[Congressional Record Volume 148, Number 17 (Tuesday, February 26, 2002)]
[Senate]
[Pages S1209-S1216]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. DOMENICI:
  S. 1964. A bill to direct the Secretary of the Interior to make a 
grant to the Hubbard Museum of the American West in Lincoln County, New 
Mexico; to the Committee on Energy and Natural Resources.
  Mr. DOMENICI. Mr. President, I am pleased to introduce this bill 
which authorizes the expansion of the Hubbard Museum of the American 
West in Lincoln County, NM. Specifically, this bill would allow the 
Secretary of Interior to make a grant of up to $4.5 million dollars to 
cover the Federal share of the museum's expansion.
  The Hubbard Museum of the American West has been serving the public 
since 1993. Opened that year under the name of The Museum of the Horse, 
the museum welcomed 25,000 visitors in its first full year of 
operations. Current annual attendance is 130,000 visitors at three 
locations and one special event within Lincoln County.
  As attendance and programs have grown, the museum no longer has the 
space or facilities to meet the needs of expanded exhibitions and 
programs. In addition, the Hubbard museum's recent affiliation with the 
Smithsonian Institute allows the museum to receive artifacts and other 
collections from the Smithsonian that can be exhibited for the benefit 
of the public. The Hubbard museum cannot fully serve the visitors or 
expand its exhibitions and programs without additional space.
  The Hubbard Museum of the American West seeks to dramatically expand 
its facility in order to increase tourism and job development in 
Lincoln County, NM. This expansion will allow the museum to fully take 
advantage of its affiliate status with the Smithsonian, address 
additional needs for collection storage and collection preservation, 
through climate control, and will provide permanent jobs for an 
economically challenged region. Early estimates indicate that the 
project will bring 25 short-term construction jobs and 15 full time 
museum jobs to Lincoln County. In addition, the expanded tourist 
attraction will allow an estimated 100 additional jobs to be created 
throughout the community.
  Lincoln County is consistently ranked in the bottom third for income 
levels in New Mexico, a State that is ranked at the bottom of most 
income level charts. The citizens of Lincoln and northern Otero 
counties include Native American, Hispanic Americans, and Anglo-
American ethnic groups. It is estimated that one third of the new 
museum employees will come from each of these ethnic groups. Of special 
concern is the hiring of a Native American who will act as a curator 
for the

[[Page S1210]]

extensive Native American artifacts that the museum owns and cares for. 
The museum also plans to add Hispanic staff members to its visitor 
services division as Spanish speaking visitors make up an estimated 20 
percent of the annual visitation. Additionally, the museum plans to 
work with the New Mexico Department of Labor to identify individuals 
who can be brought off welfare or less meaningful employment to work 
for the museum.
  The Hubbard Museum has a long history of providing free consulting 
and operating help to museums and not-for-profit organizations in 
Lincoln County. It is a true asset and I am pleased to introduce a bill 
that will help continue these worthwhile efforts.
  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. 1964

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

     SECTION 1. HUBBARD MUSEUM OF THE AMERICAN WEST, NEW MEXICO.

       (a) In General.--Subject to the availability of 
     appropriations, the Secretary of the Interior shall make a 
     grant to the Hubbard Museum of the American West in Lincoln 
     County, New Mexico, to pay the Federal share of the cost of 
     expanding the museum.
       (b) Federal Share.--The Federal share shall be 75 percent.
       (c) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section $4,500,000 for 
     fiscal year 2003, to remain available until expended.
                                 ______
                                 
      By Mr. WELLSTONE.
  S. 1965. A bill to meet the mental health and substance abuse 
treatment needs of incarcerated children and youth; to the Committee on 
the Judiciary.
  Mr. WELLSTONE. Mr. President, I rise today to reintroduce the Mental 
Health Juvenile Justice Act of 2002. As many of my colleagues know, 
increasing numbers of children with mental disorders are entering the 
juvenile justice system. Each year, more than one million children come 
into contact with the justice system, and twenty percent of those who 
are incarcerated have a serious mental illness. Many of these children 
are, in effect, dumped on the justice system because of cuts in mental 
health services in the community. These children are overwhelmingly 
poor, a disproportionate number are children of color, and most come 
from troubled homes.
  Contrary to what many believe, most children who are locked up are 
not violent. Justice Department studies show that only one in twenty 
children in the juvenile system has committed a violent offense. Most 
children with mental disorders have committed minor, nonviolent 
offenses or status offenses, such as petty theft or skipping school. 
Still others have simply run away from home to escape physical or 
sexual abuse from parents or other adults. Whenever possible, these 
children should be diverted from the juvenile justice system and toward 
community-based services, including mental health and substance abuse 
treatment as needed. Because some children with mental disorders commit 
serious and violent offenses, it is not always possible to divert them 
from incarceration. Nevertheless, these children need treatment for 
their disorders to aid in their inevitable return to the community.
  Children with mental illness are largely untreated in the current 
system, although this may contribute to the child's delinquency. The 
difficult and sometimes deplorable conditions that prevail in detention 
centers and youth prisons exacerbate the problems of these children. 
Mental health services both prevent them from committing delinquent 
offenses and from re-offending. If appropriate mental health care is 
not provided, our country will pay a higher price in repeated 
incarcerations, substance abuse, and even suicides.
  The Mental Health Juvenile Justice Act of 2002, if enacted into law, 
will go a long way to help address the needs of these children. This 
measure outlines a comprehensive federal strategy for providing 
critical assistance to children with mental illness in our juvenile 
justice system. It would:
  Train state judges, probation officers, and others on the 
identification and need for appropriate treatment of mental disorders 
and substance abuse, and on the use of community-based alternatives to 
placement in juvenile correctional facilities;
  Provide block grant funds and competitive grants to the states and 
localities to develop mental health diversion programs for children who 
come into contact with the justice system, by strengthening the 
collaboration of community agencies serving troubled children, and to 
provide mental health treatment for incarcerated children with 
emotional disorders;
  Establish a Federal Council on the Criminalization of Youth with 
Mental Disorders to report to Congress on proposed legislation to 
improve the treatment of mentally ill children who come into contact 
with the justice system; and
  Remove the most damaging provisions of the Prison Litigation Reform 
Act of 1996, by giving back to the federal courts important tools to 
remedy abusive conditions in state facilities under which juvenile 
offenders and mentally ill prisoners are being held.
  We can no longer ignore this tragedy. The neglect of youth with 
emotional disturbances in our prisons must end. We as a society have 
the moral obligation to see that they get the help they need.
                                 ______
                                 
      By Mr. BIDEN.
  S. 1966. A bill to educate health professionals concerning substance 
abuse and addiction; to the Committee on Health, Education, Labor, and 
Pensions.
  Mr. BIDEN. Mr. President, I rise today to introduce legislation to 
address the problem of substance abuse in our country.
  Last year the Robert Wood Johnson Foundation called substance abuse 
America's number one health problem. I don't think that overstates it.
  Most of us know someone, a family member, maybe a neighbor, a 
colleague, or a friend, who is addicted to drugs or alcohol. In fact, 
14 million people in this country abuse alcohol or are alcoholics. 
Nearly 15 million use drugs. And nearly four million are in need of 
treatment but not receiving it.
  Drug and alcohol abuse has far reaching consequences. It exacerbates 
social ills. It's a public safety problem. It's a public health 
problem. It's a public expenditure problem. There is an undeniable 
correlation between substance abuse and crime. Eighty percent of the 
two million men and women behind bars today have a history of drug and 
alcohol abuse or addiction or were arrested for a drug-related crime. 
Illegal drugs are responsible for thousands of deaths each year. They 
fuel the spread of AIDS and Hepatitis C. They contribute to child 
abuse, domestic violence, and sexual assault. And we all pay the price.
  It costs this Nation almost $276 billion in law enforcement, criminal 
justice expenses, medical bills, and lost earnings each year. That 
means that preventing and treating substance abuse makes sense. It 
makes good criminal justice sense. It makes public health sense. It 
makes budgetary sense. Not to mention the fact that it's the right 
thing to do.
  Yet there remains a reluctance to recognize substance abuse as a 
health issue. There's a reluctance to accept addiction as a disease. 
It's a reluctance that has kept public policy from asserting that 
addicts should be in treatment. Whether addicts are in prison or out, 
it seems to me, treatment is the only legitimate choice.
  Not only must we authorize it, we must take full advantage of the 
treatments that have been developed.
  For too long, access to effective therapies, such as methadone and 
LAAM for heroin addiction, has been strangled by layers of bureaucracy 
and regulation. The result is that only 22 percent of opiate addicts 
are now receiving pharmaco-therapy treatment.
  Yet, when I introduced a bill during the last Congress with Senators 
Hatch, Levin and Moynihan to help improve access by allowing qualified 
doctors to prescribe certain anti-addiction drugs such as buprenorphine 
right from their offices, just like other medicines, the bill initially 
met with resistance.
  But, because the facts about addiction are finally beginning to sink 
in, 69 percent of Americans now support treatment instead of jail as 
the primary focus for drug abusers, and because we were frustrated 
enough to be

[[Page S1211]]

persistent, the bill eventually passed and President Clinton signed it 
into law.
  But it's not only about increasing access to treatment. It is also 
about moving treatment into the medical mainstream. Unless family 
doctors, nurses, physician assistants and social workers can identify 
addiction when they see it, unless they know how to intervene, we will 
never make any real progress.
  That aspect of the challenge came into sharp focus for me when I read 
a report a few years ago by The National Center on Addiction and 
Substance Abuse at Columbia University, CASA.
  That report said that fewer than one percent of doctors presented 
with the classic profile of an alcoholic older woman could diagnose it 
properly. Eighty-two percent mis-diagnosed it as depression, some 
treatments for which are dangerous when taken with alcohol. A follow-up 
study showed that 94 percent of primary care physicians fail to 
diagnose substance abuse when presented with the classic symptoms. And 
41 percent of pediatricians fail to diagnose illegal drug use in 
teenage patients.
  No one recognizes this problem better than the doctors themselves. 
Fewer than one in five, only 19 percent, feel confident about 
diagnosing alcoholism. And only 17 percent feel qualified to identify 
illegal drug use. Having said that, even if they diagnose it, most 
doctors don't believe that treatment works.
  Among practitioners, as well as policy makers, we need to get the 
message out. It needs to be loud and clear. Addiction is a chronic 
relapsing disease, and as with other such diseases, while there may not 
be a cure, medical treatment can help control it.
  The medical professionals have to be educated to recognize the signs 
of substance abuse and to pursue the effective therapies that are 
available. That is why I am introducing legislation to create a grant 
program to train medical professionals to prevent and recognize 
addiction and refer patients to treatment if they need it. 
Representative Patrick Kennedy will introduce companion legislation in 
the House of Representatives.
  Like treatment, training works.
  According to a study published in the Brown University Digest of 
Addiction Theory and Application, 91 percent of health professionals 
who took part in training on addiction at Boston University were using 
the techniques they learned one to five years later.
  Every family doctor does not need to be an addiction specialist, but 
they do need to be able to recognize the signs. And they need to know 
what help is available.
  It's another step, and, in my view, a crucial one, to help bridge the 
divide between research and practice. It will help chip away at the 
incredible substance abuse-related costs we face each year in human as 
well as monetary terms.
  I hope that my colleagues will join me to support this important 
legislation. I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1966

       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 ``Health Professionals 
     Substance Abuse Education Act''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress makes the following findings:
       (1) Illegal drugs and alcohol are responsible for thousands 
     of deaths each year, and they fuel the spread of a number of 
     communicable diseases, including AIDS and Hepatitis C, as 
     well as some of the worst social problems in the United 
     States, including child abuse, domestic violence, and sexual 
     assault.
       (2) There are an estimated 14,800,000 current drug users in 
     America, more than 4,000,000 of whom are addicts. An 
     estimated 14,000,000 Americans abuse alcohol or are 
     alcoholic.
       (3) There is a significant treatment gap in the United 
     States. Nearly 4,000,000 drug users who are in need of 
     immediate treatment are not receiving it. This includes more 
     than 1,200,000 children ages 12 to 25. These numbers do not 
     take into account the number of alcoholics in need of 
     treatment.
       (4) There are more than 28,000,000 children of alcoholics 
     in America, almost 11,000,000 of whom are under 18 years of 
     age. Countless other children are affected by substance 
     abusing parents or other caretakers. Health professionals are 
     uniquely positioned to help reduce or prevent alcohol and 
     other drug-related impairment by identifying affected 
     families and youth and by providing early intervention.
       (5) Drug addiction is a chronic relapsing disease. As with 
     other chronic relapsing diseases (such as diabetes, 
     hypertension and asthma), there is no cure, although a number 
     of treatments can effectively control the disease. According 
     to an article published in the Journal of the American 
     Medical Association, treatment for addiction works just as 
     well as treatment for other chronic relapsing diseases.
       (6) Drug treatment is cost effective, even when compared 
     with residential treatment, the most expensive type of 
     treatment. Residential treatment for cocaine addiction costs 
     between $15,000 and $20,000 a year, a substantial savings 
     compared to incarceration (costing nearly $40,000 a year), or 
     untreated addiction (costing more than $43,000 a year). Also, 
     in 1998, substance abuse and addiction accounted for 
     approximately $10,000,000,000 in Federal, State, and local 
     government spending simply to maintain the child welfare 
     system. The economic costs associated with fetal alcohol 
     syndrome were estimated at $1,900,000,000 for 1992.
       (7) Many doctors and other health professionals are 
     unprepared to recognize substance abuse in their patients or 
     their families and intervene in an appropriate manner. Only 
     56 percent of residency programs have a required curriculum 
     in preventing or treating substance abuse.
       (8) Fewer than 1 in 5 doctors (only 19 percent) feel 
     confident about diagnosing alcoholism, and only 17 percent 
     feel qualified to identify illegal drug use.
       (9) Most doctors who are in a position to make a diagnosis 
     of alcoholism or drug addiction do not believe that treatment 
     works (less than 4 percent for alcoholism and only 2 percent 
     for drugs).
       (10) According to a survey by the National Center on 
     Addiction and Substance Abuse at Columbia University 
     (referred to in this section as ``CASA''), 94 percent of 
     primary care physicians and 40 percent of pediatricians 
     presented with a classic description of an alcoholic or drug 
     addict, respectively, failed to properly recognize the 
     problem.
       (11) Another CASA report revealed that fewer than 1 percent 
     of doctors presented with the classic profile of an alcoholic 
     older woman could diagnose it properly. Eighty-two percent 
     misdiagnosed it as depression, some treatments for which are 
     dangerous when taken with alcohol.
       (12) Training can greatly increase the degree to which 
     medical and other health professionals screen patients for 
     substance abuse. It can also increase the manner by which 
     such professionals screen children and youth who may be 
     impacted by the addiction of a parent or other primary 
     caretaker. Boston University Medical School researchers 
     designed and conducted a seminar on detection and brief 
     intervention of substance abuse for doctors, nurses, 
     physician's assistants, social workers and psychologists. 
     Follow-up studies reveal that 91 percent of those who 
     participated in the seminar report that they are still using 
     the techniques up to 5 years later.
       (13) According to the National Clearinghouse for Alcohol 
     and Drug Information, drug and alcohol abuse account for more 
     than $400,000,000,000 in health care costs each year. Arming 
     health care professionals with the information they need in 
     order to intervene and prevent further substance abuse could 
     lead to a significant cost savings.
       (14) A study conducted by doctors at the University of 
     Wisconsin found a $947 net savings patient in health care, 
     accident, and criminal justice costs for each individual 
     screened and, if appropriate, for whom intervention was made, 
     with respect to alcohol problems.
       (b) Purpose.--It is the purpose of this Act to--
       (1) improve the ability of health care professionals to 
     identify and assist their patients with substance abuse;
       (2) improve the ability of health care professionals to 
     identify and assist children and youth affected by substance 
     abuse in their families; and
       (3) help establish an infrastructure to train health care 
     professionals about substance abuse issues.

     SEC. 3. HEALTH PROFESSION EDUCATION.

       (a) Secretary of Health and Human Services.--The Secretary 
     of Health and Human Services may enter into interagency 
     agreements with the Health Resources Services Administration 
     or the Substance Abuse and Mental Health Services 
     Administration to enable each such Administration to carry 
     out activities to train health professionals (who are 
     generalists and not already specialists in substance abuse) 
     so that they are competent to--
       (1) recognize substance abuse in their patients or the 
     family members of their patients;
       (2) intervene, treat, or refer for treatment those 
     individuals who are affected by substance abuse;
       (3) identify and assist children of substance abusing 
     parents; and
       (4) serve as advocates and resources for community-based 
     substance abuse prevention programs.
       (b) Use of Funds.--Amounts received under an interagency 
     agreement under this section shall be used--
       (1) with respect to the Health Resources and Services 
     Administration, to support the

[[Page S1212]]

     Association for Medical Education and Research in Substance 
     Abuse (AMERSA) Interdisciplinary Project; and
       (2) with respect to the Substance Abuse and Mental Health 
     Services Administration, to support the Addiction Technology 
     Transfer Centers counselor training programs to train other 
     health professionals.
       (c) Collaboration.--To be eligible to enter into an 
     interagency agreement under this section the Health Resources 
     and Services Administration or the Substance Abuse and Mental 
     Health Services Administration shall demonstrate that such 
     Administration will participate in interdisciplinary 
     collaboration and collaborate with other nongovernmental 
     organizations with respect to activities carried out under 
     this section.
       (d) Evaluations.--The Health Resources and Services 
     Administration and the Substance Abuse and Mental Health 
     Services Administration shall conduct a process and outcome 
     evaluation of the programs and activities carried out with 
     funds received under this section, and shall provide semi-
     annual reports to the Secretary of Health Human Services and 
     the Director of the Office of National Drug Control Policy.
       (e) Definitions.--In this section--
       (1) the term ``health professional'' means a doctor, nurse, 
     physician assistant, nurse practitioner, social worker, 
     psychologist, pharmacist, osteopath, or other individual who 
     is licensed, accredited, or certified under State law to 
     provide specified health care services and who is operating 
     within the scope of such licensure, accreditation, or 
     certification; and
       (2) the terms ``doctor'', ``nurse'', ``physician 
     assistant'', ``nurse practitioner'', ``social worker'', 
     ``psychologist'', ``pharmacist'', and ``osteopath'' shall 
     have the meanings given such terms for purposes of titles VII 
     and VIII of the Public Health Service Act (42 U.S.C. 292 et 
     seq and 296 et seq.).
       (f) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section, $5,500,000 for 
     each of fiscal years 2002 through 2006, of which $1,000,000 
     in each such fiscal year shall be made available to the 
     Substance Abuse and Mental Health Services Administration and 
     $4,500,000 in each such fiscal year shall be made available 
     to the Health Resources and Services Administration, to carry 
     out this section. Amounts made available under this 
     subsection shall be used to supplement and not supplant 
     amounts being used on the date of enactment of this Act for 
     activities of the types described in this section.

     SEC. 4. SUBSTANCE ABUSE FACULTY FELLOWSHIP.

       (a) Establishment.--The Secretary of Health and Human 
     Services (referred to in this section as the ``Secretary'') 
     shall establish and administer a substance abuse faculty 
     fellowship program under which the Secretary shall provide 
     assistance to eligible institutions to enable such 
     institutions to employ individuals to serve as faculty and 
     provide substance abuse training in a multi-discipline 
     manner.
       (b) Eligibility.--
       (1) Institutions.--To be eligible to receive assistance 
     under this section, an institution shall--
       (A) be an accredited medical school or nursing school, or 
     be an institution of higher education that offers one or more 
     of the following--
       (i) an accredited physician assistant program;
       (ii) an accredited nurse practitioner program;
       (iii) a graduate program in pharmacy;
       (iv) a graduate program in public health;
       (v) a graduate program in social work; or
       (vi) a graduate program in psychology; and
       (B) prepare and submit to the Secretary an application at 
     such time, in such manner, and containing such information as 
     the Secretary may require.
       (2) Individuals.--To be eligible to receive a fellowship 
     from an eligible institution under this section, an 
     individual shall prepare and submit to the institution an 
     application at such time, in such manner, and containing such 
     information as the institution may require.
       (c) Use of Funds.--
       (1) In general.--An eligible institution shall utilize 
     assistance received under this section to provide one or more 
     fellowships to eligible individuals. Such assistance shall be 
     used to pay not to exceed 50 percent of the annual salary of 
     the individual under such a fellowship for a 5-year period.
       (2) Fellowships.--Under a fellowship under paragraph (1), 
     an individual shall--
       (A) devote a substantial number of teaching hours to 
     substance abuse issues (as part of both required and elective 
     courses) at the institution involved during the period of the 
     fellowship; and
       (B) attempt to incorporate substance abuse issues into the 
     required curriculum of the institution in a manner that is 
     likely to be sustained after the period of the fellowship 
     ends.

     Courses described in this paragraph should by taught as part 
     of several different health care training programs at the 
     institution involved.
       (3) Evaluations.--The Secretary shall conduct a process and 
     outcome evaluation of the programs and activities carried out 
     with amounts appropriated under this section and shall 
     provide semi-annual reports to the Director of the Office of 
     National Drug Control Policy and the Secretary of Health and 
     Human Services.
       (d) Authorization of Appropriations.--There is authorized 
     to be appropriated to carry out this section, $3,500,000 for 
     each of the fiscal years 2002 through 2006. Amounts made 
     available under this subsection shall be used to supplement 
     and not supplant amounts being used on the date of enactment 
     of this Act for activities of the types described in this 
     section.

     SEC. 5. OVERSIGHT COMMITTEE.

       (a) In General.--The Director of the Office of National 
     Drug Control Policy shall convene an interagency oversight 
     committee, composed of representatives of the Health 
     Resources and Services Administration, as well as the 
     National Institute on Drug Abuse, the National Institute on 
     Alcohol Abuse and Alcoholism, the Substance Abuse and Mental 
     Health Services Administration, and the National Institute on 
     Mental Health, and non-governmental organizations determined 
     to be experts in the field of substance abuse, to receive 
     updates concerning and coordinate the Federal activities 
     funded under this Act and the activities of various Federal 
     agencies, toward the goal of educating health professionals 
     about substance abuse.
       (b) Meetings.--The interagency oversight committee 
     established under subsection (a) shall meet at least twice 
     each year at the call of the Director of the Office of 
     National Drug Control Policy.
                                 ______
                                 
      By Mr. HOLLINGS:
  S. 1968. A bill to authorize the Secretary of Transportation to issue 
a certificate of documentation and coastwise trade endorsement for the 
vessel The Islander; to the Committee on Commerce, Science, and 
Transportation.
  Mr. HOLLINGS. Mr. President, I am introducing a bill today to direct 
that the vessel The Islander, Official Number SC9279BJ, be accorded 
coastwise trading privileges and be issued a certificate of 
documentation under section 12103 of title 46, of the U.S. Code.
  The Islander is a commuter launch vessel that is intended for 
commercial use. It is 40 feet in length, and 13 feet in breadth, has a 
draw of 3 and one half feet, and is self-propelled.
  The vessel was purchased by Robert ``Scott'' Fales of Charleston, 
South Carolina, who purchased it with the intention of using it for the 
transportation of passengers. However, proof of the origin of this 
vessel is unknown, and it did not meet the requirements for coastwise 
license endorsement in the United States. Such documentation is 
mandatory to enable the owner to use the vessel for its intended 
purposes. The ship was bought from a boatyard and was built by the 
Wyman Company. Although records show that the Wyman Companies were 
based in New Haven, CT, Mr. Fales has been unable to provide conclusive 
proof that the vessel was U.S. built. He has invested a considerable 
amount of money in the vessel, and without a Jones Act waiver for the 
ship, he will be forced to sell it.
  Mr. Fales is seeking this waiver because his plans to use the vessel 
for the transportation of passengers. This usage will not adversely 
affect the coastwise trade in the U.S. waters. If he is granted this 
waiver, it is his intention the comply fully with U.S. documentation 
and safety requirements.
                                 ______
                                 
      By Mr. HUTCHINSON (for himself, Mr. Lott, and Mr. Gregg):
  S. 1969. A bill to amend title I of the Employee Retirement Income 
Security Act of 1974 and the Internal Revenue Code of 1986 to provide 
additional protections to participants and beneficiaries in individual 
account plans from excessive investment in employer securities and to 
promote the provision of retirement investment advice to workers 
managing their retirement income assets, and to amend the Securities 
Exchange Act of 1934 to prohibit insider trades during any suspension 
of the ability of plan participants or beneficiaries to direct 
investment away from equity securities of the plan sponsor; to the 
Committee on Health, Education, Labor, and Pensions.
  Mr. HUTCHINSON. Mr. President, today I am introducing legislation 
along with Senator Lott and Senator Gregg which will protect the 
security of American workers retirement plans without chilling their 
growth. The Pension Security Act of 2002 is based on President Bush's 
proposal for pension reform made earlier this month. The President's 
proposal enhances protections for the 401(k) investments of 42 million 
American workers by providing individuals with better information about 
their accounts and significantly more control over their funds.
  The success of private pension plans has transformed worker 
retirement in America. Today, because of these

[[Page S1213]]

plans, the majority of retirees can experience the comfortable 
retirement that was once available only to few. But as the Enron 
situation has shown us, there are flaws in the system. When Enron stock 
plummeted 98.8 percent in one year, thousands of workers lost their 
retirement nesteggs.
  What could have prevented such massive losses? For some workers, 
better information about the wisdom of a diversified investment 
strategy would have prevented such heavy investment in company stock.
  Our bill will give employees better investment information in two 
ways. First, it will require plans to send quarterly benefits statement 
to plan participants. This statement will include easy-to-understand 
information about the importance of a well-balanced and diversified 
portfolio and the risk of holding a substantial portion of the 
portfolio in one security. Second, our bill amends complex and outdated 
laws, although intended to protect workers retirement funds, actually 
prevent them from obtaining affordable financial advice. This 
legislation will help employers to provide their workers with access to 
professional investment advice. This benefit would require full 
disclosure of any fees or potential conflicts and put strict safeguards 
in place to ensure that workers receive advice solely in their best 
interests.
  What else could have prevented the loss of so many Enron employees' 
retirement savings? Many were unable to control what was in their 
portfolio. Even when they wanted to sell off their company stock, they 
could not. Our bill addresses this problem as well. Under our proposal, 
workers could no longer be locked into a portfolio half-filled with 
company stock until retirement age. Rather, employees would be allowed 
to control 100 percent of their investment once they have participated 
in their plan for three years.
  Some Enron employees could not diversify their stock when they wanted 
to because of the well-publicized ``black-out'' or ``lockdown'' period. 
The Department of Labor is investigating several aspects of the 
practice of instituting black-out periods for necessary record-keeping 
adjustments and improvements. However, what has become obvious is that 
this practice needs legislative guidance. Our bill provides that 
guidance by requiring 30 days prior notice of any black-out period and 
codifying definitions associated with the practice. We are also 
proposing another measure to give workers more control over their 
investments. During these black-out periods, the law will place the 
entire burden of liability on the plan. This means that the plan 
providers would be personally liable for losses to the place caused by 
a breech of fiduciary duty, and this will be a powerful incentive to 
keep black-out periods as short as possible.
  One of the most infuriating spectacles of the Enron disaster was the 
Enron executives selling off their own personal shares of company stock 
while employees were prevented from doing the same during the black-out 
period. This was unconscionable, and our bill will put a stop to it. If 
this bill is enacted, what is good for the goose will be good for the 
gander. If workers cannot control their retirement investments due to a 
black-out period, neither can the company's owners, directors or 
officers purchase, acquire, transfer or sell company stock. That change 
will be a major incentive for companies to keep the necessary periods 
of time when employees do not control their investments as short as 
possible.

  The proposal we are introducing here today will give workers better 
information, more choice in their investment options, and more security 
with their retirement funds. In order to prevent a knee-jerk reaction 
to the Enron tragedy, which could cause more harm than good, the 
President has given us a plan which makes retirement savings more 
secure while also preserving the ability of individuals to make their 
own choices, based on their own situation, when investing for their 
retirement. This bill not only preserves this right, it enhances it.
  Finally I would like to thank my colleagues Senator Gregg and Senator 
Lott for joining me in introducing this bill. This bill is important, 
and we will work tirelessly to see that America's workers and their 
retirement security are protected. I thank the President for his 
leadership on this issue and I commend Congressmen John Boehner and Sam 
Johnson for introducing this bill in the House.
  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. 1969

       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 ``Pension Security Act of 
     2002''.

     SEC. 2. IMPROVED DISCLOSURE OF PENSION BENEFIT INFORMATION BY 
                   INDIVIDUAL ACCOUNT PLANS.

       (a) Pension Benefit Statements Required on Periodic 
     Basis.--
       (1) In general.--Subsection (a) of section 105 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1025) is amended by inserting ``and, in the case of an 
     applicable individual account plan, shall furnish at least 
     quarterly to each plan participant (and to each beneficiary 
     with a right to direct investments),'' after ``who so 
     requests in writing,''.
       (2) Information required from individual account plans.--
     Section 105 of such Act (29 U.S.C. 1025) is amended by adding 
     at the end the following new subsection:
       ``(e)(1) The quarterly statements required under subsection 
     (a) shall include (together with the information required in 
     subsection (a)) the following:
       ``(A) the value of investments allocated to the individual 
     account, including the value of any assets held in the form 
     of employer securities, without regard to whether such 
     securities were contributed by the plan sponsor or acquired 
     at the direction of the plan or of the participant or 
     beneficiary, and an explanation of any limitations or 
     restrictions on the right of the participant or beneficiary 
     to direct an investment; and
       ``(B) an explanation, written in a manner calculated to be 
     understood by the average plan participant, of the 
     importance, for the long-term retirement security of 
     participants and beneficiaries, of a well-balanced and 
     diversified investment portfolio, including a discussion of 
     the risk of holding substantial portions of a portfolio in 
     the security of any one entity, such as employer 
     securities.''.
       (3) Definition of applicable individual account plan.--
     Section 3 of such Act (29 U.S.C. 1002) is amended by adding 
     at the end the following new subsection:
       ``(42) The term `applicable individual account plan' means 
     any individual account plan, except that such term does not 
     include an employee stock ownership plan (within the meaning 
     of section 4975(e)(7) of the Internal Revenue Code of 1986) 
     unless there are any contributions to such plan (or earnings 
     thereunder) held within such plan that are subject to 
     subsection (k)(3) or (m)(2) of section 401 of the Internal 
     Revenue Code of 1986.''.
       (b) Civil Penalties for Failure To Provide Quarterly 
     Benefit Statements.--Section 502 of such Act (29 U.S.C. 1132) 
     is amended--
       (1) in subsection (a)(6), by striking ``(5), or (6)'' and 
     inserting ``(5), (6), or (7)'';
       (2) by redesignating paragraph (7) of subsection (c) as 
     paragraph (8); and
       (3) by inserting after paragraph (6) of subsection (c) the 
     following new paragraph:
       ``(7) The Secretary may assess a civil penalty against any 
     plan administrator of up to $1,000 a day from the date of 
     such plan administrator's failure or refusal to provide 
     participants or beneficiaries with a benefit statement on at 
     least a quarterly basis in accordance with section 105(a).''.

     SEC. 3. PROTECTION FROM SUSPENSIONS, LIMITATIONS, OR 
                   RESTRICTIONS ON ABILITY OF PARTICIPANT OR 
                   BENEFICIARY TO DIRECT OR DIVERSIFY PLAN ASSETS.

       (a) In General.--Section 101 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1021) is amended--
       (1) by redesignating the second subsection (h) as 
     subsection (j); and
       (2) by inserting after the first subsection (h) the 
     following new subsection:
       ``(i) Notice of Suspension, Limitation, or Restriction on 
     Ability of Participant or Beneficiary To Direct Investments 
     in Individual Account Plan.--
       ``(1) In general.--In the case of an applicable individual 
     account plan, the administrator shall notify participants and 
     beneficiaries of any action that would have the affect of 
     suspending, limiting, or restricting the ability of 
     participants or beneficiaries to direct or diversify assets 
     credited to their accounts.
       ``(2) Notice requirements.--
       ``(A) In general.--The notices described in paragraph (1) 
     shall--
       ``(i) be written in a manner calculated to be understood by 
     the average plan participant and shall include the reasons 
     for the suspension, limitation, or restriction, an 
     identification of the investments affected, and the expected 
     period of the suspension, limitation, or restriction, and
       ``(ii) be furnished at least 30 days in advance of the 
     action suspending, limiting, or restricting the ability of 
     the participants or beneficiaries to direct or diversify 
     assets.

[[Page S1214]]

       ``(B) Exception to 30-day notice requirement.--In any case 
     in which--
       ``(i) a fiduciary of the plan determines, in writing, that 
     a deferral of the suspension, limitation, or restriction 
     would violate the requirements of subparagraph (A) or (B) of 
     section 404(a)(1), or
       ``(ii) the inability to provide the 30-day advance notice 
     is due to circumstances beyond the reasonable control of the 
     plan administrator,

     subparagraph (A)(ii) shall not apply, and the notice shall be 
     furnished as soon as reasonably possible under the 
     circumstances.
       ``(3) Changes in expected period of suspension, limitation, 
     or restriction.--If, following the furnishing of the notice 
     pursuant to this subsection, there is a change in the 
     expected period of the suspension, limitation, or restriction 
     on the right of a participant or beneficiary to direct or 
     diversify assets, the administrator shall provide affected 
     participants and beneficiaries advance notice of the change. 
     Such notice shall meet the requirements of paragraph 
     (2)(A)(i) in relation to the extended suspension, limitation, 
     or restriction.''.
       (b) Civil Penalties for Failure To Provide Notice.--Section 
     502 of such Act (as amended by section 2(b)) is amended--
       (1) in subsection (a)(6), by striking ``(6), or (7)'' and 
     inserting ``(6), (7), or (8)'';
       (2) by redesignating paragraph (8) of subsection (c) as 
     paragraph (9); and
       (3) by inserting after paragraph (7) of subsection (c) the 
     following new paragraph:
       ``(8) The Secretary may assess a civil penalty against any 
     person of up to $100 a day from the date of the person's 
     failure or refusal to provide notice to participants and 
     beneficiaries in accordance with section 101(i). For purposes 
     of this paragraph, each violation with respect to any single 
     participant or beneficiary, shall be treated as a separate 
     violation.''.
       (c) Inapplicability of Relief From Fiduciary Liability 
     During Suspension of Ability of Participant or Beneficiary To 
     Direct Investments.--Section 404(c)(1) of such Act (29 U.S.C. 
     1104(c)(1)) is amended--
       (1) in subparagraph (B), by inserting before the period the 
     following: ``, except that this subparagraph shall not apply 
     for any period during which the ability of a participant or 
     beneficiary to direct the investment of assets in his or her 
     individual account is suspended by a plan sponsor or 
     fiduciary''; and
       (2) by adding at the end the following:
     ``Any limitation or restriction that may govern the frequency 
     of transfers between investment vehicles shall not be treated 
     as a suspension referred to in subparagraph (B) to the extent 
     such limitation or restriction is disclosed to participants 
     or beneficiaries through the summary plan description or 
     materials describing specific investment alternatives under 
     the plan.''.

     SEC. 4. LIMITATIONS ON RESTRICTIONS OF INVESTMENTS IN 
                   EMPLOYER SECURITIES.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--Section 407 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1107) is amended by adding at 
     the end the following new subsection:
       ``(g)(1) An applicable individual account plan may not 
     acquire or hold any employer securities with respect to which 
     there is any restriction on divestment by a participant or 
     beneficiary on or after the date on which the participant has 
     completed 3 years of participation (as defined in section 
     204(b)(4)) under the plan or (if the plan so provides) 3 
     years of service (as defined in section 203(b)(2)) with the 
     employer.
       ``(2) For purposes of paragraph (1), the term `restriction 
     on divestment' includes--
       ``(A) any failure to offer at least 3 diversified 
     investment options in which a participant or beneficiary may 
     direct the proceeds from the divestment of employer 
     securities, and
       ``(B) any restriction on the ability of a participant or 
     beneficiary to choose from all otherwise available investment 
     options in which such proceeds may be so directed.''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Subsection (a) of section 401 of the 
     Internal Revenue Code of 1986 (relating to requirements for 
     qualification) is amended by inserting after paragraph (34) 
     the following new paragraph:
       ``(35) Limitations on restrictions under applicable defined 
     contribution plans on investments in employer securities.--
       ``(A) In general.--A trust forming a part of an applicable 
     defined contribution plan shall not constitute a qualified 
     trust under this subsection if the plan acquires or holds any 
     employer securities with respect to which there is any 
     restriction on divestment by a participant or beneficiary on 
     or after the date on which the participant has completed 3 
     years of participation (as defined in section 411(b)(4)) 
     under the plan or (if the plan so provides) 3 years of 
     service (as defined in section 411(a)(5)) with the employer.
       ``(B) Definitions.--For purposes of subparagraph (A)--
       ``(i) Applicable defined contribution plan.--The term 
     `applicable defined contribution plan' means any defined 
     contribution plan, except that such term does not include an 
     employee stock ownership plan (as defined in section 
     4975(e)(7)) unless there are any contributions to such plan 
     (or earnings thereunder) held within such plan that are 
     subject to subsections (k)(3) or (m)(2).
       ``(ii) Restriction on divestment.--The term `restriction on 
     divestment' includes--

       ``(I) any failure to offer at least 3 diversified 
     investment options in which a participant or beneficiary may 
     direct the proceeds from the divestment of employer 
     securities, and
       ``(II) any restriction on the ability of a participant or 
     beneficiary to choose from all otherwise available investment 
     options in which such proceeds may be so directed.''.

       (2) Conforming amendment.--Section 401(a)(28)(B) of such 
     Code (relating to diversification of investments) is amended 
     by adding at the end the following new clause:
       ``(v) Exception.--This subparagraph shall not apply to an 
     applicable defined contribution plan (as defined in paragraph 
     (35)(B)(i)).''.

     SEC. 5. PROHIBITED TRANSACTION EXEMPTION FOR THE PROVISION OF 
                   INVESTMENT ADVICE.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Exemption from prohibited transactions.--Section 408(b) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1108(b)) is amended by adding at the end the following 
     new paragraph:
       ``(14)(A) Any transaction described in subparagraph (B) in 
     connection with the provision of investment advice described 
     in section 3(21)(A)(ii), in any case in which--
       ``(i) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(ii) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(iii) the requirements of subsection (g) are met in 
     connection with the provision of the advice.
       ``(B) The transactions described in this subparagraph are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;
       ``(ii) the sale, acquisition, or holding of a security or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of a security or other property) pursuant to the 
     advice; and
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with a sale, 
     acquisition, or holding of a security or other property 
     pursuant to the advice.''.
       (2) Requirements.--Section 408 of such Act is amended by 
     adding at the end the following new subsection:
       ``(g) Requirements Relating to Provision of Investment 
     Advice by Fiduciary Advisers.--
       ``(1) In general.--The requirements of this subsection are 
     met in connection with the provision of investment advice 
     referred to in section 3(21)(A)(ii), provided to an employee 
     benefit plan or a participant or beneficiary of an employee 
     benefit plan by a fiduciary adviser with respect to the plan 
     in connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of 
     amounts held by the plan, if--
       ``(A) in the case of the initial provision of the advice 
     with regard to the security or other property by the 
     fiduciary adviser to the plan, participant, or beneficiary, 
     the fiduciary adviser provides to the recipient of the 
     advice, at a time reasonably contemporaneous with the initial 
     provision of the advice, a written notification (which may 
     consist of notification by means of electronic 
     communication)--
       ``(i) of all fees or other compensation relating to the 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of the advice or in 
     connection with the sale, acquisition, or holding of the 
     security or other property,
       ``(ii) of any material affiliation or contractual 
     relationship of the fiduciary adviser or affiliates thereof 
     in the security or other property,
       ``(iii) of any limitation placed on the scope of the 
     investment advice to be provided by the fiduciary adviser 
     with respect to any such sale, acquisition, or holding of a 
     security or other property,
       ``(iv) of the types of services provided by the fiduciary 
     adviser in connection with the provision of investment advice 
     by the fiduciary adviser, and
       ``(v) that the adviser is acting as a fiduciary of the plan 
     in connection with the provision of the advice,
       ``(B) the fiduciary adviser provides appropriate 
     disclosure, in connection with the sale, acquisition, or 
     holding of the security or other property, in accordance with 
     all applicable securities laws,
       ``(C) the sale, acquisition, or holding occurs solely at 
     the direction of the recipient of the advice,
       ``(D) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with the sale, 
     acquisition, or holding of the security or other property is 
     reasonable, and
       ``(E) the terms of the sale, acquisition, or holding of the 
     security or other property are at least as favorable to the 
     plan as an arm's length transaction would be.
       ``(2) Standards for presentation of information.--The 
     notification required to be

[[Page S1215]]

     provided to participants and beneficiaries under paragraph 
     (1)(A) shall be written in a clear and conspicuous manner and 
     in a manner calculated to be understood by the average plan 
     participant and shall be sufficiently accurate and 
     comprehensive to reasonably apprise such participants and 
     beneficiaries of the information required to be provided in 
     the notification.
       ``(3) Exemption conditioned on continued availability of 
     required information on request for 1 year.--The requirements 
     of paragraph (1)(A) shall be deemed not to have been met in 
     connection with the initial or any subsequent provision of 
     advice described in paragraph (1) to the plan, participant, 
     or beneficiary if, at any time during the provision of 
     advisory services to the plan, participant, or beneficiary, 
     the fiduciary adviser fails to maintain the information 
     described in clauses (i) through (iv) of subparagraph (A) in 
     currently accurate form and in the manner described in 
     paragraph (2) or fails--
       ``(A) to provide, without charge, such currently accurate 
     information to the recipient of the advice no less than 
     annually,
       ``(B) to make such currently accurate information 
     available, upon request and without charge, to the recipient 
     of the advice, or
       ``(C) in the event of a material change to the information 
     described in clauses (i) through (iv) of paragraph (1)(A), to 
     provide, without charge, such currently accurate information 
     to the recipient of the advice at a time reasonably 
     contemporaneous to the material change in information.
       ``(4) Maintenance for 6 years of evidence of compliance.--A 
     fiduciary adviser referred to in paragraph (1) who has 
     provided advice referred to in such paragraph shall, for a 
     period of not less than 6 years after the provision of the 
     advice, maintain any records necessary for determining 
     whether the requirements of the preceding provisions of this 
     subsection and of subsection (b)(14) have been met. A 
     transaction prohibited under section 406 shall not be 
     considered to have occurred solely because the records are 
     lost or destroyed prior to the end of the 6-year period due 
     to circumstances beyond the control of the fiduciary adviser.
       ``(5) Exemption for plan sponsor and certain other 
     fiduciaries.--
       ``(A) In general.--Subject to subparagraph (B), a plan 
     sponsor or other person who is a fiduciary (other than a 
     fiduciary adviser) shall not be treated as failing to meet 
     the requirements of this part solely by reason of the 
     provision of investment advice referred to in section 
     3(21)(A)(ii) (or solely by reason of contracting for or 
     otherwise arranging for the provision of the advice), if--
       ``(i) the advice is provided by a fiduciary adviser 
     pursuant to an arrangement between the plan sponsor or other 
     fiduciary and the fiduciary adviser for the provision by the 
     fiduciary adviser of investment advice referred to in such 
     section,
       ``(ii) the terms of the arrangement require compliance by 
     the fiduciary adviser with the requirements of this 
     subsection, and
       ``(iii) the terms of the arrangement include a written 
     acknowledgment by the fiduciary adviser that the fiduciary 
     adviser is a fiduciary of the plan with respect to the 
     provision of the advice.
       ``(B) Continued duty of prudent selection of adviser and 
     periodic review.--Nothing in subparagraph (A) shall be 
     construed to exempt a plan sponsor or other person who is a 
     fiduciary from any requirement of this part for the prudent 
     selection and periodic review of a fiduciary adviser with 
     whom the plan sponsor or other person enters into an 
     arrangement for the provision of advice referred to in 
     section 3(21)(A)(ii). The plan sponsor or other person who is 
     a fiduciary has no duty under this part to monitor the 
     specific investment advice given by the fiduciary adviser to 
     any particular recipient of the advice.
       ``(C) Availability of plan assets for payment for advice.--
     Nothing in this part shall be construed to preclude the use 
     of plan assets to pay for reasonable expenses in providing 
     investment advice referred to in section 3(21)(A)(ii).
       ``(6) Definitions.--For purposes of this subsection and 
     subsection (b)(14)--
       ``(A) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice by 
     the person to the plan or to a participant or beneficiary and 
     who is--
       ``(i) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(ii) a bank or similar financial institution referred to 
     in section 408(b)(4),
       ``(iii) an insurance company qualified to do business under 
     the laws of a State,
       ``(iv) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(v) an affiliate of a person described in any of clauses 
     (i) through (iv), or
       ``(vi) an employee, agent, or registered representative of 
     a person described in any of clauses (i) through (v) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.
       ``(B) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(C) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section 202(a)(17) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(17)) (substituting the entity for the 
     investment adviser referred to in such section).''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Exemption from prohibited transactions.--Subsection (d) 
     of section 4975 of the Internal Revenue Code of 1986 
     (relating to exemptions from tax on prohibited transactions) 
     is amended--
       (A) in paragraph (14), by striking ``or'' at the end;
       (B) in paragraph (15), by striking the period at the end 
     and inserting ``; or''; and
       (C) by adding at the end the following new paragraph:
       ``(16) any transaction described in subsection (f)(7)(A) in 
     connection with the provision of investment advice described 
     in subsection (e)(3)(B), in any case in which--
       ``(A) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(B) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(C) the requirements of subsection (f)(7)(B) are met in 
     connection with the provision of the advice.''.
       (2) Allowed transactions and requirements.--Subsection (f) 
     of such section 4975 (relating to other definitions and 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(7) Provisions relating to investment advice provided by 
     fiduciary advisers.--
       ``(A) Transactions allowable in connection with investment 
     advice provided by fiduciary advisers.--The transactions 
     referred to in subsection (d)(16), in connection with the 
     provision of investment advice by a fiduciary adviser, are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;
       ``(ii) the sale, acquisition, or holding of a security or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of a security or other property) pursuant to the 
     advice; and
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with a sale, 
     acquisition, or holding of a security or other property 
     pursuant to the advice.
       ``(B) Requirements relating to provision of investment 
     advice by fiduciary advisers.--The requirements of this 
     subparagraph (referred to in subsection (d)(16)(C)) are met 
     in connection with the provision of investment advice 
     referred to in subsection (e)(3)(B), provided to a plan or a 
     participant or beneficiary of a plan by a fiduciary adviser 
     with respect to the plan in connection with any sale, 
     acquisition, or holding of a security or other property for 
     purposes of investment of amounts held by the plan, if--
       ``(i) in the case of the initial provision of the advice 
     with regard to the security or other property by the 
     fiduciary adviser to the plan, participant, or beneficiary, 
     the fiduciary adviser provides to the recipient of the 
     advice, at a time reasonably contemporaneous with the initial 
     provision of the advice, a written notification (which may 
     consist of notification by means of electronic 
     communication)--

       ``(I) of all fees or other compensation relating to the 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of the advice or in 
     connection with the sale, acquisition, or holding of the 
     security or other property,
       ``(II) of any material affiliation or contractual 
     relationship of the fiduciary adviser or affiliates thereof 
     in the security or other property,
       ``(III) of any limitation placed on the scope of the 
     investment advice to be provided by the fiduciary adviser 
     with respect to any such sale, acquisition, or holding of a 
     security or other property,
       ``(IV) of the types of services provided by the fiduciary 
     adviser in connection with the provision of investment advice 
     by the fiduciary adviser, and
       ``(V) that the adviser is acting as a fiduciary of the plan 
     in connection with the provision of the advice,

       ``(ii) the fiduciary adviser provides appropriate 
     disclosure, in connection with the sale, acquisition, or 
     holding of the security or other property, in accordance with 
     all applicable securities laws,
       ``(iii) the sale, acquisition, or holding occurs solely at 
     the direction of the recipient of the advice,
       ``(iv) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with the sale, 
     acquisition, or holding of the security or other property is 
     reasonable, and
       ``(v) the terms of the sale, acquisition, or holding of the 
     security or other property are at least as favorable to the 
     plan as an arm's length transaction would be.

[[Page S1216]]

       ``(C) Standards for presentation of information.--The 
     notification required to be provided to participants and 
     beneficiaries under subparagraph (B)(i) shall be written in a 
     clear and conspicuous manner and in a manner calculated to be 
     understood by the average plan participant and shall be 
     sufficiently accurate and comprehensive to reasonably apprise 
     such participants and beneficiaries of the information 
     required to be provided in the notification.
       ``(D) Exemption conditioned on making required information 
     available annually, on request, and in the event of material 
     change.--The requirements of subparagraph (B)(i) shall be 
     deemed not to have been met in connection with the initial or 
     any subsequent provision of advice described in subparagraph 
     (B) to the plan, participant, or beneficiary if, at any time 
     during the provision of advisory services to the plan, 
     participant, or beneficiary, the fiduciary adviser fails to 
     maintain the information described in subclauses (I) through 
     (IV) of subparagraph (B)(i) in currently accurate form and in 
     the manner required by subparagraph (C), or fails--
       ``(i) to provide, without charge, such currently accurate 
     information to the recipient of the advice no less than 
     annually,
       ``(ii) to make such currently accurate information 
     available, upon request and without charge, to the recipient 
     of the advice, or
       ``(iii) in the event of a material change to the 
     information described in subclauses (I) through (IV) of 
     subparagraph (B)(i), to provide, without charge, such 
     currently accurate information to the recipient of the advice 
     at a time reasonably contemporaneous to the material change 
     in information.
       ``(E) Maintenance for 6 years of evidence of compliance.--A 
     fiduciary adviser referred to in subparagraph (B) who has 
     provided advice referred to in such subparagraph shall, for a 
     period of not less than 6 years after the provision of the 
     advice, maintain any records necessary for determining 
     whether the requirements of the preceding provisions of this 
     paragraph and of subsection (d)(16) have been met. A 
     transaction prohibited under subsection (c)(1) shall not be 
     considered to have occurred solely because the records are 
     lost or destroyed prior to the end of the 6-year period due 
     to circumstances beyond the control of the fiduciary adviser.
       ``(F) Exemption for plan sponsor and certain other 
     fiduciaries.--A plan sponsor or other person who is a 
     fiduciary (other than a fiduciary adviser) shall not be 
     treated as failing to meet the requirements of this section 
     solely by reason of the provision of investment advice 
     referred to in subsection (e)(3)(B) (or solely by reason of 
     contracting for or otherwise arranging for the provision of 
     the advice), if--
       ``(i) the advice is provided by a fiduciary adviser 
     pursuant to an arrangement between the plan sponsor or other 
     fiduciary and the fiduciary adviser for the provision by the 
     fiduciary adviser of investment advice referred to in such 
     section,
       ``(ii) the terms of the arrangement require compliance by 
     the fiduciary adviser with the requirements of this 
     paragraph,
       ``(iii) the terms of the arrangement include a written 
     acknowledgment by the fiduciary adviser that the fiduciary 
     adviser is a fiduciary of the plan with respect to the 
     provision of the advice, and
       ``(iv) the requirements of part 4 of subtitle B of title I 
     of the Employee Retirement Income Security Act of 1974 are 
     met in connection with the provision of such advice.
       ``(G) Definitions.--For purposes of this paragraph and 
     subsection (d)(16)--
       ``(i) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice by 
     the person to the plan or to a participant or beneficiary and 
     who is--

       ``(I) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(II) a bank or similar financial institution referred to 
     in subsection (d)(4),
       ``(III) an insurance company qualified to do business under 
     the laws of a State,
       ``(IV) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(V) an affiliate of a person described in any of 
     subclauses (I) through (IV), or
       ``(VI) an employee, agent, or registered representative of 
     a person described in any of subclauses (I) through (V) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.

       ``(ii) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(iii) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section 202(a)(17) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(17)) (substituting the entity for the 
     investment adviser referred to in such section).''.

     SEC. 6. INSIDER TRADES DURING PENSION PLAN SUSPENSION PERIODS 
                   PROHIBITED.

       Section 16 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78p) is amended by adding at the end the following new 
     subsection:
       ``(h) Insider Trades During Pension Plan Suspension Periods 
     Prohibited.--
       ``(1) Prohibition.--It shall be unlawful for any such 
     beneficial owner, director, or officer of an issuer, directly 
     or indirectly, to purchase (or otherwise acquire) or sell (or 
     otherwise transfer) any equity security of such issuer (other 
     than an exempted security), during any pension plan 
     suspension period with respect to such equity security.
       ``(2) Remedy.--Any profit realized by such beneficial 
     owner, director, or officer from any purchase (or other 
     acquisition) or sale (or other transfer) in violation of this 
     subsection shall inure to and be recoverable by the issuer 
     irrespective of any intention on the part of such beneficial 
     owner, director, or officer in entering into the transaction.
       ``(3) Rulemaking permitted.--The Commission may issue rules 
     to clarify the application of this subsection, to ensure 
     adequate notice to all persons affected by this subsection, 
     and to prevent evasion thereof.
       ``(4) Definitions.--For purposes of this subsection--
       ``(A) Pension plan suspension period.--The term `pension 
     plan suspension period' means, with respect to an equity 
     security, any period during which the ability of a 
     participant or beneficiary under an applicable individual 
     account plan maintained by the issuer to direct the 
     investment of assets in his or her individual account away 
     from such equity security is suspended by the issuer or a 
     fiduciary of the plan. Such term does not include any 
     limitation or restriction that may govern the frequency of 
     transfers between investment vehicles to the extent such 
     limitation and restriction is disclosed to participants and 
     beneficiaries through the summary plan description or 
     materials describing specific investment alternatives under 
     the plan.
       ``(B) Applicable individual account plan.--The term 
     `applicable individual account plan' has the meaning provided 
     such term in section 3(42) of the Employee Retirement Income 
     Security Act of 1974.''.

     SEC. 7. EFFECTIVE DATES AND RELATED RULES.

       (a) In General.--Except as provided in subsection (b), the 
     amendments made by sections 2, 3, 4, and 6 shall apply with 
     respect to plan years beginning on or after January 1, 2003.
       (b) Special Rule for Collectively Bargained Plans.--In the 
     case of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified on or before the date of the 
     enactment of this Act, subsection (a) shall be applied to 
     benefits pursuant to, and individuals covered by, any such 
     agreement by substituting for ``January 1, 2003'' the date of 
     the commencement of the first plan year beginning on or after 
     the earlier of--
       (1) the later of--
       (A) January 1, 2004, or
       (B) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after the date of the enactment of 
     this Act), or
       (2) January 1, 2005.
       (c) Plan Amendments.--If the amendments made by sections 2, 
     3, and 4 of this Act require an amendment to any plan, such 
     plan amendment shall not be required to be made before the 
     first plan year beginning on or after January 1, 2005, if--
       (1) during the period after such amendments made by this 
     Act take effect and before such first plan year, the plan is 
     operated in accordance with the requirements of such 
     amendments made by this Act, and
       (2) such plan amendment applies retroactively to the period 
     after such amendments made by this Act take effect and before 
     such first plan year.
       (d) Amendments Relating to Investment Advice.--The 
     amendments made by section 5 shall apply with respect to 
     advice referred to in section 3(21)(A)(ii) of the Employee 
     Retirement Income Security Act of 1974 or section 
     4975(c)(3)(B) of the Internal Revenue Code of 1986 provided 
     on or after January 1, 2003.

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