[Congressional Record Volume 147, Number 164 (Friday, November 30, 2001)]
[Senate]
[Pages S12247-S12263]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. KENNEDY (for himself, Mr. Brownback, Mrs. Feinstein, Mr. 
        Kyl, Mr. Leahy, Mr. Hatch, Mr. Edwards, Mr. Helms, Mr. Durbin, 
        Mr. Thurmond, Mr. Conrad, Mr. Bond, Mrs. Clinton, Mr. Sessions, 
        Mr. DeWine, and Mrs. Hutchison):
  S. 1749. A bill to enhance the border security of the United States, 
and for other purposes; to the Committee on the Judiciary.
  Mr. KENNEDY. Mr. President, I am honored to join Senator Brownback, 
Senator Feinstein, Senator Kyl, Senator Leahy, Senator Hatch, and other 
colleagues in introducing legislation to strengthen the security of our 
borders,

[[Page S12248]]

improve our ability to screen foreign nationals, and enhance our 
ability to deter potential terrorists. Senator Brownback and I have 
worked closely with Senator Feinstein and Senator Kyl over the last 
month to develop a broad and effective response to the national 
security challenges we face. The need is urgent to improve our 
intelligence and technology capabilities, strengthen training programs 
for border officials and foreign service officers, and improve the 
monitoring of foreign nationals already in the United States.
  In strengthening security at our borders, we must also safeguard the 
unobstructed entry of the more than 31 million persons who enter the 
U.S. legally each year as visitors, students, and temporary workers. 
Many others cross our borders from Canada and Mexico to conduct daily 
business or visit close family members.
  We also must live up to our history and heritage as a nation of 
immigrants. Continued immigration is part of our national well-being, 
our identity as a Nation, and our strength in today's world. In 
defending America, we are also defending the fundamental constitutional 
principles that have made America strong in the past and will make us 
even stronger in the future.
  Our action must strike a careful balance between protecting civil 
liberties and providing the means for law enforcement to identify, 
apprehend and detain potential terrorists. It makes no sense to enact 
reforms that severely limit immigration into the United States. 
``Fortress America,'' even if it could be achieved, is an inadequate 
and ineffective response to the terrorist threat.
  Enforcement personnel at our ports of entry are a key part of the 
battle against terrorism, and we must provide them with greater 
resources, training, and technology. These men and women have a 
significant role in the battle against terrorism. This legislation will 
ensure that they receive adequate pay, can hire necessary personnel, 
are well-trained to identify individuals who pose a security threat, 
have access to important intelligence information, and have the 
technologies they need to enhance border security and facilitate cross-
border commerce.
  The Immigration and Naturalization Service must be able to retain 
highly skilled immigration inspectors. Our legislation provides 
incentives to immigration inspectors by providing them with the same 
benefits as other law enforcement personnel.
  Expanding the use of biometric technology is critical to securing our 
borders. This legislation authorizes the funding needed to bring our 
ports of entry into the biometric age and equip them with biometric 
data readers and scanners.
  We must expand the use of biometric border crossing cards. The time 
frame previously allowed for individuals to obtain these cards was not 
sufficient. This legislation extends the deadline for individuals 
crossing the border to acquire the biometric cards.
  The USA Patriot Act addressed the need for machine-readable 
passports, but it did not focus on the need for machine-readable visas 
issued by the United States. This legislation enables the Department of 
State to raise fees through the use of machine-readable visas and use 
the funds collected from these fees to improve technology at our ports 
of entry.
  Our efforts to improve border security must also include enhanced 
coordination and information-sharing by the Department of State, the 
Immigration and Naturalization Service, and law enforcement and 
intelligence agencies. This legislation will require the President to 
submit and implement a plan to improve access to critical security 
information. It will create an electronic data system to give those 
responsible for screening visa applicants and persons entering the U.S. 
the tools they need to make informed decisions. It also provides for a 
temporary system until the President's plan is fully implemented.
  We must also strengthen our ability to monitor foreign nationals in 
the United States. In 1996, Congress enacted legislation mandating the 
development of an automated entry/exit control system to record the 
entry of every non-citizen arriving in the U.S., and to match it with 
the record of departure. Although the technology is currently available 
for such a system, it has not been put in place because of the high 
costs involved. Our legislation builds on the anti-terrorism bill and 
provides greater direction to the INS for implementing the entry/exit 
system.
  We must improve the ability of foreign service officers to detect and 
intercept potential terrorists before they arrive in the U.S. Most 
foreign nationals who travel here must apply for visas at American 
consulates overseas. Traditionally, consular officers have concentrated 
on interviewing applicants to determine whether they are likely to 
violate their visa status. Although this review is important, consular 
officers must also be trained specifically to screen for security 
threats.
  Terrorist lookout committees will be established in every U.S. 
consular mission abroad in order to focus the attention of our consular 
officers on specific threats and provide essential critical national 
security information to those responsible for issuing visas and 
updating the lookout database.
  This legislation will help restrict visas to foreign nationals from 
countries that the Department of State has determined are sponsors of 
terrorism. It prohibits issuing visas to individuals from countries 
that sponsor terrorism, unless the Secretary of State has determined 
that the person is not a security threat.
  The current Visa Waiver Program, which allows individuals from 
participating countries to enter the U.S. for a limited period without 
visas, strengthens relations between the United States and those 
countries, and encourages economic growth around the world. Given it's 
importance, we must safeguard its continued use, while also ensuring 
that a country's designation as a participant in the program does not 
undermine U.S. law enforcement and security. This legislation will only 
allow a country to be designated as a visa waiver participant, or 
continue to be designated, if the Attorney General and Secretary of 
State determine that the country reports instances of passport theft to 
the U.S. government in a timely manner.
  We must do more to improve our ability to screen individuals along 
our entire North American perimeter. This legislation directs the 
Department of State, the Department of Transportation, the Department 
of Justice and the INS to work with the Office of Homeland Security to 
screen individuals at the perimeter before they reach our continent, 
and to work with Canada and Mexico to coordinate these efforts.
  We must require all airlines to electronically transmit passenger 
lists to destination airports in the United States, so that once planes 
have landed, law enforcement authorities can intercept passengers who 
are on federal lookout lists. United States airlines already do this, 
but some foreign airlines do not. Our legislation requires all airlines 
and all other vessels to transmit passenger manifest information prior 
to their arrival in the United States.
  When planes land at our airports, inspectors are under significant 
time constraints to clear the planes and ensure the safety of all 
departing passengers. Our legislation removes the existing 45 minute 
deadline, and provides inspectors with adequate time to clear and 
secure aircraft.
  In 1996, Congress established a program to collect information on 
non-immigrant foreign students and participants in exchange programs. 
Although a pilot phase of this program ended in 1999, a permanent 
system has not yet been implemented. Congress enacted provisions in the 
recent anti-terrorism bill for the quick and effective implementation 
of this system by 2003, but gaps still exist. This legislation will 
increase the data collected by the monitoring program to include the 
date of entry, the port of entry, the date of school enrollment, and 
the date the student leaves the school. It requires the Department of 
State and INS to monitor students who have been given visas, and to 
notify schools of their entry. It also requires a school to notify the 
INS if a student does not actually report to the school.
  INS regulations provide for regular reviews of over 26,000 
educational institutions authorized to enroll foreign students. 
However, inspections have

[[Page S12249]]

been sporadic in recent years. This legislation will require INS to 
monitor institutions on a regular basis. If institutions fail to comply 
with these and other requirements, they can lose their ability to admit 
foreign students. In addition, this legislation provides for an interim 
system until the program established by the 1996 law is implemented.
  As we work to achieve stronger tracking systems, we must also 
remember that the vast majority of foreign visitors, students, and 
workers who overstay their visas are not criminals or terrorists. It 
would be wrong and unfair, without additional information, to 
stigmatize them.
  The USA Patriot Act was an important part of the effort to improve 
immigration security, but further action is needed. This legislation is 
a needed bipartisan effort to strengthen the security of our borders 
and enhance our ability to prevent future terrorist attacks, while also 
reaffirming our tradition as a Nation of immigrants. I urge my 
colleagues to support it.
  Mr. BROWNBACK. Mr. President, the terrorist attacks of September 11 
have unsettled the public's confidence in our Nation's security and 
have raised concerns about whether our institutions are up to the task 
of intercepting and thwarting would-be terrorists. Given that the 
persons responsible for the attacks on the World Trade Center and the 
Pentagon came from abroad, our citizens understandably ask how these 
people entered the United States and what can be done to prevent their 
kind from doing so again. Clearly, our immigration laws and policies 
are instrumental to the war on terrorism. While the battle may be waged 
on several fronts, for the man or woman on the street, immigration is 
in many ways the front line of our defense.
  The immigration provisions in the anti-terrorist bill passed earlier 
this month, the USA PATRIOT Act of 2001, represent an excellent first 
step toward improving our border security, but we must not stop there. 
Our Nation receives millions of foreign nationals each year, persons 
who come to the United States to visit family, to do business, to tour 
our sites, to study and learn. Most of these people enter lawfully and 
mean us well. They are our relatives, our friends, and our business 
partners. They are good for our economy and, as witnesses to our 
democracy and our way of life, become our ambassadors of good will to 
their home countries.
  However, the unfortunate reality is that a fraction of these people 
mean us harm, and we must take intelligent measures to keep these 
people out. For that reason, I am pleased to introduce today, along 
with my colleagues Senator Kennedy, Senator Kyl, Senator Feinstein, 
Senator Hatch, Senator Leahy, and others, legislation that looks 
specifically toward strengthening our borders and better equipping the 
agencies that protect them. The Enhanced Border Security and Visa Entry 
Reform Act of 2001 represents an earnest, thoughtful, and bipartisan 
effort to refine our immigration laws and institutions to better combat 
the evil that threatens our Nation.
  This legislation recognizes that the war on terrorism is, in large 
part, a war of information. To be successful, we must improve our 
ability to collect, compile, and utilize information critical to our 
safety and national security. This bill requires that the agencies 
tasked with screening visa applicants and applicants for admission, 
namely the Department of State and the Immigration and Naturalization 
Service, be provided with the necessary law enforcement and 
intelligence information that will enable these agencies to identify 
alien terrorists. By directing better coordination and access, this 
legislation will bring together the agencies that have the information 
and those that need it. With input from the Office of Homeland 
Security, this bill will make prompt and effective information-sharing 
between these agencies a reality.
  In complement to the USA PATRIOT Act, this legislation provides for 
necessary improvements in the technologies used by the State Department 
and the Service. It provides funding for the State Department to better 
interface with foreign intelligence information and to better staff its 
infrastructure. It also provides the Service with guidance on the 
implementation of the Integrated Entry and Exit Data System, pointing 
the Service to such tools as biometric identifiers in immigration 
documents, machine readable visas and passports, and arrival-departure 
and security databases.
  To the degree that we can realistically do so, we should attempt to 
intercept terrorists before they reach our borders. Accordingly, we 
must consider security measures not only at domestic ports of entry but 
also at foreign ports of departure. To that end, this legislation 
directs the State Department and the Service, in consultation with 
Office of Homeland Security, to examine, expand, and enhance screening 
procedures to take place outside the United States, such as 
preinspection and preclearance. It also requires international air 
carriers to transmit passenger manifests for pre-arrival review by the 
Service. Further, it eliminates the 45-minute statutory limit on 
airport inspections, which many feel compromises the Service's ability 
to screen arriving flights properly. Finally, since we should 
ultimately look to expand our security perimeter to include Canada and 
Mexico, this bill requires these agencies to work with our neighbors to 
create a collaborative North American Security Perimeter.
  While this legislation mandates certain technological improvements, 
it does not ignore the human element in the security equation. This 
bill requires that ``terrorist lookout committees'' be instituted at 
each consular post and that consular officers be given special training 
for identifying would-be terrorists. It also provides special training 
to border patrol agents, inspectors, and foreign service officers to 
better identify terrorists and security threats to the Unites States. 
Moreover, to help the Service retain its most experienced people on the 
borders, this bill provides the Service with increased flexibility in 
pay, certain benefit incentives, and the ability to hire necessary 
support staff.
  Finally, this legislation considers certain classes of aliens that 
raise security concerns for our country: nationals from states that 
sponsor terrorism and foreign students. With respect to the former, 
this bill expressly prohibits the State Department from issuing a 
nonimmigrant visa to any alien from a country that sponsors terrorism 
until it has been determined that the alien does not pose a threat to 
the safety or national security of the United States. With respect to 
the latter, this legislation would fill data and reporting gaps in our 
foreign student programs by requiring the Service to electronically 
monitor every stage in the student visa process. It would also require 
the school to report a foreign student's failure to enroll and the 
Service to monitor schools' compliance with this reporting requirement.
  While we must be careful not to compromise our values or our economy, 
we must take intelligent, immediate steps to enhance the security of 
our borders. This legislation would implement many changes that are 
vital to our war on terrorism. I therefore urge my colleagues to 
support it.
  Mrs. FEINSTEIN. Mr. President, I am pleased to join Senators Kennedy, 
Brownback, and Kyl in introducing the Enhanced Border Security and Visa 
Entry Reform Act of 2001. We submit this legislation with 16 sponsors.
  This legislation represents a consensus, drawing upon the strengths 
of both the Visa entry Reform Act of 2001, which I introduced with my 
colleague from Arizona, Senator Kyl, and the Enhanced border Security 
Act of 2001, which Senators Kennedy and Brownback introduced.
  I believe the legislation we are introducing today will garner 
widespread support from our colleagues on both sides of the aisle.
  September 11 clearly pointed out the shortcomings of the immigration 
and visa system. For example: All 19 terrorist hijackers entered the 
U.S. legally with valid visas. Three of the hijackers had remained in 
the U.S. after their visas had expired. One entered on a foreign 
student visa. Another, Mohammed Atta had filed an application to change 
status to M-1, which was granted in July. However, Mr. Atta sought 
admission and was admitted to the United States based on his then 
current B-1 visitor visa.
  Most people don't realize how many people come into our country; how 
little we know about them; and whether they leave when required.

[[Page S12250]]

  Consider the following: The Visa Waiver Program: 23 million people 
from 29 different countries; no visas; little scrutiny; no knowledge 
where they go in the U.S. or whether they leave once their visas 
expire. The INS estimates that over 100,000 blank passports have been 
stolen from government offices in participating countries in recent 
years.
  Abuse of the VISA Waiver Program poses threats to U.S. national 
security and increases illegal immigration. For example, one of the co-
conspirators in the World Trade Center bombing of 1993 deliberately 
chose to use a fraudulent Swedish passport to attempt entry into the 
U.S. because of Sweden's participation in the Visa Waiver Program.
  Foreign Student Visa Program: more than 500,000 foreign nationals 
entering each year; within the last 10 years, 16,000 came from such 
terrorist supporting states as Iran, Iraq, Sudan, Libya, and Syria.
  The foreign student visa system is one of the most under-regulated 
systems we have today. We've seen bribes, bureaucracy, and other 
problems with this system that leave it wide open to abuse by 
terrorists and other criminals.
  For example, in the early 1990s, five officials at four California 
colleges, were convicted of taking bribes, providing counterfeit 
education documents, and fraudulently applying for more than 100 
foreign student visas.
  It is unclear what steps the INS took to find and deport the foreign 
nationals involved in this scheme.
  Each year, we have 300 million border crossings. For the most part, 
these individuals are legitimate visitors to our country. We currently 
have no way of tracking all of these visitors.
  Mohamed Atta, the suspected ringleader of the attack, was admitted as 
a non-immigrant visitor in July 2001. He traveled freely to and from 
the U.S. during the past 2 years and was, according to the INS, in 
``legal status'' the day of the attack. Other hijackers also traveled 
with ease throughout the country.
  It has become all too clear that without an adequate tracking system, 
our country becomes a sieve, creating ample opportunities for 
terrorists to enter and establish their operations without detection.
  I sit as the Chair of the Judiciary Committee's Subcommittee on 
Technology, Terrorism and Government Information. Last month, we held a 
hearing on the need for new technologies to assist our government 
agencies in keeping terrorists out of the United States.
  The testimony at that hearing was very illuminating. We were given a 
picture of an immigration system in chaos, and a border control system 
rife with vulnerabilities. Agency officials don't communicate with each 
other. Computers are incompatible. And even in instances here 
technological leaps have been made, like the issuance of more than 4.5 
million ``smart'' border crossing cards with biometric data, the 
technology is not even used.
  Personally, I am astonished that a person can apply for a visa and 
granted a visa by the State Department, and that there is no mechanism 
by which the FBI or CIA can raise a red flag with regard to the 
individual if he or she is known to have links to terrorist groups or 
otherwise pose a threat to national security.
  In the wake of September 11, it is unconscionable that a terrorist 
might be permitted to enter the U.S. simply because our government 
agencies don't share information.
  Indeed, what we have discovered in the aftermath of the September 11 
terrorist attacks was that the perpetrators of these attacks had a 
certain confidence that our immigration laws could be circumvented 
where necessary.
  The terrorists did not have to steal into the country as stowaways on 
sea vessels, or a border-jumpers evading federal authorities. Most, if 
not all, appeared to have come in with temporary visas, which are 
routinely granted to tourists, students, and other short-term visitors 
to the U.S.
  Let me talk about the legislation that I cosponsored with Senators 
Kennedy, Brownback, and Kyl.
  First, a key component of this solution is the creation of an 
interoperable data system that allows the Department of State, the INS, 
and other relevant Federal agencies to obtain critical information 
about foreign nationals who seek entry into or who have entered the 
United States.
  Right now, our government agencies use different systems, with 
different information, in different formats. And they often refuse to 
share that information with other agencies within our own government. 
This is not acceptable.
  When a terrorist presents himself at a consular office asking for a 
visa, or at a border crossing with a passport, we need to make sure 
that his name and identifying information is checked against an 
accurate, up-to-date, and comprehensive database. Period.
  The Enhanced Border Security and Visa Entry Reform Act would require 
the creation of this interoperable data system, and will require the 
cooperation of all U.S. government agencies in providing accurate and 
compatible information to that system.
  In addition, the interoperable data system would include 
sophisticated, linguistically-based, name-matching algorithms so that 
the computers can recognize that ``Muhamad Usam Abdel Raqeeb'' and 
``Haj Mohd Othman Abdul Rajeeb,'' are transliterations of the same 
name. In other words, this provision would require agencies to ensure 
that names can be matched even when they are stored in different sets 
of fields in different databases.
  Incidentally, this legislation also contains strict privacy 
provisions, limiting access to this database to authorized Federal 
officials. And the bill contains severe penalties for wrongful access 
or misuse of information contained in the database.
  Second, this legislation includes concrete steps to restore integrity 
to the immigration and visa process. including the following: The 
legislation would require all foreign nationals to be fingerprinted 
and, when appropriate, submit other biometric data, to the State 
Department when applying for visa. This provision should help eliminate 
fraud, as well as identify potential threats to the country before they 
gain access.
  We include reforms of the visa waiver program, so that any country 
wishing to participate in that program must begin to provide its 
citizens with tamper-proof, machine-readable passports. The passports 
must contain biometric data by October 26, 2003, to help verify 
identity at U.S. ports of entry.
  Prior to admitting a foreign visitor from a visa waiver country, the 
INS inspector must first determine that the individual does not appear 
in any ``lookout'' databases.
  In addition, the INS would be required to enter stolen passport 
numbers in the interoperable data system within 72 hours after 
receiving notification of the loss or theft of a passport.
  We would establish a robust biometric visa program. By October 26, 
2003, newly issued visas must contain biometric data and other 
identifying information, like more than 4 million already do on the 
Southwest border, and, just as importantly, our own officials at the 
border and other ports of entry must have the equipment necessary to 
read the new biometric cards.
  We worked closely with the university community in crafting new, 
strict requirements for the student visa program to crack down on 
fraud, make sure that students really are attending classes, and give 
the government the ability to track any foreign national who arrives on 
a student visa but fails to enroll in school.
  The legislation prohibits the issuance of a student visa to any 
citizen of a country identified by the State Department as a terrorist-
supporting nation. There is a waiver provision to this prohibition, 
however, allowing the State Department to allow students even from 
these countries in special cases.
  We require that airlines and cruiseliners provide passenger and crew 
manifests to immigration officials before arrival, so that any 
potential terrorists or other wrongdoers can be singled out before they 
arrive in this country and disappear among the general populace.
  The bill contains a number of other related provisions as well, but 
the gist of the legislation is this: Where we can provide law 
enforcement more information about potentially dangerous foreign 
nationals, we do so. Where we can reform our border-crossing system to 
weed out or deter terrorists or others

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who would do us harm, we do so. And where we can update technology to 
meet the demands of the modern war against terror, we do that as well.
  As we prepare to modify our immigration system, we must be sure to 
enact changes that are realistic and feasible. We must also provide the 
necessary tools to implement them.
  Our Nation will be no more secure tomorrow if we create new top-of-
the line databases and do not see to it that government agencies use 
them to share and receive critical information.
  We will be no safer tomorrow if we do not create a workable entry-
exit tracking system to ensure that terrorists do not enter the U.S. 
and blend into our communities without detection.
  And we will be no safer if we simply authorize new programs and 
information sharing, but do not provide the resources necessary to put 
the new technology at the border, train agents appropriately, and 
require our various government agencies to cooperate in this effort.
  We have a lot to do but I am confident that we will move swiftly to 
address these important issues. The legislation Senators Kennedy, 
Brownback, Kyl, and I introduce today is an important, and strong, 
first step. But this is only the beginning of a long, difficult 
process.
  In closing, I would like to respond to concerns that this bill is 
``anti-immigrant.'' We are a nation of immigrants. Indeed, the 
overwhelming percentage of the people who come to live in this country 
do so to enjoy the blessings of liberty, equality, and opportunity. The 
overwhelming percentage of the people who visa this country mean us no 
harm.
  But there are several thousand innocent people, including foreign 
nationals, who were killed on September 11 in part because a network of 
fanatics determined to wreak death, destruction, and terror exploited 
weaknesses in our immigration system to come here, to stay here, to 
study here, and to kill here.
  We learned at Oklahoma City that not all terrorists are foreign 
nationals. But the world is a dangerous place, and there are peopled 
and regimes that would destroy us if they had the chance.
  We are all casualties of September 11. Our society has necessarily 
changed as our perception of the threats we face has changed. The 
scales have fallen from our eyes.
  It is unfortunate that we need to address the vulnerabilities in our 
immigration system that September 11 painfully revealed. The changes we 
need to make in that system will inconvenience people. We can ``thank'' 
the terrorists for that.
  Once implemented, however, those changes will make it easier for law-
abiding foreign to visit or study here, and for law-abiding immigrants 
who want to live here. More important, once they are here, their 
safety, and ours, will be greatly enhanced.
  We must do everything we can to deter the terrorists, here and 
abroad, who would do us harm from Oklahoma City to downtown Manhattan, 
we have learned just how high the stakes are. It would dishonor the 
innocent victims of September 11 and the brave men and women of our 
armed forces who are defending our liberty at this very instant, if we 
flag or fail in this effort.
  I urge my colleagues to support us on this legislation.
  Mr. KYL. Mr. President, today, Senators Kennedy, Brownback, Feinstein 
and I join together to introduce the Enhanced Border Security and Visa 
Entry Reform Act of 2001. This bill represents the merging of counter-
terrorism legislation recently introduced by Senator Feinstein and I 
and separately by Senators Kennedy and Brownback. This bipartisan, 
streamlined product, cosponsored by both the chairman and ranking 
Republican of the Senate Judiciary Committee, will significantly 
enhance our ability to keep terrorists out of the United States and 
find terrorists who are here. I also want to reiterate my appreciation 
to Senators Kennedy, Feinstein, and Brownback, and especially to their 
staffmembers, for their hard work and cooperation in developing this 
bill. I am hopeful that we can work together toward the bill's passage, 
and signature into law, before the 107th Congress adjourns for the 
year.
  Last month the President signed into law anti-terrorism legislation 
that will provide many of the tools necessary to keep terrorists out of 
the United States, and to detain those terrorists who have entered our 
country. These tools, while all important, will be significantly 
enhanced by the bill we introduce today.
  Under the Border Security and Visa Entry Reform Act of 2001, the 
Homeland Defense director will be responsible for the coordination of 
Federal law enforcement and intelligence communities, the Departments 
of Transportation, State, Treasury, and all other relevant agencies to 
develop and implement a comprehensive, interoperable electronic data 
system for these governmental agencies to find and keep out terrorists. 
That system will be up and running by October 26, 2003, 2 years after 
the signing into law of the USA Patriot Act.
  Under our bill, terrorists will be deprived of the ability to present 
fake or altered international documents in order to gain entrance, or 
stay here. Foreign nationals will be provided with new travel 
documents, using new technology that will include a person's 
fingerprint(s) or other form of ``biometric'' identification. These 
cards will be used by visitors upon exit and entry into the United 
States, and will alert authorities immediately if a visa has expired or 
a red flag is raised by a federal agency. Under our bill, any foreign 
passport or other travel document issued after October 26, 2003 will 
have to contain a biometric component. The deadline for providing for a 
way to compare biometric information presented at the border is also 
October 26, 2003.
  Another provision of the bill will further strengthen the ability of 
the U.S. Government to prevent terrorists from using our ``Visa Waiver 
Program'' to enter the country. Under our bill, the 29 participating 
Visa Waiver nations will, in addition to the USA Patriot Act Visa 
Waiver reforms, be required to report stolen passport numbers to the 
State Department; otherwise, a nation is prohibited from participating 
in the program. In addition, our bill clarifies that the Attorney 
General must enter stolen passport numbers into the interoperable data 
system within 72 hours of notification of loss or theft. Until that 
system is established, the Attorney General must enter that information 
into any existing data system.
  Another section of our bill will make a significant difference in our 
efforts to stop terrorists from ever entering our country. Passenger 
manifests on all flights scheduled to come to the United States must be 
forwarded in real-time, and then cleared, by the Immigration and 
Naturalization Service prior to the flight's arrival. All cruise and 
cargo lines and cross-border bus lines will also have to submit such 
lists to the INS. Our bill also removes a current U.S. requirement that 
all passengers on flights to the United States be cleared by the INS 
within 45 minutes of arrival. Clearly, in some circumstances, the INS 
will need more time to clear all prospective entrants to the United 
States. These simple steps will give appropriate officials advance 
notice of foreigners coming into the country, particularly visitors or 
immigrants who pose security threats to the United States.
  The Border Security and Visa Entry Reform Act will also provide much 
needed reforms and requirements in our U.S. foreign student visa 
program, which has allowed numerous foreigners to enter the country 
without ever attending classes and, for those who do attend class, with 
lax or no oversight of such students by the Federal Government. Our 
bill will change that, and will require that the State Department 
within 4 months, with the concurrence of the Department, maintain a 
computer database with all relevant infromation about foreign students.
  In the past decade, more than 16,000 people have entered the United 
States on student visas from states included on the Government's list 
of terrorist sponsors. Notwithstanding that Syria is one of the 
countries on the list, the State Department recently issued visas to 14 
Syrian nationals so that they could attend flight schools in Fort 
Worth, TX. United States educational institutions will be required to 
immediately notify the INS when a foreign student violates the term of 
the visa by failing to show up for class or leaving

[[Page S12252]]

school early. Our legislation will prevent most persons from obtaining 
student visas if they come from terrorist-supporting states such as 
Iran, Iraq, Sudan, Libya, and Syria, unless the Secretary of State and 
Attorney General determine that such applicants do not pose a threat to 
the safety or national security of the United States.

  For the first time since the War of 1812, the United States has faced 
a massive attack from foreigners on our own soil. Every one of the 
terrorists who committed the September 11 atrocities were foreign 
nationals who had entered the United States legally through our visa 
system. None of them should have been allowed entry due to their ties 
to terrorist organizations, and yet even those whose visas had expired 
were not expelled.
  Mohamed Atta, for example, the suspected ringleader of the attacks, 
was allowed into the United States on a tourist visa, even though he 
made clear his intentions to go to flight school while in the United 
States. Clearly, at the very least, he should have been queried about 
why he was using his tourist visa to attend flight school.
  Another hijacker, Hani Hanjour, was here on a student visa that had 
expired as of September 11. Hani Hanjour never attended class. In 
addition, at least two other visitor visa-holders overstayed their 
visa. In testimony before the Terrorism subcommittee of which I am the 
ranking member, U.S. officials have told us that they possess little 
information about foreigners who come into this country, how many there 
are, and even whether they leave when required by their visas.
  America is a nation that welcomes international visitors, and should 
remain so. But terrorists have taken advantage of our system and its 
openness. Now that we face new threats to our homeland, it is time we 
restore some balance to our consular and immigration policies.
  As former chairman and now ranking Republican of the Judiciary 
Committee's Terrorism Subcommittee, I have long suggested, and strongly 
supported, many of the anti-terrorism and immigration initiatives now 
being advocated by Republicans and Democrats alike. In my sadness about 
the overwhelming and tragic events that took thousands of precious 
lives, I am resolved to push forward on all fronts to fight against 
terrorism. That means delivering justice to those who are responsible 
for the lives lost on September 11, and reorganizing the institutions 
of government so that the law-abiding can continue to live their lives 
in freedom. It is extremely important that we pass the Border Security 
and Visa Entry Reform Act before we adjourn for the year. To all of the 
Senators who worked on this bill, including Senators Kennedy, 
Feinstein, Brownback, and Hatch, Snowe, Cantwell, Bond, Sessions, 
Thurmond and others I again want to express my appreciation. This bill 
will make a difference.
                                 ______
                                 
      By Mr. HOLLINGS (for himself, Mr. McCain, Mr. Breaux, and Mr. 
        Smith of Oregon):
  S. 1750. A bill to make technical corrections to the hazmat 
provisions of the USA PATRIOT Act; to the Committee on Commerce, 
Science, and Transportation.
  Mr. HOLLING. Mr. President, today I join with my colleagues Senators 
McCain, Breaux, and Smith in introducing the Hazmat Endorsements 
Requirement Act. We introduce this legislation today to improve the 
implementation and effectiveness of Section 1012 of H.R. 3162, The 
Uniting and Strengthening America by Providing Appropriate Tools 
Required to Intercept and Obstruct Terrorism, (USA PATRIOT), Act of 
2001, [Public Law 107-56], enacted on October 26, 2001.
  The legislation we are introducing today primarily addresses 
technical corrections to Section 1012 of the USA PATRIOT Act. Due to 
procedural agreements, the Senate consideration of H.R. 3162 did not 
provide for any amendments. I did however, engage in a colloquy with 
Chairman Leahy to state my concerns with section 1012 and my desire to 
address my concerns over substance, scope and procedure in subsequent 
legislation. The changes in legislation assume continuation of the 
basic framework of section 1012 requiring that one, States request 
security checks from the Attorney General for driver license applicants 
who would transport certain hazardous materials; second, the Attorney 
General conduct checks of relevant information systems and then provide 
the results to the Department of Transportation; and third, the 
Department of Transportation notify requesting States whether 
applicants pose a security threat.
  Our bill does the following: clarifies the definition of hazardous 
materials and gives the Secretary the ability to expand the list as 
national security issues require; defines disqualifying offenses that 
would result in the denial of a hazardous materials endorsement; 
provides for an appeals process in the event an individual is denied a 
hazardous materials endorsement based on the results of a background 
check; extends the requirement for background checks to Canadian and 
Mexican drivers who drive commercial vehicles carrying hazardous 
materials in the United States; establishes penalties for fraudulently 
issued or obtained licenses; and requires the Department of 
transportation to report back to the Congress on security improvements 
that can be made in the transport of hazardous materials.
  Approximately 10 million drivers have commercial drivers licenses and 
almost 2.5 million of those drivers have hazardous materials 
endorsements. The law has not required criminal background checks for 
applicants seeking CDLs. However, section 1012 of the USA PATRIOT Act 
now requires any driver of a commercial motor vehicle who transports 
hazardous materials to have a criminal background check prior to being 
issued a commercial drivers license (CDL). That requirement became 
effective upon the enactment of that law in October.
  Since the passage of the USA PATRIOT Act, we have worked to address 
the concerns raised by all interested parties involved in this issue, 
including the administration, the States, public safety officials, 
commercial motor vehicle drivers, and motor carriers. While everyone 
has supported the concept of performing background checks, it has not 
yet been implemented because the infrastructure for conducting 
background checks does not exist. We believe the provisions contained 
in this legislation will aid the administration, the State licensing 
agencies, and all interested parties by providing a clear understanding 
of the requirements associated with granting a license permitting a 
driver to transport hazardous cargo.

  Senator Breaux chaired a hearing on October 10, 2001, on bus and 
truck security and hazardous materials licensing for commercial 
drivers. Of particular concern were reports that terrorists may have 
been seeking licenses to drive trucks with hazardous materials. On 
October 4, 2001, a Federal grand jury in Pittsburgh indicted 16 people 
on charges of fraudulently obtaining commercial driver's licenses, 
including licenses to haul hazardous materials. Other incidents include 
a report that in September the Federal Bureau of Investigation, FBI, 
arrested a man, Nabil Al-Marabh, linked to an associate of Osama bin 
Laden, who had a hazardous materials drivers license. Al-Marabh had a 
commercial driver's license issued by the State of Michigan.. That 
license, issued on September 11, 2000, allowed Al-Marabh to operate 
vehicles weighing 100,000 pounds or more. Additionally, Al-Marabh 
obtained what is called an ``endorsement'' the same day that allowed 
him to transport hazardous materials. He took a test and paid the fee 
to obtain that endorsement.
  During that hearing, many options for increasing the security of 
hazardous materials shipments were discussed, including requiring 
background checks for drivers of commercial vehicles carrying hazardous 
materials. As chairman, I am committed to working with Senators McCain, 
Breaux, and Smith to introduce a more comprehensive legislative 
proposal next year which will reauthorize the Hazardous Materials 
Transportation Act, HMTA. Reauthorization of the HMTA addresses 
training, emergency response, safety and security concerns for all 
movements of hazardous materials.
  Annually, more than four billion tons of hazardous materials, an 
estimated 800,000 hazardous materials shipments daily, are transported 
by land, sea, and air in the United States. While hazardous materials 
transportation invoices all transportation modes, truck transport 
typically accounts for the

[[Page S12253]]

majority of all hazardous materials shipments, although the tonnage 
transported is more equally divided between truck and rail.
  There are 3.12 million tractor-trailer drivers in the United States. 
The entire trucking industry employs more than 9 million people. Trucks 
annually transport 6 billion tons of freight, representing 63 percent 
of the total domestic tonnage shipped. There are 540,000 trucking 
companies in the U.S., and 80 percent of those have 20 or fewer trucks. 
The types of vehicles carrying hazardous materials on the Nation's 
highways range from cargo tank trucks to conventional tractor-trailers 
and flatbeds that carry large portable tank containers.
  In 2000, there were 17,347 hazardous materials incidents related to 
transportation in the United States, 14,861 via highway transportation. 
These incidents are mostly minor releases of chemicals; only 244 
incidents caused injuries, and there were 13 deaths.
  Since the events of September 11, 2001, a number of legislative 
proposals have been introduced to address terrorism and the prevention 
of terrorist acts within the United States. I am pleased to report that 
the Commerce Committee has addressed security concerns in a bipartisan 
manner in all modes of transportation. On November 19, 2001, the 
President signed into law S. 1447, the Aviation Security Act, P.L. 107-
71. On August 2, 2001, the Commerce Committee favorably reported S. 
1214, the Port and Maritime Security Act, and on October 17, 2001, the 
Commerce Committee unanimously approved S. 1550, the Rail Security Act. 
Both of these measures are awaiting consideration by the Senate.
  This legislation which addresses the important issue of the safety of 
hazardous materials transportation on our Nation's highways. This 
legislation should be considered as soon as possible. We must ensure 
the hazardous materials transported over our Nation's roads are carried 
by qualified drivers. Our legislation accomplishes this in a manner 
that provides clear and consistent requirements for licensing with 
minimum bureaucratic red tape and delay in the issuance of licenses to 
eligible drivers.
  I would request that the text of this bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1750

       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 ``Hazmat Endorsement 
     Requirements Act''.

     SEC. 2. LIMITATION ON ISSUANCE OF HAZMAT LICENSES.

       (a) In General.--Chapter 313 of title 49, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 31318. Issuance, renewal, upgrade, transfer, and 
       periodic check of hazmat licenses

       ``(a) In General.--A State may not issue, renew, upgrade, 
     or transfer a hazardous materials endorsement for a 
     commercial driver's license to any individual authorizing 
     that individual to operate a commercial motor vehicle 
     transporting a hazardous material in commerce unless the 
     Secretary of Transportation has determined that the 
     individual does not pose a security risk warranting denial of 
     the endorsement or license. Each State shall implement a 
     program under which a background records check is requested--
       ``(1) whenever a commercial driver's license with a 
     hazardous materials endorsement is to be issued, renewed, 
     upgraded, or transferred; and
       ``(2) periodically (as prescribed by the Secretary by 
     regulations) for all other individuals holding a commercial 
     driver's license with a hazardous materials endorsement.
       ``(b) Determination of Security Risk.--
       ``(1) In general.--An individual may not be denied a 
     hazardous materials endorsement for a commercial driver's 
     license under subsection (a) unless the Secretary determines 
     that individual--
       ``(A) in the 10-year period ending on the date of the 
     background investigation, was convicted (or found not guilty 
     by reason of insanity) of an offense described in section 
     44936(b)(1)(B) of this title (disregarding the matter in 
     clause (xiv)(IX) after `1 year,');
       ``(B) is described in section 175b(b)(2) of title 18, 
     United States Code; or
       ``(C) may be denied admission to the United States or 
     removed from the United States under subclause (IV), (VI), or 
     (VII) of section 212(a)(3)(B)(i) of the Immigration and 
     Nationality Act (8 U.S.C. 1182(a)(3)).
       ``(2) Mitigating circumstances.--In making a determination 
     under paragraph (1), the Secretary shall give consideration 
     to the circumstances of any disqualifying act or offense, 
     restitution made by the individual, Federal and State 
     mitigation remedies, and other factors from which it may be 
     concluded that the individual does not pose a security risk 
     warranting denial of the license or endorsement.
       ``(3) Appeals process.--The Secretary shall establish an 
     appeals process under this section for individuals found to 
     be ineligible for a hazardous materials endorsement for a 
     commercial driver's license that includes notice and an 
     opportunity for a hearing.
       ``(c) Background Records Check.--
       ``(1) In general.--Upon the request of a State regarding 
     issuance of a hazardous materials endorsement for a 
     commercial driver's license to an individual, the Attorney 
     General shall--
       ``(A) conduct a background records check regarding the 
     individual;
       ``(B) take appropriate criminal enforcement action required 
     by information developed or obtained in the course of the 
     background check; and
       ``(C) upon completing the background records check, notify 
     the Secretary of Transportation of the completion and results 
     of the background records check.
       ``(2) Scope.--A background records check regarding an 
     individual under this subsection shall consist of the 
     following:
       ``(A) A check of the relevant criminal history data bases.
       ``(B) In the case of an alien, a check of the relevant data 
     bases to determine the status of the alien under the 
     immigration laws of the United States.
       ``(C) As appropriate, a check of the relevant international 
     data bases through Interpol-U.S. National Central Bureau or 
     other appropriate means.
       ``(D) Review of any other national security-related 
     information or data base identified by the Attorney General 
     for purposes of such a background records check.
       ``(3) Secretary to notify state.--After making the 
     determination required by subsection (b)(1), the Secretary of 
     Transportation shall promptly notify the State of the 
     determination.
       ``(d) Reporting Requirement.--Each State shall submit to 
     the Secretary of Transportation, at such time and in such 
     manner as the Secretary may prescribe, such information as 
     the Secretary may require, concerning each individual to whom 
     the State issues a hazardous materials endorsement for a 
     commercial driver's license.
       ``(e) Restrictions on Use and Maintenance of Information.--
       ``(1) FOIA not to apply.--Information obtained by the 
     Attorney General or the Secretary of Transportation under 
     this section may not be made available to the public under 
     section 552 of title 5, United States Code.
       ``(2) Confidentiality.--Any information other than criminal 
     acts or offenses constituting grounds for disqualification 
     under subsection (b)(1) shall be maintained confidentially by 
     the Secretary and may be used only for making determinations 
     under this section.
       ``(f) Renewal Waiver for Background Check Delays.--The 
     Secretary shall provide a waiver for State compliance with 
     the requirements of subsection (a) for renewals to the extent 
     necessary to avoid the interruption of service by a license 
     holder while a background check is being completed.
       ``(g) Definitions.--In this section:
       ``(1) Hazardous materials.--The term `hazardous material' 
     means--
       ``(A) a substance or material designated by the Secretary 
     under section 5103(a) of this title for which the Secretary 
     requires placarding of a commercial motor vehicle 
     transporting it in commerce; and
       ``(B) a substance or material, including a substance or 
     material on the Centers for Disease Control's list of select 
     agents, designated as a hazardous material by the Secretary 
     under procedures to be established by the Secretary.
       ``(2) Alien.--The term `alien' has the meaning given the 
     term in section 101(a)(3) of the Immigration and Nationality 
     Act (8 U.S.C. 1101(a)(3)).''.
       (b) Enforcement.--Section 31311(a) of title 49, United 
     States Code, is amended by adding at the end the following:
       ``(21) The State shall comply with the requirements of 
     section 31318.''.
       (c) Conforming Amendments.--
       (1) Section 31305(a)(5)(C) of title 49, United States Code, 
     is amended by striking ``section 5103a'' and inserting 
     ``section 31318''.
       (2) The chapter analysis for chapter 313 is amended by 
     adding at the end the following:

``31318. Limitation on issuance of hazmat licenses''.

       (3) Chapter 51 of title 49, United States Code, is 
     amended--
       (A) by striking section 5103a; and
       (B) by striking the item in the chapter analysis relating 
     to section 5103a.
       (4) Section 1012(c) of the USA PATRIOT Act of 2001 is 
     amended by striking ``section 5103a'' and inserting ``section 
     31318''.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     take effect on October 26, 2001.
       (2) Limit on retroactivity.--Notwithstanding paragraph (1), 
     no enforcement action shall be taken against a State under 
     section 31311 (a) (21) of title 49, United States Code, for 
     any act committed, or failure to act that occurred, in 
     violation of that section before the effective date of the 
     interim final rule prescribed by the Secretary of 
     Transportation under section 31318 of title 49, United States 
     Code.

[[Page S12254]]

       (3) Interim final rule authority.--The Secretary of 
     Transportation shall issue an interim final rule as a 
     temporary regulation under section 31318 of title 49, United 
     States Code, as soon as practicable after the date of 
     enactment of this Act without regard to the provisions of 
     chapter 5 of title 5, United States Code. The Secretary shall 
     initiate a rulemaking in accordance with such provisions as 
     soon as practicable after the date of enactment of this Act. 
     The final rule issued pursuant to that rulemaking shall 
     supersede the interim final rule promulgated under this 
     paragraph.

     SEC. 3. PROHIBITION ON OPERATING WITHOUT PROPER HAZMAT 
                   ENDORSEMENT OR LICENSE.

       (a) In General.--Chapter 313 of title 49, United States 
     Code, is further amended by adding at the end the following:

     ``Sec. 31319. Prohibition on unauthorized transportation of 
       hazardous materials

       ``(a) In General.--Notwithstanding any provision of law, 
     treaty, or international agreement to the contrary, after the 
     effective date of the interim final rule promulgated by the 
     Secretary of Transportation under section 2(d)(3) of the 
     Hazmat Endorsement Requirements Act, no individual may 
     operate a commercial motor vehicle transporting a hazardous 
     material in commerce in the United States without a hazardous 
     materials endorsement or a license authorizing that 
     individual to operate a commercial motor vehicle transporting 
     a hazardous material in commerce--
       ``(1) issued by a State in accordance with the requirements 
     of section 31318 of this title; or
       ``(2) issued by the government of Canada or Mexico, or a 
     political subdivision thereof, after a background check that 
     is the same as, of substantially similar to, the background 
     check required by section 31318.
       ``(b) Penalty.--The Secretary shall by regulation prescribe 
     the penalty for violation of subsection (a).''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     313 is amended by adding at the end the following:

``31319. Prohibition on unauthorized transportation of hazardous 
              materials''.

     SEC. 4. PENALTY FOR FRAUDULENT ISSUANCE OR RENEWAL OF 
                   COMMERCIAL DRIVER'S LICENSE.

       (a) In General.--Chapter 313 of title 49, United States 
     Code, is further amended by adding at the end the following:

     ``Sec. 31320. Penalty for fraudulent issuance, renewal, 
       upgrade, or transfer of commercial driver's license.

       ``Any person who knowingly issues, obtains, or knowingly 
     facilitates the issuance, renewal, upgrade, transfer, or 
     obtaining of, a commercial driver's license or an endorsement 
     for a commercial driver's license knowing the license or 
     endorsement to have been wrongfully issued or obtained, or 
     issued, renewed, upgraded, transferred, or obtained through 
     the submission of false information or the intentional 
     withholding of required information is guilty of a Class E 
     felony punishable by a fine, imprisonment, or both as 
     provided in title 18, United States Code.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     313 is amended by adding at the end the following:

``31320. Penalty for fraudulent issuance of renewal of commercial 
              driver's license''.

     SEC. 5. MOTOR CARRIER SECURITY REPORT.

       (a) In General.--
       (1) In general.--The Secretary of Transportation shall 
     assess the security risks associated with motor carrier 
     transportation and develop prioritized recommendations for--
       (A) improving the security of hazardous materials shipments 
     by motor carriers, including shipper responsibilities;
       (B) using biometrics or other identification systems to 
     improve the security of motor carrier transportation;
       (C) technological advancements in the area of information 
     access and transfer for the purpose of identifying the 
     location of hazmat shipments and facilitating the 
     availability of safety and security information; and
       (D) reducing other significant security related risks to 
     public safety and interstate commerce, taking into account 
     the impact that any proposed security measure might have on 
     the provision of motor carrier transportation.
       (2) Existing private and public sector efforts.--The 
     assessment shall include a review of any actions already 
     taken to address identified security issues by both public 
     and private entities.
       (b) Consultation; Use of Existing Resources.--In carrying 
     out the assessment required by subsection (a), the Secretary 
     shall--
       (1) consult with operators, drivers, safety advocates, and 
     public safety officials (including officials responsible for 
     responding to emergencies); and
       (2) utilize, to the maximum extent feasible, the resources 
     and assistance of the Transportation Research Board of the 
     National Academy of Sciences.
       (c) Report.--
       (1) Contents.--Within 180 days after the date of enactment 
     of this Act, the Secretary shall transmit to the Senate 
     Committee on Commerce, Science, and Transportation and the 
     House of Representatives Committee on Transportation and 
     Infrastructure a report, without compromising national 
     security, containing--
       (A) the assessment and prioritized recommendations required 
     by subsection (a);
       (B) any proposals the Secretary deems appropriate for 
     providing Federal financial, technological, or research and 
     development to assist carriers and shippers in reducing the 
     likelihood, severity, and consequences of deliberate acts of 
     crime or terrorism toward motor carrier employees, shipments, 
     or property; and
       (C) data on the number of shipments and type of hazardous 
     materials for which placarding is required for transport by 
     motor carriers in the United States, including the transport 
     of hazardous materials shipments by Canadian or Mexican motor 
     carriers with authority to enter into the United States.
       (2) Format.--The Secretary may submit the report in both 
     classified and redacted formats if the Secretary determines 
     that such action is appropriate or necessary.

     SEC. 6. STUDY.

       The Secretary of Transportation shall conduct research and 
     operational testing to determine the feasibility, costs, and 
     benefits of requiring motor carriers transporting certain 
     high-risk hazardous materials, as determined by the 
     Secretary, to install ignition or engine locking devices, 
     silent alarms, satellite technology, or other mechanisms to 
     increase the security associated with the transportation of 
     such shipments by motor carriers. The Secretary may conduct a 
     pilot program to assess such devices.

  Mr. McCAIN. Mr. President, I am pleased to join with Senators 
Hollings, Breaux, and Smith in introducing the Hazmat Endorsements 
Requirement Act. The legislation we are introducing today is in large 
part a technical correction proposal to address Section 1012 of the USA 
PATRIOT Act, enacted October 26, 2001. Today's bill is designed to fill 
in a few of the gaps of the new law with respect to commercial drivers 
licenses and hazardous materials endorsements and to provide guidance 
to the Department of Transportation and the States on how to implement 
the new requirements.
  The safe transport of hazardous materials is of critical importance 
to both our nation's economy and public safety. The events of September 
11 have led to an even greater awareness of the necessity of ensuring 
hazardous cargo is transported in a manner that provides the highest 
level of safety and security possible. This bill would help improve the 
safety and security of hazardous materials transported on our roads and 
highways by ensuring the driver of such loads is not a risk to national 
security.
  Annually, more than four billion tons of hazardous materials, an 
estimated 800,000 hazardous materials shipments daily, are transported 
by land, sea, and air in the United States. While hazardous materials 
transportation involves all transportation modes, truck transport 
typically accounts for the majority of all hazardous materials 
shipments, although the tonnage transported is more equally divided 
between truck and rail. The types of vehicles carrying hazardous 
materials on the nation's highways range from cargo tank trucks to 
conventional tractor-trailers and flatbeds that carry large portable 
tank containers. The shipped materials are used in thousands of 
commercial manufactured products and they include: chlorine for water 
treatment; ammonia for fertilizers; plastics; home siding materials; 
battery casings; leather finishes; fireproofing agents for textiles; 
and, motor vehicle gasoline.
  The hazardous materials industry has a notable safety record, in 
large part due to the safety efforts of the individuals and companies 
involved in transporting hazardous materials. On average, only 10 to 15 
fatalities are attributed annually to releases of hazardous materials 
in transportation.
  The Commercial Motor Vehicle Safety Act of 1986 was enacted in an 
effort to ensure that drivers of large trucks and buses are qualified 
to operate such vehicles and to remove unsafe and unqualified drivers 
from the highways. The 1986 Act, which created the Commercial Driver's 
License Program, retained the state's right to issue a driver's 
license, but established minimum national standards which states must 
meet when licensing commercial motor vehicle, CMV, drivers.
  The CDL program places requirements on the CMV driver, the employing 
motor carrier and the States. Drivers who operate special types of 
vehicles or who transport passengers or hazardous materials need to 
pass additional tests to obtain specific endorsements to permit such 
transport on their CDL.

[[Page S12255]]

  Since 1986, over 10.5 million drivers have obtained a CDL, and almost 
2.5 million of those drivers have received hazardous materials 
endorsements. The law has not required criminal background checks for 
applicants seeking CDLs. However, section 1012 of the USA PATRIOT Act 
now requires any driver of a commercial motor vehicle who transports 
hazardous materials to have a criminal background check prior to being 
issued a commercial drivers license, CDL. That requirement became 
effective upon the enactment of that law in October.
  Both Senator Hollings and I strongly support the intent of the 
background check requirement. Unfortunately, the Senate Commerce, 
Science, and Transportation Committee, with jurisdiction over the CDL 
program and hazardous materials transportation, did not have an 
opportunity to offer our recommendations to the provision in the USA 
PATRIOT Act due to procedural agreements at the time that legislation 
was approved by the Senate. Therefore, the measure we are introducing 
today provides technical modifications to section 1012 and would ensure 
the Department of Transportation, the States, and the drivers of 
commercial motor vehicles have a very clear direction with respect to 
the requirements associated with a hazardous materials endorsement.
  Through Senator Hollings leadership, we have sought input on this 
issue from all interested parties, including the administration, the 
states, public safety officials, commercial motor vehicle drivers, and 
motor carriers. We believe the provisions contained in this legislation 
will aid the administration and all interested parties by providing a 
clear understanding of the requirements associated with granting a 
license permitting a driver to transport hazardous cargo.
  I urge my colleagues' timely consideration of this important 
legislation. We should take expeditious action to ensure the hazardous 
materials transported over our nation's roads is provided by qualified 
drivers. This must be accomplished in a manner that provides clear and 
consistent requirements for licensing with minimum bureaucratic red 
tape and delay in the issuance of licenses to eligible drivers.
                                 ______
                                 
      By Mr. GRAMM (for himself, Mr. Enzi, Mr. Bennett, Mr. Bunning, 
        and Mr. Allard):
  S. 1751. A bill to promote the stabilization of the economy by 
encouraging financial institutions to continue to support economic 
development, including development in urban areas, through the 
provision of affordable insurance coverage against acts of terrorism, 
and for other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.
  Mr. GRAMM. Mr. President, today I am joined by Senators Enzi, 
Bennett, Bunning, and Allard, in introducing the Terrorism Risk 
Insurance Act of 2001. This legislation will effectively, and in a 
straightforward way, address a crisis before us.
  The crisis of which I speak is, like a tidal wave, currently away 
from the shore. Its movement is little noticed until it reaches the 
shore, when its consequences will be disastrous. That is, the 
consequences will be disastrous unless we prepare for them now. This 
legislation will do that.
  Tidal waves are started by major seismic, earth shaking events. The 
earth shaking event that set this tidal wave in motion took place on 
September 11. Our Nation has responded admirably to the very visible 
problems caused by that day. We need to act just as admirably and 
effectively to address this hidden wave.
  This hidden wave nearing our shores is the unavailability to 
terrorism risk insurance, an unavailability that will strike a little 
more than one month from now. Already we are receiving signs from all 
across the country that terrorism risk insurance is becoming increasing 
hard to get, in many cases it is not available at all even today. That 
is because insurance companies have to be able to estimate and measure 
risk in order to be able to provide for it, in order to be able to 
spread the risk, and to do that so that the insurance is affordable. 
Right now, in the short term, they cannot do that. If they cannot do 
that, they cannot offer the coverage without jeopardizing the solvency 
of their companies and the value of all their other insurance policies.
  I want to make it clear that the problem before us is not one of the 
weakness of our insurance industry. It is a strong and vibrant 
industry. The industry needs no help, no bail out, no government 
assistance. And our bill would not give them any assistance, not one 
penny. Our bill addresses the needs of the insurance customers, the 
customers who, without this short term program, will not be able to 
find affordable insurance coverage against terrorism risks.
  What does that mean for the economy? It means that without insurance, 
banks will not make loans where there is an uncovered risk, a risk that 
what they are lending the money for might be destroyed or harmed by a 
terrorist. It means that simple, ordinary, everyday business 
transactions that rely upon the security of underlying insurance 
coverage will not take place. That means that, without this 
legislation, come January 1 and the weeks leading up to it a brand new 
weight will be placed upon our economic recovery just as it starts to 
get going.
  Will the insurance industry be able to figure out how to price this 
coverage? Yes. But history tells us that they will not figure it out 
right away. It will take a few months, maybe a couple of years.
  The legislation we are introducing today is a program that will work 
to solve this problem in the mean time. It has been put together in 
close consultation with industry, with the consumers of insurance 
products and with the insurance companies. It has been put together in 
close consultation with the White House and the Treasury Department, 
and it enjoys their support.
  This bill will not create any new, forever government program. It is 
short term in structure and intent. It is limited in its extent. It is 
designed to force the insurance industry to develop its own capacity to 
handle this new risk in a shortened period of time. From our 
discussions with the industry, with the state regulators, with 
insurance consumers, we believe that the industry will be up to the 
task.
  Central to our proposal is that this legislation would not provide 
one penny of federal assistance to the insurance industry. No insurance 
company will get a penny out of this program. All of the benefits of 
this program would go to victims of terrorist activities.
  The structure of our program is, for a two-year period that may be 
extended by the Secretary of the Treasury for only one additional year, 
to divide the terrorism risk with industry. We say to industry, here, 
you take the first risk. It is all yours. But we will define what that 
initial risk is so that you can price it. We will put limits on it. We 
will, for the period of this program, take over the currently unknown 
risk, the cataclysmic risk, while you develop the means for dealing 
with that new risk as well, as the industry always has.
  Under our program, in the first two years, the industry has sole 
responsibility for the first $10 billion of risk from terrorist events. 
The industry then has ten percent of the risk above that to encourage 
them to manage and become familiar with managing the catastrophic risk, 
while the Federal Government will carry ninety percent of that 
catastrophic risk. If a third year is added, then the industry will 
have the sole responsibility for the first $20 billion of risk.
  I believe that this is the most effective way not only to deal with 
this tidal wave approaching our shores but in fact to ward it off. The 
program is simple and understandable. The program does not have the 
victims of terrorism paying any extra premiums to the government for 
the coverage provided by the government. We don't make the suffering 
pay yet again. But we also do not expose the taxpayer to liability for 
frivolous lawsuits that might follow a terrorist event.
  With the Federal Government providing this insurance benefit, we do 
not also want to open the Treasury doors to frivolous or predatory 
litigation. But these limitations are narrow, and they are limited to 
the life of the program. They end when the Federal program ends. The 
limitations are similar to the limitations in place today against 
lawsuits brought against the federal government. We cannot expose the 
taxpayer to punitive damages at

[[Page S12256]]

the same time that he is providing generous assistance to the victims 
of terrorism.
  There are a few things that we need to do before adjournment of the 
Congress this year. I believe that this legislation, that addresses 
this very serious problem, should be on that sort list of things that 
we need to do.
  I ask that the text of the bill and a summary of its highlights be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1751

       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 ``Terrorism Risk Insurance Act 
     of 2001''.

     SEC. 2. CONGRESSIONAL FINDINGS AND PURPOSE.

       (a) Findings.--The Congress finds that--
       (1) property and casualty insurance firms are important 
     financial institutions, the products of which allow 
     mutualization of risk and the efficient use of financial 
     resources and enhance the ability of the economy to maintain 
     stability, while responding to a variety of economic, 
     political, environmental, and other risks with a minimum of 
     disruption;
       (2) the ability of businesses and individuals to obtain 
     property and casualty insurance at reasonable and predictable 
     prices, in order to spread the risk of both routine and 
     catastrophic loss, is critical to economic growth, urban 
     development, and the construction and maintenance of public 
     and private housing, as well as to the promotion of United 
     States exports and foreign trade in an increasingly 
     interconnected world;
       (3) the ability of the insurance industry to cover the 
     unprecedented financial risks presented by potential acts of 
     terrorism in the United States can be a major factor in the 
     recovery from terrorist attacks, while maintaining the 
     stability of the economy;
       (4) widespread financial market uncertainties have arisen 
     following the terrorist attacks of September 11, 2001, 
     including the absence of information from which financial 
     institutions can make statistically valid estimates of the 
     probability and cost of future terrorist events, and 
     therefore the size, funding, and allocation of the risk of 
     loss caused by such acts of terrorism;
       (5) a decision by property and casualty insurers to deal 
     with such uncertainties, either by terminating property and 
     casualty coverage for losses arising from terrorist events, 
     or by radically escalating premium coverage to compensate for 
     risks of loss that are not readily predictable, could 
     seriously hamper ongoing and planned construction, property 
     acquisition, and other business projects, generate a dramatic 
     increase in rents, and otherwise suppress economic activity; 
     and
       (6) the United States Government should provide temporary 
     financial compensation to insured parties, contributing to 
     the stabilization of the United States economy in a time of 
     national crisis, while the financial services industry 
     develops the systems, mechanisms, products, and programs 
     necessary to create a viable financial services market for 
     private terrorism risk insurance.
       (b) Purpose.--The purpose of this Act is to establish a 
     temporary Federal program that provides for a transparent 
     system of shared public and private compensation for insured 
     losses resulting from acts of terrorism in order to--
       (1) protect consumers by addressing market disruptions and 
     ensure the continued widespread availability and 
     affordability of property and casualty insurance for 
     terrorism risk; and
       (2) allow for a transitional period for the private markets 
     to stabilize, resume pricing of such insurance, and build 
     capacity to absorb any future losses, while preserving State 
     insurance regulation and consumer protections.

     SEC. 3. DEFINITIONS.

       In this Act, the following definitions shall apply:
       (1) Act of terrorism.--
       (A) Certification.--The term ``act of terrorism'' means any 
     act that is certified by the Secretary, in concurrence with 
     the Secretary of State, and the Attorney General of the 
     United States--
       (i) to be a violent act or an act that is dangerous to--
       (I) human life;
       (II) property; or
       (III) infrastructure;
       (ii) to have resulted in damage within the United States, 
     or outside of the United States in the case of an air carrier 
     described in paragraph (3)(A)(ii); and
       (iii) to have been committed by an individual or 
     individuals acting on behalf of any foreign person or foreign 
     interest, as part of an effort to coerce the civilian 
     population of the United States or to influence the policy or 
     affect the conduct of the United States Government by 
     coercion.
       (B) Limitation.--No act or event shall be certified by the 
     Secretary as an act of terrorism if--
       (i) the act or event is committed in the course of a war 
     declared by the Congress; or
       (ii) losses resulting from the act or event, in the 
     aggregate, do not exceed $5,000,000.
       (C) Determinations final.--Any certification of, or 
     determination not to certify, an act or event as an act of 
     terrorism under this paragraph shall be final, and shall not 
     be subject to judicial review.
       (2) Business interruption coverage.--The term ``business 
     interruption coverage''--
       (A) means coverage of losses for temporary relocation 
     expenses and ongoing expenses, including ordinary wages, 
     where--
       (i) there is physical damage to the business premises of 
     such magnitude that the business cannot open for business;
       (ii) there is physical damage to other property that 
     totally prevents customers or employees from gaining access 
     to the business premises; or
       (iii) the Federal, State, or local government shuts down an 
     area due to physical or environmental damage, thereby 
     preventing customers or employees from gaining access to the 
     business premises; and
       (B) does not include lost profits, other than in the case 
     of a small business concern (as defined in section 3 of the 
     Small Business Act (15 U.S.C. 632) and applicable regulations 
     hereunder) in any case described in clause (i), (ii), or 
     (iii) of subparagraph (A).
       (3) Insured loss.--The term ``insured loss''--
       (A) means any loss resulting from an act of terrorism that 
     is covered by any type of commercial or personal property and 
     casualty insurance policy or endorsement, including business 
     interruption coverage, issued by a participating insurance 
     company if such loss--
       (i) occurs within the United States; or
       (ii) occurs to an air carrier (as defined in section 40102 
     of title 49, United States Code), regardless of where the 
     loss occurs; and
       (B) does not include any loss covered by any type of life 
     or health insurance policy.
       (4) Participating insurance company.--The term 
     ``participating insurance company'' means any insurance 
     company, including any subsidiary or affiliate thereof
       (A) that--
       (i) is licensed or admitted to engage in the business of 
     providing primary insurance in any State; or
       (ii) is not so licensed or admitted, if it is an eligible 
     surplus line carrier listed on the Quarterly Listing of Alien 
     Insurers of the National Association of Insurance 
     Commissioners, or any successor thereto;
       (B) that offers in all of its property and casualty 
     insurance policies, coverage for insured losses;
       (C) that offers property and casualty insurance coverage 
     for insured losses that does not differ materially from the 
     terms, amounts, and other coverage limitations applicable to 
     losses arising from events other than acts of terrorism; and
       (D) that meets any other criteria that the Secretary may 
     reasonably prescribe.
       (5) Person.--The term ``person'' means any individual, 
     business or nonprofit entity (including those organized in 
     the form of a partnership, limited liability company, 
     corporation, or association), trust or estate, or a State or 
     political subdivision of a State or other governmental unit.
       (6) Program.--The term ``Program'' means the Terrorism 
     Insured Loss Shared Compensation Program established by this 
     Act.
       (7) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury.
       (8) State.--The term ``State'' means any State of the 
     United States, the District of Columbia, the Commonwealth of 
     Puerto Rico, the Commonwealth of the Northern Mariana 
     Islands, American Samoa, Guam, and each of the United States 
     Virgin Islands.
       (9) United states.--The term ``United States'' means all 
     States of the United States.

     SEC. 4. TERRORISM INSURED LOSS SHARED COMPENSATION PROGRAM.

       (a) Establishment of Program.--
       (1) In general.--There is established in the Department of 
     the Treasury the Terrorism Insured Loss Shared Compensation 
     Program.
       (2) Authority of the secretary.--Notwithstanding any other 
     provision of State or Federal law, the Secretary shall 
     administer the Program, and shall pay the Federal share of 
     compensation for insured losses in accordance with subsection 
     (c).
       (b) Conditions for Federal Payments.--No payment may be 
     made by the Secretary under subsection (c), unless--
       (1) a policyholder that suffers an insured loss, or a 
     person acting on behalf of that policyholder, files a claim 
     with a participating insurance company;
       (2) at the time of offer, purchase, and renewal of each 
     policy covering an insured loss, the participating insurance 
     company provides, as soon as practicable following the date 
     of enactment of this Act, clear and conspicuous disclosure in 
     the policy to the policyholder of the premium charged for 
     insured losses covered by the Program and the Federal share 
     of compensation for insured losses under the Program;
       (3) the participating insurance company processes the claim 
     for the insured loss in accordance with its standard business 
     practices, and any reasonable procedures that the Secretary 
     may prescribe; and
       (4) the participating insurance company submits to the 
     Secretary, in accordance with such reasonable procedures as 
     the Secretary may establish--
       (A) a claim for payment of the Federal share of 
     compensation for insured losses under the Program;
       (B) written verification and certification--
       (i) of the underlying claim; and
       (ii) of all payments made to policyholders for insured 
     losses; and

[[Page S12257]]

       (C) certification of its compliance with the provisions of 
     this subsection.
       (c) Shared Insurance Loss Coverage.--
       (1) Federal share.--Subject to the limitations in paragraph 
     (2), the Federal share of compensation under the Program, to 
     be paid by the Secretary, shall be--
       (A) for insured losses resulting from an act of terrorism 
     occurring during the period beginning on the date of 
     enactment of this Act and ending on December 31, 2002, 90 
     percent of the aggregate amount of all such losses in excess 
     of $10,000,000,000;
       (B) for insured losses resulting from an act of terrorism 
     occurring during the period beginning on January 1, 2003 and 
     ending on December 31, 2003, 90 percent of the aggregate 
     amount of all such losses in excess of $10,000,000,000; and
       (C) if the Program is extended in accordance with section 
     6, for insured losses resulting from an act of terrorism 
     occurring during the period beginning on January 1, 2004 and 
     ending on December 31, 2004, 90 percent of the aggregate 
     amount of all such losses in excess of $20,000,000,000.
       (2) Cap on annual liability.--Notwithstanding paragraph 
     (1), or any other provision of Federal or State law, if the 
     aggregate insured losses exceed $100,000,000,000 during any 
     period referred to in subparagraphs (A) and (B) of paragraph 
     (1) (or the period referred to in subparagraph (C) of 
     paragraph (1) if the Program is extended in accordance with 
     section 6)--
       (A) the Secretary shall not make any payment under this Act 
     for any portion of the amount of such losses that exceeds 
     $100,000,000,000; and
       (B) participating insurance companies shall not be liable 
     for the payment of any portion of the amount that exceeds 
     $100,000,000,000.
       (3) Notice to congress.--The Secretary shall notify the 
     Congress if estimated or actual aggregate insured losses 
     exceed $100,000,000,000 in any period described in paragraph 
     (1), and the Congress shall determine the procedures for and 
     the source of any such excess payments.
       (4) Final netting.--The Secretary shall have sole 
     discretion to determine the time at which claims relating to 
     any insured loss or act of terrorism shall become final.
       (5) Determinations final.--Any determination of the 
     Secretary under this subsection shall be final, and shall not 
     be subject to judicial review.
       (d) Funding.--
       (1) Payment authority.--This Act constitutes payment 
     authority in advance of appropriation Acts and represents the 
     obligation of the Federal Government to provide for the 
     Federal share of compensation for insured losses under the 
     Program.
       (2) Authorization of appropriations.--There are authorized 
     to be appropriated to the Secretary such sums as may be 
     necessary to pay the administrative expenses of the Program.

     SEC. 5. GENERAL AUTHORITY AND ADMINISTRATION OF CLAIMS.

       (a) General Authority.--The Secretary shall have the powers 
     and authorities necessary to carry out the Program, including 
     authority--
       (1) to investigate and audit all claims under the Program; 
     and
       (2) to prescribe regulations and procedures to implement 
     the Program.
       (b) Interim Rules and Procedures.--The Secretary shall 
     issue interim final rules or procedures specifying the manner 
     in which--
       (1) participating insurance companies may file, verify, and 
     certify claims under the Program;
       (2) the Secretary shall publish or otherwise publicly 
     announce the applicable percentage of insured losses to be 
     paid by participating insurance companies and the Federal 
     share of compensation for insured losses under the Program;
       (3) the Federal share of compensation for insured losses 
     will be paid under the Program, including payments based on 
     estimates of or actual aggregate insured losses;
       (4) the Secretary may, at any time, seek repayment from or 
     reimburse any participating insurance company, based on 
     estimates of insured losses under the Program, to effectuate 
     the insured loss sharing schedule and limitations contained 
     in section 4;
       (5) participating insurance companies that incur insured 
     losses shall pay their pro rata share of insured losses in 
     accordance with the schedule and limitations contained in 
     section 4; and
       (6) the Secretary will determine any final netting of 
     payments for actual insured losses under the Program, 
     including payments owed to the Federal Government from any 
     participating insurance company and any Federal share of 
     compensation for insured losses owed to any participating 
     insurance company, to effectuate the insured loss sharing 
     schedule and limitations contained in section 4.
       (c) Subrogation Rights.--The United States shall have the 
     right of subrogation with respect to any payment made by the 
     United States under the Program.
       (d) Contracts for Services.--The Secretary may employ 
     persons or contract for services as may be necessary to 
     implement the Program.
       (e) Civil Penalties.--The Secretary may assess civil money 
     penalties for violations of this Act or any rule, regulation, 
     or order issued by the Secretary under this Act relating to 
     the submission of false or misleading information for 
     purposes of the Program, or any failure to repay any amount 
     required to be reimbursed under regulations or procedures 
     described in section 5(b). The authority granted under this 
     subsection shall continue during any period in which the 
     Secretary's authority under section 6(d) is in effect.

     SEC. 6. TERMINATION OF PROGRAM; DISCRETIONARY EXTENSION.

       (a) Termination of Program.--
       (1) In general.--The Program shall terminate, on December 
     31, 2003, unless the Secretary--
       (A) determines, after considering the report and finding 
     required by this section, that the Program should be extended 
     for one additional year, until December 31, 2004; and
       (B) promptly notifies the Congress of such determination 
     and the reasons therefore.
       (2) Determination final.--The determination of the 
     Secretary under paragraph (1) shall be final, and shall not 
     be subject to judicial review.
       (3) Termination after extension.--If the Program is 
     extended under paragraph (1), this Act is repealed, and the 
     Program shall terminate, on December 31, 2004.
       (b) Report to Congress.--Not later than 18 months after the 
     date of enactment of this Act, the Secretary shall submit a 
     report to Congress--
       (1) regarding--
       (A) the availability of insurance coverage for acts of 
     terrorism;
       (B) the affordability of such coverage, including the 
     effect of such coverage on premiums; and
       (C) the capacity of the insurance industry to absorb future 
     losses resulting from acts of terrorism, taking into account 
     the profitability of the insurance industry; and
       (2) that considers--
       (A) the impact of the Program on each of the factors 
     described in paragraph (1); and
       (B) the probable impact on such factors and on the United 
     States economy if the Program terminates on December 31, 
     2003.
       (c) Finding Required.--A determination under subsection (a) 
     to extend the Program shall be based on a finding by the 
     Secretary that--
       (1) widespread market uncertainties continue to disrupt the 
     ability of insurance companies to price insurance coverage 
     for losses resulting from acts of terrorism, thereby 
     resulting in the continuing unavailability of affordable 
     insurance for consumers; and
       (2) extending the Program for an additional year would 
     likely encourage economic stabilization and facilitate a 
     transition to a viable market for private terrorism risk 
     insurance.
       (d) Continuing Authority to Pay or Adjust Compensation.--
     Following the termination of the Program under subsection 
     (a), the Secretary may take such actions as may be necessary 
     to ensure payment, reimbursement, or adjustment of 
     compensation for insured losses arising out of any act of 
     terrorism occurring during the period in which the Program 
     was in effect under this Act and as to which a determination 
     has been made in accordance with the provisions of section 4 
     and regulations promulgated thereunder.
       (e) Study and Report on Scope of the Program.--
       (1) Study.--The Secretary, after consultation with the 
     National Association of Insurance Commissioners, 
     representatives of the insurance industry, and other experts 
     in the insurance field, shall conduct a study of the 
     potential effects of acts of terrorism on the availability of 
     life insurance and other lines of insurance coverage.
       (2) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary shall submit a report to 
     the Congress on the results of the study conducted under 
     paragraph (1).

     SEC. 7 PRESERVATION OF STATE LAW.

       Nothing in this Act shall affect the jurisdiction or 
     regulatory authority of the insurance commissioner (or any 
     agency or office performing like functions) of any State over 
     any participating insurance company or other person--
       (1) except as specifically provided in this Act; and
       (2) except that--
       (A) the definition of the term ``act of terrorism'' in 
     section 3 shall be the exclusive definition for purposes of 
     compensation for insured losses under this Act, and shall 
     preempt any provision of State law that is inconsistent with 
     that definition, to the extent that such provision of law 
     would otherwise apply to any insurance policy relating to 
     terrorism risk in the United States;
       (B) during the period beginning on the date of enactment of 
     this Act and ending on December 31, 2002, rates for terrorism 
     risk insurance covered by this Act and filed with any State 
     shall not be subject to prior approval or a waiting period, 
     under any law of a State that would otherwise be applicable, 
     except that nothing in this Act affects the ability of any 
     State to invalidate a rate as excessive, inadequate, or 
     unfairly discriminatory; and
       (C) during the period beginning on the date of enactment of 
     this Act and for so long as the Program is in effect as 
     provided in Section 6 (including any period during which the 
     Secretary's authority under Section 6(d) is in effect), books 
     and records of any participating insurance company shall be 
     provided, or caused to be provided, to the Secretary or his 
     designee upon request by the Secretary or his designee 
     notwithstanding any provision of the laws of any State 
     prohibiting or limiting such access.

     SEC. 8. SENSE OF THE CONGRESS.

       It is the sense of the Congress that the insurance industry 
     should build capacity and

[[Page S12258]]

     aggregate risk to provide affordable property and casualty 
     coverage for terrorism risk.

     SEC. 9. PROCEDURES FOR CIVIL ACTIONS.

       (a) Federal Cause of Action.--There shall exist a Federal 
     cause of action for property damage, personal injury, or 
     death arising out of or resulting from an act of terrorism, 
     which shall be the exclusive cause of action and remedy for 
     claims for property damage, personal injury, or death arising 
     out of or resulting from an act of terrorism. All State 
     causes of action of any kind for property damage, personal 
     injury, or death otherwise available arising out of or 
     resulting from an act of terrorism, are hereby preempted, 
     except as provided in subsection (f).
       (b) Governing Law.--The substantive law for decision in an 
     action for property damage, personal injury, or death arising 
     out of or resulting from an act of terrorism under this 
     section shall be derived from the law, including applicable 
     choice of law principles, of the State, or States determined 
     to be required by the district court assigned under 
     subsection (c), unless such law is inconsistent with or 
     otherwise preempted by Federal law.
       (c) Federal Jurisdiction.--
       (1) In general.--Notwithstanding any other provision of 
     law, not later than 90 days after the occurrence of an act of 
     terrorism, the Judicial Panel on Multidistrict Litigation 
     shall assign a single Federal district court to conduct 
     pretrial and trial proceedings in all pending and future 
     civil actions for property damage, personal injury, or death 
     arising out of or resulting from that act of terrorism.
       (2) Selection criteria.--The Judicial Panel on 
     Multidistrict Litigation shall select and assign the district 
     court under paragraph (1) based on the convenience of the 
     parties and the just and efficient conduct of the 
     proceedings.
       (3) Jurisdiction.--The district court assigned by the 
     Judicial Panel on Multidistrict Litigation shall have 
     original and exclusive jurisdiction over all actions under 
     paragraph (1). For purposes of personal jurisdiction, the 
     district court assigned by the Judicial Panel on 
     Multidistrict Litigation shall be deemed to sit in all 
     judicial districts in the United States.
       (4) Transfer of cases filed in other federal courts.--Any 
     civil action for property damage, personal injury, or death 
     arising out of or resulting from an act of terrorism that is 
     filed in a Federal district court other than the Federal 
     district court assigned by the Judicial Panel on 
     Multidistrict Litigation under paragraph (1) shall be 
     transferred to the Federal district court so assigned.
       (5) Removal of cases filed in state courts.--Any civil 
     action for property damage, personal injury, or death arising 
     out of or resulting from an act of terrorism that is filed in 
     a State court shall be removable to the Federal district 
     court assigned by the Judicial Panel on Multidistrict 
     Litigation under paragraph (1).
       (d) Approval of Settlements.--Any settlement between the 
     parties of a civil action described in this section for 
     property damage, personal injury, or death arising out of or 
     resulting from an act of terrorism shall be subject to prior 
     approval by the Secretary after consultation with the 
     Attorney General.
       (e) Limitation on Damages.--Punitive or exemplary damages 
     shall not be available in any civil action subject to this 
     section.
       (f) Claims Against Terrorists.--Nothing in this section 
     shall in any way limit the ability of any plaintiff to seek 
     any form of recovery from any person, government or other 
     entity that was a participant in, or aider and abettor of, 
     any act of terrorism.
       (g) Offset--In determining the amount of money damages 
     available under this section, the court shall offset any 
     compensation or benefits received or entitled to be received 
     by the plaintiff or plaintiffs from any collateral source, 
     including the United States or any Federal agency thereof, in 
     response to or as a result of the act of terrorism.
       (h) Effective Period.--This section shall apply only to 
     actions for property damage, personal injury, or death 
     arising out of or resulting from acts of terrorism that occur 
     during the effective period of the Program, including, if 
     applicable, any extension period under section 6.

     SEC. 10. REPEAL OF THE ACT.

       This Act shall be repealed at the close of business on the 
     termination date of the Program under section 6(a), but the 
     provisions of this section shall not be construed as 
     preventing the Secretary from taking, or causing to be taken, 
     such actions under sections 4(c)(4), (5), sections 5(a)(1), 
     (c), (e), section 6(d), and section 9(d) of this Act and 
     applicable regulations promulgated thereunder. Further, the 
     provisions of this section shall not be construed as 
     preventing the availability of funding under section 4(d) 
     during any period in which the Secretary's authority under 
     section 6(d) is in effect.
                                  ____


       Key Provisions of the Terrorism Risk Insurance Act of 2001

       All property and casualty policyholders are covered, 
     including those insured under workers compensation policies 
     and those with business interruption coverage.
       Federal tax dollars will be paid as compensation to insured 
     victims of terrorist attacks, not to insurance companies.
       The insurance industry would fully cover losses arising 
     from certified acts of terrorism, up to $10 billion in each 
     year. The government will provide compensation for 90 percent 
     of losses exceeding $10 billion, with the insurance industry 
     continuing to pay for 10 percent of the losses.
       The program is temporary, expiring after two years. The 
     Treasury Secretary has the option to extend the program for 
     one additional year.
       The Secretary of the Treasury, in concurrence with the 
     Secretary of State and the Attorney General, will determine 
     whether an event qualifies as a terrorist attack.
       In order for property and casualty insurers to participate 
     in the program, insurers are required to offer terrorism 
     coverage to all of their policyholders under terms that are 
     consistent with their other property and casualty policies.
       Insurance companies are required to disclose to customers 
     which portion of their premiums they are paying for terrorism 
     risk coverage, apart from other property and casualty 
     coverages.
       Careful, narrow restrictions on lawsuit liability are 
     included to protect taxpayer funds from being exposed to 
     opportunistic, predatory assaults on the U.S. Treasury.
       The State system of insurance regulation is preserved with 
     very few exceptions. First, the definition of an ``act of 
     terrorism'' under the bill will become the definition in 
     every state. Also, the small number of states that require 
     pre-approval of rate will be restrained from doing so far 
     terrorism risk coverage during the first year. This does not, 
     however, preempt a state insurance regulatory's ability to 
     review and revise the rates once they are in effect. Finally, 
     the Secretary of the Treasury would have access to the books 
     and records of participating insurers in all States.

  Mr. ENZI. Mr. President, today I join with Senators Gramm, Bunning, 
and Bennett in introducing legislation that provides a temporary 
public-private partnership for terrorism insurance in the wake of the 
September 11 attacks. This bill provides a joint partnership between 
insurance companies and the Federal Government for the next 3 years in 
cases of terrorist attacks.
  September 11 has proven to be the most expensive disaster to ever 
take place on American soil. With cost estimates ranging from $40 to 
$60 billion, the attacks have drained the capital reserves of some of 
the largest insurance companies in the world. In addition, as we know 
all too well, the risk for future attacks is very high. In the absence 
of this legislation, the insurance industry would be unable to pay the 
potentially extraordinary costs, and the Federal Government would 
likely be responsible for the entire costs. This is preemptive 
legislation.
  I believe this legislation strikes the right balance between what the 
responsibilities should be between the insurance industry and the 
Federal Government. In each of the first 2 years, the insurance 
industry is responsible for the first $10 billion of any attack. By 
placing a $10 billion initial retention for the insurance industry, we 
ensure that the Federal Government does not get involved unless it is 
absolutely necessary.
  After that, we agree the Federal Government should pay 90 percent of 
the remaining costs up to a $100 billion threshold. After the first 2 
years, the Secretary of the Treasury will decide whether the industry 
is prepared to once again begin offering this type of coverage. If he 
believes they are not prepared, he may extend the program for 1 
additional year.
  This legislation also includes special provisions for small 
businesses which might be affected by terrorist attacks. A small 
business that is located in a building that is destroyed requires 
different treatment than a global corporation. Whereas a large, 
multinational corporation has offices all over the world with different 
lines of revenue, a small business could be eliminated by a single 
incident that would likely destroy all their equipment, possibly kill 
personnel, and virtually make it impossible for the business to 
continue. This bill allows for small businesses to recover lost profits 
and receive funding for business interruptions due to an attack.
  I am sure that many of my colleagues have heard from their State 
insurance regulators the same as I have. My State insurance 
commissioner informs me that few, if any, of the new policies being 
submitted for next year's coverage offer terrorism insurance. With 
insurance being primarily regulated by the States, this has caused a 
backlog of filings from being approved and paperwork is quickly 
accumulating at the State level. We must act quickly to alleviate this 
backlog that will lead to uncertainty in the marketplace.
  The legislation also includes very targeted liability provisions. 
These

[[Page S12259]]

provisions are extremely narrow and directed only at this specific 
program. Without these limitations, we would open the Federal 
Government's checkbook to every trial lawyer in America, and the 
American taxpayers would have unlimited liability. The trial lawyers 
were committed to not pursuing frivolous claims that resulted from 
September 11, and I certainly hope that they would continue their 
commitment if America is attacked again.
  In closing, I would only like to add that I believe the insurance 
industry should be commended for the way in which they've handled the 
September 11 crisis. Despite losing many employees in the bombing, they 
were one of the first groups at the front of the line offering their 
assistance and support for the victims. To my knowledge, not a single 
company has attempted to withhold payment from this disaster. They have 
been most cooperative in working through the myriad proposals that have 
been circulated and their support has expedited this process.
  I look forward to working with my colleagues to move this legislation 
before we adjourn.
                                 ______
                                 
      By Mr. CORZINE (for himself, Ms. Snowe, Ms. Cantwell, Mr. Dodd, 
        Mr. Leahy, and Mrs. Murray):
  S. 1752. A bill to amend the Public Health Service Act with respect 
to facilitating the development of microbicides for preventing 
transmission of HIV and other sexually transmitted diseases; to the 
Committee on Health, Education, Labor, and Pensions.
  Mr. CORZINE. Mr. President, I rise today to introduce legislation, 
the Microbicides Development Act of 2001. I am very pleased to be 
introducing this bipartisan bill along with my colleagues, Senators 
Snowe, Cantwell, Dodd, Leahy, and Murray. I extend my gratitude to 
Senator Cantwell, in particular, for her support and assistance in the 
development of this legislation. Additionally, I applaud the efforts of 
my colleague in the House of Representatives, Republican Congresswoman 
Connie Morella of Maryland, for her leadership on this important issue. 
We all believe this initiative is vital to the pursuit of combating the 
global HIV/AIDS crisis.
  As you know, tomorrow, December 1, is World AIDS Day. Twenty years 
ago, the Centers for Disease Control became aware of a virus that was 
claiming the lives of thousands of gay men in the United States. 
Throughout most of the 1980s, we thought of AIDS purely as a gay men's 
disease. Twenty years later, we find that we couldn't have been more 
wrong, as we have seen this disease spread globally to women, children, 
and heterosexual men, infecting and killing millions.
  Today, women and children are being impacted by this epidemic at 
alarming rates. Every day, 6,300 women worldwide become infected with 
HIV. In fact, women now represent the fastest growing group of new HIV 
infections in the United States. AIDS is the fourth leading cause of 
death among women aged 25 to 44 in this country. Unfortunately, I have 
seen the devastation that this disease is having on women, as New 
Jersey has the Nation's fourth highest HIV/AIDS infection rate among 
women, and the second highest infection rate among all adults.
  Despite this growing trend, however, there exists absolutely no HIV 
or STD prevention method that is within a woman's personal control. 
Condom use must be negotiated with a partner. We are all aware that for 
too many women, particularly low-income women in the developing world 
who reply upon a male partner for economic support, there is no power 
of negotiation. We know these women are at risk, yet, we expect them to 
protect themselves without any tools.
  Today we have the opportunity to invest in groundbreaking research 
that can produce these tools, and ultimately, empower women. 
Microbicides are self-administered products that women could use to 
prevent transmission of STDs, including HIV/AIDS. I say ``could,'' 
because due to insufficient research investments, no microbicides have 
been brought to market. This legislation would encourage federal 
investments for microbicide research through the establishment of 
programs at the National Institutes for Health, NIH, and the Centers 
for Disease Control and Prevention, CDC.
  In addition to investing new resources in microbicide research, the 
Microbicides Development Act will expedite the implementation of the 
NIH's 5-year strategic plan for microbicide research, as well as expand 
coordination among Federal agencies already involved in this research, 
including NIH, CDC, and the United States Agency on International 
Development, USAID. The bill also establishes Microbicide Research and 
Development Teams at the NIH. These teams will bring together public 
and private scientists and resources to research and development 
microbicides for the prevention of HIV and STD infection.
  The Microbicides Development Act of 2001 has the potential not only 
to save millions of lives, but also to save billions in health care 
costs. Every year, 15 million new HIV and other STD infections occur 
among Americans aged 15 and older. The direct cost to the U.S. economy 
of STDs and HIV infection is approximately $8.4 billion. When the 
indirect costs, such as lost productivity, are included, that figure 
rises to an estimated $20 billion.
  While new therapies are being developed to prolong the lives of 
individuals infected with HIV/AIDS--and we must continue developing new 
therapies--only prevention can truly ensure the safety and health of 
those vulnerable to infection. If we do not pay a small price now to 
invest in new prevention methods, we will pay a much higher price 
later.
  Federal support for microbicide research is crucial. Numerous small 
biotechnology companies and university researchers are actively engaged 
in microbicide research, but they are almost totally dependent on 
public-sector grants to continue their work and to test their products. 
Existing public sector grants for microbicides, however, are too small 
and too short-term to move product leads forward. According to the 
Alliance for Microbicide Development and other health advocates, in 
order to bring a microbicide to market within the next 5 years, current 
Federal investments in microbicide research should be increased to $75 
million this year. The NIH currently invests only $25 million a year, 
or 1 percent of its total HIV/AIDS budget, in such important research.
  This legislation will make microbicide research the priority it 
should be, a priority the Federal Government must have if it expects to 
save the lives of women and their children worldwide, who, 20 years 
after the first AIDS death, will otherwise become victims of a 
preventable disease.
  In closing, I would like to request that an opinion piece written by 
United Nations' Secretary General Kofi Annan that appeared in the 
Washington Post yesterday be included in the Record. In his comments 
recognizing World AIDS Day, Secretary Annan reiterates the importance 
of investing in new prevention methods as we continue to fight against 
AIDS.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                         No Letting Up on AIDS

                            (By Kofi Annan)

       Every day more than 8,000 people die of AIDS. Every hour 
     almost 600 people become infected. Every minute a child dies 
     of the virus. Just as life--and death--goes on after Sept. 
     11, so must we continue our fight against the HIV/AIDS 
     epidemic. Before the terrorist attacks two months ago, 
     tremendous momentum had been achieved in the fight. To lose 
     it now would be to compound one tragedy with another.
       New figures, released in advance of World AIDS Day, Dec. 1, 
     show that more than 40 million people are now living with the 
     virus. The vast majority of them are in sub-Saharan Africa, 
     where the devastation is so acute that it has become one of 
     the main obstacles to development. But parts of the Caribbean 
     and Asia are not far behind, and the pandemic is spreading at 
     an alarming rate in Eastern Europe.
       For too long, global progress in facing up to AIDS was 
     painfully slow, and nowhere near commensurate with the 
     challenge. But in the past year, for much of the 
     international community the magnitude of the crisis has 
     finally begun to sink in. Never, in the two long decades that 
     the world has faced this growing catastrophe, has there been 
     such a sense of common resolve and collective possibility.
       Public opinion has been mobilized by the media, 
     nongovernmental organizations and activists, by doctors and 
     economists and by people living with the disease. 
     Pharmaceutical companies have made their AIDS drugs more 
     affordable in poor countries, and a growing number of 
     corporations have created programs to provide both prevention

[[Page S12260]]

     and treatment for employees and the wider community. 
     Foundations are making increasingly imaginative and generous 
     contributions, both financial and intellectual--in 
     prevention, in reducing mother-to-child transmission, in the 
     search for a vaccine.
       In a growing number of countries, effective prevention 
     campaigns have been launched. There has been an increasing 
     recognition, among both donors and the most affected 
     countries, of the link between prevention and treatment. 
     There has also been a new understanding of the particular 
     toll AIDS is taking on women--and of the key role they have 
     in fighting the disease.
       The entire United Nations family is fully engaged in this 
     fight, working to a common strategic plan and supporting 
     country, regional and global efforts through our joint 
     program, UNAIDS. Perhaps most important, a new awareness and 
     commitment have taken hold among governments--most notably in 
     Africa.
       Last June the membership of the United Nations met in a 
     special session of the General Assembly to devise a 
     comprehensive and coordinated global response to the AIDS 
     crisis.
       They adopted a powerful declaration of commitments, calling 
     for a fundamental shift in our response to HIV/AIDS as a 
     global economic, social and development challenge of the 
     highest priority. They reaffirmed the pledge, made by world 
     leaders in their Millennium Declaration, to halt and begin to 
     reverse the spread of AIDS by 2015. And they set out a number 
     of further ambitious but realistic time-bound targets and 
     goals. Among them were commitments to reach, by 2005, an 
     overall target of annual expenditure on AIDS of $7 billion to 
     $10 billion per year in low- and middle-income countries; to 
     ensure, by 2005, that a wide range of prevention programs are 
     available in all countries; and to support the establishment 
     of a fund to help finance an urgent and expanded response to 
     the epidemic.
       Only seven months after I proposed this new international 
     facility to support the global fight against AIDS and other 
     infectious diseases, pledges to the fund stand at more than 
     $1.5 billion. The fund cannot be the only channel of 
     resources for a full-scale global response to AIDS. But what 
     is most heartening is the range of pledges that have been 
     made: from the world's wealthiest nations--starting with the 
     founding contribution from the United States last May--but 
     also from some of its poorest, as well as from foundations, 
     corporations and private individuals.
       It is clear that we have the road map, the tools and the 
     knowledge to fight AIDS. What we must sustain now is the 
     political will. Life after Sept. 11 has made us all think 
     more deeply about the kind of world we want for our children. 
     It is the same world we wanted on Sept. 10--a world in which 
     a child does not die of AIDS every minute.

  Ms. CANTWELL. Mr. President, I rise today with my colleagues Senators 
Corzine and Snowe to introduce the Microbicides Development Act of 
2001, and to recognize tomorrow, December 1, as World AIDS Day. As we 
reflect on the last 20 years of battling this disease, we need to 
remember the thousands of people here in the United States and the 
millions worldwide afflicted by HIV and AIDS.
  It is hard to believe that it has been 20 years since we first 
learned of the disease that would come to be known as Acquired Immune 
Deficiency Syndrome or AIDS. In those 20 years medical and 
pharmaceutical advancements have made HIV/AIDS more manageable for 
some, but a cure is yet to be found. And in those 20 years since we 
first learned of AIDS we have begun to see a changing face of AIDS 
across the country, as well as in my home State of Washington.
  Consider these facts.
  Twenty years ago, HIV infections attributed to sex between gay men 
accounted for nearly all HIV/AIDS cases in the country. Today, more 
than half-- 54 percent--of HIV infections are in different population 
groups: straight or bisexual women, or straight men. In fact, between 
the beginning of the AIDS epidemic and today, the proportion of women 
newly infected with HIV more than tripled-- from 7 percent to 23 
percent.
  Twenty years ago, HIV infections were primarily appearing in 
Caucasians. Today, HIV/AIDS is disproportionately affecting communities 
of color. Approximately two-thirds of all women and over 40 percent of 
all men reported with AIDS were black. Although Hispanics represent 13 
percent of the population, they accounted for 19 percent of new HIV 
infections in 1999.
  And one in four Washingtonians infected with HIV is under aged 22. 
Half are under 25. These are people that have grown up with the 
disease--they should be educated on prevention and they should know how 
to take care of themselves. But somehow complacency--whether from the 
new drugs and medical treatment--or from disease ennui--has replaced 
the message we want to be sending.
  We have long known that the only way to stop the advance of this 
terrible disease is through a coordinated and comprehensive approach to 
education, prevention and treatment. As a community we need to refocus 
our efforts and not allow complacency--especially among populations not 
traditionally associated with HIV/AIDS --to dictate the future. There 
must be a continued commitment to he eradication of this terrible 
disease.
  Before the end of today, several hundred people will become infected 
with AIDS. In these days of fear of Anthrax and discussions of 
bioterrorism we should not loose sight of the worst natural pandemic in 
human history. Twenty years after the U.S. Centers for Disease Control 
and Prevention first identified AIDS, I am afraid that this vast 
tragedy has become a little too familiar, and we may have become a 
little too complacent.
  The HIV/AIDS epidemic rages on, from Asia and Eastern Europe to the 
Caribbean and most tragically Africa. As AIDS has become an 
international crisis, its face has become that of humanity itself. I 
fear that AIDS may become the single greatest obstacle to global 
development humanity has ever faced.
  And while it is easy to become discouraged in the face of such a 
huge, heartbreaking calamity--the truth is we know how to stop the 
spread of AIDS. Through a coordinated and comprehensive program of 
education, prevention and treatment, we know that the epidemic can be 
greatly reduced in scope.
  To that end, I'm proud to join Senator Corzine in sponsoring the 
Microbicides Development Act of 2001. This bill increases authorization 
of funding for microbicide research at the National Institutes of 
Health and the CDC.
  Microbicides represent a novel and virtually unexplored area in STD/
HIV research. Microbicides can kill or inactivate the bacteria and 
viruses that cause STDs and AIDS. Despite their huge potential, 
microbicide research is underrepresented in the federal HIV research 
portfolio. Currently, Microbicide development represents only one 
percent of federal research in HIV/AIDS.
  Microbicides are unique in that they are under development as topical 
products--a cream or gel. This gives them a high degree of versatility 
and user control. This is especially important for women who are unable 
to or cannot ask their partner to use a condom to prevent spreading 
HIV. Development of a dependable, affordable and easy to use 
microbicide would represent a major breakthrough in AIDS prevention--
allowing populations like commercial sex workers to have more control 
over their own bodies. It is extremely important to prevent HIV 
transmission and serve women, a population increasingly at risk for HIV 
infection.
  Microbicide development is a fertile but unexplored anti-HIV research 
area. Pharmaceutical companies have generally concentrated on high 
return disease treatments and government-sponsored vaccine programs. 
While there are potential microbicides in the research and development 
pipeline, this bill encourages the pursuit of these promising compounds 
by increasing authorization for the current federal investment in 
microbial research in the next fiscal year.
  Through this bill, we will emphasize the work at the National 
Institutes of Health and the Centers for Disease Control and Prevention 
to develop products to prevent the transmission of AIDS for women. I 
can think of no new direction in AIDS prevention that has a larger 
potential--we know that the best preventatives must be easy to use and 
controlled by the user. I expect that microbicides will fill a new role 
in preventing the spread of HIV and AIDS. I thank Senator Corzine for 
his leadership on this issue and I urge my colleagues to support this 
bill.
                                 ______
                                 
      By Mr. BINGAMAN (for himself, Mr. Campbell, and Ms. Cantwell):
  S. 1753. A bill to amend title XIX of the Social Security Act to 
include medical assistance furnished through

[[Page S12261]]

an urban Indian health program operated by an urban Indian organization 
pursuant to a grant or contract with the Indian Health Service under 
title V of the Indian Health Care improvement Act in the 100 percent 
Federal medical assistance percentage applicable to the Indian Health 
Service; to the Committee on Finance.
  Mr. BINGAMAN. Mr. President, the legislation I am introducing today 
with Senators Campbell and Cantwell entitled the ``Urban Indian Health 
Medicaid Amendments Act of 2001'' would raise the Medicaid matching 
rate to 100 percent for Medicaid-covered services provided to Medicaid-
eligible American Indians and Alaska Natives at urban Indian health 
programs.
  The legislation eliminates the discrepancy in current law that 
provides for a higher matching rate to states for care delivered in an 
non-urban outpatient facility operated by the Indian Health Service, or 
IHS, or by a tribe or a tribal organization under contract with IHS 
compared to the lower matching rate to an urban Indian program funded 
by the IHS to deliver services to Medicaid-eligible Native Americans 
residing in urban areas.
  The bill would not alter current policy toward facilities operated by 
the IHS or by tribes or tribal organizations. As under current law, the 
Federal Government would continue to pay 100 percent of the cost of 
treating Medicaid-eligible American Indian or Alaska Natives at an IHS 
hospital or tribal clinic. Similarly, the bill would not alter the 
amounts paid to IHS hospitals or tribal clinics for treating Medicaid 
patients.
  Instead, the bill simply extends the 100 percent federal matching 
rate to the costs of treatment of Medicaid-eligible Native Americans in 
urban Indian health programs and corrects the inconsistency in 
treatment under current Medicaid law.
  The urban Indian health program was first authorized in 1976 in Title 
V of the ``Indian Health Care Improvement Act.'' According to a report 
entitled ``Urban Indian Health'' by the Kaiser Family Foundation that 
was released this month, ``The purpose of the Title V program is to 
make outpatient health services accessible to urban Indians, either 
directly or by referral. These services are provided through non-profit 
organizations, controlled by urban Indians, that receive funds under 
contract with the IHS.''
  In fact, the Federal Government, through the IHS, currently funds 36 
urban Indian health programs in 20 states: Arizona, 3; California, 8; 
Colorado, 1; Illinois, 1; Kansas, 1; Massachusetts, 1; Michigan, 1; 
Minnesota, 1; Montana, 5; Nebraska, 1; Nevada, 1; New Mexico, 1; New 
York, 1; Oklahoma, 2; Oregon, 1; South Dakota, 1; Texas, 1; Utah, 1; 
Washington, 2; and Wisconsin, 2.
  These programs are nonprofit organizations that provide outpatient 
primary care services, and in some cases, just referral services, to 
urban Indians, many of whom are eligible for Medicaid. In FY 2001, 
Congress appropriated $29.9 million, or just 1 percent of the Indian 
Health Service budget, in discretionary funding to these programs. 
These programs are expected to supplement this direct funding with 
revenues from third party payers, such as private insurance and 
Medicaid.

  Urban Indian health programs may participate as providers in their 
state's Medicaid program and receive payment for services covered by 
Medicaid that are furnished to Medicaid-eligible urban Indians. 
Whatever amount the state pays the urban Indian program for a Medicaid 
patient visit, the Federal Government will match the State's 
expenditure at the State's regular Federal Medicaid matching rate, or 
FMAP.
  In contrast, if an American Indian or Alaska Native who is eligible 
for Medicaid receives primary care services covered by Medicaid at an 
outpatient facility operated by the IHS or by a tribe or a tribal 
organization under contract with the IHS, the Federal Government will 
pay 100 percent of the cost of the service.
  The policy rationale for this enhanced matching rate is that because 
Indian health is a Federal responsibility, states should not have to 
share in the costs of providing Medicaid services to Native American 
beneficiaries receiving care through facilities operated directly by 
the Federal Government's IHS or by tribes or tribal organizations on 
behalf of the IHS. This same rationale applies to Medicaid-covered 
services provided by urban Indian programs funded by the IHS to deliver 
services to Medicaid-eligible Native Americans residing in urban areas. 
Unfortunately, the Medicaid statute does not reflect this policy. This 
legislation would address this inequity.
  Moreover, as a report by the Kaiser Family Foundation entitled 
``Urban Indian Health'' released this month adds, ``Extension of this 
100 percent matching rate to services provided by Title V providers to 
Medicaid-eligible urban Indians may give State Medicaid programs an 
incentive to treat these `safety net' clinics more favorably in both a 
fee-for-service and managed care context.''
  The proposal would simply amend the third sentence in section 1905(b) 
of the Social Security Act to read as follows (new language in italic):

       Notwithstanding the first sentence of this section, the 
     Federal medical assistance percentage shall be 100 per centum 
     with respect to amounts expended as medical assistance for 
     services which are received through an Indian Health Service 
     facility or program whether operated by the Indian Health 
     Service or by an Indian tribe or tribal organization or by an 
     urban Indian health program (as defined in section 4 of the 
     Indian Health Care Improvement Act).

  The amendment would be effective for Medicaid services furnished on 
or after October 1, 2001. Under this language, the enhanced 100 percent 
matching rate would apply only to services furnished directly 
``through'' an urban Indian health program, not by referral. Note that 
the amendment would not determine the particular amount the state 
Medicaid program pays an urban Indian health program for a particular 
service, such as a patient visit. The language only affects the Federal 
Government's share of that payment amount.
  Despite the fact that recent Census figures indicate that 57 percent 
of the 2.5 million people that identify themselves solely as American 
Indian and Alaska Native live in metropolitan areas, including 17,444 
in Albuquerque, New Mexico, the IHS budget only provides 1 percent of 
its funding to urban Indian health programs. We should and must begin 
to take steps to eliminate such dramatic discrepancies.
  As a result, within the Medicaid program, just as the Federal 
Government reimburses States 100 percent for the costs of services 
delivered to Native American beneficiaries receiving care through 
facilities operated directly by the Federal Government's IHS or by 
tribes or tribal organizations on behalf of the IHS, the same should 
apply to urban Indian health programs. This simple, yet important bill 
will eliminate the disparity and I urge its swift passage.
  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. 1753

       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 ``Urban Indian Health Medicaid 
     Amendments Act of 2001''.

     SEC. 2. INCLUSION OF MEDICAL ASSISTANCE FURNISHED THROUGH AN 
                   URBAN INDIAN HEALTH PROGRAM IN 100 PERCENT 
                   FMAP.

       (a) In General.--The third sentence of section 1905(b) of 
     the Social Security Act (42 U.S.C. 1396d(b)) is amended--
       (1) by inserting ``or program'' after ``facility'';
       (2) by striking ``or by'' and inserting ``, by''; and
       (3) by inserting ``, or by an urban Indian organization 
     pursuant to a grant or contract with the Indian Health 
     Service under title V of the Indian Health Care Improvement 
     Act'' before the period.
       (b) Effective Date.--The amendments made by subsection (a) 
     take effect on October 1, 2002.
                                 ______
                                 
      By Mr. LEAHY (for himself, Mr. Hatch, Mr. Reid, and Mr. Bennett):
  S. 1754. A bill to authorize appropriations for the United States 
Patent and Trademark Office for fiscal years 2002 through 2007, and for 
other purposes; to the Committee on the Judiciary.
  Mr. LEAHY. Mr. President, I am pleased to join with Senators Hatch, 
Reid, and Bennett in the introduction of the Patent and Trademark 
Office

[[Page S12262]]

Authorization Act of 2002. Senator Hatch and I, as leaders of the 
Judiciary Committee, have had great success in working together to 
protect America's innovators and to protect our patent and trademark 
system.
  This bill is another example of our bipartisan effort to strengthen 
America's future. By joining with Senators Reid and Bennett, this bill 
will send a strong message to America's innovators and inventors that 
the Congress intends to protect and enhance our patent system. The PTO 
serves a critical role in the promotion and development of commercial 
activity in the United States by granting patents and trademark 
registrations to our nation's innovators and businesses.
  The costs of running the PTO are entirely paid for by fees collected 
by the PTO form users, individuals and companies that seek to benefit 
from patent and trademark protections. However, since 1992 Congress has 
diverted over $800 million of those fees for other government programs 
unrelated to the PTO.
  This bill sends a strong message that Congress should appropriate to 
the PTO a funding level equal to these fees. The reason for this is 
simple: the creation of intellectual property by Americans, individuals 
and businesses, is a massive positive driving force for our economy and 
is a huge plus for our trade balance with the rest of the world. In 
recent years, the number of patient applications has risen 
dramatically, and that trend is expected to continue. Our patent 
examiners are very overworked, and emerging areas such as biotechnology 
and business method patents may overwhelm the system.
  If fully implemented as intended, this bill can greatly assist the 
PTO in issuing quality patents more quickly which means more 
investment, more jobs and greater productivity for American businesses. 
Similarly, early federal registration of the name, logo, or symbol of a 
company or product is necessary to protect rights and avoid expensive 
litigation. Section 2 of the bill thus authorizes Congress to 
appropriate to the PTO, in fiscal years 2002 through 2007, an amount 
equal to the fees estimated by the Secretary of Commerce to be 
collected in each of the next five fiscal years. The Secretary shall 
make this report to the Congress by February 15 of each such fiscal 
year.
  Section 3 of the bill directs the PTO to develop, in the next three 
years, an electronic system for the filing and processing of all patent 
and trademark applications that is user friendly and that will allow 
the Office to process and maintain electronically the contents and 
history of all applications. Of the amount appropriated under section 
2, section 3 authorizes Congress to appropriate not more than $50 
million in fiscal years 2002 and 2003 for the electronic filing system.
  Third, the bill requires the PTO to develop a strategic plan to set 
forth for the methods by which the PTO will enhance patent and 
trademark quality, reduce pendency, and develop an effective electronic 
system for the benefit of filers, examiners, and the general public 
regarding patents and trademarks.
  I am pleased that my colleagues in the other body, Congressmen Coble 
and Berman, have introduced similar legislation. I am very concerned 
that the Bush Administration budget for FY 2002 planned to divert $207 
million in PTO fees to programs outside the PTO. This diversion takes 
fees paid by inventors and businesses to secure patents or trademarks 
and uses them to promote unrelated programs. It does this at a time 
when the number of patent and trademark applications has increased by 
50 percent since 1996, and while the ``waiting period,'' or pendency 
period, has increased 20 percent 1996. Even worse, the PTO estimates 
that the patent pendency period could increase to 38 months by 2006.

  The bill also contains two sections which will clarify two provisions 
of current law and thus provide certainty and guidance to the PTO and 
for inventors and businesses.
  Section 5 expands the scope of matters that may be raised during the 
reexamination process to a level which had been the case for many 
years. Let me explain the background. Congress established the patent 
reexamination system in 1980 for three purposes: to attempt to settle 
patent validity questions quickly and less expensively than litigation; 
to allow courts to rely on PTO expertise; and, third, to reinforce 
investor confidence in the certainty of patent rights by affording an 
opportunity to review patents of doubtful validity.
  This system of encouraging third parties to pursue reexamination as 
an efficient method of settling patent disputes is still a good idea. 
However, by clarifying current law this bill increases the discretion 
of the PTO and enhances the effectiveness of the reexamination process. 
It does this by permitting the use of relevant evidence that was 
considered by the PTO, but not necessarily cited. Thus, adding this 
sentence to current law, which only allows for reexaminations when 
``substantial new questions of patentability exist'', will help prevent 
the misuse of defective patents, especially those concerning business 
method patents.
  It permits a reexamination based on prior art cited by an applicant 
that the examiner failed to adequately consider. Thus, this change 
allows the PTO to correct some examiner errors that it would not 
otherwise be able to correct.
  Section 6 of the bill modestly improves the usefulness of inter 
partes reexamination procedures by enhancing the ability of third-party 
requesters to participate in that process by allowing such a third 
party to appeal an adverse reexamine decision in Federal court or to 
participate in the appeal brought by the patentee. This may make inter 
partes reexamination a somewhat more attractive option for challenging 
a patent in that a third party should feel more comfortable that the 
courts can be accessed to rectify a mistaken reexamination decision. 
This section should increase the use of the reexamine system and thus 
decrease the number of patent matters adjudicated in federal court.
  I again want to express my appreciation to the co-sponsors of this 
bill, Senators Hatch, Reid, and Bennett and look forward to working 
with other Senators on these matters.
  Mr. HATCH. Mr. President, I am pleased to join with Senators Leahy, 
Reid,  and Bennett in the introduction of the Patent and Trademark 
Office Authorization Act of 2002. As Senator Leahy mentioned, he and I, 
as leaders of the Judiciary Committee, have enjoyed a productive 
relationship working together to protect America's innovators, and to 
strengthen our intellectual property laws as well as the agencies that 
administer and enforce them.
  One of the issues we have long worked on is strengthening the ability 
of the United States Patent Office, ``USPTO'', to do its important work 
in reviewing and granting intellectual property rights to inventors 
seeking the patents that drive our high-tech economy or those 
businesses that seek to protect the trademarks that consumers rely on 
to find the goods and services they want. For those inventors and 
businesses to succeed in using those patent or trademark rights, the 
USPTO needs to do a quality and timely job in reviewing and granting 
those rights.
  However, over the past few years, the USPTO has been under mounting 
pressure on three fronts, increased filings, increased complexity in 
the filings, and increased difficulty retaining valuable and 
experienced examiners in the face of more lucrative offers in the 
private sector. These pressures, if unaddressed, can lead to delays for 
applicants of months or years, or to reduced quality and reliability of 
the determinations that issue from the USPTO. Indeed, the USPTO 
estimates that the patent pendency period could rise to 38 months by 
2006. I hate to think that innovative products could sit on the shelf 
for more than three years awaiting government review. This is 
especially troubling when we realize that in many high-tech sectors the 
shelf life of a product is often less than half that time. Such 
increased waiting periods and lower quality decision-making means 
slower innovation, less competitiveness, higher costs, and greater risk 
for those seeking patents or trademarks. And, consequently, the rest of 
us and our economy could see slower recovery and weaker growth. 
Addressing these challenges will require leadership, of course, which I 
believe can be provided by the President's nominee to head the USPTO, 
former Congressman Jim Rogan. But, to be realistic, we

[[Page S12263]]

must admit that surely it will also require resources.
  As many in this body know, the costs of running the USPTO are 
entirely paid for by fees collected from applicants, individuals and 
companies that seek to benefit from patent and trademark protection. 
However, since 1992 Congress has diverted an amount estimated at over 
$800 million from those fees for other government programs unrelated to 
the USPTO.
  At a time when our economy needs support, it seems doubly wrong to 
levy what amounts to a tax on innovation, a tax imposed by taking a 
portion of the fees America's innovators and businesses pay to secure 
protection for their economy-generating products and services and 
spending it on unrelated government programs. I believe that fees paid 
to secure patent and trademark rights should be used to process those 
applications faster with better reliability precisely because getting 
the products of American ingenuity to market faster helps grow 
our economy faster.

  That is why I am glad to join my colleagues in introducing this bill 
which takes the position that Congress should appropriate to the USPTO 
a funding level equal to the fees applicants pay. I agree with my 
colleagues that if fully implemented as intended, this bill can greatly 
assist the USPTO in issuing quality patents more quickly, which in turn 
can lead to more investment, job creation, and productivity for 
American businesses.
  In addition to establishing the principle that user fees collected by 
the USPTO should be used to serve those who pay them, the bill makes 
additional improvements to the way the USPTO does business, further 
enhancing its ability to serve American companies and inventors. Among 
these improvements are the requirement that the USPTO develop a user-
friendly electronic system for the filing and processing of all patent 
and trademark applications, and that the PTO to develop a strategic 
plan to enhance patent and trademark quality, reduce pendency, and 
otherwise improve their systems and services for the benefit of 
applicants, examiners, and the general public. The bill also contains 
two sections which will clarify two provisions of current law regarding 
reexamination of patents to provide greater guidance to the USPTO and 
its customers about the scope and availability of the reexamination 
process. Both of these changes should help streamline and reduce the 
costs of post-grant patent decisions.
  I again want to express my appreciation to Senator Leahy, the 
chairman of the Judiciary Committee, for this leadership, and to the 
other co-sponsors of this bill, Senators Reid and Bennett. I look 
forward to working with them and my other colleagues on this important 
legislation.

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