ongoing study and analysis of the 
     prescription medicine benefit program under part D of the 
     medicare program under title XVIII of the Social Security Act 
     (as added by section 3 of this Act), including an analysis of 
     each of the following:
       (1) The extent to which the administering entities have 
     achieved volume-based discounts similar to the favored price 
     paid by other large purchasers.
       (2) Whether access to the benefits under such program are 
     in fact available to all beneficiaries, with special 
     attention given to access for beneficiaries living in rural 
     and hard-to-serve areas.
       (3) The success of such program in reducing medication 
     error and adverse medicine reactions and improving quality of 
     care, and whether it is probable that the program has 
     resulted in savings through reduced hospitalizations and 
     morbidity due to medication errors and adverse medicine 
     reactions.
       (4) Whether patient medical record confidentiality is being 
     maintained and safe-guarded.
       (5) Such other issues as the Comptroller General may 
     consider.
       (b) Reports.--The Comptroller General shall issue such 
     reports on the results of the ongoing study described in 
     subsection (a) as the Comptroller General shall deem 
     appropriate and shall notify Congress on a timely basis of 
     significant problems in the operation of the part D 
     prescription medicine program and the need for legislative 
     adjustments and improvements.
       (c) Miscellaneous Studies and Reports.--
       (1) Study on methods to encourage additional research on 
     breakthrough pharmaceuticals.--
       (A) In general.--The Secretary of Health and Human Services 
     shall seek the advice of the Secretary of the Treasury on 
     possible tax and trade law changes to encourage increased 
     original research on new pharmaceutical breakthrough products 
     designed to address disease and illness.
       (B) Report.--Not later than January 1, 2003, the Secretary 
     shall submit to Congress a report on such study. The report 
     shall include recommended methods to encourage the 
     pharmaceutical industry to devote more resources to research 
     and development of new covered products than it devotes to 
     overhead expenses.
       (2) Study on pharmaceutical sales practices and impact on 
     costs and quality of care.--
       (A) In general.--The Secretary of Health and Human Services 
     shall conduct a study on the methods used by the 
     pharmaceutical industry to advertise and sell to consumers 
     and educate and sell to providers.
       (B) Report.--Not later than January 1, 2003, the Secretary 
     shall submit to Congress a report on such study. The report 
     shall include the estimated direct and indirect costs of the 
     sales methods used, the quality of the information conveyed, 
     and whether such sales efforts leads (or could lead) to 
     inappropriate prescribing. Such report may include 
     legislative and regulatory recommendations to encourage more 
     appropriate education and prescribing practices.
       (3) Study on cost of pharmaceutical research.--
       (A) In general.--The Secretary of Health and Human Services 
     shall conduct a study on the costs of, and needs for, the 
     pharmaceutical research and the role that the taxpayer 
     provides in encouraging such research.
       (B) Report.--Not later than January 1, 2003, the Secretary 
     shall submit to Congress a report on such study. The report 
     shall include a description of the full-range of taxpayer-
     assisted programs impacting pharmaceutical research, 
     including tax, trade, government research, and regulatory 
     assistance. The report may also include legislative and 
     regulatory recommendations that are designed to ensure that 
     the taxpayer's investment in pharmaceutical research results 
     in the availability of pharmaceuticals at reasonable prices.
       (4) Report on pharmaceutical prices in major foreign 
     nations.--Not later than January 1, 2003, the Secretary of 
     Health and Human Services shall submit to Congress a report 
     on the retail price of major pharmaceutical products in 
     various developed nations, compared to prices for the same or 
     similar products in the United States. The report shall 
     include a description of the principal reasons for any price 
     differences that may exist.

     SEC. 8. MEDIGAP TRANSITION PROVISIONS.

       (a) In General.--Notwithstanding any other provision of 
     law, no new medicare supplemental policy that provides 
     coverage of expenses for prescription drugs may be issued 
     under section 1882 of the Social Security Act on or after 
     January 1, 2003, to an individual unless it replaces a 
     medicare supplemental policy that was issued to that 
     individual and that provided some coverage of expenses for 
     prescription drugs.

[[Page S5455]]

       (b) Issuance of Substitute Policies if Prescription Drug 
     Coverage Is Obtained Through Medicare.--
       (1) In general.--The issuer of a medicare supplemental 
     policy--
       (A) may not deny or condition the issuance or effectiveness 
     of a medicare supplemental policy that has a benefit package 
     classified as ``A'', ``B'', ``C'', ``D'', ``E'', ``F'', or 
     ``G'' (under the standards established under subsection 
     (p)(2) of section 1882 of the Social Security Act, 42 U.S.C. 
     1395ss) and that is offered and is available for issuance to 
     new enrollees by such issuer;
       (B) may not discriminate in the pricing of such policy, 
     because of health status, claims experience, receipt of 
     health care, or medical condition; and
       (C) may not impose an exclusion of benefits based on a 
     preexisting condition under such policy,

     in the case of an individual described in paragraph (2) who 
     seeks to enroll under the policy not later than 63 days after 
     the date of the termination of enrollment described in such 
     paragraph and who submits evidence of the date of termination 
     or disenrollment along with the application for such medicare 
     supplemental policy.
       (2) Individual covered.--An individual described in this 
     paragraph is an individual who--
       (A) enrolls in a prescription drug plan under part D of 
     title XVIII of the Social Security Act; and
       (B) at the time of such enrollment was enrolled and 
     terminates enrollment in a medicare supplemental policy which 
     has a benefit package classified as ``H'', ``I'', or ``J'' 
     under the standards referred to in paragraph (1)(A) or 
     terminates enrollment in a policy to which such standards do 
     not apply but which provides benefits for prescription drugs.
       (3) Enforcement.--The provisions of paragraph (1) shall be 
     enforced as though they were included in section 1882(s) of 
     the Social Security Act (42 U.S.C. 1395ss(s)).
       (4) Definitions.--For purposes of this subsection, the term 
     ``medicare supplemental policy'' has the meaning given such 
     term in section 1882(g) of the Social Security Act (42 U.S.C. 
     1395ss(g)).
                                 ______
                                 
      By Mr. HARKIN (for himself, Mr. Helms, Mr. Schumer, Mr. Hollings, 
        and Mrs. Feinstein):
  S. 926. A bill to prohibit the importation of any article that is 
produced, manufactured, or grown in Burma; to the Committee on 
Environment and Public Works.
  Mr. HARKIN. Mr. President, the people of Burma continue to suffer at 
the hands of the world's most brutal military dictatorship which 
cynically calls itself the State Peace and Development Council, (SPDC). 
Now more than ever, as a nation committed to internationally-recognized 
human rights and worker rights, democracy, and freedom, America must 
heed the call of the International Labor Organization, (ILO), and 
support stronger, coordinated multilateral actions against Burma's 
repressive regime. In the face of overwhelming evidence of continued, 
systematic use of forced labor, including forced child labor in Burma, 
we must do all we can to deny any material support to the military 
dictators who rule that country with an iron fist.
  Furthermore, there is no clear and tangible evidence that the latest 
informal, closed-door dialogue between the Burmese generals on one side 
and Aung San Suu Kyi and the other duly-elected leaders of the pro-
democracy movement on the other side is bearing fruit. Therefore, we 
must demonstrate anew to the Burmese people our recognition of their 
nightmarish plight as well as our support for their noble struggle to 
achieve democratic governance.
  In 1997, a strong, bipartisan majority of the Congress enacted some 
sanctions and former President Clinton issued an Executive Order in 
response to a prolonged pattern of egregious human rights violations in 
Burma. At the heart of those measures is the existing prohibition on 
U.S. private companies making new investments in Burma's 
infrastructure. Many other national governments, as well as scores of 
city and State governments in the U.S. followed suit and adopted their 
own sanctions.
  Nevertheless, the ruling military junta in Burma has clung to power 
and continues to blatantly violate internationally-recognized human and 
worker rights. The 1999 State Department Human Rights Country Report on 
Burma cited ``credible reports that Burmese Army soldiers have 
committed rape, forced porterage, and extrajudicial killing.'' It 
referred to arbitrary arrests and the detention of at least 1300 
political prisoners.
  The following excerpts from the most recent 2000 State Department 
Human Rights Country Report paint an even more disturbing reality:

       The Burmese Government's extremely poor human rights record 
     and longstanding severe repression of its citizens continued 
     during the year. Citizens continued to live subject at any 
     time and without appeal to the arbitrary and sometimes brutal 
     dictates of the military regime. Citizens did not have the 
     right to change their government. There continued to be 
     credible reports, particularly in ethnic minority areas, that 
     security forces committed serious human rights abuses, 
     including extrajudicial killings and rape. Disappearances 
     continued, and members of the security forces tortured, beat, 
     and otherwise abused prisoners and detainees.
       The judiciary is not independent and there is no effective 
     rule of law.
       The Government continued to restrict worker rights, ban 
     unions, and use forced labor for public works and for the 
     support of military garrisons. Forced labor, including forced 
     child labor, remains a serious problem. The use of forced 
     labor as porters by the army--with attendant mistreatment, 
     illness, and sometimes death--remain a common practice. In 
     November, 2000 the International Labor Organization ILO 
     Governing Body judged that the Government had not taken 
     effective action to deal with `widespread and systematic' use 
     of forced labor in the country and, for the first time in its 
     history, called on all ILO members to apply sanctions to 
     Burma. Child labor is also a problem and varies in severity 
     depending on the country's region. Trafficking in persons, 
     particularly in women and girls to Thailand and China, mostly 
     for the purposes of prostitution, remain widespread.
       As of September, 2000, the International Committee of the 
     Red Cross had visited more than 35,000 prisoners in at least 
     30 prisons, including more than 1,800 political prisoners. 
     The ICRC also has begun tackling the problem of the roughly 
     36,000 persons in forced labor camps.
       The Government continued to infringe on citizens' privacy 
     rights, and security forces continued to monitor citizens' 
     movements and communications systematically, to search homes 
     without warrants, and to relocate persons forcibly without 
     just compensation or due process.
       The SPDC continued to restrict severely freedom of speech, 
     press assembly, and association. It has pressured many 
     thousands of members to resign from the National League for 
     Democracy, NLD, and closed party offices nationwide. Since 
     1990 the junta frequently prevented the NLD and other pro-
     democracy parties from conducting normal political 
     activities. The junta recognizes the NLD as a legal entity; 
     however, it refuses to accept the legal political status of 
     key NLD party leaders, particularly the party's general 
     secretary and 1991 Nobel Laureate, Aung San Suu Kyi, and 
     restrict her activities severely through security measures 
     and threats.

  Furthermore, Human Rights Watch/Asia reports that children from 
ethnic minorities are forced to work under inhumane conditions for the 
Burmese Army, lacking adequate medical care and sometimes dying from 
beatings.
  Last year, the UN Special Rapporteur on Burma, in a chilling and 
alarming account, puts the number of child soldiers at 50,000, the 
highest in the world. Sadly, the children most vulnerable to 
recruitment into the military are orphans, street children, and the 
children of ethnic minorities.
  The same UN report also discusses the dire state of minorities in 
Burma who continue to be the targets of violence. Specifically, it 
details that the most frequently observed human rights violations aimed 
at minorities include extortion, rape, torture and other forms of 
physical abuse, forced labor, ``portering'', arbitrary arrests, long-
term imprisonment, forcible relocation, and in some cases, 
extrajudicial executions. It also cites reports of massacres in the 
Shan state in the months of January, February, and May of 2000.
  A 1998 International Labor Organization Commission of Inquiry 
determined that forced labor in Burma is practiced in a ``widespread 
and systematic manner, with total disregard for the human dignity, 
safety, health and basic needs of the people.''
  Last August, California District Court Judge Ronald Lew found in one 
high-profile court case ``ample evidence in the record linking the 
Burmese Government's use of forced labor to human rights abuses.''
  In sum, the Burmese military junta continues to commit such horrific 
and appalling human rights and worker rights violations that we have no 
choice but to unite with other nations around the world and take 
stronger action.
  Even though the Burmese military junta has been terrorizing the 48 
million people of Burma since it came to power in 1988 and has vowed to 
destroy the National League for Democracy, NLD, Aung San Suu Kyi, a 
remarkably courageous leader and very brave woman, manages to stand 
steadfast,

[[Page S5456]]

like a living Statue of Liberty, in her undaunted quest and that of the 
Burmese people for democracy. We must never forget that she and her NLD 
colleagues won 392 of 485 seats in a democratic election held in 1990. 
But they have never been allowed to take office.
  Aung San Suu Kyi, the 1991 Nobel Peace Prize winner, and countless 
others are denied freedom of association, speech and movement on a 
daily basis. Last summer, she came under renewed threats and 
intimidation. For example, her vehicle was forced off the road last 
August by Burmese security forces when she tried to travel outside 
Rangoon to meet with her NLD colleagues. She sat in her car on the 
roadside for a week until a midnight raid of 200 riot police forced her 
back to her home and placed her under house arrest until September 14, 
2000. Nevertheless, she tried again on September 21st, but she was 
prevented from boarding a train. The pathetic excuse from the 
authorities for abridging her freedom to travel within Burma, on that 
occasion, was that all tickets had been sold out.
  This Congress must answer anew the cry of the Burmese people and 
their courageous freedom-fighters. That is why I am introducing 
bipartisan legislation today, along with Senator Jessee Helms and 
several of our colleagues, to ban soaring imports from Burma, most of 
which are apparel and textiles sold by many brand-name American 
retailers. I am equally pleased that U.S. Congressman Tom Lantos from 
California is introducing the companion bill in the U.S. House of 
Representatives this week.
  Most Americans think that a trade ban with Burma already exists. 
Nothing could be further from the truth. When I began investigating 
U.S. trade with Burma last summer in concern with the National Labor 
Committee, I was chocked and alarmed to discover skyrocketing U.S. 
apparel and textile imports for example.
  Last November I requested cable traffic between the U.S. Embassy in 
Burma and the U.S. State Department at Foggy Bottom to see exactly what 
officials in Washington, D.C. knew about soaring imports from Burma. It 
took nearly four months for me to get this unclassified cable traffic. 
But now I know why. Its contents are very troubling. It constitutes 
irrefutable evidence that current U.S. sanctions with Burma are far 
more apparent than real. They are far more bluster than bite. Consider 
the fact that the U.S. Government currently provides the Burmese 
military junta with very easy access to the U.S. apparel market because 
95 percent of their exports are under no practical import restrictions 
at all.
  Due to rising imports of apparel and textiles from Burma alone, more 
than $400 million dollars are now flowing into the coffers of the 
Burmese military dictatorship. These ruthless military dictators and 
their drug-trafficking cohorts are spending this hard currency to 
purchase more guns from China and to buy loyalty among their troops to 
continue their policy of extreme repression and human cruelty.
  In other words, American consumers are unwittingly helping to sustain 
the repressive military junta's grip on power when buying travel and 
sports bags, women's underwear, jumpers, shorts, tank tops and towels 
made in the Burmese gulag. It is outrageous that many brand-name U.S. 
apparel companies such as FILA, Jordache, and Arrow Golf are making 
more and more of their clothes in the Burmese gulag where many workers 
earn as little as 7 cent/hour or $3.23/week and where production is 
non-stop--24 hours/day and 7 days/week.
  Make no mistake about it. U.S. apparel imports from Burma are 
providing the SPDC with a growing source of critically-needed hard 
currency because the military dictators directly own or have taken de 
facto control of production in many apparel and textile factories. They 
are further enriched by a 5 percent export tax. As I said earlier, this 
hard currency is used to finance the purchase of new weapons and 
ammunition from China and elsewhere, thus helping to underwrite the 
perpetuation of modern-day slavery, forced labor and forced child labor 
in Burma.
  But you don't have to take my work for it. U Maung Maung, the General 
Secretary of the Federation of Trade Unions in Burma, decried at a 
recent news conference in Washington, D.C., that ``the practice of 
purchasing garments made in Burma extends the continued exploitation of 
my people, including the use of slave labor by the regime, by further 
delaying the return of democratic government in Burma.'' At grave 
personal risk, he and other NLD leaders have disclosed the growing 
importance of exports to America and other foreign markets in helping 
sustain the Burmese military junta in power.
  Some may question whether a ban on Burmese trade, including apparel 
and textile imports, might not harm American companies and consumers? 
Nothing could be further from the truth. Currently, U.S. apparel and 
textile imports from Burma account for less than one-half of one 
percent of total U.S. apparel and textile imports.
  Others may assert that enactment of this legislation would violate 
WTO rules. Yes, Burma does belong to the WTO. Accordingly, the SPDC 
would have the standing technically to bring a formal complaint when 
this legislation is enacted. But our response to such a development 
should be bring it on. Let the Burmese generals argue before the WTO 
that they have the right to export products made by forced labor and 
child slaves and in flagrant violation of other internationally-
recognized worker rights. This would clearly bring into focus the folly 
of writing rules for global trade that don't include enforceable worker 
rights, thus compelling workers in civilized trading nations to have to 
compete for their jobs de facto with forced labor in Burma.
  America must answer the clarion call of the ILO and take a stronger 
stand in solidarity with the Burmese people and in defense of universal 
human rights and worker rights in that besieged nation. A trade ban 
with Burma will reaffirm the belief of the American people that 
increased trade with foreign countries must promote respect for human 
rights and worker rights as well as property rights. It will also 
signal American readiness to join in a new and stronger course of 
coordinated, multilateral action that is designed to force the Burmese 
generals from power once and for all and to satisfy the yearning of the 
Burmese people for democratic, self-government.
  In closing, I also ask unanimous consent that the text of the bill be 
printed in the Record and that four recent editorials from the 
Washington Post, the New York Times, and the Boston Globe calling 
attention to the profound and prolonged suffering of the Burmese people 
and the need for stronger action in the U.S. and around the world also 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 926

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

     SECTION 1. FINDINGS.

       Congress makes the following findings:
       (1) The International Labor Organization (ILO), invoking an 
     extraordinary constitutional procedure for the first time in 
     its 82-year history, adopted in 2000 a resolution calling on 
     the State Peace and Development Council to take concrete 
     actions to end forced labor in Burma.
       (2) In this resolution, the ILO recommended that 
     governments, employers, and workers organizations take 
     appropriate measures to ensure that their relations with the 
     State Peace and Development Council do not abet the system of 
     forced or compulsory labor in that country, and that other 
     international bodies reconsider any cooperation they may be 
     engaged in with Burma and, if appropriate, cease as soon as 
     possible any activity that could abet the practice of forced 
     or compulsory labor.

     SEC. 2. UNITED STATES SUPPORT FOR MULTILATERAL ACTION TO END 
                   FORCED LABOR AND THE WORST FORMS OF CHILD LABOR 
                   IN BURMA.

       (a) Trade Ban.--
       (1) In general.--Notwithstanding any other provision of 
     law, until such time as the President determines and 
     certifies to Congress that Burma has met the conditions 
     described in paragraph (2), no article that is produced, 
     manufactured, or grown in Burma may be imported into the 
     United States.
       (2) Conditions described.--The conditions described in this 
     paragraph are the following:
       (A) The State Peace and Development Council in Burma has 
     made measurable and substantial progress in reversing the 
     persistent pattern of gross violations of internationally-
     recognized human rights and worker rights, including the 
     elimination of forced labor and the worst forms of child 
     labor.
       (B) The State Peace and Development Council in Burma has 
     made measurable and

[[Page S5457]]

     substantial progress toward implementing a democratic 
     government including--
       (i) releasing all political prisoners; and
       (ii) deepening, accelerating, and bringing to a mutually-
     acceptable conclusion the dialogue between the State Peace 
     and Development Council (SPDC) and democratic leadership 
     within Burma (including Aung San Suu Kyi and the National 
     League for Democracy (NLD) and leaders of Burma's ethnic 
     peoples).
       (C) The State Peace and Development Council in Burma has 
     made measurable and substantial progress toward full 
     cooperation with United States counter-narcotics efforts 
     pursuant to the terms of section 570(a)(1)(B) of Public Law 
     104-208, the Foreign Operations, Export Financing, and 
     Related Programs Appropriations Act, 1997.
       (b) Effective Date.--The provisions of this section shall 
     apply to any article entered, or withdrawn from warehouse for 
     consumption, on or after the 15th day after the date of 
     enactment of this Act.
                                  ____


                [From the New York Times, May 11, 2001]

                     Myanmar's Incorrigible Leaders

       A few months ago it looked as if the military junta in 
     Myanmar might ease its repressive rule slightly. The regime 
     was talking with the country's courageous pro-democracy 
     leader, Daw Aung San Suu Kyi, and there even seemed to be a 
     possibility that she would be liberated from the prolonged 
     house arrest the government has enforced. But those hopes 
     have all but vanished. If the Bush administration means to 
     speak out against human rights abuses abroad and pressure 
     governments to treat their citizens humanely, Myanmar would 
     be a fine place to start.
       The military leaders of Myanmar, formerly called Burma, are 
     among the world's cruelest violators of human rights. The 
     junta has tortured and executed political opponents, 
     exploited forced labor and condoned a burgeoning traffic in 
     heroin and amphetamines. In the clearest indication that the 
     regime has little intention of reforming, the United Nations 
     special envoy who acted as a catalyst for the talks between 
     the government and Mrs. Aung San Suu Kyi has been denied 
     permission to visit the country since January. Also, an 
     anticipated release of political prisoners has failed to 
     materialize, as has a pledge by the junta that Mrs. Aung San 
     Suu Kyi's party, the National League for Democracy, would be 
     allowed to resume activity.
       Earlier this year the junta released 120 mostly youthful 
     members of the party who had been imprisoned the previous 
     year, but it is still believed to be holding as many as 1,700 
     political prisoners, including 35 people who were elected to 
     Parliament in 1990. Mrs. Aung San Suu Kyi's party won more 
     than three-quarters of the seats in that election, but the 
     junta annulled the results.
       The United States and the European Union have cooperated to 
     isolate Myanmar, and in 1997 the Clinton administration 
     banned new American investments there. But some Asian 
     countries have been reluctant to join in sanctions. China, in 
     particular, has helped sustain the junta with military aid. 
     Regrettably, last month Japan broke ranks with a Western-led 
     12-year ban on non-humanitarian assistance to Myanmar by 
     approving a $29 million grant for a hydroelectric dam.
       Last year the International Labor Organization, responding 
     to concerns about forced labor, voted to urge governments and 
     international donors to impose further sanctions on Myanmar. 
     Washington should consider a ban on imports from that nation, 
     including textiles. Myanmar is rapidly increasing apparel 
     exports to the United States. Mrs. Aung San Suu Kyi's allies 
     have argued that the hard-currency earnings primarily benefit 
     the military, not the laborers who make the garments. 
     Washington should certainly be using its influence with Japan 
     and other Asian countries to deter any further 
     nonhumanitarian assistance.
                                  ____


                  [From the Boston Globe, May 7, 2001]

                         Burma Sanctions' Value

       When it comes to the military dictatorship ruling Burma, 
     President Bush has an opportunity he should welcome to 
     demonstrate the realism his advisers commend and, 
     simultaneously, a firm commitment to America's democratic 
     ideals.
       The Burmese junta stands condemned by much of the world for 
     its horrendous abuse of human rights, its complicity in the 
     trafficking of heroin and methamphetamines, and its thwarting 
     of the democratic government that was elected with 80 percent 
     of the seats in Parliament in Burma's last free election, in 
     1990.
       Currently, there are varying sanctions on the junta. The 
     International Labor Organization, for the first time in its 
     81-year history, asked its members to sanction the regime for 
     the continuing, brutal imposition of forced labor on Burmese 
     and minority ethnic groups.
       There are also European Union sanctions and restrictions 
     imposed by the Clinton administration that prohibit new U.S. 
     investment in Burma and ban senior officials in the regime 
     from obtaining visas to enter the United States.
       Although it is far from clear that the junta intends to 
     permit a revival of democracy, there is little doubt that it 
     has engaged in talks with Nobel Peace Prize winner Aung San 
     Suu Kyi--who is held under virtual house arrest in Rangoon--
     in large part because of the unremitting pressure of 
     sanctions.
       As a result of sanctions, the officers in power cannot 
     disguise their bankrupting of what had been one of Asia's 
     most literate and resource-rich countries. Even the junta's 
     principal sponsor for membership in the Association of 
     Southeast Asian Nations, Prime Minister Mahathir Mohammad of 
     Malaysia, has counseled Burma's ruling officers to ease the 
     embarrassment of their fellow ASEAN members by opening a 
     dialogue with Suu Kyi.
       In a letter last month to Bush, 35 senators including 
     Edward Kennedy and John Kerry made a strong case for 
     maintaining sanctions, noting that ``the sanctions have been 
     partially responsible for prompting the regime to engage in 
     political dialogue with Aung San Suu Kyi and her 
     supporters.'' The letter also said there is ``strong evidence 
     directly linking members of the regime to'' the trafficking 
     of ``the heroin which plagues our communities.''
       Bush should insist that the junta take measurable steps 
     toward the retrieval of democracy in Burma, and not merely 
     for altruistic reasons. Next to the regime in North Korea, 
     the Burmese junta has been Beijing's chummiest ally, 
     permitting China to project its burgeoning power into the Bay 
     of Bengal, to the dismay of India.
       Were a democratic government to replace the junta, 
     neighboring Thailand, which is now suffering from an influx 
     of drugs from Burma, would join India and the rest of the 
     region in breathing a sigh of relief.
                                  ____


               [From the Washington Post, Nov. 26, 2000]

                        A Rebuke to Forced Labor

       Not in 81 years had the International Labor Organization 
     imposed such sanctions; but Burma is a special case. The ILO, 
     a United Nations arm in which unions, businesses and 
     governments participate, found that the Asian nation also 
     known as Myanmar has so flagrantly violated international 
     norms that sanctions had to be imposed. In particular, its 
     ruling generals were found guilty of encouraging forced and 
     slave labor in ``a culture of fear.''
       Burma is a special case in part because its dictators 
     cannot even pretend to reflect the will of their people. In 
     1990, they permitted a national election. A pro-democracy 
     party headed by Aung San Suu Kyi, daughter of Burma's hero of 
     independence, won four out of five parliamentary seats. But 
     parliament never met; the generals refused to accept the 
     results. Aung San Suu Kyi, who won the Nobel peace prize in 
     1991, is under house arrest; most of her party colleagues are 
     in prison. The generals grow more corrupt while Burma grows 
     ever poorer.
       The ILO sanctions approved last week are, as AFL-CIO 
     president John Sweeney said, ``only a starting point.'' 
     Nations are ``urged to halt any aid, trade or relationship 
     that helps Burmese leaders remain in power,'' he said. The 
     United States already has imposed restrictions on investment, 
     but that hasn't stopped companies such as Unocal from 
     mounting major efforts in the country. Nor has it prevented 
     trade, much of which enriches only the generals.
       Companies that do business in Burma now more than ever will 
     have to explain themselves. So will nations that sought to 
     water down the ILO action, including fellow autocracies like 
     Malaysia and China and, more surprisingly, democracies like 
     India and Japan. Those nations, though, found themselves very 
     much in the minority, just as Burma finds itself more 
     isolated than ever.
                                  ____


                [From the New York Times, Nov. 19, 2000]

                          The Ruin of Myanmar

       The Southeast Asian nation of Myanmar is a case study in 
     repression and misgovernment. For 12 years a secretive 
     military junta has ground down the liberties and living 
     standards of 50 million people. By banning most contact with 
     the outside world and buying off the leadership of restive 
     ethnic minorities, the junta has deflected serious challenges 
     to its rule, despite the dismal failure of its economic 
     policies and spreading social ills.
       The military has ruled Myanmar since 1962, when it was 
     known as Burma. After the violent suppression of democracy 
     movement in 1988, an even more ruthless set of generals took 
     charge. They permitted elections in 1990, then ignored the 
     results when democratic forces led by Daw Aung Sang Suu Kyi 
     won an overwhelming victory. She has spent 6 of the past 11 
     years under house arrest. Other leaders of her party have 
     been relentlessly persecuted, university students have been 
     relocated from the cities, and unions and civic associations 
     have been prohibited. The junta has banned computer modems, 
     e-mail and the Internet and made it a crime for people to 
     invite foreigners into their homes.
       The Times's Blaine Harden recently reported that Myanmar, 
     which a half-century ago had one of Asia's best health care 
     systems and highest literacy rates, is now near the bottom in 
     these and many other measures of development as government 
     spending has been diverted from schools and health care to 
     the military. Most people now live on less than a dollar a 
     day. Drug smuggling and AIDS have grown explosively and 
     threaten to spill over to neighboring countries like China 
     and Thailand.
       The United States has led international efforts to isolate 
     Myanmar through economic sanctions, including a ban on new 
     investment. But other Asian countries have been reluctant to 
     apply pressure. China, in particular, has helped sustain the 
     junta through

[[Page S5458]]

     military aid. But an increasing number of countries are 
     losing patience. Last week the 175-member International Labor 
     Organization took the unusual step of condemning the junta's 
     use of forced labor and invited member countries to impose 
     sanctions. A good start would be restricting trade and 
     investment in areas of the economy that profit from forced 
     labor. Washington too should consider additional steps like 
     encouraging disinvestment by American companies. Myanmar's 
     people deserve international support in their struggle 
     against a destructive tyranny.
                                 ______
                                 
      By Mr. CORZINE:
  S. 927. A bill to amend title 23, United States Code, to provide for 
a prohibition on use of mobile telephones while operating a motor 
vehicle; to the Committee on Environment and Public Works.
  Mr. CORZINE. Mr. President, today I am introducing a bill, the Mobile 
Telephone Driving Safety Act of 2001, to enhance highway safety by 
encouraging States to restrict the use of cell phones while operating a 
motor vehicle.
  The cell phone is an important and valuable type of technology that 
has grown increasingly popular throughout our nation. But as cell phone 
use has grown, so has a related problem, the increasing number of 
traffic accidents caused by drivers who are distracted by cell phone 
use.
  The risks of driving while talking on the phone were made very clear 
to many Americans when on April 29, 2001 a car containing model Nikki 
Taylor crashed into a utility pole. The driver of the car admitted that 
he had been distracted from operating the car when he tried to answer 
his cellular telephone. That few second distraction was all that was 
necessary to cause the crash. As a result, Ms. Taylor suffered severe 
and life-threatening injuries.
  Unfortunately, Ms. Taylor's case is just the most visible recent 
example of a much broader problem. Several studies have established 
that using a cell phone while driving substantially increases the risk 
of an accident. One, published in the New England Journal of Medicine, 
concluded that ``use of cellular telephones in motor vehicles is 
associated with a quadrupling of the risks of a collision during the 
brief period of a call''. The study goes on to say ``this relative risk 
is similar to the hazard associated with driving with a blood alcohol 
level at the legal limit''.
  In response to the growing problem of cell phone use while driving, 
counties and municipalities around the country, including two 
municipalities in my own State of New Jersey, have banned the use of 
cell phones while driving on their roads. Just recently, Governor 
Pataki of New York endorsed similar statewide legislation. Yet, at this 
point, no State has actually enacted such a law. Many cite strong 
industry resistance to explain the failure of state legislatures to 
act.
  While some wireless industry representatives may resist cell phone 
driving safety legislation, the American people strongly support the 
idea. A recent poll by Quinnipiac University showed that 87 percent of 
New York voters support such a ban. This survey echoes the results from 
other surveys taken nationwide.
  In addition to preventing accidents and saving lives, a ban on cell 
phone use while driving also would help lower the cost of auto 
insurance. That is especially important to me because I represent a 
state in which insurance premiums are among the highest in the nation.
  The Mobile Telephone Driving Safety Act of 2001 is structured in a 
manner similar to other Federal laws designed to promote highway 
safety, such as laws that encourage states to enact tough drunk driving 
standards. Under the legislation, a portion of Federal highway funds 
would be withheld from States that do not enact a ban on cell phone use 
while driving. Initially, this funding could be restored if states act 
to move into compliance. Later, the highway funding forfeited by one 
state would be distributed to other states that are in compliance. 
Experience has shown that the threat of losing highway funding is very 
effective in ensuring that states comply.
  To meet the bill's requirements, States would have to ban cell phone 
use while driving. However, such a ban need not be absolute. It could 
include an exception where there are exceptional circumstances, such as 
the use of a phone to report a disabled vehicle or medical emergency. 
In addition, if a state makes a determination that the use of ``hands 
free'' cell phones does not pose a threat to public safety, such use 
could be exempted from the ban, as well.
  This is a necessary bill to keep our streets and highways safe. I 
urge my colleagues to support this legislation.
                                 ______
                                 
      By Mr. JEFFORDS (for himself, Mr. Kennedy, and Mr. Feingold):
  S. 928. A bill to amend the Age Discrimination in Employment Act of 
1967 to require, as a condition of receipt or use of Federal financial 
assistance, that States waive immunity to suit for certain violations 
of that Act, and to affirm the availability of certain suits for 
injunctive relief to ensure compliance with that Act; to the Committee 
on Health, Education, Labor, and Pensions.
  Mr. JEFFORDS. Mr. President, I am pleased to be here today to 
introduce legislation that will restore to state employees the ability 
to bring claims of age discrimination against their employers under the 
Age Discrimination and Employment Act of 1967. The Older Workers Rights 
Restoration Act of 2001 seeks to provide state employees who allege age 
discrimination the same procedures and remedies as those afforded to 
other employees with respect to ADEA.
  This legislation is needed to protect older workers like Professor 
Dan Kimel, who has taught physics Florida State University for nearly 
35 years. Professor Kimel testified at a recent hearing before the 
Senate Health, Education, Labor and Pensions Committee that, despite 
his years of faithful service, in 1992 he was earning less in real 
dollars than his starting salary. To add insult to injury, his employer 
was hiring younger faculty out of graduate schools at salaries that 
were higher than he and other long-service faculty members were 
earning. In 1995, Professor Kimel and 34 colleagues brought a claim of 
age discrimination against the Florida Board of Regents.
  Dan Kimel and his colleagues brought their cases under the Age 
Discrimination and Employment Act of 1967, ADEA. In 1974, Congress 
amended the ADEA to ensure that state employees, such as Dan Kimel had 
full protection against age discrimination. I stand before you today 
because this past year the Supreme Court ruled that Dan Kimel and other 
affected faculty do not have the right to bring their ADEA claims 
against their employer. The Court in Kimel v. Florida Board of Regents, 
held that Congress did not have the power to abrogate state sovereign 
immunity to individuals under the ADEA. As a result of the decision, 
state employees, who are victims of age discrimination, no longer have 
the remedies that are available to individuals who work in the private 
sector, for local governments or for the federal government. Indeed, 
unless a state chooses to waive its sovereign immunity or the Equal 
Employment Opportunity Commission decides to bring a suit, state 
workers no longer have a federal remedy for their claims of age 
discrimination. In effect, this decision has transformed older state 
employees into second class citizens.
  For a right without a remedy is no right at all. Employees should not 
have to lose their right to redress simply because they happen to work 
for a state government. And a considerable portion of our workforce has 
been impacted. In Vermont, for example, the State is one of our largest 
employers. We cannot and should not permit these state workers to lose 
the right to redress age discrimination.
  This legislation will resolve this problem. The Older Workers Rights 
Restoration Act of 2001 will restore the full protections of the ADEA 
to Dan Kimel and countless other state employees in federally assisted 
programs. The legislation will do this by requiring the states to waive 
their sovereign immunity as a condition of receiving federal funds for 
their programs or activities. The Older Workers Rights Restoration Act 
of 2001 follows the framework of many other civil rights laws, 
including the Civil Rights Restoration Act of 1987. Under this 
framework, immunity is only waived with regard to the program or 
activity actually receiving federal funds. States are not obligated to 
accept such funds; and if they do not they are immune from private ADEA 
suits. The legislation also

[[Page S5459]]

confirms that these employees may bring actions for equitable relief 
under the ADEA.
  I urge all my colleagues to join me in supporting this bill.
  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. 928

       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 ``Older Workers' Rights 
     Restoration Act of 2001''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) Since 1974, the Age Discrimination in Employment Act of 
     1967 (29 U.S.C. 621 et seq.) has prohibited States from 
     discriminating in employment on the basis of age. In EEOC v. 
     Wyoming, 460 U.S. 226 (1983), the Supreme Court upheld 
     Congress' constitutional authority to prohibit States from 
     discriminating in employment on the basis of age. The 
     prohibitions of the Age Discrimination in Employment Act of 
     1967 remain in effect and continue to apply to the States, as 
     the prohibitions have for more than 25 years.
       (2) Age discrimination in employment remains a serious 
     problem both nationally and among State agencies, and has 
     invidious effects on its victims, the labor force, and the 
     economy as a whole. For example, age discrimination in 
     employment--
       (A) increases the risk of unemployment among older workers, 
     who will as a result be more likely to be dependent on 
     government resources;
       (B) prevents the best use of available labor resources;
       (C) adversely effects the morale and productivity of older 
     workers; and
       (D) perpetuates unwarranted stereotypes about the abilities 
     of older workers.
       (3) Private civil suits by the victims of employment 
     discrimination have been a crucial tool for enforcement of 
     the Age Discrimination in Employment Act of 1967 since the 
     enactment of that Act. In Kimel v. Florida Board of Regents, 
     120 S. Ct. 631 (2000), however, the Supreme Court held that 
     Congress lacks the power under the 14th amendment to the 
     Constitution to abrogate State sovereign immunity to suits by 
     individuals under the Age Discrimination in Employment Act of 
     1967. The Federal Government has an important interest in 
     ensuring that Federal financial assistance is not used to 
     subsidize or facilitate violations of the Age Discrimination 
     in Employment Act of 1967. Private civil suits are a critical 
     tool for advancing that interest.
       (4) As a result of the Kimel decision, although age-based 
     discrimination by State employers remains unlawful, the 
     victims of such discrimination lack important remedies for 
     vindication of their rights that are available to all other 
     employees covered under that Act, including employees in the 
     private sector, local government, and the Federal Government. 
     Unless a State chooses to waive sovereign immunity, or the 
     Equal Employment Opportunity Commission brings an action on 
     their behalf, State employees victimized by violations of the 
     Age Discrimination in Employment Act of 1967 have no adequate 
     Federal remedy for violations of that Act. In the absence of 
     the deterrent effect that such remedies provide, there is a 
     greater likelihood that entities carrying out programs and 
     activities receiving Federal financial assistance will use 
     that assistance to violate that Act, or that the assistance 
     will otherwise subsidize or facilitate violations of that 
     Act.
       (5) Federal law has long treated nondiscrimination 
     obligations as a core component of programs or activities 
     that, in whole or part, receive Federal financial assistance. 
     That assistance should not be used, directly or indirectly, 
     to subsidize invidious discrimination. Assuring 
     nondiscrimination in employment is a crucial aspect of 
     assuring nondiscrimination in those programs and activities.
       (6) Discrimination on the basis of age in programs or 
     activities receiving Federal financial assistance is, in 
     contexts other than employment, forbidden by the Age 
     Discrimination Act of 1975 (42 U.S.C. 6101 et seq.). Congress 
     determined that it was not necessary for the Age 
     Discrimination Act of 1975 to apply to employment 
     discrimination because the Age Discrimination in Employment 
     Act of 1967 already forbade discrimination in employment by, 
     and authorized suits against, State agencies and other 
     entities that receive Federal financial assistance. In 
     section 1003 of the Rehabilitation Act Amendments of 1986 (42 
     U.S.C. 2000d-7), Congress required all State recipients of 
     Federal financial assistance to waive any immunity from suit 
     for discrimination claims arising under the Age 
     Discrimination Act of 1975. The earlier limitation in the Age 
     Discrimination Act of 1975, originally intended only to avoid 
     duplicative coverage and remedies, has in the wake of the 
     Kimel decision become a serious loophole leaving millions of 
     State employees without an important Federal remedy for age 
     discrimination, resulting in the use of Federal financial 
     assistance to subsidize or facilitate violations of the Age 
     Discrimination in Employment Act of 1967.
       (7) The Supreme Court has upheld Congress' authority to 
     condition receipt of Federal financial assistance on 
     acceptance by the States or other recipients of conditions 
     regarding or related to the use of that assistance, as in 
     Cannon v. University of Chicago, 441 U.S. 677 (1979). The 
     Court has further recognized that Congress may require a 
     State, as a condition of  receipt of Federal financial 
     assistance, to waive the State's sovereign immunity to 
     suits for a violation of Federal law, as in College 
     Savings Bank v. Florida Prepaid Postsecondary Education 
     Expense Board, 527 U.S. 666 (1999). In the wake of the 
     Kimel decision, in order to assure compliance with, and to 
     provide effective remedies for violations of, the Age 
     Discrimination in Employment Act of 1967 in State programs 
     or activities receiving or using Federal financial 
     assistance, and in order to ensure that Federal financial 
     assistance does not subsidize or facilitate violations of 
     the Age Discrimination in Employment Act of 1967, it is 
     necessary to require such a waiver as a condition of 
     receipt or use of that assistance.
       (8) A State's receipt or use of Federal financial 
     assistance in any program or activity of a State will 
     constitute a limited waiver of sovereign immunity under 
     section 7(g) of the Age Discrimination in Employment Act of 
     1967 (as added by section 4 of this Act). The waiver will not 
     eliminate a State's immunity with respect to programs or 
     activities that do not receive or use Federal financial 
     assistance. The State will waive sovereign immunity only with 
     respect to suits under the Age Discrimination in Employment 
     Act of 1967 brought by employees within the programs or 
     activities that receive or use that assistance. With regard 
     to those programs and activities that are covered by the 
     waiver, the State employees will be accorded only the same 
     remedies that are accorded to other covered employees under 
     the Age Discrimination in Employment Act of 1967.
       (9) The Supreme Court has repeatedly held that State 
     sovereign immunity does not bar suits for prospective 
     injunctive relief brought against State officials, as in Ex 
     parte Young, 209 U.S. 123 (1908). Clarification of the 
     language of the Age Discrimination in Employment Act of 1967 
     will confirm that that Act authorizes such suits. The 
     injunctive relief available in such suits will continue to be 
     no broader than the injunctive relief that was available 
     under that Act before the Kimel decision, and that is 
     available to all other employees under that Act.

     SEC. 3. PURPOSES.

       The purposes of this Act are--
       (1) to provide to State employees in programs or activities 
     that receive or use Federal financial assistance the same 
     rights and remedies for practices violating the Age 
     Discrimination in Employment Act of 1967 as are available to 
     other employees under that Act, and that were available to 
     State employees prior to the Supreme Court's decision in 
     Kimel v. Florida Board of Regents, 120 S. Ct. 631 (2000);
       (2) to provide that the receipt or use of Federal financial 
     assistance for a program or activity constitutes a State 
     waiver of sovereign immunity from suits by employees within 
     that program or activity for violations of the Age 
     Discrimination in Employment Act of 1967; and
       (3) to affirm that suits for injunctive relief are 
     available against State officials in their official 
     capacities for violations of the Age Discrimination in 
     Employment Act of 1967.

     SEC. 4. REMEDIES FOR STATE EMPLOYEES.

       Section 7 of the Age Discrimination in Employment Act of 
     1967 (29 U.S.C. 626) is amended by adding at the end the 
     following:
       ``(g)(1)(A) A State's receipt or use of Federal financial 
     assistance for any program or activity of a State shall 
     constitute a waiver of sovereign immunity, under the 11th 
     amendment to the Constitution or otherwise, to a suit brought 
     by an employee of that program or activity under this Act for 
     equitable, legal, or other relief authorized under this Act.
       ``(B) In this paragraph, the term `program or activity' has 
     the meaning given the term in section 309 of the Age 
     Discrimination Act of 1975 (42 U.S.C. 6107).
       ``(2) An official of a State may be sued in the official 
     capacity of the official by any employee who has complied 
     with the procedures of subsections (d) and (e), for 
     injunctive relief that is authorized under this Act. In such 
     a suit the court may award to the prevailing party those 
     costs authorized by section 722 of the Revised Statutes (42 
     U.S.C. 1988).''.

     SEC. 5. SEVERABILITY.

       If any provision of this Act, an amendment made by this 
     Act, or the application of such provision or amendment to any 
     person or circumstance is held to be invalid, the remainder 
     of this Act, the amendments made by this Act, and the 
     application of such provision or amendment to another person 
     or circumstance shall not be affected.

     SEC. 6. EFFECTIVE DATE.

       (a) Waiver of Sovereign Immunity.--With respect to a 
     particular program or activity, section 7(g)(1) of the Age 
     Discrimination in Employment Act of 1967 (29 U.S.C. 
     626(g)(1)) applies to conduct occurring on or after the day, 
     after the date of enactment of this Act, on which a State 
     first receives or uses Federal financial assistance for that 
     program or activity.
       (b) Suits Against Officials.--Section 7(g)(2) of the Age 
     Discrimination in Employment Act of 1967 (29 U.S.C. 
     626(g)(2)) applies to any suit pending on or after the date 
     of enactment of this Act.


[[Page S5460]]


  Mr. KENNEDY. Mr. President, I am honored today to join Chairman 
Jeffords and Senator Feingold to introduce the Older Workers' Rights 
Restoration Act of 2001. Our goal is to restore to older state 
government workers the right to seek remedies for age discrimination. A 
recent decision by the Supreme Court took that right away. State 
workers now have fewer federal protections against age discrimination 
than other employees in the country. This bill will remedy that 
injustice.
  In 1967, Congress outlawed age discrimination in employment in the 
private sector by passing the Age Discrimination in Employment Act. In 
1974, recognizing that employees of state government agencies were also 
often subject to pervasive and arbitrary age discrimination, Congress 
extended the Act to cover state governments. For more than 25 years, 
state employees were protected from age discrimination, and had the 
same remedies as all other employees covered by this law.
  But in Kimel v. Florida Board of Regents, decided last year, the 
Supreme Court held that Congress lacked the power to subject states to 
suits under the federal age discrimination laws. As a result, unless a 
state agrees to allow suits against its agencies in such cases, state 
employees cannot seek relief on their own behalf to remedy age 
discrimination.
  In a recent hearing before the Labor Committee, I was privileged to 
hear the eloquent testimony of Dr. J. Daniel Kimel, the plaintiff in 
the Supreme Court case. Dr. Kimel has been a professor of physics at 
Florida State University for 35 years and is paid less than younger 
faculty. Because of the Supreme Court's ruling, Dr. Kimel has been 
unable to seek any remedy at all for this age-based salary 
discrimination.
  Large numbers of State employees, those who work for State colleges 
and universities, State police forces, State departments of 
transportation, State environmental protection agencies and many other 
State agencies, lack effective Federal remedies for age discrimination. 
That result is unfair. These State workers are vulnerable to age 
discrimination, which wastes valuable talent and adversely affects 
morale.
  No worker should be subject to discriminatory hiring, firing, or 
other job action based on age or any other characteristic that has 
nothing to do with job performance. We must act to see that workers are 
adequately protected against this threat.
  The bill that Chairman Jeffords, Senator Feingold and I are 
introducing today is in the best tradition of the nation's civil rights 
laws. It provides that when a State program receives Federal tax 
dollars, the program must permit its employees to seek remedies under 
the Federal age discrimination law. The courts have long recognized 
that Congress can act to see that Federal funds are not used to 
subsidize discrimination, and this is what our bill will do. In fact, 
all of the scholars who testified in our Committee hearing agree that 
this is an appropriate and constitutional use of Congress' power.
  This important bill will help to ensure that all Americans are 
protected from age discrimination in employment. I urge my colleagues 
to join me in supporting this needed legislation.
                                 ______
                                 
      By Mr. HUTCHINSON:
  S. 929. A bill to amend the National Labor Relations Act to preserve 
charitable giving; to the Committee on Health, Education, Labor, and 
Pensions.
  Mr. HUTCHINSON. Mr. President, I rise today to introduce the Preserve 
Charitable Giving Act. I am proud of this legislation but am profoundly 
saddened that it has become necessary.
  Aggressive union organizing tactics have made this legislation 
necessary because those tactics have forced many of our nation's 
largest retailers who allow charities to solicit donations on their 
premises to also give unions access to their premises for the express 
purpose of organizing or face a flurry of unfair labor practice 
charges. When faced with this situation, these retailers are thus 
forced to deny access to everyone, resulting in a loss of charitable 
donations. The magnitude of this loss cannot be overstated, as 
charitable donations raised through Wal*Mart alone are over $127 
million annually. This means that there are now fewer hot meals for the 
hungry, fewer toys for poor children, and less clothing and shelter for 
the homeless.
  This is unacceptable. Companies should not be forced to choose 
between furthering charity or increasing union membership. The Preserve 
Charitable Giving Act will clarity the National Labor Relations Act so 
that retailers who choose to allow access to their premises for 
charitable solicitations will not also be forced to give access for 
union organizing purposes. Thus, I ask my colleagues to preserve 
charitable giving by helping to enact this legislation.
  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. 929

       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 ``Preserve Charitable Giving 
     Act''.

     SEC. 2. PROPERTY ACCESS.

       Section 8(a)(1) of the National Labor Relations Act is 
     amended by adding after ``section 7'' the following: 
     ``Provided, That in the case of a published, written, or 
     posted no solicitation or no access rule, an exception for 
     charitable, eleemosynary, or other beneficent purposes shall 
     not be grounds for finding an unfair labor practice''.
                                 ______
                                 
      By Mr. McCAIN:
  S. 930. A bill to authorize the Secretary of the Interior to set 
aside up to $2 per person from park entrance fees or assess up to $2 
per person visiting the Grand Canyon National Park to secure bonds for 
capital improvements, and for other purposes; to the Committee on 
Energy and Natural Resources.
  Mr. McCAIN. Mr. President, I rise today to introduce legislation that 
will authorize the Secretary of Interior to develop and implement a 
bonding program to help finance capital improvement projects at the 
Grand Canyon National Park in Arizona.
  For the past few years, I have worked on legislation to implement a 
national parks bonding program to benefit the National Parks system by 
proposing a unique public-private partnership mechanism to finance 
capital improvements through bond revenues. This legislation has 
received substantial support by many of the organizations working with 
the National Parks system. The legislation I am introducing today is 
similar to the National Parks Capital Improvements Act of 2001, but it 
specifically authorizes a park-specific bonding program for the Grand 
Canyon National Park in my home state of Arizona.
  This park-specific proposal is similar to actions taken back in the 
late 1980's to legislate a solution to the air traffic and noise 
pollution problems affecting the Grand Canyon National Park caused by 
overflights over the canyon. Congress enacted legislation to require 
specific measures to mitigate air traffic through the National Parks 
Overflights Act. Once a framework for the Grand Canyon National Park 
was established, it became clear that broader legislation was necessary 
to address similar overflights issues to promote safety and quiet in 
the entire national parks system.
  Much in the same way, I am proposing to allow the Secretary of 
Interior to utilize the bonding mechanism at the Grand Canyon National 
Park, in partnership with a supporting organization. Bonding has worked 
well in other governmental sectors to leverage additional financing for 
local projects where federal or state resources are not otherwise 
sufficient or available.
  This bonding legislation, as well as the broader national parks 
bonding bill, would allow the Grand Canyon National Park to utilize up 
to $2 of its existing fee structure to dedicate to securing bonds to 
finance capital improvement projects. For example, based on current 
visitation rates at the Grand Canyon, a $2 surcharge would enable us to 
raise $100 million from a bond issue amortized over 20 years. That is a 
significant amount of money which could be used to accomplish many 
critical park projects. With approximately 1.2 million acres to 
protect, this type of financial tool would go far to help redress the 
backlog of needed repairs, maintenance and other

[[Page S5461]]

approved projects at the Grand Canyon National Park.
  I remain committed to broader legislation to implement a park-wide 
bonding program. However, I am proposing that we should also consider 
testing this innovative approach by authorizing its use to help protect 
one of the nation's largest and most magnificent parks, the Grand 
Canyon.
  I ask unanimous consent to print the text of this bill in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 930

       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 ``Grand 
     Canyon Capital Improvements 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. Definitions.
Sec. 3. Fundraising organization.
Sec. 4. Memorandum of agreement.
Sec. 5. Park surcharge or set-aside.
Sec. 6. Use of bond proceeds.
Sec. 7. Report.
Sec. 8. Regulations.

     SEC. 2. DEFINITIONS.

       In this Act:
       (1) Fundraising organization.--The term ``fundraising 
     organization'' means an entity authorized to act as a 
     fundraising organization under section 3(a).
       (2) Memorandum of agreement.--The term ``memorandum of 
     agreement'' means a memorandum of agreement entered into by 
     the Secretary under section 3(a) that contains the terms 
     specified in section 4.
       (3) Park.--The term ``Park'' means the Grand Canyon 
     National Park.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.

     SEC. 3. FUNDRAISING ORGANIZATION.

       (a) In General.--The Secretary may enter into a memorandum 
     of agreement under section 4 with an entity to act as an 
     authorized fundraising organization for the benefit of the 
     Park.
       (b) Bonds.--The fundraising organization for the Park shall 
     issue taxable bonds in return for the surcharge or set-aside 
     for the Park collected under section 5.
       (c) Professional Standards.--The fundraising organization 
     shall abide by all relevant professional standards regarding 
     the issuance of securities and shall comply with all 
     applicable Federal and State law.
       (d) Audit.--The fundraising organization shall be subject 
     to an audit by the Secretary.
       (e) No Liability for Bonds.--The United States shall not be 
     liable for the security of any bonds issued by the 
     fundraising organization.

     SEC. 4. MEMORANDUM OF AGREEMENT.

       The fundraising organization shall enter into a memorandum 
     of agreement that specifies--
       (1) the amount of the bond issue;
       (2) the maturity of the bonds, not to exceed 20 years;
       (3) the per capita amount required to amortize the bond 
     issue, provide for the reasonable costs of administration, 
     and maintain a sufficient reserve consistent with industry 
     standards;
       (4) the project or projects at the Park that will be funded 
     with the bond proceeds and the specific responsibilities of 
     the Secretary and the fundraising organization with respect 
     to each project; and
       (5) procedures for modifications of the agreement with the 
     consent of both parties based on changes in circumstances, 
     including modifications relating to project priorities.

     SEC. 5. PARK SURCHARGE OR SET-ASIDE.

       (a) In General.--Notwithstanding any other provision of 
     law, the Secretary may authorize the Superintendent of the 
     Park--
       (1) to charge and collect a surcharge in an amount not to 
     exceed $2 for each individual otherwise subject to an 
     entrance fee for admission to the Park; or
       (2) to set aside not more than $2 for each individual 
     charged the entrance fee.
       (b) Surcharge in Addition to Entrance Fees.--The Park 
     surcharge under subsection (a) shall be in addition to any 
     entrance fee collected under--
       (1) section 4 of the Land and Water Conservation Fund Act 
     of 1965 (16 U.S.C. 460l-6a);
       (2) the recreational fee demonstration program authorized 
     by section 315 of the Department of the Interior and Related 
     Agencies Appropriations Act, 1996 (as contained in Public Law 
     104-134; 110 Stat. 1321-156; 1321-200; 16 U.S.C. 460l-6a 
     note); or
       (3) the national park passport program established under 
     title VI of the National Parks Omnibus Management Act of 1998 
     (16 U.S.C. 5991 et seq.).
       (c) Limitation.--The total amount charged or set aside 
     under subsection (a) may not exceed $2 for each individual 
     charged an entrance fee.
       (d) Use.--A surcharge or set-aside under subsection (a) 
     shall be used by the fundraising organization to--
       (1) amortize the bond issue;
       (2) provide for the reasonable costs of administration; and
       (3) maintain a sufficient reserve consistent with industry 
     standards, as determined by the bond underwriter.

     SEC. 6. USE OF BOND PROCEEDS.

       (a) Eligible Projects.--
       (1) In general.--Subject to paragraph (2), bond proceeds 
     under this Act may be used for a project for the design, 
     construction, operation, maintenance, repair, or replacement 
     of a facility in the Park.
       (2) Project limitations.--A project referred to in 
     paragraph (1) shall be consistent with--
       (A) the laws governing the National Park System;
       (B) any law governing the Park; and
       (C) the general management plan for the Park.
       (3) Prohibition on use for administration.--Other than 
     interest as provided in subsection (b), no part of the bond 
     proceeds may be used to defray administrative expenses.
       (b) Interest on Bond Proceeds.--Any interest earned on bond 
     proceeds may be used by the fundraising organization to--
       (1) meet reserve requirements; and
       (2) defray reasonable administrative expenses incurred in 
     connection with the management and sale of the bonds.

     SEC. 7. REPORT.

       (a) In general.--Not later than 2 years after the 
     promulgation of regulations under section 8, the Secretary 
     shall submit to Congress a report on the bond program.
       (b) Requirements.--The report shall include--
       (1) a review of the bond program carried out under this Act 
     at the Park; and
       (2) recommendations to Congress on whether to establish a 
     bond program at all units of the National Park System.

     SEC. 8. REGULATIONS.

       The Secretary, in consultation with the Secretary of 
     Treasury, shall promulgate regulations to carry out this Act.
                                 ______
                                 
      By Mr. HARKIN (for himself, Mr. Smith of Oregon, Mr. Johnson, Mr. 
        Daschle, Mr. Leahy, Mr. Schumer, Mr. Dorgan, Mr. Dayton, Mrs. 
        Clinton, Ms. Stabenow, Mr. Kennedy, Mr. Kohl, Mr. Kerry, Mr. 
        Sarbanes. Mr. Wellstone, Mr. Durbin, and Mrs. Boxer):
  S. 932. A bill to amend the Food Security Act of 1985 to establish 
the conservation security program; to the Committee on Agriculture, 
Nutrition, and Forestry.
  Mr. HARKIN. Mr. President, today I am introducing the Conservation 
Security Act of 2001, a bill that represents a fresh bipartisan farmer-
friendly approach to farm policy and agricultural conservation. I am 
pleased to be joined by my colleague Senator Gordan Smith from Oregon, 
as well as Senators Daschle, Leahy, Dorgan, Johnson, Dayton, Schumer, 
Clinton, Stabenow, Kohl, Sarbanes, Kerry, Kennedy, Wellstone, Durbin, 
and Boxer.
  America's farmers and ranches produce a bountiful, safe, and 
nourishing food supply, and they also protect our natural resources, 
environment and wildlife habitat. Farmers and ranches have a long 
history of stewardship of private lands. They are the key to enhancing 
conservation of resources for future generations.
  Private land conservation became a national priority in the days of 
the Dust Bowl, leading to the creation in the 1930s of the Soil 
Conservation Service, (now the Natural Resources Conservation Service), 
at the Department of Agriculture. With the very foundation of our food 
supply at risk, the federal government stepped forward with billions of 
dollars in assistance to help farmers conserve their precious soils.
  Since that time, total federal spending on conservation has steadily 
declined in inflation-adjusted dollars. Funds for lands in production 
have been especially hard hit. Yet today, agriculture faces a wide 
range of environmental challenges, from overgrazing and manure 
management to cropland runoff and air quality impairment. Urban and 
rural citizens alike are increasingly interested in supporting 
conservation on agricultural lands.
  Farmers and ranchers pride themselves on being good stewards of the 
land, but they are limited by financial constraints. Every dollar spent 
on constructing a filter strip or developing a nutrient management plan 
is a dollar unavailable for other purposes. And even in better times, 
there is a lot of competition for each dollar in a farm's budget.
  Who benefits from conservation on agricultural lands? As much or more 
than farmers, all of us, depend on the careful stewardship of our air, 
water, soil and other natural resources. Farmers and ranchers tend not 
only to their crops and animals, but also to our nation's natural 
resources.
  Since all Americans share in these benefits, it is only right that we 
contribute to conserving private lands. It

[[Page S5462]]

is time to enter into a true conservation partnership with farmers and 
ranchers to help ensure hat conservation is an integral and permanent 
part of our agricultural policy nationwide.
  In the 1985 farm bill, we required farmers who wanted to participate 
in USDA farm programs to develop soil conservation plans for their 
highly erodible land. This provision helped put new conservation plans 
in place for our most fragile farmlands. In the most recent farm bill, 
we streamlined conservation programs and established new cost-share and 
incentive payments for certain practices. These measures have helped 
enhance the environment and natural resources, but we still have more 
to do.

  The Conservation Security Act of 2001 builds on our past successes 
and takes a bold step forward in farm and conservation policy.
  The Conservation Security Act would establish a universal and 
voluntary incentive payment program, the Conservation Security Program, 
to support and encourage conservation activities by farmers and 
ranchers. Under this program, farmers and ranchers could receive as 
much as $50,000 a year in-conservation payments by entering into 5- to 
10-year agreements with USDA and carrying out eligible conservation 
practices. Moreover, the program is designed to encourage 
implementation of practices that address local conservation priorities. 
Payments are based on the number and types of practices and level of 
conservation carried out on their lands in agricultural production. 
Farmers and ranchers may choose to implement practices from one or more 
of the following three tiers of practices.
  In Tier I, participating farmers would adopt or maintain basic 
individual practices, including nutrient management, soil conservation, 
and wildlife habitat management on part or all of their operation. Tier 
I plans are for 5-year periods. Based on enrolled acreage, practices 
and the level of conservation, farmers or ranchers in Tier I would 
receive annual payments that could reach as much as $20,000. A one-time 
advance payment could be made of the greater of $1,000 or 20 percent of 
the annual payment.
  Farmers or ranchers in Tier II would implement more extensive 
conservation practices on their working lands. They could choose from 
Tier I practices and practices II practices, including controlled 
rotational grazing, partial field practices like buffers strips and 
windbreaks, wetland restoration and wildlife habitat enhancement, for a 
period of 5 to 10 years, at the farmer's discretion. The practices 
adopted in Tier II must address at least one resource of concern (i.e. 
water quality, air quality, soil quality, wildlife habitat, etc.) for 
the entire operation. For adopting or maintaining Tier II practices, 
farmers or ranchers would receive up to $35,000 a year with access to a 
one-time advance payment of the greater of $2,000 or 20 percent of the 
annual payment.
  To qualify under Tier III, farmers and ranchers would adopt a 
comprehensive set of conservation practices on the entire operation. 
The Practices would address all resources of concern on the operation, 
including air, land, water and wildlife. For carrying out a Tier III 
plan of practices, farmers and ranchers would receive up to $50,000 a 
year with access to a one-time advance payment of the greater of $3,000 
or 20 percent of the annual payment.
  Again, I emphasize, the Conservation Security Program would be 
totally voluntary. Farmers and ranchers would decide if they want to 
participate and to what extent they want to participate. The more 
conservation they do, the greater the payment. Many farmers are already 
using many of these practices, but they receive little or no financial 
support. This legislation changes that by rewarding those farmers and 
ranchers who have already implemented these practices through payments 
for maintaining them.
  In addition, the Conservation Security Act provides a strong 
incentive to go beyond the farm's current level of conservation. And it 
does so in a way that is compatible with our international trade 
obligations. The payments received under the Conservation Security 
Program would fit into the ``Green Box'' under the WTO Uruguay Round.

  Payments received under the Conservation Security Program are not 
linked to participation in commodity programs, and farmers don't have 
to participate in the Conservation Security Program to be eligible for 
commodity payments. Further, the Conservation Security Act, which 
focuses on land in production, complements and does not interfere with 
the existing conservation programs. A farmer or rancher may participate 
in these programs, including the Conservation Reserve Program, the 
Wetlands Reserve Program, and the Farmland Protection Program and still 
participate in the Conservation Security Program. We need to support 
these and the other conservation programs, but to truly benefit 
agriculture and address the public's desire to enhance the environment, 
natural resources and wildlife habitat on agricultural land we must 
also address conservation needs on land in production.
  Farmers and ranchers across our country want to take actions to 
enhance the environment, but they need financial and technical 
assistance. The Conservation Security Act provides that needed 
assistance. Further, the Conservation Security Act was crafted to 
include opportunities for all producers nationwide, including producers 
of fruits, vegetables, speciality crops, row crops and livestock to 
participate in the Conservation Security Program.
  Our private lands are a national treasure, and conservation on farm 
and ranchlands provides environmental benefits that are just as 
important as the production of abundant and safe food. The Conservation 
Security Act will help secure the economic future of our farmers and 
ranchers by providing them the means to increase their income while 
conserving our natural resources, the environment, and wildlife habitat 
for today and for future generations.
  I thank the Chair.
  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. 932

       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 ``Conservation Security Act of 
     2001''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) in addition to producing food and fiber, agricultural 
     producers can contribute to the public good by providing 
     improved soil productivity, clean air and water, fish and 
     wildlife habitat, landscape and recreational amenities, and 
     other natural resources and environmental benefits;
       (2) agricultural producers in the United States have a long 
     history of embracing environmentally friendly conservation 
     practices and desire to continue those practices and engage 
     in new and additional conservation practices;
       (3) agricultural producers that engage in conservation 
     practices--
       (A) may not receive economic rewards for implementing 
     conservation practices; and
       (B) should be encouraged to engage in good stewardship, and 
     should be rewarded for doing so;
       (4) despite significant progress in recent years, 
     significant environmental challenges on agricultural land 
     remain;
       (5) since the 1930's, when agricultural conservation became 
     a national priority, Federal resources for conservation 
     assistance have declined over 50 percent, when adjusted for 
     inflation;
       (6) existing conservation programs do not provide 
     opportunities for all interested agricultural producers to 
     participate;
       (7) a voluntary, incentive-based conservation program open 
     to all agricultural producers that qualify and desire to 
     participate would--
       (A) encourage greater improvement of natural resources and 
     the environment;
       (B) address the economic implications of conservation 
     practices in a manner consistent with international 
     obligations of the United States;
       (C) enable United States farmers and ranchers to produce 
     food for a growing world population; and
       (D) encourage conservation practices that provide a public 
     benefit while not infringing on the freedom of an 
     agricultural producer to manage agricultural operations as 
     the agricultural producer chooses;
       (8) total farm conservation planning can help producers 
     increase profitability, enhance resource protection, and 
     improve quality of life;
       (9) on-farm practices may help deter invasive species that 
     jeopardize native species or impair agricultural land of the 
     United States; and
       (10) a conservation program described in paragraph (7) 
     would help achieve a better

[[Page S5463]]

     balance between Federal payments supporting conservation on 
     land used for agricultural production and Federal payments 
     for the purpose of retiring agricultural land from 
     production.

     SEC. 3. CONSERVATION SECURITY PROGRAM.

       (a) In General.--Subtitle D of title XII of the Food 
     Security Act of 1985 (16 U.S.C. 3830 et seq.) is amended by 
     adding at the end the following:

               ``CHAPTER 6--CONSERVATION SECURITY PROGRAM

     ``SEC. 1240P. DEFINITIONS.

       ``In this chapter:
       ``(1) Conservation practice.--The term `conservation 
     practice' means a land-based farming technique that--
       ``(A) requires planning, implementation, management, and 
     maintenance; and
       ``(B) promotes 1 or more of the purposes described in 
     section 1240Q(a).
       ``(2) Conservation security contract.--The term 
     `conservation security contract' means a contract described 
     in section 1240Q(e).
       ``(3) Conservation security plan.--The term `conservation 
     security plan' means a plan described in section 1240Q(c).
       ``(4) Conservation security program.--The term 
     `conservation security program' means the program established 
     under section 1240Q(a).
       ``(5) Nutrient management.--The term `nutrient management' 
     means management of the quantity, source, placement, form, 
     and timing of the land application of nutrients on land 
     enrolled in the conservation security program and other 
     additions to soil--
       ``(A) to achieve or maintain adequate soil fertility for 
     agricultural production; and
       ``(B) to minimize the potential for loss of environmental 
     quality, including soil, water, fish and wildlife habitat, 
     and air quality impairment.
       ``(6) Resource of concern.--The term `resource of concern' 
     means a conservation priority of the State and locality under 
     section 1240Q(c)(3).
       ``(7) Resource-conserving crop.--The term `resource-
     conserving crop' means--
       ``(A) a perennial grass;
       ``(B) a legume grown for use as forage, seed for planting, 
     or green manure;
       ``(C) a legume-grass mixture;
       ``(D) a small grain grown in combination with a grass or 
     legume, whether interseeded or planted in succession; and
       ``(E) such other plantings, including trees and annual 
     grasses, as the Secretary considers appropriate for a 
     particular area.
       ``(8) Resource-conserving crop rotation.--The term 
     `resource-conserving crop rotation' means a crop rotation 
     that--
       ``(A) includes at least 1 resource-conserving crop;
       ``(B) reduces erosion;
       ``(C) improves soil fertility and tilth; and
       ``(D) interrupts pest cycles.
       ``(9) Resource management system.--The term `resource 
     management system' means a system of conservation practices 
     and management relating to land or water use that is designed 
     to prevent resource degradation and permit sustained use of 
     the land and water, as defined in the Natural Resource 
     Conservation Service technical guidance handbooks.

     ``SEC. 1240Q. CONSERVATION SECURITY PROGRAM.

       ``(a) In General.--The Secretary shall establish a 
     conservation security program to assist owners and operators 
     of agricultural operations to promote, as is applicable for 
     each operation--
       ``(1) conservation of soil, water, energy, and other 
     related resources;
       ``(2) soil quality protection and improvement;
       ``(3) water quality protection and improvement;
       ``(4) air quality protection and improvement;
       ``(5) soil, plant, or animal health and well-being;
       ``(6) diversity of flora and fauna;
       ``(7) on-farm conservation and regeneration of biological 
     resources, including plant and animal germplasm;
       ``(8) wetland restoration, conservation, and enhancement;
       ``(9) wildlife habitat management, with special emphasis on 
     species identified by the Natural Heritage Program of the 
     State;
       ``(10) reduction of greenhouse gas emissions and 
     enhancement of carbon sequestration;
       ``(11) systems that protect human health and safety;
       ``(12) environmentally sound management of invasive 
     species; or
       ``(13) any similar conservation purpose (as determined by 
     the Secretary).
       ``(b) Eligibility.--
       ``(1) Eligible owners and operators.--To be eligible to 
     participate in the conservation security program (other than 
     to receive technical assistance under subsection (h)(6) for 
     the development of conservation security contracts), an owner 
     or operator shall--
       ``(A) develop and submit to the Secretary, and obtain the 
     approval of the Secretary of, a conservation security plan 
     that meets the requirements of subsection (c)(1); and
       ``(B) enter into a conservation security contract with the 
     Secretary to carry out the conservation security plan.
       ``(2) Eligible land.--
       ``(A) In general.--Except as provided in subparagraph 
     (C)(iii), private agricultural land (including cropland, 
     rangeland, grassland, and pasture land) that is entirely used 
     as part of the agricultural operation of an owner or operator 
     on the date of enactment of this chapter shall be eligible 
     for enrollment in the conservation security program.
       ``(B) Forested land.--Private forested land shall be 
     eligible for enrollment in the conservation security program 
     if the forested land is integrated into the agricultural 
     operation, including land that is used for--
       ``(i) alleycropping;
       ``(ii) forest farming;
       ``(iii) forest buffers;
       ``(iv) windbreaks;
       ``(v) silvopasture systems; and
       ``(vi) such other uses as the Secretary may determine 
     appropriate.
       ``(C) Exclusions.--
       ``(i) Conservation reserve program.--Land enrolled in the 
     conservation reserve program under subchapter B of chapter I 
     shall not be eligible for enrollment in the conservation 
     security program except for land enrolled in partial field 
     conservation practice enrollment options.
       ``(ii) Wetlands reserve program.--Land enrolled in the 
     wetlands preserve program established under subchapter C of 
     chapter 1 of subtitle D shall not be eligible for enrollment 
     in the conservation security program.
       ``(iii) Tolerance level.--The Secretary shall promulgate 
     regulations to ensure that land shall not be eligible for 
     enrollment in the conservation security program if the land--

       ``(I) is initially used for the production of an 
     agricultural commodity after the date of enactment of this 
     chapter; and
       ``(II) cannot be used for the production of an agricultural 
     commodity without resulting in the loss of soil at a level 
     that exceeds the soil loss tolerance level.

       ``(c) Conservation Security Plans.--
       ``(1) In general.--A conservation security plan shall--
       ``(A) identify the resources and designated land to be 
     conserved under the conservation security plan;
       ``(B) describe the tier of conservation practices, and the 
     particular conservation practices to be implemented, 
     maintained, or improved, in accordance with subsection (d) on 
     the land covered by the conservation security contract for 
     the specified term;
       ``(C) contain a schedule for the implementation, 
     maintenance, or improvement of the conservation practices 
     described in the conservation security plan during the term 
     of the conservation security contract;
       ``(D) meet the requirements of the highly erodible land and 
     wetland conservation requirements of subtitles B and C; and
       ``(E) contain such other terms as the Secretary determines 
     to be appropriate.
       ``(2) Comprehensive planning.--The Secretary shall 
     encourage owners and operators that enter into conservation 
     security contracts--
       ``(A) to undertake a comprehensive examination of the 
     opportunities for conserving natural resources and improving 
     the profitability, environmental health, and quality of life 
     in relation to their entire agricultural operations;
       ``(B) to develop a long-term strategy for implementing, 
     monitoring, and evaluating conservation practices and 
     environmental results in the entire agricultural operation;
       ``(C) to participate in other Federal, State, local, or 
     private conservation programs;
       ``(D) to maintain the agricultural integrity of the land; 
     and
       ``(E) to adopt innovative conservation technologies and 
     management practices.
       ``(3) State and local conservation priorities.--To the 
     maximum extent practicable and in a manner consistent with 
     the conservation security program, each conservation security 
     plan shall address the conservation priorities of the State 
     and locality in which the agricultural operation is located 
     (as determined by the State conservationist in consultation 
     with the State technical committee established under subtitle 
     G and the local working groups of the State technical 
     committee).
       ``(d) Conservation Practices.--
       ``(1) In general.--
       ``(A) Establishment of tiers.--The Secretary shall 
     establish 3 tiers of conservation practices that are eligible 
     for payment under a conservation security contract.
       ``(B) Eligible conservation practices.--
       ``(i) In general.--The Secretary shall make eligible for 
     payment under a conservation security contract land 
     management, vegetative, and structural practices that--

       ``(I) are necessary to achieve the objectives of the 
     conservation security plan; and
       ``(II) primarily provide for and have as the primary 
     purpose resource protection and environmental improvement.

       ``(ii) Determination.--

       ``(I) In general.--In determining the eligibility of a 
     practice described in clause (i), the Secretary shall require 
     the lowest cost alternatives be used to fulfill the 
     objectives of the conservation security plan.
       ``(II) Limitation.--Notwithstanding subclause (I), the 
     adoption of innovative technologies shall, to the maximum 
     extent practicable, not be limited.

       ``(2) Sustainable economic uses.--With respect to land 
     enrolled in the conservation security program, including all 
     land use adjustment activities specified under Tier II, the 
     Secretary shall permit economic uses of the land that--
       ``(A) maintain the agricultural nature of land;
       ``(B) achieve the natural resource and environmental 
     benefits of the plan; and

[[Page S5464]]

       ``(C) are approved as part of the conservation security 
     plan.
       ``(3) On-farm research and demonstration.--With respect to 
     land enrolled in the conservation security program that will 
     be maintained using a Tier II or Tier III conservation 
     practice established under paragraph (5), the Secretary may 
     approve a conservation security plan that includes on-farm 
     research and demonstration activities, including innovative 
     approaches to--
       ``(A) total farm planning;
       ``(B) total resource management;
       ``(C) integrated farming systems;
       ``(D) germplasm conservation and regeneration;
       ``(E) greenhouse gas reduction and carbon sequestration;
       ``(F) agro-ecological restoration and wildlife habitat 
     restoration;
       ``(G) agro-forestry;
       ``(H) invasive species control;
       ``(I) energy conservation and management; or
       ``(J) farm and environmental results monitoring and 
     evaluation.
       ``(4) Use of handbook and guides.--
       ``(A) In general.--In determining eligible conservation 
     practices under the conservation security program, the 
     Secretary shall use the National Handbook of Conservation 
     Practices and the field office technical guides of the 
     Natural Resources Conservation Service.
       ``(B) Conservation practice standards.--To the maximum 
     extent practicable, the Secretary shall establish guidance 
     standards for implementation of eligible conservation 
     practices that shall include measurable goals for enhancing 
     and preventing degradation of resources.
       ``(C) Adjustments.--After providing notice and an 
     opportunity for public participation, the Secretary shall 
     make such adjustments to the National Handbook of 
     Conservation Practices as are necessary to carry out this 
     chapter.
       ``(D) Pilot testing.--
       ``(i) In general.--Under any of the 3 tiers of conservation 
     practices established under paragraph (5), the Secretary may 
     approve requests by an owner or operator for pilot testing of 
     new technologies and innovative conservation practices and 
     systems.
       ``(ii) Incorporation into standards.--After evaluation by 
     the Secretary and provision of notice and an opportunity for 
     public participation, the Secretary may incorporate new 
     technologies and innovative conservation practices and 
     systems into the standards for implementation of conservation 
     practices established under paragraph (1)(C).
       ``(5) Tiers.--To carry out this subsection, the Secretary 
     shall establish the following 3 tiers of conservation 
     practices:
       ``(A) Tier i.--
       ``(i) In general.--A conservation security plan for land 
     enrolled in the conservation security program that will be 
     maintained using Tier I conservation practices shall--

       ``(I) if applicable, address at least 1 resource of concern 
     to the particular agricultural operation;
       ``(II) apply to the total agricultural operation or to a 
     particular unit of the agricultural operation;
       ``(III) cover both--

       ``(aa) conservation practices that are being implemented as 
     of the date on which the conservation security contract is 
     entered into; and
       ``(bb) conservation practices that are newly implemented 
     under the conservation security contract; and

       ``(IV) meet applicable standards for implementation of 
     conservation practices established under paragraph (4);

       ``(ii) Conservation practices.--Tier I conservation 
     practices shall consist of, as appropriate for the 
     agricultural operation of an owner or operator, 1 or more of 
     the following basic conservation activities:

       ``(I) Soil conservation, quality, and residue management.
       ``(II) Nutrient management.
       ``(III) Pest management.
       ``(IV) Invasive species management.
       ``(V) Irrigation water conservation and water quality 
     management.
       ``(VI) Grazing, pasture, and rangeland management.
       ``(VII) Fish and wildlife habitat management, with special 
     emphasis on species identified by the Natural Heritage 
     Program of the State or the appropriate State agency.
       ``(VIII) Fish and wildlife protection and enhancement.
       ``(IX) Air quality management.
       ``(X) Energy conservation measures.
       ``(XI) Biological resource conservation and regeneration.
       ``(XII) Worker health and safety protection measures.
       ``(XIII) Animal welfare management.
       ``(XIV) Plant and animal germplasm conservation, 
     evaluation, and development.
       ``(XV) Contour farming.
       ``(XVI) Strip cropping.
       ``(XVII) Cover cropping.
       ``(XVIII) Sediment dams.
       ``(XIX) Recordkeeping.
       ``(XX) Monitoring and evaluation.
       ``(XXI) Any other conservation practice that the Secretary 
     determines to be appropriate and comparable to other 
     conservation practices described in this clause.

       ``(iii) Tier ii practices.--A conservation security plan 
     for land enrolled in the conservation security program that 
     will be maintained using Tier I conservation practices may 
     include Tier II conservation practices.
       ``(B) Tier ii.--
       ``(i) In general.--A conservation security plan for land 
     enrolled in the conservation security program that will be 
     maintained using Tier II conservation practices shall--

       ``(I) address at least 1 resource of concern as specified 
     in the conservation security plan covering the total 
     agricultural operation;
       ``(II) cover both--

       ``(aa) conservation practices that are being implemented as 
     of the date on which the conservation security contract is 
     entered into; and
       ``(bb) conservation practices that are newly implemented 
     under the conservation security contract; and

       ``(III) meet applicable resource management system criteria 
     for the chosen resource of concern of the agricultural 
     operation;

       ``(ii) Conservation practices.--Tier II conservation 
     practices shall consist of, as appropriate for the 
     agricultural operation of an owner or operator, any of the 
     Tier I conservation practices and 1 or more of the following 
     land use adjustment or protection practices:

       ``(I) Resource-conserving crop rotations.
       ``(II) Controlled, rotational grazing.
       ``(III) Conversion of portions of cropland from a soil-
     depleting use to a soil-conserving use, including production 
     of cover crops.
       ``(IV) Partial field conservation practices (including 
     windbreaks, grass waterways, shelter belts, filter strips, 
     riparian buffers, wetland buffers, contour buffer strips, 
     living snow fences, crosswind trap strips, field borders, 
     grass terraces, wildlife corridors, and critical area 
     planting appropriate to the agricultural operation).
       ``(V) Fish and wildlife habitat protection and restoration.
       ``(VI) Native grassland and prairie protection and 
     restoration.
       ``(VII) Wetland protection and restoration.
       ``(VIII) Agroforestry practices and systems.
       ``(IX) Any other conservation practice involving 
     modification of the use of land that the Secretary determines 
     to be appropriate and comparable to other conservation 
     practices described in this clause.

       ``(C) Tier iii.--
       ``(i) In general.--A conservation security plan for land 
     enrolled in the conservation security program that will be 
     maintained using Tier III conservation practices shall--

       ``(I) address all resources of concern in the total 
     agricultural operation;
       ``(II) cover both--

       ``(aa) conservation practices that are being implemented as 
     of the date on which the conservation security contract is 
     entered into; and
       ``(bb) conservation practices that are newly implemented 
     under the conservation security contract; and

       ``(III) meet applicable resource management system 
     criteria;

       ``(ii) Conservation practices.--Tier III conservation 
     practices shall consist of, as appropriate for the 
     agricultural operation of an owner or operator--

       ``(I) appropriate Tier I and Tier II conservation 
     practices; and
       ``(II) development, implementation, and maintenance of a 
     conservation security plan that, over the term of the 
     conservation security contract--

       ``(aa) integrates a full complement of conservation 
     practices to foster environmental enhancement and the long-
     term sustainability of the natural resource base of an 
     agricultural operation; and
       ``(bb) improves profitability and quality of life 
     associated with the agricultural operation.
       ``(e) Conservation Security Contracts.--
       ``(1) In general.--On approval of a conservation security 
     plan of an owner or operator, the Secretary shall enter into 
     a conservation security contract with the owner or operator 
     to enroll the land covered by the conservation security plan 
     in the conservation security program.
       ``(2) Term.--Subject to paragraphs (3) and (4)--
       ``(A) a conservation security contract for land enrolled in 
     the conservation security program that will be maintained 
     using 1 or more Tier I conservation practices shall have a 
     term of 5 years; and
       ``(B) a conservation security contract for land enrolled in 
     the conservation security program that implements a 
     conservation security plan that meets the requirements of 
     subparagraph (B) or (C) of subsection (d)(5) shall have a 
     term of 5 to 10 years, at the option of the owner or 
     operator.
       ``(3) Modifications.--
       ``(A) Optional modifications.--
       ``(i) In general.--An owner or operator may apply to the 
     Secretary to modify the conservation security plan in a 
     manner consistent with the purposes of the conservation 
     security program.
       ``(ii) Approval by the secretary.--Any modification under 
     clause (i)--

       ``(I) shall be approved by the Secretary; and
       ``(II) shall authorize the Secretary to redetermine, if 
     necessary, the amount and timing of the payments pursuant to 
     the conservation security contract under subsection 
     (h)(2)(C).

       ``(B) Other modifications.--
       ``(i) In general.--The Secretary may in writing require an 
     owner or operator to modify a conservation security contract 
     before the expiration of the conservation security contract 
     if the Secretary determines that a change made to the type, 
     size, management,

[[Page S5465]]

     or other aspect of the agricultural operation of the owner or 
     operator would, without the modification, significantly 
     interfere with achieving the purposes of the conservation 
     security program.
       ``(ii) Payments.--The Secretary may adjust the amount and 
     timing of the payment schedule under the conservation 
     security contract to reflect any modifications required under 
     this subparagraph.
       ``(iii) Deadline.--The Secretary may terminate a 
     conservation security contract if a modification required 
     under this subparagraph is not submitted to the Secretary in 
     the form of an amended conservation security contract by the 
     date that is 90 days after the date of receipt of the written 
     request for the modification.
       ``(iv) Termination.--An owner or operator that is required 
     to modify a conservation security contract under this 
     subparagraph may, in lieu of modifying the contract--

       ``(I) terminate the conservation security contract; and
       ``(II) retain payments received under the conservation 
     security contract, if the owner or operator fully complied 
     with the obligations of the owner or operator under the 
     conservation security contract.

       ``(4) Renewal.--
       ``(A) In general.--At the option of an owner or operator, 
     the conservation security contract of the owner or operator 
     may be renewed, for a term described in subparagraph (B), 
     if--
       ``(i) the owner or operator agrees to any modification of 
     the applicable conservation security contract that the 
     Secretary determines to be necessary to achieve the purposes 
     of the conservation security program;
       ``(ii) the Secretary determines that the owner or operator 
     has complied with the terms and conditions of the 
     conservation security contract, including the conservation 
     security plan; and
       ``(iii) in the case of a conservation security contract for 
     land previously enrolled at the tier I level in the 
     conservation security program, the owner or operator shall 
     increase the level of conservation treatment on lands 
     enrolled in the conservation security program by--

       ``(I) adopting new conservation practices; or
       ``(II)expanding existing practices to meet the resource 
     management systems criteria.

       ``(B) Terms of renewal.--Under subparagraph (A)--
       ``(i) a conservation security contract for land enrolled in 
     the conservation security program that will be maintained 
     using a Tier I conservation practice may be renewed for 5-
     year terms;
       ``(ii) a conservation security contract for land enrolled 
     in the conservation security program that will be maintained 
     using a Tier II or Tier III conservation practice may be 
     renewed for 5-year to 10-year terms, at the option of the 
     owner or operator; and
       ``(iii) previous participation in the conservation security 
     program does not bar renewal more than once.
       ``(f) No Violation for Noncompliance Due to Circumstances 
     Beyond the Control of the Owner or Operator.--The Secretary 
     shall include in the conservation security contract a 
     provision, and may modify a conservation security contract 
     under subsection (e)(3)(B), to ensure that an owner or 
     operator shall not be considered in violation of a 
     conservation security contract for failure to comply with the 
     conservation security contract due to circumstances beyond 
     the control of the owner or operator, including a disaster or 
     related condition.
       ``(g) Duties of Owners and Operators.--Under a conservation 
     security contract, an owner or operator shall agree, during 
     the term specified under the conservation security contract--
       ``(1) to implement the applicable conservation security 
     plan approved by the Secretary;
       ``(2) to keep appropriate records showing the effective and 
     timely implementation of the conservation security plan;
       ``(3) not to engage in any activity that would interfere 
     with the purposes of the conservation security plan;
       ``(4) at the option of the Secretary, to refund all or a 
     portion of the payments to the Secretary if the owner or 
     operator fails to maintain a conservation practice, as 
     specified in the conservation security contract; and
       ``(5) on the violation of a term or condition of the 
     conservation security contract--
       ``(A) if the Secretary determines that the violation 
     warrants termination of the conservation security contract--
       ``(i) to forfeit all rights to receive payments under the 
     conservation security contract; and
       ``(ii) to refund to the Secretary all or a portion of the 
     payments received by the owner or operator under the 
     conservation security contract, including an advance payment 
     and interest on the payments, as determined by the Secretary; 
     or
       ``(B) if the Secretary determines that the violation does 
     not warrant termination of the conservation security 
     contract, to refund to the Secretary, or accept adjustments 
     to, the payments provided to the owner or operator, as the 
     Secretary determines to be appropriate.
       ``(h) Duties of the Secretary.--
       ``(1) Advance payment.--At the time at which a person 
     enters into a conservation security contract, the Secretary 
     shall make an advance payment to the person in an amount not 
     to exceed--
       ``(A) in the case of a contract to maintain Tier I 
     conservation practices described in subsection (d)(5)(A), the 
     greater of--
       ``(i) $1,000; or
       ``(ii) 20 percent of the value of the annual payment under 
     the contract, as determined by the Secretary;
       ``(B) in the case of a contract to maintain Tier II 
     conservation practices described in subsection (d)(5)(B), the 
     greater of--
       ``(i) $2,000; or
       ``(ii) 20 percent of the value of the annual payment under 
     the contract, as determined by the Secretary; or
       ``(C) in the case of a contract to maintain Tier III 
     conservation practices described in subsection (d)(5)(C), the 
     greater of--
       ``(i) $3,000; or
       ``(ii) 20 percent of the value of the annual payment under 
     the contract, as determined by the Secretary.
       ``(2) Annual payments.--
       ``(A) In general.--Subject to subparagraphs (B) through 
     (F), under a conservation security contract, the Secretary 
     shall, in amounts and for a period of years specified in the 
     conservation security contract and taking into account any 
     advance payments, make an annual payment to the person in an 
     amount not to exceed--
       ``(i) in the case of a contract to maintain Tier I 
     conservation practices described in subsection (d)(5)(A), 
     $20,000;
       ``(ii) in the case of a contract to maintain Tier II 
     conservation practices described in subsection (d)(5)(B), 
     $35,000; or
       ``(iii) in the case of a contract to maintain Tier III 
     conservation practices described in subsection (d)(5)(C), 
     $50,000.
       ``(B) Inflation adjustment.--The Secretary may 
     periodically, including at the time at which a conservation 
     security contract is renewed, adjust the payment and payment 
     limitations under subparagraph (A) to reflect changes in the 
     Prices Paid by Farmers Index.
       ``(C) Time of payment.--The Secretary shall provide payment 
     under a conservation security contract as soon as practicable 
     after October 1 of each calendar year.
       ``(D) Criteria for determining amount of payments.--Subject 
     to subparagraphs (A) and (F), the Secretary shall establish 
     criteria for determining the amount of an annual payment to a 
     person under this paragraph that--
       ``(i) shall be as objective and transparent as practicable; 
     and
       ``(ii) shall be based on--

       ``(I) to the maximum extent practicable, outcome-based 
     factors related to the natural resource and environmental 
     benefits that result from the adoption, maintenance, and 
     improvement in implementation of the conservation practices 
     carried out by the person;
       ``(II) practice-based factors, including--

       ``(aa) the number of eligible practices established or 
     maintained;
       ``(bb) the schedule for the conservation practices 
     described in subsection (c)(1)(C);
       ``(cc) the cost of the adoption, maintenance, and 
     improvement in implementation of conservation practices that 
     are newly implemented under the conservation security 
     contract;
       ``(dd) the extent to which compensation will ensure 
     maintenance and improvement of conservation practices that 
     are or have been implemented;
       ``(ee) the extent to which the conservation security plan 
     meets applicable resource management system standards;
       ``(ff) the extent to which the conservation security plan 
     addresses State and local conservation priorities as provided 
     for under subsection (c)(3); and
       ``(gg) the extent of activities undertaken beyond what is 
     required to comply with any applicable Federal agricultural 
     law;

       ``(III) additional cost factors, including--

       ``(aa) the income loss or economic value forgone by the 
     person due to land use adjustments resulting from the 
     adoption, maintenance, and improvement of conservation 
     practices;
       ``(bb) the costs associated with any on-farm research, 
     demonstration, or pilot testing components of the 
     conservation security plan; and
       ``(cc) the costs associated with monitoring and evaluating 
     results under the conservation security plan; and

       ``(IV) such other factors as the Secretary determines to be 
     appropriate to encourage participation in the conservation 
     security program and to reward environmental stewardship.

       ``(E) Bonus payment.--Subject to subparagraph (A), the 
     Secretary shall offer bonus payments based on--
       ``(i) participation in a watershed or regional resource 
     conservation plan involving at least 75 percent of landowners 
     in the targeted area; and
       ``(ii) the special considerations associated with an owner 
     or operator that is a qualified beginning farmer or rancher 
     (as defined in section 343(a) of the Consolidated Farm and 
     Rural Development Act (7 U.S.C. 1991(a))).
       ``(F) Land enrolled in other conservation programs.--
       ``(i) In general.--Notwithstanding any other provision of 
     law, if an owner or operator has land enrolled in another 
     conservation program administered by the Secretary and has 
     applied to enroll the same land in the conservation security 
     program, the owner or operator may elect to--

       ``(I) convert the contract under the other conservation 
     program to a conservation security contract, without penalty, 
     except

[[Page S5466]]

     that this subclause shall not apply to a long-term permanent 
     conservation or easement; or
       ``(II) have each annual payment to the owner or operator 
     under this paragraph reduced to reflect payment for practices 
     the owner or operator receives under the other conservation 
     program, except that the annual payment under this paragraph 
     may include incentives for qualified practices that enhance 
     or extend the conservation benefit achieved under the other 
     conservation program.

       ``(ii) Payment limitations.--If an owner or operator has 
     identical land enrolled in the conservation security program 
     and 1 or more other conservation programs administered by the 
     Secretary, the Secretary shall include all payments, other 
     than easement or rental payments, from the conservation 
     security program and the other conservation programs in 
     applying the annual payment limitations under subparagraph 
     (A).
       ``(iii) Payment from non-federal agricultural programs.--
     Payments received from a Federal program administered by the 
     Secretary, or any State, local, or private agricultural 
     program, shall not be considered an annual payment for 
     purposes of the annual payment limitations under subparagraph 
     (A).
       ``(G) Waste storage or treatment facilities.--An annual 
     payment to an owner or operator under this paragraph shall 
     not be provided for the purpose of construction or 
     maintenance of animal waste storage or treatment facilities 
     or associated waste transport or transfer devices for animal 
     feeding operations.
       ``(3) Regulations.--
       ``(A) In general.--The Secretary shall issue regulations--
       ``(i) defining the term `person' for the purposes of this 
     chapter--

       ``(I) which regulations shall conform, to the extent 
     practicable, to the regulations defining the term `person' 
     issued under section 1001; and
       ``(II) which term shall be defined so that no individual 
     directly or indirectly may receive payments exceeding the 
     applicable amount specified in paragraph (1) or (2);

       ``(ii) providing adequate safeguards to protect the 
     interests of tenants and sharecroppers, including provision 
     for sharing, on a fair and equitable basis; and
       ``(iii) prescribing such other rules as the Secretary 
     determines to be necessary to ensure a fair and reasonable 
     application of the limitations established under paragraphs 
     (1) and (2).
       ``(B) Penalties for schemes or devices.--
       ``(i) In general.--If the Secretary determines that a 
     person has adopted a scheme or device to evade, or that has 
     the purpose of evading, the regulations issued under 
     subparagraph (A), the person shall be ineligible to 
     participate in the conservation security program for the year 
     for which the scheme or device was adopted and each of the 
     following 5 years.
       ``(ii) Fraud.--If the Secretary determines that fraud was 
     committed in connection with the scheme or device, the person 
     shall be ineligible to participate in the conservation 
     security program for the year for which the scheme or device 
     was adopted and each of the following 10 years.
       ``(4) Termination.--
       ``(A) In general.--Subject to subsection (g), the Secretary 
     shall allow an owner or operator to terminate the 
     conservation security contract.
       ``(B) Payments.--The owner or operator may retain any or 
     all payments received under a terminated conservation 
     security contract if--
       ``(i) the owner or operator is in full compliance with the 
     terms and conditions, including any maintenance requirements, 
     of the conservation security contract; and
       ``(ii) the Secretary determines that retention of payment 
     will not defeat the goals enumerated in the conservation 
     security plan of the owner or operator.
       ``(5) Transfer or change of interest in land subject to 
     conservation security contract.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the transfer, or change in the interest, of an owner or 
     operator in land subject to a conservation security contract 
     shall result in the termination of the conservation security 
     contract.
       ``(B) Transfer of duties and rights.--Subparagraph (A) 
     shall not apply if, not later than 60 days after the date of 
     the transfer or change in the interest in land, the 
     transferee of the land provides written notice to the 
     Secretary that all duties and rights under the conservation 
     security contract have been transferred to the transferee.
       ``(6) Technical assistance.--
       ``(A) In general.--For each fiscal year, the Secretary 
     shall use such sums as are necessary from funds of the 
     Commodity Credit Corporation to provide technical assistance 
     to owners and operators for the development and 
     implementation of conservation security contracts.
       ``(B) Technical assistance provided by persons not employed 
     by the department of agriculture.--
       ``(i) In general.--Under subparagraph (A), subject to 
     clause (ii), technical assistance provided by qualified 
     persons not employed by the Department of Agriculture, 
     including farmers, ranchers, and local conservation district 
     personnel, may include--

       ``(I) conservation planning;
       ``(II) design, installation, and certification of 
     conservation practices;
       ``(III) training for producers; and
       ``(IV) such other activities as the Secretary determines to 
     be appropriate.

       ``(ii) Outside assistance.--

       ``(I) In general.--The Secretary may contract directly with 
     qualified persons not employed by the Department of 
     Agriculture to provide technical assistance.
       ``(II) Payment by secretary.--The Secretary may provide a 
     payment or voucher to an owner or operator enrolled in the 
     conservation security program if the owner or operator 
     chooses to contract with qualified persons not employed by 
     the Department of Agriculture.

       ``(iii) Coordination by the secretary.--The Secretary shall 
     provide overall technical coordination and leadership for the 
     conservation security program, including final approval of 
     all conservation security plans.
       ``(7) Education, outreach, monitoring, and evaluation.--
       ``(A) In general.--
       ``(i) Funding.--In addition to the amounts made available 
     under paragraph (6), for each fiscal year, the Secretary 
     shall use such sums as are necessary from funds of the 
     Commodity Credit Corporation to carry out education, 
     outreach, monitoring, and evaluation activities in support of 
     the conservation security program, of which not less than 50 
     percent of the sums shall be used for monitoring and 
     evaluation activities.
       ``(ii) Amount.--For each fiscal year, the amount made 
     available under clause (i) shall be not less than 40 percent 
     of the amount made available for technical assistance under 
     paragraph (6) for the fiscal year.
       ``(B) Use of persons not affiliated with department of 
     agriculture.--
       ``(i) In general.--In carrying out activities described in 
     subparagraph (A), the Secretary may use persons not employed 
     by the Department of Agriculture, including networks of 
     agricultural producers operating in a small watershed, local 
     conservation district personnel, or other appropriate local 
     entity.
       ``(ii) Education, outreach, and monitoring.--The Secretary 
     may contract with private non-profit, community-based 
     organizations, and educational institutions with demonstrated 
     experience in providing education, outreach, monitoring, 
     evaluation, or related services to agricultural producers 
     (including owners and operators of small and medium-size 
     farms, socially disadvantaged agricultural producers, and 
     limited resource agricultural producers).
       ``(C) Included activities.--Activities described in 
     subparagraph (A) may include innovative uses of computer 
     technology and remote sensing to monitor and evaluate 
     resource and environmental results on a local, regional, or 
     national level.
       ``(8) Socially disadvantaged and limited resource owners 
     and operators.--The Secretary shall provide outreach, 
     training, and technical assistance specifically to encourage 
     and assist socially disadvantaged owners and operators to 
     participate in the conservation security program.
       ``(9) Program evaluation.--The Secretary shall maintain 
     data concerning conservation security plans, conservation 
     practices planned or implemented, environmental outcomes, 
     economic costs, and related matters under this section.
       ``(10) Confidentiality.--To maintain confidentiality, the 
     Secretary shall not release or disclose publicly the 
     conservation security plan of an owner or operator under this 
     chapter unless the Secretary--
       ``(A) obtains the authorization of the owner or operator 
     for the release or disclosure;
       ``(B) releases the information in an anonymous or 
     aggregated form; or
       ``(C)(i) is otherwise required by law to release or 
     disclose the plan and;
       ``(ii) releases the plan in an anonymous or aggregated 
     form.
       ``(11) Mediation and informal hearings.--If the Secretary 
     makes a decision under this chapter that is adverse to an 
     owner or operator, at the request of the owner or operator, 
     the Secretary shall provide the owner or operator with 
     mediation services or an informal hearing on the decision.
       ``(i) Reports.--Not later than 18 months after the date of 
     enactment of this chapter and at the end of each 2-year 
     period thereafter, the Secretary shall submit to Congress a 
     report evaluating the results of the conservation security 
     program, including--
       ``(1) an evaluation of the scope, quality, and outcomes of 
     the conservation practices carried out under this section; 
     and
       ``(2) recommendations for achieving specific and 
     quantifiable improvements for each of the purposes specified 
     in subsection (a).
       ``(j) Funding.--Of the funds of the Commodity Credit 
     Corporation, the Corporation shall make available to carry 
     out this chapter such sums as are necessary, to remain 
     available until expended.
       ``(k) Exemption From Automatic Sequester.--Notwithstanding 
     any other provision of law, no order issued for any fiscal 
     year under section 252 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 (2 U.S.C. 902) shall affect any 
     payment under this chapter.''.
       (b) Administration.--Section 1243(a) of the Food Security 
     Act of 1985 (16 U.S.C. 3843(a)) is amended--
       (1) in paragraph (1)(C), by striking ``and'' at the end;
       (2) in paragraph (2), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:

[[Page S5467]]

       ``(3) the conservation security program established under 
     chapter 6 of subtitle D.''.
       (c) State Technical Committees.--Section 1262(c)(8) of the 
     Food Security Act of 1985 (16 U.S.C. 3862(c)(8)) is amended 
     by striking ``chapter 4'' and inserting ``chapters 4 and 6''.

     SEC. 4. REGULATIONS.

       The Secretary of Agriculture shall promulgate such 
     regulations as are necessary to carry out this Act and the 
     amendments made by this Act.
                                 1_____
                                 
      By Mr. JEFFORDS (for himself, Mrs. Clinton, Mr. Leahy, Mr. 
        Lieberman, and Mr. Schumer):
  S. 933. A bill to amend the Federal Power Act to encourage the 
development and deployment of innovative and efficient energy 
technologies; to the Committee on Energy and Natural Resources.
  Mr. JEFFORDS. Mr. President, I rise today to introduce, with Senators 
Clinton, Leahy, Lieberman, and Schumer, the Combined Heat and Power 
Advancement Act of 2001. This legislation ensures that highly efficient 
sources of electricity, such as combined heat and power systems, are 
able to interconnect nationwide with the electricity grid by 
establishing uniform and nondiscriminatory interconnection standards. 
Enabling these innovative, clean, and efficient technologies to come 
online will reduce energy costs and help protect public health and the 
environment.
  Last week, President bush released the National Energy Policy 
Development Group's comprehensive energy plan. I am pleased this plan 
includes recommendations related to increasing energy conservation and 
efficiency. Specially, the plan recommends the development of well-
designed combined heat and power, CHP, systems.
  I am heartened that President Bush recognizes the positive impact 
that CHP systems can have on our nation's energy needs. These 
innovative systems produce both electricity and steam from a single 
fuel source in a facility located near the consumer. By recovering and 
utilizing waste heat, these systems save fuel that would otherwise be 
needed to produce heat or steam in a separate unit. CHP systems can 
reach energy efficiency levels in excess of 80 percent. This is well 
above the 33 percent average for conventional electrical generation 
technologies. In short, the U.S. can obtain more than twice the power 
from the same amount of energy by widely implementing combined heat and 
power technologies and applications.
  Unfortunately, several regulatory and policy barriers block the 
widespread use of these innovative technologies. The bill would ensure 
that CHP systems and other innovative technologies can interconnect 
with a local distribution utility and that the costs of such 
interconnections shall be just reasonable, and not unduly 
discriminatory.
  Currently, there are roughly 50 Gigawatts, GW, of energy produced 
from CHP systems annually. If this barrier is removed, 50 GW of 
additional CHP electrical generating capacity could be brought to 
market by 2010. To illustrate the magnitude of potential savings to the 
entire nation, the result of this additional capacity is equal to all 
the energy needed to power Massachusetts. Most of these systems are 
targeted for industry, where thermal and electrical needs are most 
often located close together. However, there is also tremendous 
potential for CHP in homes. Fifty GW of CHP could light and heat 50 
million homes, or 43 percent of all U.S. homes, for the same energy 
that the central station plans could only light the homes. With removal 
of regulatory barriers, these efficient systems may begin to be 
economical at the small sizes suitable for homes.
  We cannot solve today's energy problems with yesterday's solutions. 
CHP represents an innovative approach to expanding energy supply by 
maximizing energy efficiency. These systems will encourage 
technological innovations, reduce energy prices, spur economic 
development, enhance productivity, increase employment, improve 
environmental quality, and advance energy security and reliability in 
the United States.
  I invite my colleagues to join me in my efforts to promote combined 
heat and power by co-sponsoring this important legislation. I ask that 
the text of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 933

       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 ``Combined Heat and Power 
     Advancement Act of 2001''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) the removal of barriers to the development and 
     deployment of combined heat and power technologies and 
     systems, an example of an array of innovative energy-supply 
     and energy-efficient technologies and systems, would--
       (A) encourage technological innovation;
       (B) reduce energy prices;
       (C) spur economic development;
       (D) enhance productivity;
       (E) increase employment; and
       (F) improve environmental quality and energy self-
     sufficiency;
       (2) the level of efficiency of the United States 
     electricity-generating system has been stagnant over the past 
     several decades;
       (3) technologies and systems available as of the date of 
     enactment of this Act, including a host of innovative onsite, 
     distributed generation technologies, could--
       (A) dramatically increase productivity;
       (B) double the efficiency of the United States electricity-
     generating system; and
       (C) reduce emissions of regulated pollutants and greenhouse 
     gases;
       (4) innovative electric technologies emit a much lower 
     level of pollutants as compared to the average quantity of 
     pollutants generated by United States electric generating 
     plants as of the date of enactment of this Act;
       (5) a significant proportion of the United States energy 
     infrastructure will need to be replaced by 2010;
       (6) the public interest would best be served if that 
     infrastructure were replaced by innovative technologies that 
     dramatically increase productivity, improve efficiency, and 
     reduce pollution;
       (7) financing and regulatory practices in effect as of the 
     date of enactment of this Act do not recognize the 
     environmental and economic benefits to be obtained from the 
     avoidance of transmission and distribution losses, and the 
     reduced load on the electricity-generating system, provided 
     by onsite, combined heat and power production;
       (8) many legal, regulatory, informational, and perceptual 
     barriers block the development and dissemination of combined 
     heat and power and other innovative energy technologies; and
       (9) because of those barriers, United States taxpayers are 
     not receiving the benefits of the substantial research and 
     development investment in innovative energy technologies made 
     by the Federal Government.

     SEC. 3. PURPOSE.

       The purpose of this Act is to encourage energy productivity 
     and efficiency increases by removing barriers to the 
     development and deployment of combined heat and power 
     technologies and systems.

     SEC. 4. INTERCONNECTION.

       (a) Definitions.--Section 3 of the Federal Power Act (16 
     U.S.C. 796) is amended--
       (1) by striking paragraph (23) and inserting the following:
       ``(23) Transmitting utility.--The term `transmitting 
     utility' means any entity (notwithstanding section 201(f)) 
     that owns, controls, or operates an electric power 
     transmission facility that is used for the sale of electric 
     energy.''; and
       (2) by adding at the end the following:
       ``(26) Appropriate regulatory authority.--The term 
     `appropriate regulatory authority' means--
       ``(A) the Commission;
       ``(B) a State commission;
       ``(C) a municipality; or
       ``(D) a cooperative that is self-regulating under State law 
     and is not a public utility.
       ``(27) Generating facility.--The term `generating facility' 
     means a facility that generates electric energy.
       ``(28) Local distribution utility.--The term `local 
     distribution utility' means an entity that owns, controls, or 
     operates an electric power distribution facility that is used 
     for the sale of electric energy.
       ``(29) Non-federal regulatory authority.--The term `non-
     Federal regulatory authority' means an appropriate regulatory 
     authority other than the Commission.''.
       (b) Interconnection to Distribution Facilities.--Section 
     210 of the Federal Power Act (16 U.S.C. 824i) is amended--
       (1) by redesignating subsection (e) as subsection (g); and
       (2) by inserting after subsection (d) the following:
       ``(e) Interconnection to Distribution Facilities.--
       ``(1) Interconnection.--
       ``(A) In general.--A local distribution utility shall 
     interconnect a generating facility with the distribution 
     facilities of the local distribution utility if the owner of 
     the generating facility--
       ``(i) complies with the final rule promulgated under 
     paragraph (2); and
       ``(ii) pays the costs of the interconnection.
       ``(B) Costs.--The costs of the interconnection--
       ``(i) shall be just and reasonable, and not unduly 
     discriminatory, as determined by the appropriate regulatory 
     authority; and
       ``(ii) shall be comparable to the costs charged by the 
     local distribution utility for interconnection by any 
     similarly situated

[[Page S5468]]

     generating facility to the distribution facilities of the 
     local distribution utility.
       ``(C) Applicable requirements.--The right of a generating 
     facility to interconnect under subparagraph (A) does not--
       ``(i) relieve the generating facility or the local 
     distribution utility of other Federal, State, or local 
     requirements; or
       ``(ii) provide the generating facility with transmission or 
     distribution service.
       ``(2) Rule.--
       ``(A) In general.--Not later than 1 year after the date of 
     enactment of this subparagraph, the Commission shall 
     promulgate a final rule to establish reasonable and 
     appropriate technical standards for the interconnection of a 
     generating facility with the distribution facilities of a 
     local distribution utility.
       ``(B) Process.--To the extent feasible, the Commission 
     shall develop the standards through a process involving 
     interested parties.
       ``(C) Advisory committee.--The Commission shall establish 
     an advisory committee composed of qualified experts to make 
     recommendations to the Commission concerning development of 
     the standards.
       ``(D) Administration.--
       ``(i) By a non-federal regulatory authority.--Except where 
     subject to the jurisdiction of the Commission pursuant to 
     provisions other than clause (ii), a non-Federal regulatory 
     authority may administer and enforce the rule promulgated 
     under subparagraph (A).
       ``(ii) By the commission.--To the extent that a non-Federal 
     regulatory authority does not administer and enforce the 
     rule, the Commission shall administer and enforce the rule 
     with respect to interconnection in that jurisdiction.
       ``(3) Right to backup power.--
       ``(A) In general.--In accordance with subparagraph (B), a 
     local distribution utility shall offer to sell backup power 
     to a generating facility that has interconnected with the 
     local distribution utility to the extent that the local 
     distribution utility--
       ``(i) is not subject to an order of a non-Federal 
     regulatory authority to provide open access to the 
     distribution facilities of the local distribution utility;
       ``(ii) has not offered to provide open access to the 
     distribution facilities of the local distribution utility; or
       ``(iii) does not allow a generating facility to purchase 
     backup power from another entity using the distribution 
     facilities of the local distribution utility.
       ``(B) Rates, terms, and conditions.--A sale of backup power 
     under subparagraph (A) shall be at such a rate, and under 
     such terms and conditions, as are just and reasonable and not 
     unduly discriminatory or preferential, taking into account 
     the actual incremental cost, whenever incurred by the local 
     distribution utility, to supply such backup power service 
     during the period in which the backup power service is 
     provided, as determined by the appropriate regulatory 
     authority.
       ``(C) No requirement for certain sales.--A local 
     distribution utility shall not be required to offer backup 
     power for resale to any entity other than the entity for 
     which the backup power is purchased.
       ``(D) New or expanded loads.--To the extent backup power is 
     used to serve a new or expanded load on the distribution 
     system, the generating facility shall pay any reasonable 
     costs associated with any transmission, distribution, or 
     generation upgrade required to provide such service.''.
       (c) Interconnection to Transmission Facilities.--Section 
     210 of the Federal Power Act (16 U.S.C. 824i) is amended by 
     inserting after subsection (e) (as added by subsection (b)) 
     the following:
       ``(f) Interconnection to Transmission Facilities.--
       ``(1) Interconnection.--
       ``(A) In general.--Notwithstanding subsections (a) and (c), 
     a transmitting utility shall interconnect a generating 
     facility with the transmission facilities of the transmitting 
     utility if the owner of the generating facility--
       ``(i) complies with the final rule promulgated under 
     paragraph (2); and
       ``(ii) pays the costs of the interconnection.
       ``(B) Costs.--
       ``(i) In general.--Subject to clause (ii), the costs of the 
     interconnection--

       ``(I) shall be just and reasonable and not unduly 
     discriminatory; and
       ``(II) shall be comparable to the costs charged by the 
     transmitting utility for interconnection by any similarly 
     situated generating facility to the transmitting facilities 
     of the transmitting utility.

       ``(ii) Effect of ferc lite.--A non-Federal regulatory 
     authority that, under any provision of Federal law enacted 
     before, on, or after the date of enactment of this 
     subparagraph, is authorized to determine the rates for 
     transmission service shall be authorized to determine the 
     costs of any interconnection under this subparagraph in 
     accordance with that provision of Federal law.
       ``(C) Applicable requirements.--The right of a generating 
     facility to interconnect under subparagraph (A) does not--
       ``(i) relieve the generating facility or the transmitting 
     utility of other Federal, State, or local requirements; or
       ``(ii) provide the generating facility with transmission or 
     distribution service.
       ``(2) Rule.--
       ``(A) In general.--Not later than 1 year after the date of 
     enactment of this subparagraph, the Commission shall 
     promulgate a final rule to establish reasonable and 
     appropriate technical standards for the interconnection of a 
     generating facility with the transmission facilities of a 
     transmitting utility.
       ``(B) Process.--To the extent feasible, the Commission 
     shall develop the standards through a process involving 
     interested parties.
       ``(C) Advisory committee.--The Commission shall establish 
     an advisory committee composed of qualified experts to make 
     recommendations to the Commission concerning development of 
     the standards.
       ``(3) Right to backup power.--
       ``(A) In general.--In accordance with subparagraph (B), a 
     transmitting utility shall offer to sell backup power to a 
     generating facility that has interconnected with the 
     transmitting utility unless--
       ``(i) Federal or State law (including regulations) allows a 
     generating facility to purchase backup power from an entity 
     other than the transmitting utility; or
       ``(ii) a transmitting utility allows a generating facility 
     to purchase backup power from an entity other than the 
     transmitting utility using--

       ``(I) the transmission facilities of the transmitting 
     utility; and
       ``(II) the transmission facilities of any other 
     transmitting utility.

       ``(B) Rates, terms, and conditions.--A sale of backup power 
     under subparagraph (A) shall be at such a rate, and under 
     such terms and conditions, as are just and reasonable and not 
     unduly discriminatory or preferential, taking into account 
     the actual incremental cost, whenever incurred by the local 
     distribution utility, to supply such backup power service 
     during the period in which the backup power service is 
     provided, as determined by the appropriate regulatory 
     authority.
       ``(C) No requirement for certain sales.--A transmitting 
     utility shall not be required to offer backup power for 
     resale to any entity other than the entity for which the 
     backup power is purchased.
       ``(D) New or expanded loads.--To the extent backup power is 
     used to serve a new or expanded load on the transmission 
     system, the generating facility shall pay any reasonable 
     costs associated with any transmission, distribution, or 
     generation upgrade required to provide such service.''.
       (d) Conforming Amendments.--Section 210 of the Federal 
     Power Act (16 U.S.C. 824i) is amended--
       (1) in subsection (a)(1)--
       (A) by inserting ``transmitting utility, local distribution 
     utility,'' after ``electric utility,''; and
       (B) in subparagraph (A), by inserting ``any transmitting 
     utility,'' after ``small power production facility,'';
       (2) in subsection (b)(2), by striking ``an evidentiary 
     hearing'' and inserting ``a hearing'';
       (3) in subsection (c)(2)--
       (A) in subparagraph (B), by striking ``or'' at the end;
       (B) in subparagraph (C), by striking ``and'' at the end and 
     inserting ``or''; and
       (C) by adding at the end the following:
       ``(D) promote competition in electricity markets, and''; 
     and
       (4) in subsection (d), by striking the last sentence.
                                 ______
                                 
      By Mr. BURNS (for himself and Mr. Baucus):
  S. 934. A bill to require the Secretary of the Interior to construct 
the Rocky Boy's North Central Montana Regional Water System in the 
State of Montana, to offer to enter into an agreement with the Chippewa 
Cree Tribe to plan, design, construct, operate, maintain and replace 
the rocky Boy's Rural Water System, and to provide assistance to the 
North Central Montana Regional Water Authority for the planning, 
design, and construction of the noncore system, and for other purposes; 
to the Committee on Indian Affairs.
  Mr. BURNS. Mr. President, I am pleased today to join my colleague 
from Montana, Senator Baucus, in introducing the Rocky Boy's/North 
Central Montana Regional Water System Act of 2001. The purpose of this 
bill is to authorize a regional water delivery system which will serve 
both the Rocky Boy's Reservation and the surrounding region in north 
central Montana. For the last few years I have been working on this 
bill with the members of the Chippewa Cree Tribe, the citizens of the 
six towns affected, and the users of the eight water districts who have 
joined together to bring clean, safe drinking water to their families. 
More than 30,000 people would be serviced by this rural water system.
  This bill is needed now for a number of reasons. First, it will 
provide a means to import water to the Rocky Boy's Reservation for 
drinking and for other everyday needs. Over the last decade, the 
population of the Rocky Boy's Reservation has grown by 40 percent, 
leaving existing water infrastructure insufficient. Secondly, there are

[[Page S5469]]

three small water systems in the region which are currently operating 
out of compliance with the EPA's Surface Water Treatment Rule. Others 
are nearing non-compliance, and one has been issued an administrative 
rule by the Montana Department of Environmental Quality to begin water 
treatment as soon as possible.
  This bill helps us to realize that simply maintaining a small town or 
district's water system can be so expensive and filled with red tape 
that its users can hardly afford it. Under current law even if small 
systems are able to be developed, they must be continually monitored 
and the results reported. That may not be a problem in a larger 
community with a sizeable tax base and a labor pool, but in a rural 
setting those expenses and responsibilities are spread between so few 
people that it can quickly become a major problem. I know rural 
Montana. I can tell you our very smallest towns are hurting. They are 
deeply affected by a lagging agricultural economy, and the inability to 
provide water for any number of reasons could be enough to shut a small 
town down. Is that what we want? I don't think so. One of the ways we 
can address that problem is with the development of regional water 
systems, which are more efficient, and easier to manage.
  I truly believe it is time to stand up and face our commitments to 
Indian Country and rural America head on. This bill is the perfect 
opportunity for that, because it uses the teamwork of committed 
citizens and builds on the system they have developed. This is a very 
good example of cooperation between tribal and non-tribal entities, and 
of what happens when people come to the table ready to find a solution.
  This project has been a long time coming. The State of Montana 
committed to it in 1997 with a promise of $10 million for construction, 
and by providing technical assistance through the Montana Department of 
Environmental Quality. Initial federal assistance followed in the form 
of an appropriation of $300,000 for engineering and planning for fiscal 
year 2000. The report was completed and the preliminary engineering is 
complete. With the passage of the water compact settling the water 
rights between the Chippewa Cree Tribe and Montana, P.L. 106-163 signed 
by President Clinton in 1999, the stage was set for this project to be 
built.
  All the bases have been covered and it is time to authorize this 
project. There is a real need for a less burdensome way to manage the 
water needs of the area. The Rocky Boy's Reservation is in need of an 
expanded water source and system, and smaller water districts and 
municipalities are also struggling to stay in operation. The best way 
to solve both these problems at once is to build an efficient regional 
water system. I propose we do just that and show our commitment to 
rural America.

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