[Congressional Record Volume 147, Number 101 (Thursday, July 19, 2001)]
[Senate]
[Pages S7957-S7969]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. Dodd (for himself, Mr. Lieberman, and Mr. Sessions):
  S. 1197. A bill to authorize a program of assistance to improve 
international building practices in eligible Latin American countries; 
to the Committee on Foreign Relations.
  Mr. DODD. Mr. President, I rise today to introduce legislation that 
will improve building safety in Latin America, increase the cost-
effectiveness of our disaster relief assistance, and, most importantly, 
save lives. As many of us know, throughout the last decade, the people 
of Latin America have been the victims of numerous natural disasters 
that have resulted in death, property damage, and destruction. Indeed, 
in the last three years the continent has been ravaged by Hurricane 
Mitch, earthquakes in El Salvador and Peru, and horrendous rains and 
mudslides. These disasters have exacted a tremendous toll on the 
region, causing over 12,000 deaths, $40 billion in damage, and numerous 
injuries.
  The cost to rebuild following these disasters is prohibitive and 
places a tremendous burden on the already struggling emerging economies 
of Latin America. To mitigate this cost, the United States has 
frequently released disaster relief funds to help affected countries 
recover the injured, maintain order, and rebuild their infrastructure. 
For example, the combined assistance released by the United States 
following Hurricane Mitch and the recent earthquakes totals over $1.2 
billion. I fully support these appropriations, and believe that we have 
a duty to assist our neighbors and allies when they are confronted with 
natural disasters. I do, however, believe that we can make this 
assistance more cost-effective in the long run, while saving lives.
  As I stated, I fully support offering U.S. monetary assistance to 
rebuild following natural disasters. However, because much of Latin 
America does not utilize modern, up-to-date building codes, much of 
this assistance goes to waste. For example, following the earthquakes 
in El Salvador in 1986, the United States provided $98 million dollars 
to rebuild that country. Most of the reconstruction was done by local 
Salvadoran contractors, and these structures were not built to code. 
Now, 15 years later, following the most recent earthquakes in El 
Salvador, the United States offered over $100 million dollars in aid. 
Had reconstruction in 1986 been done to code, undoubtedly the cost of 
the most recent earthquake would have been lower in both monetary value 
and lives.
  To remedy this problem, and encourage safe, modern building practices 
in countries that need them the most, I introduce today, with my 
colleagues Senator Lieberman and Senator Sessions, the Code and Safety 
for the Americas, CASA Act. The CASA Act would authorize the 
expenditure of $3 million over two years from general foreign aid funds 
to translate the International Code Council family of building codes, 
which are the standard for the United States, into Spanish. 
Furthermore, it would provide funding for the International Code 
Council's proposal to train architects and contractors in El Salvador 
and Ecuador in the proper use of the code. By educating builders and 
providing them the necessary code for their work in their own language, 
it is only a matter of time before we will begin to see safer buildings 
in the region, and a return on our investment. The United States spent 
over $10 million in body bags, temporary tent housing, and first aid 
alone following the recent earthquake in El Salvador. For a 
comparatively modest sum, $3 million, we can reduce the need for this 
type of aid by attacking the problem of shoddy building before it 
begins.
  In addition, after this program has been implemented in El Salvador 
and Ecuador, it could easily be replicated in other Latin American 
countries at low cost, requiring only funding for the training program. 
While we want to start this program on a small scale, I am confident 
that other countries will request similar training programs in the 
future. In fact, other countries have already asked to be considered 
for a future expansion of the program. The Inter-American Development 
Bank and UN have expressed interest in this idea, and are potential 
candidates to provide partial funding of any future expansion. Given 
this interest, it is highly likely that, in the future, a public-
private partnership can be constructed to expand this program to Peru, 
Guatemala, and the rest of Spanish-speaking Latin America. Also, we 
cannot forget the valuable contributions that American volunteer 
organizations such as the International Executive Service Corps can 
make to this program in the long-run.
  This legislation is supported by architects, contractors, and public 
officials both in the United States and in Latin America. Students of 
architecture in Latin America want to be taught proper standards and 
code application, and local governments have requested the code in 
Spanish. So, this is not a case of the ``ugly'' America imposing its 
will on Latin America. We have been asked to share this lifesaving code 
with our Southern neighbors and, indeed, the number of requests from 
different countries has been staggering.
  In short, this legislation will save lives, lessen the damage caused 
by future disasters, and illustrate our good will toward our Latin 
American allies while proving to be cost-effective for the United 
States through decreased aid following future disasters. For a detailed 
analysis of the problem, and this solution, I wish to draw my 
colleagues attention to an article by Steven Forneris, an American 
architect living in Ecuador, that appeared in ``Building Standards'' 
magazine. In it, Mr. Forneris argues the value of this proposal from 
his position at the front lines in Ecuador. He clearly and eloquently 
outlines why Latin America needs building code reform, and why it is in 
the best interests of the United States to involve itself in this 
endeavor.
  The CASA Act is common-sense legislation that will dramatically 
improve the lives of citizens of our hemisphere, and represents a real 
chance for American leadership in the Hemisphere at very little cost. I 
hope that my colleagues will join me in this humanitarian effort.
  I ask unanimous consent that Mr. Forneris' article be printed in the 
Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

              [From Building Standards, March-April 2001]

             Is It Wrong To Ask for Help on Building Codes?

                         (By Stephen Forneris)

       I work in the field of architecture, part of the time in 
     the City of Guayaquil, Ecuador, and the other part of the 
     time in New York State. Like everyone involved in this 
     profession, one of my chief responsibilities is to guard the 
     health, safety and welfare of my clients. The architects I 
     work with in New York do this by following the International 
     Codes promulgated by the International Code Council (ICC). 
     When working as an architect myself in the small Latin 
     American nation of Ecuador, which simply does not have the 
     resources to develop a complete building code of its own, I 
     am left with a set of very limited and woefully inadequate 
     codes.
       Ecuador developed its current code 20 years ago by 
     translating portions of 1970s versions of the American 
     Concrete Institute ``Building Code Requirements for 
     Reinforced Concrete and the Uniform Building Code'' (UBC). 
     While a noble effort at the time, it is antiquated by today's 
     standards. The adopted provisions only address structural 
     design requirements and the code does not provide for any 
     general life-safety design concerns such as fire and egress. 
     In 1996, the president of Ecuador signed a bill to develop a 
     new code, but it will take years before it is fully complete 
     and will still only consider structural design requirements. 
     So what does this

[[Page S7958]]

     have to do with the United Nations or the U.S. Government?
       As part of its International Decade for Natural Disaster 
     Reduction program, the United Nation's Risk Assessment Tools 
     for Diagnosis of Urban Areas Against Seismic Disasters 
     (RADIUS) project conducted a study of Guayaquil. The RADIUS 
     team determined there to be a 53-percent chance that a 
     magnitude 8.0 or greater earthquake will strike within 200 
     miles of the city in the next 50 years. An estimated 26,000 
     fatalities would result, along with approximately 90,000 
     injuries severe enough to require hospitalization. 
     Projections indicate that up to 75 percent of the local 
     hospitals would be non-operational and 90,000 people left 
     homeless. Power would be out for up to three weeks, 
     telephones inoperable and roads impassable for two months, 
     running water cut off for three months, and sewage systems 
     unusable for a year. All told, damage from the tragedy is 
     expected to exceed one billion U.S. dollars . . . and 
     Guayaquil, which is situated in a zone of high seismic 
     activity that stretches from Chile to Alaska, is not even the 
     most vulnerable of Ecuador's cities.
       I watched news of the recent earthquakes in El Salvador and 
     India with apprehension, knowing that it is only a matter of 
     time before Guayaquil joins the ranks of these horrific human 
     disasters. My colleagues in New York and I are shocked at 
     what those poor people must be going through and are proud 
     that our government is doing its part to help. We are a kind 
     people at our core, and the U.S. Agency for International 
     Development (USAID) has given El Salvador $8,365,777 and 
     India $12,595,631 in assistance. I have to wonder, though, if 
     the U.S. government has been able to allocate nearly $21 
     million over the past few months for international disaster 
     relief, should it not be possible to get funding to mitigate 
     the effects of future disasters like these?
       In 1999, James Lee Witt, then director of the U.S. Federal 
     Emergency Management Agency (FEMA) stated: ``At FEMA, we're 
     working to change the way Americans think about disasters. 
     We've made prevention the focus of emergency management in 
     the United States, and we believe strong, rigorously enforced 
     building codes are central to that effort.'' In 1999, FEMA 
     signed an agreement with ICC to encourage states to adopt and 
     enforce the International Building Code (IBC). As the U.S. 
     government has turned to an aggressive program of domestic 
     prevention, it only seems logical to apply this philosophy 
     in its projects abroad.
       Guayaquil, and all of Latin America for that matter, needs 
     our help right now. The FEMA-endorsed International Codes 
     arguably provide the best mitigation for natural disasters 
     available in the world, and ICC representatives have informed 
     me that they have a team ready to translate them into 
     Spanish. If USAID is capable of providing such quick and 
     significant funding for plastic sheets, water jugs, hygiene 
     kits, food assistance, etc., why not consider funding 
     translation of the International Codes for a fraction of that 
     cost?
       In February of this year, The Associated Press reported 
     that USAID had agreed to provide an additional $3 million to 
     El Salvador for emergency housing. Less than a month later, 
     President Bush pledged $100 million more in aid, which El 
     Salvador's President Francisco Flores has stated will be used 
     to reconstruct basic infrastructure and housing in the 
     country. It is worth recalling that only 15 years ago the 
     U.S. government provided El Salvador reconstruction funds 
     totaling $98 million after a smaller earthquake. This brings 
     the total to more than $200 million in less than 20 years, 
     yet the people of El Salvador are no safer because their 
     homes still do not meet any of the generally accepted U.S. 
     building code standards.
       I have to wonder what kind of message we are sending to 
     developing countries? Have we created a ``disaster lottery'' 
     in which needed aid comes only after images of devastation 
     flash across the evening news? If so, South America alone 
     stands to receive hundreds of millions of dollars in disaster 
     relief over the next few years. In contrast, code 
     translation, certification and training would greatly reduce 
     the risk in the region for much less. What we need to do is 
     think about saving lives now. It is sad to think that it may 
     be easier to get coffins in which to bury the dead than the 
     building codes that would save many of those same people's 
     lives. It is my hope that the U.S. and United Nations, 
     motivated by compassion, foresight and simple economics, can 
     help provide all of Latin America with the truly vital and 
     life-protecting building codes the region urgently needs.


                               References

       Jaime Argudo. ``Radius Study'' IIFIUC Guayaquil Ecuador, 
     University Catolica de Santiago de Guayaquil, page 8.
       U.S. Agency for International Development website. 
     www.usaid.gov. 2/26/01.
       James Lee Witt, Director of U.S. Federal Emergency 
     Management Agency, remarks to the International Code Council, 
     9/13/99, St. Louis, MO.
       Julie Watson, ``El Salvador Seeks Aid after Quake'', 2/15/
     01. Reprinted with permission of The Associated Press.
       Sandra Sobieraj, ``Bush Promises Help For El Salvador,'' 3/
     2/01. Reprinted with permission of The Associated Press.
                                 ______
                                 
      By Mrs. HUTCHISON (for herself, Mr. Breaux, Ms. Collins, Mr. 
        Baucus, Mr. Chafee, Ms. Landrieu, Mr. Lott, Mr. Conrad, Mr. 
        Murkowski, Mr. Allard, Mr. Brownback, Mr. Cochran, Mr. 
        Domenici, Mr. Gramm, Mr. Enzi, Mr. Helms, Mr. Hutchinson, Mr. 
        Inhofe, Mr. Nickles, Mr. Stevens, and Mr. Thomas):
  S. 1199. A bill to amend the Internal Revenue Code of 1986 to allow a 
tax credit for marginal domestic oil and natural gas well production 
and an election to expense geological and geophysical expenditures and 
delay rental payments; to the Committee on Finance.
  Mrs. HUTCHISON. Mr. President, I rise today to speak about an energy 
bill I am re-introducing this year, marginal well tax credits. I am 
proud to introduce the Hutchison-Breaux-Collins Marginal Well 
Preservation Act of 2001.
  As we look to long-term solutions to the high cost of gasoline, 
electricity and home heating oil, marginal well tax incentives are 
critical to increasing supply and retaining our energy independence. 
Our crisis of volatile fuel prices in the U.S. has led this year to 
historically high gasoline prices, airline ticket surcharges for rising 
jet fuel costs, and expected problems with high home heating oil costs 
this coming winter. This problem is real, it is growing, and it demands 
a response from Congress to join with the Administration to find a 
comprehensive, long-term solution.
  Senators representing all regions of the country, including the 
Northeast and Midwest have a common interest: to make the United States 
less susceptive to the volatility of world oil markets by reducing 
America's dependence on foreign oil. I understand that when the price 
of home heating oil spikes in the Northeast, it hurts those Senators' 
constituents. They understand when the price of oil falls below $10 a 
barrel, as it did just over two years ago, and we lose 18,000 jobs as 
we did in Texas, that hurts my constituents. We understand that these 
are merely two sides of the same coin: growing dependence on foreign 
oil.
  In fact, at the heart of my legislation is the goal of reducing our 
imports of foreign oil to less than 50 percent by the year 2010. While 
it is incredible to me that we have let America slide into greater than 
55 percent dependence today, from the 46 percent dependence we saw in 
1992, nevertheless a goal of producing at least half of our oil needs 
right here in the United States is a laudable and, I believe, an 
achievable one.
  The core problem with our growing dependence on foreign oil is an 
underutilized domestic reserve base of both crude oil and natural gas. 
In 1992, we imported 46 percent of our oil needs from overseas. It is 
equally important to realize that in 1974, when America was brought to 
her knees by the OPEC oil embargo, we imported only 36 percent of our 
oil. Today, as I mentioned, we stand at over 55 percent imports. While 
it is true that OPEC controls less, in percentage terms, of the world 
oil market than it did in 1974, if the major oil producing countries of 
the world were ever to get their collective act together, they cold not 
only wreak havoc with the American economy, they could literally shut 
it down. As the sole remaining superpower in the world, and as the 
country with an economy that is the envy of the industrialized world, 
this threat to our economic as well as our national security is simply 
and totally unacceptable.
  We simply must take steps today to increase the amount of oil and 
natural gas we produce right here at home. It is estimated that, in 
total, the United States possesses as much as 160 billion barrels of 
oil and as many as 1,700 trillion cubic feet of natural gas. This is 
enough to fuel the U.S. economy for at least 60 years without importing 
a single drop of foreign oil. While shutting-off foreign oil completely 
may not be realistic, it is realistic to utilize our reserves much more 
than we do today.
  Believe it or not, much of this oil and gas could be produced in 
areas where it is being produced today and has for decades that is not 
environmentally sensitive. That is why I have advocated for tax 
incentives that would make it economically feasible for production to 
continue and actually increase in areas largely where production takes 
place today. Much of this production is from so-called ``marginal'' 
wells, those wells that produce less than 15 barrels of oil and less 
than 90 thousand cubic feet of natural gas per day.

[[Page S7959]]

  Many of these wells are so small that, once they close, they never 
reopen. There were close to 500,000 such wells across the U.S. 
Together, they have the capacity to produce 20 percent of America's 
oil. This is roughly the same amount of oil the U.S. imports from Saudi 
Arabia. During the oil price plummet over two years ago, more than a 
quarter of these wells closed, many of them for good.

  The overwhelming majority of producing wells in Texas are marginal 
wells. A survey by the Independent Producers Association of America, 
IPAA, found that marginal wells account for 75 percent of all crude 
production for small independent operators; up to 50 percent for mid-
sized independents; and up to 20 percent for large companies.
  A more sensible energy independence policy would be to offer tax 
relief to producers of these smaller wells that would help them stay in 
business when prices fall below a break-even point. When U.S. producers 
can stay in business during periods of low prices, supply will be 
higher and help keep prices from shooting up too high.
  My legislation provides a maximum $3 per barrel tax credit for the 
first 3 barrels of daily production from a marginal oil well, and a 
similar credit for marginal gas wells. The marginal oil well credit 
would be phased in-and-out in equal increments as prices for oil and 
natural gas fall and rise. For oil, it would phase in between $18 and 
$15 per barrel.
  A counter-cyclical system such as this would help keep producers 
alive during the record low prices, so they can be producing during the 
record highs. This would gradually ease our dependence on overseas oil.
  There's another benefit to encouraging marginal well production: it 
has a multiplier effect. In 1997, these low-volume wells generated $314 
million in taxes paid annually to State governments. These revenues are 
sued for State and local schools, highways and other state-funded 
projects and services.
  Another idea in my plan is to offer incentives to restart inactive 
wells by offering producers a tax exemption for the costs of doing so. 
This would ensure greater oil availability and also increase Federal 
and State tax revenues paid by oil producers and energy sector 
employees. Everyone wins. More jobs, more State and Federal revenue, 
and, most importantly, more domestic oil.
  Studies and actual results have borne this out. In Texas, a program 
similar to this has met with considerable success. Over 6,000 wells 
have been returned to production, injecting approximately $1.65 billion 
into the Texas economy each year. We should try this nationwide.
  We do not have to be at the whim of market forces beyond our control. 
The only way out, though, is to be part of the price setting process, 
rather than be price takers. To do that, we've got to increase our 
domestic supply. We have an excellent opportunity to unite around this 
bill, Democrats and Republicans, energy production and energy 
consumption States.
  Marginal well tax incentive legislation is a positive, proactive 
approach that I believe can garner a majority of support in Congress 
and that will begin to reverse the slide toward greater and greater 
dependence on foreign oil.
                                 ______
                                 
      By Mr. HATCH. (for himself, Mr. Breaux, Mrs. Lincoln, Mr. Allard, 
        Mr. Thompson, and Mr. Graham):
  S. 1201. A bill to amend the Internal Revenue Code of 1986 to provide 
for S corporation reform, and for other purposes; to the Committee on 
Finance.
  Mr. HATCH. Mr. President, I rise today to introduce the Subchapter S 
Modernization Act of 2001. I am very pleased to be joined in this 
effort by Senators Breaux, Lincoln, Thompson, Allard, and Gramm.
  The bill we are introducing today is a continuation of a bipartisan 
effort that began in the Senate nearly a decade ago when former 
Senators Pryor and Danforth, along with myself and six other senators, 
introduced the S Corporation Reform Act of 1993. We recognized then, as 
the sponsors of today's bill do now, that S corporations are a vital 
and growing part of our economy and that our tax law should reflect the 
importance of these entities and provide tax rules that allow them to 
grow and compete with a minimum of complexity and a maximum of 
flexibility.
  According to the Joint Committee on Taxation, there were nearly 2.6 
million S corporations in the United States in 1998, up from about 
500,000 in 1980. In fact, S corporations now outnumber both C 
corporations and partnerships. These are predominantly small businesses 
in the retail and service sectors. Over 92 percent of all S 
corporations in 1998 reported less than $1 million in assets. Many of 
these businesses, however, are growing rapidly. These are the kinds of 
businesses that make up ``Main Street USA.'' In my home state of Utah, 
over half the corporations have elected Subchapter S treatment.
  Subchapter S of the Internal Revenue Code was enacted in 1958 to help 
remove tax considerations from small business owners' decisions to 
incorporate. This elective tax treatment has been helpful to millions 
of small businesses over the years, particularly to those just starting 
out. Subchapter S provides entrepreneurs the advantage of corporate 
protection from liability along with the single level of tax enjoyed by 
partnerships and limited liability companies.
  However, Subchapter S as enacted and modified over the years contains 
a variety of limitations, restrictions, and pitfalls for the unwary. 
And, even though some very important improvements have been made over 
the years, including many first introduced in the 1993 S Corporation 
Reform Act I mentioned earlier, more needs to be done to bring the tax 
treatment of these important businesses into the 21st Century. This is 
what our bill today is all about.
  A May 2001 study by the Federal Reserve Bank of Kansas City 
highlights the importance of small businesses to our economy and points 
out why Congress should do everything possible to make it easier for 
these entities to get started and grow. The study points out that more 
than 75 percent of the net new jobs created from 1990 to 1995 occurred 
in small firms, defined as those with fewer than 500 employees. 
Moreover, seven of the ten fastest growing industries have been 
dominated by small businesses in recent years, including the high 
technology sector, where small firms employ 38 percent of that 
industry's workers.
  In the rural parts of America, the role of small enterprises is even 
more important. Small businesses account for 90 percent of all rural 
establishments. In 1998, small companies employed 60 percent of rural 
workers and provided half of rural payrolls.
  What do these small businesses, especially those in small-town 
America, most need to grow, to thrive, and even to survive? According 
to the White House Conference on Small Business, two of the most 
important issue areas for these enterprises is easier access to capital 
and an easing of the tax burden. The bill we are introducing today 
addresses both of these vital issues.
  Perhaps the biggest challenge facing all kinds of businesses, but 
especially smaller ones, is attracting adequate capital. Unfortunately, 
Subchapter S is currently a hindrance, rather than a help, for many 
corporations facing this challenge. For example, current law allows for 
only one class of stock for S corporations. Further, S corporations are 
not allowed currently to issue convertible debt. Nor are they allowed 
to have a non-resident alien as a shareholder. These restrictions all 
limit the ability of S corporations in attracting capital, which is 
very often the lifeblood of growing a business.
  Several of the provisions of the Subchapter S Modernization Act are 
designed to alleviate these restrictions on the ways S corporations can 
attract capital. This will help make them more competitive with other 
small enterprises doing business in other forms, such as partnerships 
or limited liability companies, that do not face such barriers.
  Even though electing Subchapter S currently offers much to a small 
corporation in the way of tax relief, principally because such an 
election eliminates the corporate level of taxation, S corporations 
still face some significant tax burdens in the way of potential 
pitfalls and tax traps for the unwary. Some of these impediments exist 
in the requirements of elective S corporation status, and others are in 
the rules governing the day-to-day operations of the

[[Page S7960]]

entities. In either case, these provisions stifle growth and impede job 
creation.
  Most of the sections of the bill we introduce today are dedicated to 
eliminating many of these barriers and making it easier for companies 
to elect Subchapter S and to operate in this status once the election 
is made.
  The Small Business Job Protection Act of 1996 made many important 
changes to Subchapter S. One of the most significant was the ability 
for small banks to elect to be S corporations for the first time. This 
opened the door for many small community banks to become more 
competitive with other financial institutions operating in their towns 
and neighborhoods. So far, more than 1,400 banks in the U.S. have made 
the election, which represents about 18 percent of the more than 8,000 
community banks in the United States.

  According to a survey taken earlier this year by the accounting firm 
Grant Thornton, 3 percent of the remaining community banks plan to 
elect Subchapter S status in 2001, and another 14 percent are 
considering the election after this year.
  The availability of Subchapter S has been a positive development in 
increasing profitability and competitiveness of many community banks. 
However, two problems currently exist. The first is that current law 
includes several significant hurdles to many small banks in converting 
to S corporation status. These include restrictions on the types and 
number of shareholders allowed. The second problem is that some of the 
operating rules under Subchapter S are unduly inflexible, complex, and 
harsh.
  The bill we introduce today attempts to address many of these 
challenges by easing the restrictions on the kinds of shareholders who 
can own S corporation stock and the number of shareholders allowed, as 
well as relaxing some of the operational rules. These changes are 
designed to make it significantly easier for community banks to take 
advantage of the benefits of Subchapter S.
  Small businesses are key to the continued growth of our economy and 
to future job creation. The way I see it, it is the job of government 
to see that unnecessary restrictions and barriers to the success of 
these businesses are removed so that these small enterprises can 
attract capital and function with the maximum of efficiency.
  Some would argue that S corporations are a relic of the past and that 
newer, more flexible forms of doing business, such as limited liability 
companies, are the business entities of the future. Such a view is a 
great distortion of reality. S corporations are a large and growing 
part of our economy. They have served a vital function in our 
communities for the past 43 years and will continue to do so. Our tax 
laws should be overhauled to streamline these rules and make them as 
flexible and easy to work in as possible.
  The S Corporation Modernization Act enjoys the support of a broad 
range of associations and trade groups, many of which have worked with 
us in crafting the bill. I want to especially acknowledge the 
assistance of the American Institute of Certified Public Accountants, 
the Taxation Section of the American Bar Association, the Independent 
Bankers Association of America, and the Utah Bankers Association. These 
organizations contributed time and talent in making recommendations for 
many of the improvements in this bill.
  I urge my colleagues to take a close look at this bill, and to 
support it. Thousands of small and growing businesses in every State 
will benefit from the improvements included therein. Its enactment will 
lead to an increased ability of these enterprises to attract capital, 
expand, and create new jobs.
  I ask unanimous consent that a section-by-section description of the 
bill and a letter of support from a group of organizations that endorse 
it be printed in the Record.
  There being no objection, the additional material was ordered to be 
printed in the Record, as follows:

               Supporters of S Corporation Modernization

       Dear Senators Hatch, Breaux, Lincoln, and Allard: The 
     undersigned organizations, speaking on behalf of many of 
     America's small businesses, want to commend and thank you for 
     sponsoring the S Corporation Modernization Act of 2001. This 
     important legislation will improve capital formation 
     opportunities for small businesses, preserve family-owned 
     businesses, and eliminate unnecessary and unwarranted traps 
     for taxpayers. We want to express our unqualified and 
     enthusiastic support for the entire bill.
       In 1958, Congress created S corporations to create an 
     effective alternative business structure for private 
     entrepreneurs. Under Subchapter S, if certain requirements 
     and restrictions are met, a business can choose to operate in 
     corporate form without being penalized with a second level of 
     tax. Today, about 2.6 million S corporations operate in 
     virtually every sector and in every State across America. 
     These S corporations employ many Americans and hold over 
     $1.45 trillion in business assets.
       Though many of these businesses have been successful 
     ventures, the qualifications and restrictions contained in 
     the original Subchapter S rules were very limiting and 
     complex. Over time, Congress has removed some of these 
     restrictions and has made incremental changes to update and 
     improve the Subchapter S rules. Congress last acted in 1996 
     to pass reforms to make S Corporation rules more compatible 
     with modern-day business demands.
       Unfortunately today, many of these companies are still 
     burdened by obsolete rules, which stunt expansion, inhibit 
     venture capital attraction, and otherwise impede these 
     businesses from meeting the demands of the challenging global 
     economy. As the domestic economy faces increasing challenges, 
     such restrictions are particularly troubling. For S 
     corporations, which have been a key element in America's 
     economic growth, we can no longer afford to keep such 
     antiquated restrictions in place.
       Indeed, the need for any of these restrictions is highly 
     doubtful. Over the last decade, all States (with supporting 
     rulings from the IRS) have now enacted statutes creating 
     limited liability companies (LLCs). LLCs operate like S 
     corporations (with limited liability and subject to a single 
     level of tax), but face none of the burdensome and 
     unnecessary restrictions. As a result, new business 
     enterprises are being formed at an accelerating rate under 
     the LLC regime. The Subchapter S Modernization Act of 2001 
     will go a long way toward lifting these needless burdens on S 
     corporations.
       For these reasons, we agree with you that it is again time 
     to revisit Subchapter S reform, and we look forward to 
     working with you to enact the S Corporation Modernization Act 
     of 2001. Thank you again for your championship of this 
     important initiative.
           Sincerely,
         U.S. Chamber of Commerce; Employee-Owned S Corporations 
           of America; S Corporation Association; National 
           Cattleman's Beef Association; Associated General 
           Contractors of America; National Association of 
           Realtors; National Multi Housing Council; National 
           Apartment Association; Small Business Survival 
           Committee; Independent Insurance Agents of America; 
           National Association of Manufacturers; Independent 
           Community Bankers of America; American Bankers 
           Association; Utah Bankers Association; Independent 
           Bankers Association of Texas; Independent Bankers of 
           Colorado; Maine Association of Community Banks; 
           Independent Community Bankers of Minnesota; Community 
           Bankers of Wisconsin; Community Bankers Association of 
           Indiana; Community Bankers Association of Kansas; 
           Bluegrass Bankers Association; The Community Bankers 
           Association of Alabama; Independent Community Bankers 
           of New Mexico; Iowa Independent Bankers; California 
           Independent Bankers; Community Bankers Association of 
           Illinois; Montana Independent Bankers; Missouri 
           Independent Bankers Association; Nebraska Independent 
           Community Bankers; Arkansas Community Bankers; 
           Community Bankers Association of Georgia; Michigan 
           Association of Community Bankers; Community Bankers of 
           Louisiana; Independent Bankers Association of New York; 
           Pennsylvania Association of Community Bankers; 
           Independent Community Bankers of South Dakota; 
           Independent Community Bankers of North Dakota; West 
           Virginia Association of Community Bankers; Virginia 
           Association of Community Banks; Community Bankers 
           Association of Oklahoma; Community Bankers Association 
           of New Hampshire.
                                  ____


 Subchapter S Modernization Act of 2001--Section-by-Section Description

       The Subchapter S Modernization Act of 2001 includes the 
     following provisions to help improve capital formation 
     opportunities for small business, preserve family-owned 
     businesses, and eliminate unnecessary and unwarranted traps 
     for taxpayers.


           Title I--Eligible Shareholders of An S Corporation

     Section 101. Members of family treated as 1 shareholders
       The Act provides for an election to count family members 
     that are not more than six generations removed from a common 
     ancestor as one shareholder for purposes of the number of 
     shareholder limitation (currently 75 shareholders). The 
     election requires the consent of a majority of all 
     shareholders. The provision helps family-owned S corporations 
     plan for the future without fear of termination of their S 
     corporation elections.

[[Page S7961]]

     Section 102. Nonresident aliens allowed to be shareholders
       The Act would permit nonresident aliens to be S corporation 
     shareholders. To assure collection of the appropriate amount 
     of tax, the Act requires the S corporation to withhold and 
     pay a tax on effectively connected income allocable to its 
     nonresident alien shareholders. The provision enhances an S 
     corporation's ability to expand into international markets 
     and expands an S corporation's access to capital.
     Section 103. Expansion of bank S corporation eligible 
         shareholders to include IRAs
       The Act permits Individual Retirement Accounts (IRAs) to 
     hold stock in a bank that is a S corporation. Additionally, 
     the Act would exempt the sale of bank S corporation stock in 
     an IRA from the prohibited transaction rules. Currently, IRAs 
     own community bank stock, which results in a significant 
     obstacle to banks that want to make an S election. The 
     provision allows an IRA to own bank S stock, and thus, avoids 
     transactions to buy back stock, which drains the bank's 
     resources.
     Section 104. Increase in number of eligible shareholders to 
         150
       Currently a corporation is not eligible to be an S 
     corporation if it has more than 75 shareholders. The Act 
     increases the number of permitted shareholders to 150. The 
     provision will enable S corporation to raise more capital and 
     plan for the future without endangering their S corporation 
     status.


 Title II--Qualification and Eligibility Requirements of S Corporations

     Section 201. Issuance of preferred stock permitted
       The Act would permit S corporations to issue qualified 
     preferred stock (``QPS''). QPS generally would be stock that 
     (i) is not entitled to vote, (ii) is limited and preferred as 
     to dividends and does not participate in corporate growth to 
     any significant extent, and (iii) has redemption and 
     liquidation rights which do not exceed the issue price of 
     such stock (except for a reasonable redemption or liquidation 
     premium). Stock would not fail to be treated as QPS merely 
     because it is convertible into other stock. This provision 
     increases access to capital from investors who insist on 
     having a preferential return and facilitates family 
     succession by permitting the older generation of shareholders 
     to relinquish control of the corporation but maintain an 
     equity interest.
     Section 202. Safe harbor expanded to include convertible debt
       The Act permits S corporations to issue debt that may be 
     converted into stock of the corporation provided that the 
     terms of the debt are substantially the same as the terms 
     that could have been obtained from an unrelated party. The 
     Act also expands the current law safe-harbor debt provision 
     to permit nonresident alien individuals as creditors. The 
     provision facilitates the raising of investment capital.
     Section 203. Repeal of excessive passive investment income as 
         a termination event
       The Act would repeal the rule that an S corporation would 
     lose its S corporation status if it has excess passive income 
     for three consecutive years. A corporate-level ``sting'' (or 
     double) tax would still apply, as modified in Section 204 
     below, to excess passive income.
     Section 204. Modifications to passive income rules
       The Act would increase the threshold for taxing excess 
     passive income from 25 percent to 60 percent (consistent with 
     a Joint Tax Committee recommendation on simplification 
     measures). In addition, the Act removes gains from the sales 
     or exchanges of stock or securities from the definition of 
     passive investment income for purposes of the sting tax.
     Section 205. Stock basis adjustment for certain charitable 
         contributions
       Current rules discourage charitable gifts of appreciated 
     property by S corporations. The Act would remedy this problem 
     by providing for an increase in the basis of shareholders' 
     stock in an amount equal to excess of the value of the 
     contributed property over the basis of the property 
     contributed. This provision conforms the S corporation rules 
     to those applicable to charitable contributions by 
     partnerships.


           TITLE III--TREATMENT OF S CORPORATION SHAREHOLDERS

     Section 301. Treatment of losses to shareholders
       In the case of a liquidation of an S corporation, current 
     law can result in double taxation because of a mismatch of 
     ordinary income (realized at the corporate level and passed 
     through to the shareholder) and a capital loss (recognized at 
     the shareholder level on the liquidating distribution). 
     Although careful tax planning can avoid this result, many S 
     corporations do not have the benefit of sophisticated tax 
     advice. The Act eliminates this potential trap by providing 
     that any portion of any loss recognized by an S corporation 
     shareholder on amounts received by the shareholder in a 
     distribution in complete liquidation of the S corporation 
     would be treated as an ordinary loss to the extent of the 
     shareholder's ``ordinary income basis'' in the S corporation 
     stock.
     Section 302. Transfer of suspended losses incident to divorce
       The Act allows for the transfer of a pro rata portion of 
     the suspended losses when S corporation stock is transferred, 
     in whole or in part, incident to divorce. Under current IRS 
     regulations, any suspended losses or deductions are personal 
     to the shareholder and cannot, in any manner, be transferred 
     to another person. Accordingly, if a shareholder transfers 
     all of his or her stock in an S corporation to his or her 
     former spouse as a result of divorce, any suspended losses or 
     deductions with respect to such stock are permanently 
     disallowed. This result is inequitable and unduly harsh, and 
     needlessly complicates property settlement negotiations.
     Section 303. Use of passive activity loss and at-risk amount 
         by qualified subchapter S trust income beneficiaries
       The Act clarifies that, if a QSST transfers its entire 
     interest in S corporation stock to an unrelated party in a 
     fully taxable transaction, the income beneficiary's suspended 
     losses from S corporation activity under the passive activity 
     loss rules would be freed up for use by the income 
     beneficiary. The Act further provides that the income 
     beneficiary's at-risk amount with respect to S activity would 
     be increased by the amount of gain recognized by the QSST on 
     a disposition of S stock. These provisions clarify a 
     troublesome area under current law, and so, eliminate traps 
     for the unwary taxpayer.
     Section 304. Deductibility of interest expense incurred by an 
         electing small business trust to acquire S corporation 
         stock
       The Act provides that interest expense incurred by an ESBT 
     to acquire S corporation stock is deductible by the S portion 
     of the trust. Recently issued proposed regulations would 
     provide that interest expense incurred by an ESBT to acquire 
     stock in an S corporation is allocable to the S portion of 
     the trust, but is not deductible. This result is contrary to 
     the treatment of other taxpayers, who are entitled to deduct 
     interest incurred to acquire an interest in a pass through 
     entity. Further, Congress never intended to place ESBTs at a 
     disadvantage relative to other taxpayers.
     Section 305. Disregard of unexercised powers of appointments 
         in determining potential current beneficiaries of ESBT
       The Act revises the definition of a ``potential current 
     beneficiary'' in the context of the ESBT eligibility rules by 
     providing that powers of appointment should only be evaluated 
     when the power is actually exercised. Current law provides 
     that postponed or non-exercisable powers will not interfere 
     with the making of an ESBT election. However, proposed 
     regulations provide that, once such powers become 
     exercisable, the S election will automatically terminate if 
     the power could potentially be exercised in favor of an 
     ineligible individual--whether it was actually exercised in 
     favor of the ineligible individual or not. The application of 
     this rule would prevent many family trusts from qualifying as 
     ESBTs.
       The Act expands the existing method to cure a potential 
     current beneficiary problem. Under the Act, an ESBT will have 
     a period of up to one year (currently 60 days) to either 
     dispose of all of its S stock or otherwise cause the 
     ineligible potential current beneficiary's position in the 
     trust to be eliminated without causing the ESBT election or 
     the corporation's S election to fail.
     Section 306. Clarification of electing small business trust 
         distribution rules
       The Act clarifies that, with regard to ESBT distributions, 
     separate share treatment applies to the S and non-S portions 
     under section 641(c).
     Section 307. Allowance of charitable contributions deduction 
         for electing small business trusts
       The Act permits a deduction for charitable contributions 
     made by an ESBT, while taxing the charity on its share of the 
     S corporation's income as unrelated business taxable income. 
     Current law discourages charitable contributions by S 
     corporation shareholders by preventing an ESBT from claiming 
     a charitable contribution deduction. The Act encourages 
     philanthropy by permitting a charitable deduction while at 
     the same time effectively taxing the S corporation's income 
     in the hands of the recipient charity to the extent of the 
     deduction.
     Section 308. Shareholder basis not increased by income 
         derived from cancellation of S corporation's debt
       The Act provides that cancellation of indebtedness (COD) 
     income excluded from the gross income of an S corporation, 
     i.e., due to the S corporation's insolvency, does not 
     increase shareholder's basis in S corporation stock. The Act 
     changes the result reached in the recent U.S. Supreme Court 
     decision in Gitlitz v. Comm'r (2000).
     Section 309. Back-to-back loans as indebtedness.
       The Act clarifies that a back-to-back loan (a loan made to 
     an S corporation shareholder who in turn loans those funds to 
     his S corporation) constitutes ``indebtedness of the S 
     corporation to the shareholder'' so as to increase such 
     shareholder's basis in the S corporation. The provision would 
     help many shareholders avoid inequitable pitfalls encountered 
     where a loan to an S corporation is not properly structured, 
     even though the shareholder has clearly made an economic 
     outlay with respect to his investment in the S corporation 
     for which a basis increase is appropriate.

[[Page S7962]]

       title iv--expansion of s corporation eligibility for banks

     Section 401. Exclusion of investment securities income from 
         passive income test for bank S corporations
       The Act clarifies that interest and dividends on 
     investments maintained by a bank for liquidity and safety and 
     soundness purposes shall not be ``passive'' income. By 
     treating all bank income as earned from the active and 
     regular conduct of a banking business, banks will no longer 
     face the conundrum of evaluating investment decisions based 
     on tax considerations rather than on more important safety 
     and economic soundness issues.
     Section 402. Treatment of qualifying director shares
       The Act clarifies that qualifying director shares of bank 
     are not to be treated as a second class of stock. Instead, 
     the qualifying director shares are treated as a liability of 
     the bank and no increase or loss from the S corporation will 
     be allocated to these qualifying director shares. The 
     provision clarifies the law and removes a significant 
     obstacle unique among banks contemplating a S corporation 
     election.
     Section 403. Bad debt charge offs in years after election 
         year treated as items of built-in loss
       The Act permits bank S corporations to recapture up to 100 
     percent of their bad debt reserves on their first S 
     corporation tax return and/or their last C corporation income 
     tax return prior to the effective date of the S election. 
     Banks that convert to S corporation status must change from 
     the reserve method of accounting to the specific charge off 
     method. The resulting recapture income is treated as built-in 
     gain subject to tax at both the shareholder and the corporate 
     level. The Act allows banks to accelerate the recapture of 
     bad debt reserve to their last C corporation tax year. The 
     corporate level tax would still be paid on the recapture 
     income, but the recapture would no longer trigger a tax for 
     the bank's shareholders.


              title v--qualified subchapter s subsidiaries

     Section 501. Relief from inadvertently invalid qualified 
         subchapter S subsidiary elections and terminations
       The Act provides statutory authority for the Secretary to 
     grant relief for invalid QSub elections, and terminations of 
     QSub status, if the Secretary determines that the 
     circumstances resulting in such ineffectiveness or 
     termination were inadvertent. This would allow the IRS to 
     provide relief in appropriate cases, just as it currently 
     does in the case of invalid or terminated S corporation 
     elections.
     Section 502. Information returns for qualified subchapter S 
         subsidiaries
       The Act would help clarify that a Qualified Subchapter S 
     Subsidiary (QSSS) can provide information returns under their 
     own tax ID number to help avoid confusion by employers, 
     depositors, and other parties.
     Section 503. Treatment of the sale of interest in a qualified 
         subchapter S subsidiary
       The Act treats the disposition of QSub stock as a sale of 
     the undivided interest in the QSub's assets based on the 
     underlying percentage of stock transferred followed by a 
     deemed contribution by the S corporation and the acquiring 
     party in a nontaxable transaction. Under current law, an S 
     corporation may be required to recognize 100 percent of the 
     gain inherent in a QSub's assets if it sells as little as 21 
     percent of the QSub's stock. IRS regulations suggest this 
     result can be avoided by merging the QSub into a single 
     member LLC prior to the sale, then selling an interest in the 
     LLC (as opposed to stock in the QSub). The Act achieves this 
     result without any unnecessary merger and thus removes a trap 
     for the unwary.
     Section 504. Exception to application of step transaction 
         doctrine for restructuring in connection with making 
         qualified subchapter S subsidiary elections
       The Act provides that the step transaction doctrine does 
     not apply to the deemed liquidation resulting from QSub 
     elections. Application of the step transaction doctrine, in 
     the context of making a QSub election, introduces complexity 
     and uncertainty in what should be a simple matter. The 
     doctrine requires knowledge of decades of jurisprudence and 
     administrative interpretations, and poses an unnecessary trap 
     for the unwary.


                    TITLE VI--ADDITIONAL PROVISIONS

     Section 601. Elimination of all earnings and profits 
         attributable to pre-1983 years
       The Small Business Job Protection Act of 1996 eliminated 
     certain pre-1983 earnings and profits of S corporations that 
     had S corporation status for their first tax year beginning 
     after December 31, 1996. The provision should apply to all 
     corporations  and S) with pre-1983 S earnings and 
     profits without regard to when they elect S status. There 
     seems to be no policy reason why the elimination was 
     restricted to corporations with an S election in effect for 
     their first taxable year beginning after December 31, 1996.
     Section 602. No gain or loss on deferred intercompany 
         transactions because of conversion to S corporation or 
         qualified S corporation subsidiary
       The Act makes clear that any gain or income from an 
     intercompany transaction is not taxed at the time of the S 
     corporation or QSub elections.
     Section 603. Treatment of charitable contribution and foreign 
         tax credit carryforwards
       The Act provides that charitable contribution carryforwards 
     and other carryforwards arising from a taxable year for which 
     the corporation was a C corporation shall be allowed as a 
     deduction against the net recognized built-in gain of the 
     corporation for the taxable year. This provision is 
     consistent with the legislative history of the 1986 Act.
     Section 604. Distribution by an S corporation to an employee 
         stock ownership plan
       An ESOP will usually borrow from the sponsoring corporation 
     to fund its acquisition of employer securities. In the case 
     of a C corporation, the tax code provides that an ESOP will 
     not be treated as engaging in a ``prohibited transaction'' if 
     it uses any ``dividend'' on employer securities purchased 
     with loan proceeds to make payments on the loan regardless of 
     whether such employer securities have been pledged as 
     collateral to secure the loan. The policy facilitates the 
     payment of ESOP loans and thereby promotes employee 
     ownership. Because S corporation distributions are 
     technically not ``dividends'', the Act provides that S 
     corporation distributions are treated as dividends. This 
     clarification is necessary to ensure that the policy of 
     facilitating the payment of ESOP loans applies equally to S 
     corporation and C corporation ESOPs.

  Mr. BREAUX. Mr. President, I am pleased to introduce with my 
colleagues, Senators Hatch, Lincoln, and Thompson, the Subchapter S 
Modernization Act of 2001. This bill is very important to the 2.6 
million S Corporations in this country and to the thousands of S 
Corporations in my own State of Louisiana.
  The Small Business Administration estimates that small businesses 
account for seventy-five percent of the employment growth in the United 
Sates and are the major creators of new jobs. Small businesses employ 
52 percent of all private workers and provide 51 percent of the output 
in the private sector. They have been, in large part, the engine that 
fuels our economy.
  S Corporations make up a large number of the Nation's small 
businesses. In fact, the Joint Committee on Taxation estimates that 
over ninety-two percent of all S Corporations report less than $1 
million in assets. They operate in every sector of the economy, employ 
millions of Americans and hold over $1.45 trillion in business assets. 
As such, anything we can do the help S Corporations will help the 
economy. The Subchapter S Modernization Act does this by encouraging S 
Corporations to expand, allowing S Corporations to attract more 
capital, and removing tax traps for the unwary.
  The legislation expands the list of eligible shareholders to non-
resident aliens and some Individual Retirement Accounts held by banks. 
The bill also permits families to be treated as one shareholder, which 
not only expands the size of S corporations, but also helps keep family 
businesses together. In additional, the bill increases the number of 
permitted shareholders to 150 from the current law limit of 75.
  All of these important provisions also give S Corporations greater 
flexibility in attracting new sources of investment and capital. By 
permitting S Corporations to issue preferred stock, the Subchapter S 
Modernization Act increases access to capital from investors, such as 
venture capitalists, who insist on a preferential return. This 
provision also facilitates family ownership by allowing older 
generations to relinquish control of the corporation to later 
generations while maintaining an equity interest in the company.
  Lastly, the bill removes many complex tax traps and clarifies the law 
regarding many provisions enacted in 1996. Per the Joint Committee on 
Taxation's recommendation in its simplification report, our bill 
repeals the excessive passive investment income rule as a termination 
event for S corporations and increases the threshold for taxing excess 
passive investment income from 25 percent to 60 percent. Capital gains 
are excluded from the definition of passive income. The rules for 
taxing Electing Small Business Trusts and managing Qualified Subchapter 
S Subsidiaries are simplified in many ways, thus reducing the 
possibility that companies will inadvertently terminate their S 
corporation election.
  I urge my colleagues to support this bill.
  Mrs. LINCOLN. Mr. President, today my colleagues and I are 
introducing legislation which is critically important to millions of 
small and family-owned businesses across this Nation. The Subchapter S 
Modernization Act of

[[Page S7963]]

2001 is the culmination of months of hard work by Senators Hatch, 
Breaux and me. We have worked to bring new ideas together with known 
and necessary S corporation reforms into a comprehensive piece of 
legislation which will help improve capital formation opportunities for 
small businesses, will help preserve family-owned businesses, and will 
eliminate unnecessary and unwarranted traps for well-intentioned 
taxpayers.
  Small businesses are the backbone of commerce in my home State of 
Arkansas. There are between sixteen and seventeen thousand small 
businesses formed as S corporations in Arkansas and over 2.58 million 
nationwide. According to the Joint Committee on Taxation, over ninety-
two percent of these companies have assets totaling less than one 
million dollars and a majority are in the retail trade and service 
sectors. These are truly your mom and pop stores and businesses, and I 
am proud to be working on their behalf.
  This bill represents not just the hard work of the principal sponsors 
but also of several of my colleagues past and present. I would like, in 
the short time that I have, to acknowledge the past efforts of former 
Senators Pryor and Danforth, who represented small business S 
corporations so well and who helped develop many of the provisions we 
have included in the Subchapter S Modernization Act of 2001. I would 
also like to recognize Senator Allard, who has joined in sponsoring 
this legislation, and who has been a lead proponent of S corporation 
reforms which would allow small financial institutions to benefit from 
Subchapter S. And, of course, I would like to thank Senators Thompson, 
Gramm, and Thomas who have joined Senator Hatch, Breaux, and me as 
original sponsors of what I believe is very good legislation for hard 
working men and women across this Nation.
                                 ______
                                 
      By Mr. BENNETT:
  S. 1205. A bill to adjust the boundaries of the Mount Nebo Wilderness 
Area, and for other purposes; to the Committee on Energy and Natural 
Resources.
  Mr. BENNETT. Mr. President, I rise today to introduce the Mount Nebo 
Wilderness Boundary Adjustment Act. This legislation is intended to 
correct several small boundary issues that have frustrated Juab County 
and its residents' attempts to maintain their sources of water.
  Mount Nebo, located in Juab County, UT, is an 11,929 foot peak in the 
Wasatch Mountains. The surrounding area is home to bighorn sheep, 
spectacular views of the Great Basin, primitive recreation, and the 
source of water for many who live and farm around the towns of Nephi 
and Mona, UT. Due to the wilderness characteristics of the lands 
including and surrounding Mount Nebo, Congress designated the 28,000 
acre Mount Nebo Wilderness as part of the Utah Wilderness Act of 1984. 
While the United States Forest Service was drawing the maps of the 
newly designated Mount Nebo Wilderness, nine areas were improperly 
included in the wilderness boundaries that contained springs, 
pipelines, and other water structures which provide water to the 
residents of Juab County.
  Water in the west is truly the lifeblood of the region. Without 
water, our towns and cities, both large and small, would dry up and 
blow away. Equally important is the ability to maintain springs, 
pipelines, and other structures that allow water to be put to 
beneficial use. The water that flows from the Mount Nebo Wilderness 
provides irrigation for Juab County farmers, is part of the Nephi City 
culinary water system, and provides water directly to a number of 
residents who live in close proximity to the wilderness. It should be 
noted that the water rights for some of these springs were granted as 
early as 1855 and have been providing water ever since. These pipelines 
and water structures are old and need constant maintenance. Wilderness 
prohibitions do not provide the flexibility needed by the county to 
maintain its water sources.
  This legislation would redraw the boundaries of the wilderness area 
to allow motorized access for the county and other affected users in 
order to maintain existing water structures. Because this boundary 
adjustment will result in the removal of lands from the Mount Nebo 
Wilderness, the county has identified existing USFS land adjacent to 
the wilderness to serve as replacement acreage which will result in a 
net gain of 14 acres of wilderness. I believe this is legislation that 
benefits all parties. The Forest Service will have a wilderness area 
with fewer access issues and the counties will be able to maintain 
their critical water sources.
  I am offering a simple piece of legislation that will solve a 
longstanding problem for one of Utah's counties. I would greatly 
appreciate Senator Bingaman's help in moving this bill through his 
committee as soon as possible.
                                 ______
                                 
      By Mr. VOINOVICH (for himself, Mr. Inhofe, Mr. Frist, and Mr. 
        McConnell):
  S. 1206. A bill to reauthorize the Appalachian Regional Development 
Act of 1965, and for other purposes; to the Committee on Environment 
and Public Works.
  Mr. VOINOVICH. Mr. President, I rise today, joined by my colleagues, 
Senator Bill Frist, Senator James Inhofe, and Senator Mitch McConnell, 
to introduce the Appalachian Regional Development Act Amendments of 
2001. Once enacted, our bill will reauthorize the Appalachian Regional 
Commission, ARC and create a specific initiative to help bridge the 
``digital divide'' between Appalachia and the rest of our nation.
  One of the honors that I have as a United States Senator is to serve 
as a member of the Subcommittee on Transportation and Infrastructure of 
the Environment and Public Works Committee. One of the reasons I am 
pleased to be on this subcommittee is the fact that it has oversight 
jurisdiction over the ARC. As a Senator who represents one of the 
thirteen States within the ARC, my membership on this subcommittee 
gives me a great opportunity to focus on issues of direct importance to 
this region of our Nation.
  In 1965, Congress established the ARC to help bring the Appalachian 
region of our Nation into the mainstream of the American economy. This 
region includes 406 counties in 13 States, including Ohio, and has a 
population of about 22 million people.
  The ARC is composed of the governors of the 13 Appalachian states and 
a Federal representative who is appointed by the President. The Federal 
representative serves as the Federal Co-Chairman with the governors 
electing one of their number to serve as the States' Co-Chairman. As a 
unique partnership between the Federal Government and these 13 States, 
the ARC runs programs in a wide range of activities, including highway 
construction, education and training, health care, housing, enterprise 
development, export promotion, telecommunications and technology, and 
water and sewer infrastructure. All of these activities help achieve a 
goal of a viable and self-sustaining regional economy.
  ARC's programs fall into two broad categories. The first is a 3,025-
mile corridor highway system to break the regional isolation created by 
mountainous terrain, thereby linking the Appalachian communities to 
national and international markets. Roughly 80 percent of the 
Appalachian Development Highway System is either completed or under 
construction.
  The second is an area development program to create a basis for 
sustained local economic growth. Ranging from water and sewer 
infrastructure to worker training to business financing and community 
leadership development, these projects provide Appalachian communities 
with the critical building blocks for future growth and development. 
The sweeping range of options allows governors and local officials to 
tailor the federal assistance to their individual needs.
  The ARC currently ranks all of the 406 counties in the Appalachian 
region, including the 29 counties in Ohio that are covered by the ARC, 
according to four categories: distressed, transitional, competitive, 
and attainment. These categories determine the extent for potential ARC 
support for specific projects. They also help ensure that support goes 
to the areas with the greatest need. Distressed countries are the most 
``at-risk,'' with unemployment at least 150 percent of the national 
average, a poverty rate of at least 150 percent of the national 
average, and a per capita market income of

[[Page S7964]]

no more than two-thirds of the national average. Generally, this means 
that a distressed county has an unemployment rate of greater than 7.4 
percent, a poverty rate of at least 19.7 percent, and a per capita 
income of less than $14,164. In fiscal year 2001, 114 counties, or 
roughly one-fourth of the counties in the ARC, have been classified as 
distressed. Ten of these counties are in Ohio.
  In order to undertake a wide variety of projects to help improve the 
region's economy, the ARC uses the Federal dollars it receives to 
leverage additional State and local funding. This successful 
partnership enables communities in Ohio and throughout Appalachia to 
have programs which help them to respond to a variety of grassroots 
needs. In Ohio, ARC funds support projects in five goal areas: skills 
and knowledge, physical infrastructure, community capacity, dynamic 
local economies, and health care. In rough figures, every ARC dollar 
Ohio received in fiscal year 2000 leveraged approximately $2.60 in 
additional federal, state and local funds. In fiscal year 2000, ARC 
provided approximately $4.7 million to fund non-highway projects in 
Ohio.
  As my colleagues are aware, the current authorization of the ARC will 
soon expire. In anticipation of the need for reauthorization 
legislation, I have been working since last year on putting together a 
bill that focuses on the issues that the ARC needs to address in the 
early part of the 21st century. One of the more productive activities I 
did in preparation for reauthorization was to conduct a Transportation 
and Infrastructure Subcommittee field hearing on the ARC at the Opera 
House in Nelsonville, OH, in August 2000. Following the hearing, I had 
the opportunity to tour the region to witness first-hand the beneficial 
impact of ARC-funded projects in the community.
  My objectives for both the field hearing and the tour were to obtain 
an overview of the importance of ARC programs to Appalachia, to closely 
examine the progress that has been made with respect to the 
implementation of these programs, and to identify the challenges that 
still must be overcome for the region to fully participate in our 
Nation's economy. Along with the poignant visual impact of my tour, the 
testimony I received from the impressive array of witnesses at this 
hearing provided valuable input that has been very helpful in drafting 
this legislation.
  Our legislation, the Appalachian Regional Development Act Amendments 
of 2001, would allow the ARC to continue its important work for the 
people of Appalachia. One of the most innovative aspects of our bill 
would establish a Telecommunications and Technology Initiative that 
would focus on providing training in new technologies; assisting local 
governments, businesses, schools, and hospitals in developing e-
commerce networks; and creating more jobs and business opportunities 
though access to telecommunications infrastructure.
  E-commerce is one of the largest factors driving our economy and any 
business that wants to successfully compete in today's technological 
revolution must have access to the Internet. By establishing a specific 
initiative under the ARC to help the people of Appalachia connect with 
today's technology, we are also helping Appalachian communities achieve 
the same quality of life that is available to the rest of the Nation.
  The bill also would increase the percentage of ARC funds required to 
be spent on activities or projects that benefit distressed counties or 
area. Right now, the requirement is set at 30 percent, and under our 
bill, it would increase to 50 percent. An analysis of fiscal year 1999 
and 2000 shows that the ARC already spends about half of its project 
funding on grants to Appalachia's poorest counties, therefore this 
provision simply codifies current practice.
  In addition, the bill would establish the ARC as the lead Federal 
agency in coordinating the economic development programs carried out by 
Federal agencies in the region through the establishment of an 
Interagency Coordinating Council on Appalachia. The Council would be 
established by the President and its membership composed of 
representatives of the Federal agencies that carry out economic 
development programs in the region.
  The bill also would change the non-federal match requirement for 
administrative grants to the region's Local Development Districts from 
50 percent to 25 percent for those Local Development Districts which 
include all or part of at least one distressed county. Local 
Development Districts are multi-county economic development planning 
agencies that work with local governments, non-profit organizations, 
and the private sector to determine local economic development needs 
and provide professional guidance for local economic development 
strategies. There are 71 Local Development Districts working with ARC 
in Appalachia.

  Additionally, the bill would authorize annual appropriations for the 
ARC for five years, beginning with $83 million in fiscal year 2002 and 
increasing by $3 million in each of fiscal years 2003 through 2006. Of 
the authorized amount, $10 million would be earmarked each fiscal year 
for the Telecommunications and Technology Initiative.
  For more than 35 years, the ARC has had a dramatic impact on the 
lives of the men and women who live in the Appalachian region of our 
Nation, helping to cut the region's poverty rate in half, lowering the 
infant mortality rate by two-thirds, doubling the percentage of high 
school graduates to where it is now slightly above the national 
average, slowing the region's out-migration, reducing unemployment 
rates, and narrowing the per capita income gap between Appalachia and 
the rest of the United States.
  Despite its successes to date, the ARC has not completed its mission 
in Appalachia. I know that there is a vast reserve of potential in 
Appalachia that is just waiting to be tapped, and I wholeheartedly 
agree with one of ARC's guiding principles that the most valuable 
investment that can be made in a region is in its people.
  The ARC is the type of Federal initiative that we should be 
encouraging. I urge my colleagues to join me in cosponsoring this 
legislation, and I urge its speedy consideration by the Senate.
  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. 1206

       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 ``Appalachian Regional 
     Development Act Amendments of 2001''.

     SEC. 2. PURPOSES.

       The purposes of this Act are--
       (1) to reauthorize the Appalachian Regional Development Act 
     of 1965 (40 U.S.C. App.); and
       (2) to ensure that the people and businesses of the 
     Appalachian region have the knowledge, skills, and access to 
     telecommunication and technology services necessary to 
     compete in the knowledge-based economy of the United States.

     SEC. 3. FUNCTIONS OF THE COMMISSION.

       Section 102(a) of the Appalachian Regional Development Act 
     of 1965 (40 U.S.C. App.) is amended--
       (1) in paragraph (5), by inserting ``, and support,'' after 
     ``formation of'';
       (2) in paragraph (7), by striking ``and'' at the end;
       (3) in paragraph (8), by striking the period at the end and 
     inserting ``; and''; and
       (4) by adding at the end the following:
       ``(9) seek to coordinate the economic development 
     activities of, and the use of economic development resources 
     by, Federal agencies in the region.''.

     SEC. 4. INTERAGENCY COORDINATING COUNCIL ON APPALACHIA.

       Section 104 of the Appalachian Regional Development Act of 
     1965 (40 U.S.C. App.) is amended--
       (1) by striking ``The President'' and inserting ``(a) In 
     General.--The President''; and
       (2) by adding at the end the following:
       ``(b) Interagency Coordinating Council on Appalachia.--
       ``(1) Establishment.--In carrying out subsection (a), the 
     President shall establish an interagency council to be known 
     as the `Interagency Coordinating Council on Appalachia'.
       ``(2) Membership.--The Council shall be composed of--
       ``(A) the Federal Cochairman, who shall serve as 
     Chairperson of the Council; and
       ``(B) representatives of Federal agencies that carry out 
     economic development programs in the region.''.

[[Page S7965]]

     SEC. 5. TELECOMMUNICATIONS AND TECHNOLOGY INITIATIVE.

       Title II of the Appalachian Regional Development Act of 
     1965 (40 U.S.C. App.) is amended by inserting after section 
     202 the following:

     ``SEC. 203. TELECOMMUNICATIONS AND TECHNOLOGY INITIATIVE.

       ``(a) In General.--The Commission may provide technical 
     assistance, make grants, enter into contracts, or otherwise 
     provide funds to persons or entities in the region for 
     projects--
       ``(1) to increase affordable access to advanced 
     telecommunications, entrepreneurship, and management 
     technologies or applications in the region;
       ``(2) to provide education and training in the use of 
     telecommunications and technology;
       ``(3) to develop programs to increase the readiness of 
     industry groups and businesses in the region to engage in 
     electronic commerce; or
       ``(4) to support entrepreneurial opportunities for 
     businesses in the information technology sector.
       ``(b) Source of Funding.--
       ``(1) In general.--Assistance under this section may be 
     provided--
       ``(A) exclusively from amounts made available to carry out 
     this section; or
       ``(B) from amounts made available to carry out this section 
     in combination with amounts made available under any other 
     Federal program or from any other source.
       ``(2) Federal share requirements specified in other laws.--
     Notwithstanding any provision of law limiting the Federal 
     share under any other Federal program, amounts made available 
     to carry out this section may be used to increase that 
     Federal share, as the Commission determines to be 
     appropriate.
       ``(c) Cost Sharing for Grants.--Not more than 50 percent 
     (or 80 percent in the case of a project to be carried out in 
     a county for which a distressed county designation is in 
     effect under section 226) of the costs of any activity 
     eligible for a grant under this section may be provided from 
     funds appropriated to carry out this section.''.

     SEC. 6. PROGRAM DEVELOPMENT CRITERIA.

       (a) Elimination of Growth Center Criteria.--Section 
     224(a)(1) of the Appalachian Regional Development Act of 1965 
     (40 U.S.C. App.) is amended by striking ``in an area 
     determined by the State have a significant potential for 
     growth or''.
       (b) Assistance to Distressed Counties and Areas.--Section 
     224 of the Appalachian Regional Development Act of 1965 (40 
     U.S.C. App.) is amended by adding at the end the following:
       ``(d) Assistance to Distressed Counties and Areas.--For 
     each fiscal year, not less than 50 percent of the amount of 
     grant expenditures approved by the Commission shall support 
     activities or projects that benefit severely and persistently 
     distressed counties and areas.''.

     SEC. 7. GRANTS FOR ADMINISTRATIVE EXPENSES OF LOCAL 
                   DEVELOPMENT DISTRICTS.

       Section 302(a)(1)(A)(i) of the Appalachian Regional 
     Development Act of 1965 (40 U.S.C. App.) is amended by 
     inserting ``(or, at the discretion of the Commission, 75 
     percent of such expenses in the case of a local development 
     district that has a charter or authority that includes the 
     economic development of a county or part of a county for 
     which a distressed county designation is in effect under 
     section 226)'' after ``such expenses''.

     SEC. 8. AUTHORIZATION OF APPROPRIATIONS.

       Section 401 of the Appalachian Regional Development Act of 
     1965 (40 U.S.C. App.) is amended to read as follows:

     ``SEC. 401. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) In General.--In addition to amounts authorized by 
     section 201 and other amounts made available for the 
     Appalachian development highway system program, there are 
     authorized to be appropriated to the Commission to carry out 
     this Act--
       ``(1) $83,000,000 for fiscal year 2002;
       ``(2) $86,000,000 for fiscal year 2003;
       ``(3) $89,000,000 for fiscal year 2004;
       ``(4) $92,000,000 for fiscal year 2005; and
       ``(5) $95,000,000 for fiscal year 2006.
       ``(b) Telecommunications and Technology Initiative.--Of the 
     amounts made available under subsection (a), $10,000,000 for 
     each fiscal year shall be made available to carry out section 
     203.
       ``(c) Availability.--Sums made available under subsection 
     (a) shall remain available until expended.''.

     SEC. 9. TERMINATION.

       Section 405 of the Appalachian Regional Development Act of 
     1965 (40 U.S.C. App.) is amended by striking ``2001'' and 
     inserting ``2006''.

     SEC. 10. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Section 101(b) of the Appalachian Regional Development 
     Act of 1965 (40 U.S.C. App.) is amended in the third sentence 
     by striking ``implementing investment program'' and inserting 
     ``strategy statement''.
       (b) Section 106(7) of the Appalachian Regional Development 
     Act of 1965 (40 U.S.C. App.) is amended by striking 
     ``expiring no later than September 30, 2001''.
       (c) Sections 202, 214, and 302(a)(1)(C) of the Appalachian 
     Regional Development Act of 1965 (40 U.S.C. App.) are amended 
     by striking ``grant-in-aid programs'' each place it appears 
     and inserting ``grant programs''.
       (d) Section 202(a) of the Appalachian Regional Development 
     Act of 1965 (40 U.S.C. App.) is amended in the second 
     sentence by striking ``title VI of the Public Health Service 
     Act (42 U.S.C. 291-291o), the Mental Retardation Facilities 
     and Community Mental Health Centers Construction Act of 1963 
     (77 Stat. 282),'' and inserting ``title VI of the Public 
     Health Service Act (42 U.S.C. 291 et seq.), the Developmental 
     Disabilities Assistance and Bill of Rights Act of 2000 (42 
     U.S.C. 15001 et seq.),''.
       (e) Section 207(a) of the Appalachian Regional Development 
     Act of 1965 (40 U.S.C. App.) is amended by striking ``section 
     221 of the National Housing Act, section 8 of the United 
     States Housing Act of 1937, section 515 of the Housing Act of 
     1949,'' and inserting ``section 221 of the National Housing 
     Act (12 U.S.C. 1715l), section 8 of the United States Housing 
     Act of 1937 (42 U.S.C. 1437f), section 515 of the Housing Act 
     of 1949 (42 U.S.C. 1485),''.
       (f) Section 214 of the Appalachian Regional Development Act 
     of 1965 (40 U.S.C. App.) is amended--
       (1) in the section heading, by striking ``grant-in-aid'' 
     and inserting ``grant'';
       (2) in subsection (a)--
       (A) by striking ``grant-in-aid Act'' each place it appears 
     and inserting ``Act'';
       (B) in the first sentence, by striking ``grant-in-aid 
     Acts'' and inserting ``Acts'';
       (C) by striking ``grant-in-aid program'' each place it 
     appears and inserting ``grant program''; and
       (D) by striking the third sentence;
       (3) by striking subsection (c) and inserting the following:
       ``(c) Definition of Federal Grant Program.--
       ``(1) In general.--In this section, the term `Federal grant 
     program' means any Federal grant program authorized by this 
     Act or any other Act that provides assistance for--
       ``(A) the acquisition or development of land;
       ``(B) the construction or equipment of facilities; or
       ``(C) any other community or economic development or 
     economic adjustment activity.
       ``(2) Inclusions.--In this section, the term `Federal grant 
     program' includes a Federal grant program such as a Federal 
     grant program authorized by--
       ``(A) the Consolidated Farm and Rural Development Act (7 
     U.S.C. 1921 et seq.);
       ``(B) the Land and Water Conservation Fund Act of 1965 (16 
     U.S.C. 460l-4 et seq.);
       ``(C) the Watershed Protection and Flood Prevention Act (16 
     U.S.C. 1001 et seq.);
       ``(D) the Carl D. Perkins Vocational and Technical 
     Education Act of 1998 (20 U.S.C. 2301 et seq.);
       ``(E) the Federal Water Pollution Control Act (33 U.S.C. 
     1251 et seq.);
       ``(F) title VI of the Public Health Service Act (42 U.S.C. 
     291 et seq.);
       ``(G) sections 201 and 209 of the Public Works and Economic 
     Development Act of 1965 (42 U.S.C. 3141, 3149);
       ``(H) title I of the Housing and Community Development Act 
     of 1974 (42 U.S.C. 5301 et seq.); or
       ``(I) part IV of title III of the Communications Act of 
     1934 (47 U.S.C. 390 et seq.).
       ``(3) Exclusions.--In this section, the term `Federal grant 
     program' does not include--
       ``(A) the program for construction of the Appalachian 
     development highway system authorized by section 201;
       ``(B) any program relating to highway or road construction 
     authorized by title 23, United States Code; or
       ``(C) any other program under this Act or any other Act to 
     the extent that a form of financial assistance other than a 
     grant is authorized.''; and
       (4) by striking subsection (d).
       (g) Section 224(a)(2) of the Appalachian Regional 
     Development Act of 1965 (40 U.S.C. App.) is amended by 
     striking ``relative per capita income'' and inserting ``per 
     capita market income''.
       (h) Section 225 of the Appalachian Regional Development Act 
     of 1965 (40 U.S.C. App.)--
       (1) in subsection (a)(3), by striking ``development 
     program'' and inserting ``development strategies''; and
       (2) in subsection (c)(2), by striking ``development 
     programs'' and inserting ``development strategies''.
       (i) Section 303 of the Appalachian Regional Development Act 
     of 1965 (40 U.S.C. App.) is amended--
       (1) in the section heading, by striking ``investment 
     programs'' and inserting ``strategy statements'';
       (2) in the first sentence, by striking ``implementing 
     investments programs'' and inserting ``strategy statements''; 
     and
       (3) by striking ``implementing investment program'' each 
     place it appears and inserting ``strategy statement''.
       (j) Section 403 of the Appalachian Regional Development Act 
     of 1965 (40 U.S.C. App.) is amended--
       (1) in the next-to-last undesignated paragraph, by striking 
     ``Committee on Public Works and Transportation'' and 
     inserting ``Committee on Transportation and Infrastructure''; 
     and
       (2) by striking the last undesignated paragraph.
                                 ______
                                 
      By Mr. DOMENICI:
  S. 1207. A bill to direct the Secretary of Veterans Affairs to 
establish a national cemetery for veterans in the Albuquerque, New 
Mexico, metropolitan area; to the Committee on Veterans' Affairs.
  Mr. DOMENICI. Mr. President, it is with great pleasure and honor that 
I

[[Page S7966]]

rise today to introduce a bill to create a National Veterans Cemetery 
in Albuquerque, NM.
  The men and women who have served in the United States Armed Forces 
have made immeasurable sacrifices to this great Nation. Veterans have 
secured liberty for citizens of the United States since time and 
immemorial. Their sacrifices and those of their families must not be 
forgotten.
  These veterans deserve to be buried in a National Cemetery with their 
fellow comrades. However, the Santa Fe National Cemetery, which serves 
the Northern two thirds of New Mexico, is rapidly approaching maximum 
capacity.
  Some years ago, the Senate passed my legislation to extend the useful 
life of the Santa Fe National Cemetery by authorizing the use of flat 
grave markers. However, that legislation was a temporary measure, 
rather than a solution since the Cemetery will lack sufficient plot 
space by 2008. The solution that I am seeking is to designate a new 
National Cemetery in Albuquerque, NM.
  I believe all New Mexicans are proud of the Santa Fe National 
Cemetery. Since its humble beginnings, it has grown from 39/100 of an 
acre to its current 77 acres.
  The cemetery first opened in 1868 and was designated a National 
Cemetery in April of 1875. Service men and women from all of our 
Nation's wars hold an honored spot within its hallowed ground.
  With that proud history in mind, we must find another suitable site 
to serve as the last resting place for New Mexico's veterans.
  I would like to thank Congresswoman Heather Wilson for bringing this 
important issue to my attention, and for introducing companion 
legislation earlier this year.
  The need to begin planning soon cannot be overstated. Half of New 
Mexico's 180,000 veterans live in the Albuquerque/Santa Fe area. 
Interment rates continue to rise with the passing of our older veterans 
and will peak in 2008.
  Therefore, I am introducing legislation today to create a National 
Veterans Cemetery in Albuquerque, NM.
  The bill simply directs the Secretary of Veterans Affairs to 
establish a National Cemetery in the Albuquerque metropolitan area and 
to submit a report to Congress setting forth a schedule for 
establishing the Cemetery.
  In conclusion I would 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. 1207

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

     SECTION 1. ESTABLISHMENT OF NATIONAL CEMETERY.

       (a) In General.--The Secretary of Veterans Affairs shall 
     establish, in accordance with chapter 24 of title 38, United 
     States Code, a national cemetery in the Albuquerque, New 
     Mexico, metropolitan area to serve the needs of veterans and 
     their families.
       (b) Report.--As soon as practicable after the date of the 
     enactment of this Act, the Secretary shall submit to Congress 
     a report that sets forth a schedule for the establishment of 
     the national cemetery under subsection (a) and an estimate of 
     the costs associated with the establishment of the national 
     cemetery.
                                 ______
                                 
      By Mr. GRAHAM (for himself, Mr. Grassley, Mr. Lieberman, Mr. 
        Durbin, Ms. Landrieu, Mrs. Clinton, and Mr. Schumer):
  S. 1208. A bill to combat the trafficking, distribution, and abuse of 
Ecstasy (and other club drugs) in the United States; to the Committee 
on the Judiciary.
  Mr. GRAHAM. Mr. President, I rise today, along with my colleagues, 
Senators Grassley, Lieberman, Durbin, Landrieu, and Clinton, to 
introduce the Ecstasy Prevention Act of 2001; legislation to combat the 
recent rise in trafficking, distribution and violence associated with 
MDMA, a club drug commonly known as Ecstasy. Ecstasy has become the 
``feel good'' drug of choice among many of our young people, and drug 
pushers are marketing it as a ``friendly'' drug to mostly teenagers and 
young adults.
  Last year I sponsored and Congress passed legislation which drew 
attention to the dangers of Ecstasy and strengthened the penalties 
attached to trafficking in Ecstasy and other ``club drugs.'' Since 
then, Ecstasy use and trafficking continue to grow at epidemic 
proportions, and there are many accounts of deaths and permanent damage 
to the health of those who use Ecstasy. The U.S. Customs Service 
continues to report large increases in Ecstasy seizures, over 9 million 
pills were seized by Customs last year, a dramatic rise from the 
400,000 seized in 1997. According to the United States Customs Service, 
in Fiscal Year 2001, two individual seizures affected by Customs 
Inspectors in Miami, FL totaled approximately 422,000 ecstasy tablets. 
These two seizures alone exceeded the entire amount of ecstasy seized 
by the Customs Service in all of Fiscal Year 1997. The Deputy Director 
of Office of National Drug Control Policy, ONDCP, Dr. Donald Vereen, 
Jr., M.D., M.P.H., recently said that ``Ecstasy is one of the most 
problematic drugs that has emerged in recent years.'' The National Drug 
Intelligence Center, in its most recent publication ``Threat Assessment 
2001,'' has noted that ``no drug in the Other Dangerous Drugs Category 
represents a more immediate threat than MDMA'' or Ecstasy.
  The Office of National Drug Control Policy's Year 2000 Annual Report 
on the National Drug Control Strategy clearly states that the use of 
Ecstasy is on the rise in the United States, particularly among 
teenagers and young professionals. My State of Florida has been 
particularly hard hit by this plague, but so have the States of many of 
my colleagues here. Ecstasy is customarily sold and consumed at 
``raves,'' which are semi-clandestine, all-night parties and concerts. 
Numerous data also reflect the increasing availability of ecstasy in 
metropolitan centers and suburban communities. In the most recent 
release of Pulse Check: Trends in Drug Abuse Mid-year 2000, which 
featured MDMA and club drugs, it was reported that the sale and use of 
club drugs have expanded from raves and nightclubs to high schools, 
streets, neighborhoods and other open venues.
  Not only has the use of Ecstasy exploded, more than doubling among 
12th graders in the last two years, but it has also spread well beyond 
its origin as a party drug for affluent white suburban teenagers to 
virtually every ethnic and class group, and from big cities like New 
York and Los Angeles to rural Vermont and South Dakota.

  And now, this year, law enforcement officials say they are seeing 
another worrisome development, increasingly violent turf wars among 
Ecstasy dealers, and some of those dealers are our young people. 
Homicides linked to Ecstasy dealing have occurred in recent months in 
Norfolk, VA; Elgin, IL, near Chicago; and in Valley Stream, NY. Police 
suspect Ecstasy in other murders in the suburbs, of Washington, DC, and 
Los Angeles, and violence is being linked to Israeli drug dealers in 
Los Angeles and to organized crime in New York City. Ecstasy is also 
becoming widely available on the Internet. Last year, a man arrested in 
Orlando, FL, had been selling Ecstasy to customers in New York.
  The lucrative nature of Ecstasy encourages its importation. 
Production costs are as low as two to twenty-five cents per dose while 
retail prices in the U.S. range from twenty dollars to $45 per dose. 
Manufactured mostly in Europe, in nations such as the Netherlands, 
Belgium, and Spain where pill presses are not controlled as they are in 
the U.S., ecstasy has erased all of the old routes law enforcement has 
mapped out for the smuggling of traditional drugs. And now the trade is 
being promoted by organized criminal elements, both from abroad and 
here. Although Israeli and Russian groups dominate MDMA smuggling, the 
involvement of domestic groups appears to be increasing. Criminal 
groups based in Chicago, Phoenix, Texas, and Florida have reportedly 
secured their own sources of supply in Europe.
  Young Americans are being lulled into a belief that ecstasy, and 
other designer drugs are ``safe'' ways to get high, escape reality, and 
enhance intimacy in personal relationships. The drug traffickers make 
their living off of perpetuating and exploiting this myth.
  I want to be perfectly clear in stating that ecstasy is an extremely 
dangerous drug. In my State alone, between July and December of last 
year, there were 25 deaths in which MDMA or a variant

[[Page S7967]]

were listed as a cause of death, and there were another 25 deaths where 
MDMA was present in the toxicology, although not actually listed as the 
cause of death. This drug is a definite killer.
  The ``Ecstasy Prevention Act of 2001'' renews and enhances our 
commitment toward fighting the proliferation and trafficking of Ecstasy 
and other club drugs. It builds on last year's Ecstasy Anti-
Proliferation Act of 2000 and provides legislation to assist the 
Federal and local organizations that are fighting to stop this 
potentially life-threatening drug. This legislation will allot funding 
for programs that will educate law enforcement officials and young 
people and will assist community-based anti-drug efforts. To that end, 
this bill amends Section 506B(c) of title V of the Public Health 
Service Act, by adding that priority of funding should be given to 
communities that have taken measures to combat club drug trafficking 
and use, to include passing ordinances and increasing law enforcement 
on Ecstasy.
  The bill also provides money for the National Institute on Drug Abuse 
to conduct research and evaluate the effects that MDMA or Ecstasy has 
on an individual's health. And, because there is a fear that the lack 
of current drug tests ability to screen for Ecstasy may encourage 
Ecstasy use over other drugs, the bill directs ONDCP to commission a 
test for Ecstasy that meets the standards of and can be used in the 
Federal Workplace.

  Through this campaign, our hope is that Ecstasy will soon go the way 
of crack, which saw a dramatic reduction in the quantities present on 
our streets after information of its unpredictable impurities and side 
effects were made known to a wide audience. By using this educational 
effort we hope to avoid future deaths and ruined lives.
  The Ecstasy Prevention Act of 2000 can only help in our fight against 
drug abuse in the United States. Customs is working hard to stem the 
flow of Ecstasy into our country. As legislators we have a 
responsibility to stop the proliferation of this potentially life 
threatening drug. The Ecstasy Prevention Act of 2001 will assist the 
Federal and local agencies charged to fight drug abuse by raising the 
public profile on the substance-abuse challenge posed by the increasing 
availability and use of Ecstasy and by focusing on the serious danger 
it presents to our youth.
  We urge our colleagues in the Senate to join us in this important 
effort by co-sponsoring this bill.
                                 ______
                                 
      By Mr. Bingaman (for himself, Mr. Baucus, Mr. Daschle, Mr. 
        Conrad, Mr. Rockefeller, Mr. Breaux, Mr. Kerry, Mr. Torricelli, 
        Mrs. Lincoln, Mr. Jeffords, Mr. Bayh, Mr. Dayton, and Mr. 
        Lieberman):
  S. 1209. A bill to amend the Trade Act of 1974 to consolidate and 
improve the trade adjustment assistance programs, to provide community-
based economic development assistance for trade-affected communities, 
and for other purposes; to the Committee on Finance.
  Mr. BINGAMAN. Mr. President, I rise today to introduce the Trade 
Adjustment Assistance for Workers, Farmers, Communities, and Firms Act 
of 2001, and would like to add Senators Baucus, Daschle, Conrad, 
Rockefeller, Kerry, Torricelli, Jeffords, Lincoln, Breaux, Bayh, 
Dayton, and Lieberman as original co-sponsors.
  This legislation represents the culmination of almost two years of 
effort, including discussions with individuals who process or receive 
trade adjustment assistance, conversations with labor and trade policy 
experts, consultations with the Department of Labor, requests for 
studies from the General Accounting Office, and dialogue between my 
colleagues in the Senate. The legislation is extremely important, as it 
directly addresses the question of how Congress will assist those 
workers and communities negatively impacted by international trade. It 
is also long overdue, as Congress--the Senate in particular--has 
discussed reform of the trade adjustment assistance programs for a 
number of years. The last revision of the trade adjustment assistance 
programs occurred when NAFTA was passed, and we only added to the 
programs at that time, we did not make them compatible in any tangible 
way. I believe it is time to act, and I think we have a unique 
opportunity to act in that there is interest both in Congress and the 
Administration to improve the trade adjustment assistance programs in a 
fundamental and a beneficial way.
  Let me give some background on trade adjustment assistance, and why I 
feel it is so important to address at this time.
  In 1962, when the Trade Expansion Act was being considered in 
Congress, the Kennedy Administration established a basic rule 
concerning international trade as it applies to American workers. When 
someone loses their job as a result of trade agreements entered into by 
the U.S. government, we have an obligation to assist these Americans in 
finding new employment. It is a very straightforward proposition 
really. If you lose your job because of U.S. trade policy, the Federal 
Government should help you in your effort to get a job in a competitive 
industry at a wage equivalent to what you are making now. While I 
believe the United States should be committed to expanding the 
international trading system, I also believe we should help our workers 
get back on their feet when they are harmed by trade agreements.
  I find this proposition to be reasonable, appropriate, and fair. It 
suggests that the U.S. government supports an open, multilateral 
trading system, but recognizes that it is responsible for the negative 
impacts this policy has on its citizens. It suggests that the U.S. 
government believes that an open trading system provides long-term 
advantages for the United States and its people, but the short-terms 
costs must be addressed if the policy is to continue and the United 
States is to remain competitive. It suggests that there is a collective 
interest that must be pursued by the United States in the international 
trading system, but that our individual and community interests must be 
simultaneously protected for the greater good of our country.
  This commitment to American workers has continued over the years--
through both Democratic and Republican administrations and Congresses--
and I am convinced the Trade Adjustment Assistance program should be 
both solidified and expanded at this time. I say this for two reasons.
  First, as I have stated above, because from where I stand American 
workers and communities deserve some tangible help from the competitive 
pressures of the international trading system. We cannot stand by and 
pretend that there is not a need to assist workers and communities 
adjust to the dramatic changes that are now occurring as a result of 
globalization. Trade adjustment assistance will help do this.
  Second, as a practical matter, passage of stronger trade adjustment 
assistance legislation will allow us to intensively pursue 
international trade negotiations and focus on important issues like 
liberalization, transparency, access, inequality, and poverty in the 
international economy. If we support programs like Trade Adjustment 
Assistance--programs that empower American workers, that raise living 
standards, and that advance the prospects of everyone in our country--
then we open the possibility for more comprehensive and beneficial 
international trade agreements. We must understand that globalization 
is inevitable, and over time will only move at an even more rapid pace. 
The question for us in this chamber is not whether we can stop it--we 
cannot--but how we can manage it to benefit the national interest of 
the United States. Trade adjustment assistance programs for workers and 
communities will help do this.
  There is no denying that globalization is a double-edged sword. But 
while there are obvious benefits that come from a more open and 
interdependent trading system, we cannot ignore the problems that come 
as a result. In my State of New Mexico we have seen a number of plant 
closings and lay-offs, including some in my own home town of Silver 
City. These people cannot simply go across the street and look for new 
work. They are people who have been dedicated to their companies and 
have played by the rules over the years. When I talk to these people, 
they ask me: Where am I supposed to work now? Where do I find a job 
with a salary that allows me to support a family, own a house, put food 
on the table, and live a decent life?

[[Page S7968]]

Where are the benefits of free trade for me now that my company has 
gone overseas?
  These are hard questions, especially given their current situation. 
But my answer is that they deserve an opportunity to get income support 
and re-training to rebuild their lives. They deserve a program that 
creates skills that are needed, that moves them into new jobs faster, 
that provides opportunities for the future, that keeps families and 
communities intact. They deserve the recognition that they are 
important, and that through training they can continue to contribute to 
the economic welfare of the United States.
  Trade adjustment assistance offers the potential for this outcome. 
Over the years it has consistently helped workers across the United 
States deal with the transition that is an inevitable part of a 
changing international economic system. It helps people that can work 
and want to work to train for productive jobs that contribute to the 
economic strength of their communities and our country. Although TAA 
has not been without its flaws, it remains the only program we have 
that allows workers and companies to adjust and remain competitive. 
Without it, in my opinion, we are saying unequivocally that we don't 
care what happens to you, that we bear no responsibility for the 
position that you are in, that you are on your own. We can't do that. 
We have made a promise to workers in every administration, both 
Democrat and Republican, and we should continue to do so.

  As we wrote this legislation, we kept a number of fundamental 
objectives in mind:
  First, we wanted to combine existing trade adjustment assistance 
programs and harmonize their various requirements so they would provide 
more effective and efficient results for individuals and communities. 
In doing so, we wanted to provide allowances, training, job search, 
relocation, and support service assistance to secondary workers and 
workers affected by shifts in production. We also ensured that the 
State-based delivery system created through the Workforce Investment 
Act remained intact but tightened the program so response times to lay-
offs and trade adjustment assistance applications would quicker.
  Second, we wanted to recognize the direct correlation between job 
dislocation, job training, and economic development, especially in 
communities that have been hit hard by unemployment. In the past, trade 
adjustment assistance focused specifically on individual re-training, 
but it did not address the possibility that unemployment might be so 
high in a community that jobs were not available for an individual 
after they had completed a training program. To rectify this problem, 
we have created a community trade adjustment assistance program, 
designed to provide strategic planning assistance and economic 
development funding to those communities that need it the most. In 
doing so, we have emphasized the responsibility of regional and local 
agencies and organizations to create a community-based recovery plan 
and activate a response designed to alleviate economic problems in 
their region, and to establish stakeholder partnerships in the 
community that enhance competitiveness through workforce development, 
specific business needs, education reform, and economic development.
  Third, we wanted to encourage greater cooperation between Federal, 
regional, and local agencies that deal with individuals receiving trade 
adjustment assistance. At present, individuals that are receiving trade 
adjustment assistance obtain counseling from one-stop shops in their 
region, but typically this is limited to information related to 
allowances and training. Not available is the other information 
concerning funds available through other Federal departments and 
agencies, such as health care for individuals and their families. To 
prevent the creation of duplicative programs and to use the funds that 
are currently available, we have asked that an inter-agency working 
group on trade adjustment assistance be created and that a inter-agency 
database on Federal, State, and local resources available to TAA 
recipients be established.
  Fourth, we wanted to establish accountability in the trade adjustment 
assistance program. In the past, data concerning trade adjustment 
assistance has been collected, but not in a uniform fashion across all 
States and regions. The Department of Labor and the General Accounting 
Office have done their best to obtain data that allow us to evaluate 
programs and measure outcomes, and we have used this data in writing 
this bill. In the future, however, we need to ensure that Congress has 
the information needed that will allow us to make targeted reforms.
  Finally, we wanted to help family farmers. At present, trade 
adjustment assistance is available for employees of agricultural firms, 
the reason being that firms have individuals that can become 
unemployed. Family farmers, however, are not in this position. For 
them, there is no way to become unemployed, and therefore, no way for 
them to become eligible for trade adjustment assistance.
  This legislation improves upon the current system in a number of 
ways. As I mentioned above, for the first time Congress will establish 
a two-tier system for trade adjustment assistance, recognizing that 
trade can adversely affect both individuals and communities.
  For individuals, the legislation: harmonizes TAA and NAFTA/TAA across 
the board as it relates to eligibility requirements, certification time 
periods, and training enrollment discrepancies, making it one coherent, 
comprehensive program; extends TAA benefits to all secondary workers 
and all workers affected by shifts in production; increases TAA 
benefits so allowances and training are both available for a 78 week 
period; provides relocation and job search allowances to TAA 
recipients; provides support services for individuals, including child-
care and dependent-care; increases the time frame available for breaks 
in training to 30 days; allows individuals who return to work to 
receive training funds for up to 26 weeks; entitles individual 
certified under trade adjustment assistance program to training, and 
caps total training program funding at $300m per year; establishes 
sliding scale wage insurance program at the Department of Labor; 
requires detailed data on program performance by States and Department 
of Labor, plus regular Department of Labor report on efficacy of 
program to Congress; establishes inter-agency group to coordinate 
Federal assistance to individuals and communities; allows individual 
eligible for trade adjustment assistance program a tax credit of 50% on 
amount paid for continuation of health care coverage premiums; requires 
the General Accounting Office to conduct a study of all assistance 
available from Federal Government for workers facing job loss and 
economic distress; requires States to conduct a study of all assistance 
available from Federal Government for workers facing job loss and 
economic distress; provides States with grants not to exceed $50,000 to 
conduct such study; requires General Accounting Office and States to 
submit reports to Senate Finance Committee and House Ways and Means 
Committee within one year of enactment of this Act; establishes that 
the Senate Finance Committee and the House Ways and Means Committee can 
by resolution direct the Secretary to initiate a certification process 
covering any group of workers.

  For communities, the legislation: establishes Office of Community 
Economic Adjustment (OCEA) at Commerce; establishes inter-agency group 
to coordinate Federal assistance to communities; establishes community 
economic adjustment advisors to provide technical assistance to 
communities and act as liaison between community and Federal government 
concerning strategic planning and funding; provides funding for 
strategic planning; provides funding for community economic adjustment 
efforts; responds to the criticism contained in several reports and 
creates a series of performance benchmarks and reporting requirements, 
all of which will allow us to gauge the effectiveness and efficiency of 
the program.
  For companies, the legislation: re-authorizes TAA for firms program.
  For Farmers, Ranchers, and Fishermen, the legislation: establishes 
special provisions that allow TAA to cover family farmers, ranchers, 
and fishermen.

[[Page S7969]]

  Let me conclude by saying that I consider the Trade Adjustment 
Assistance program to be a commitment between our government and the 
American people. It is the only program designed to help American 
workers cope with the changes that occur as a result of international 
trade. Current legislation expires on September 30th of this year, and 
it is time to do something more than a simple reauthorization. I ask my 
colleagues to support this bill.

                          ____________________