[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
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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.
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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
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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
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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.
____________________