[Congressional Record Volume 149, Number 58 (Thursday, April 10, 2003)]
[Senate]
[Pages S5175-S5248]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. ENSIGN (for himself, Mr. Brownback, Mr. Inhofe, Mr.
Talent, Mr. Santorum, Mr. Grassley, Mr. Enzi, Mr. Sessions, Mr.
Allen, Mr. Bunning, Mr. Fitzgerald, Mr. Chambliss, Mr. DeWine,
Mr. McConnell, Mr. Coleman, Mr. Kyl, Mr. Nickles, Mr. Graham of
South Carolina, Mr. Bond, Mr. Hagel, Mr. Craig, Mr. McCain, and
Mr. Hatch):
S. 851. A bill to amend title 18, United States Code, to prohibit
taking minors across State lines in circumvention of laws requiring the
involvement of parents in abortion decisions; to the Committee on the
Judiciary.
Mr. ENSIGN. Mr. President, I rise to introduce the Child Custody
Protection Act. This legislation makes it a Federal offense to
knowingly transport a minor across a State line, with the intent that
she obtain an abortion, in circumvention of a State's parental consent
or parental notification law.
I have three young children in school, including a daughter, so I
know something about parental consent. My wife and I, like most
parents, have to give our written consent for school activities all the
time.
In most schools, an underage child can't go on a school field trip
without a signed permission slip. An underage child also can't receive
mild medication at school, such as aspirin, for the alleviation of pain
or discomfort unless a parent signs a release form permitting the
school nurse to administer it. In some schools, a child may not take
sex education class without parental consent. Nothing, however,
prevents this same child from being taken across State lines, in direct
disobedience of State laws, for the purpose of undergoing a life-
altering abortion.
The Child Custody Protection Act simply attempts to strengthen the
effectiveness of State laws designed to protect children from the
health and safety risks associated with abortion. In many cases, only a
girl's parents know of her prior psychological and medical history,
including allergies to medication and anesthesia. Also, parents are
usually the only people who can provide authorization for post-abortion
medical procedures or the release of pertinent data from family
physicians. When a pregnant girl is taken to have an abortion without
her parents' knowledge, none of these precautions can be taken. The
harsh reality is that leaving parents uniformed about their underage
daughter's abortion may not only be detrimental to the physical and
mental health of the child but may, in some instances, be fatal.
This legislation does not supercede, override, or in any way alter
existing State parental involvement laws. It does not impose any
parental notice or consent requirement on any State. The Child Custody
Protection Act addresses the interstate transportation of minors in
order to circumvent valid, existing state laws and uses the authority
of Congress to regulate interstate activity to protect those laws from
evasion.
[[Page S5176]]
Currently, forty-three States have laws requiring a minor to get the
consent of or notify one or both parents prior to an abortion, but only
thirty-three are enforcing those measures. Most of the statutes apply
to a child under the age of 18 and provide for a court bypass procedure
should she be unable to involve her parents.
This legislation is a common sense solution to a dire problem. A
minor who is forbidden to drink alcohol, to stay out past a certain
hour, or to drive a car in some states is certainly not prepared to
make a life-altering, hazardous decision, such as an abortion, without
the consultation or consent of at least one parent.
In fact, a poll found that 85 percent of voters, including 75 percent
of ``pro-choice'' voters, said ``No'' when asked, ``Should a person be
able to take a minor girl across State lines to obtain an abortion
without her parents' knowledge?''
I would like to thank the original cosponsors of this bill for their
support, Senators Brownback, Inhofe, Talent, Santorum, Grassley, Enzi,
Sessions, Allen, Bunning, Fitzgerald, Chambliss, DeWine, McConnell,
Coleman, Kyl, Nickles, Lindsey Graham, Bond, Hagel, Craig, McCain and
Hatch. I look forward to working with them, and other members of the
Senate, to ensure that underage girls are protected from unscrupulous
individuals who want them to make a life-altering decision without
parental involvement.
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. 851
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 ``Child Custody Protection
Act''.
SEC. 2. TRANSPORTATION OF MINORS IN CIRCUMVENTION OF CERTAIN
LAWS RELATING TO ABORTION.
(a) In General.--Title 18, United States Code, is amended
by inserting after chapter 117 the following:
``CHAPTER 117A--TRANSPORTATION OF MINORS IN CIRCUMVENTION OF CERTAIN
LAWS RELATING TO ABORTION
``Sec.
``2431. Transportation of minors in circumvention of certain laws
relating to abortion.
``Sec. 2431. Transportation of minors in circumvention of
certain laws relating to abortion
``(a) Offense.--
``(1) Generally.--Except as provided in subsection (b),
whoever knowingly transports a minor across a State line,
with the intent that such minor obtain an abortion, and
thereby in fact abridges the right of a parent under a law
requiring parental involvement in a minor's abortion
decision, in force in the State where the minor resides,
shall be fined under this title or imprisoned not more than
one year, or both.
``(2) Definition.--For the purposes of this subsection, an
abridgement of the right of a parent occurs if an abortion is
performed on the minor, in a State other than the State where
the minor resides, without the parental consent or
notification, or the judicial authorization, that would have
been required by that law had the abortion been performed in
the State where the minor resides.
``(b) Exceptions.--
``(1) The prohibition of subsection (a) does not apply if
the abortion was necessary to save the life of the minor
because her life was endangered by a physical disorder,
physical injury, or physical illness, including a life
endangering physical condition caused by or arising from the
pregnancy itself.
``(2) A minor transported in violation of this section, and
any parent of that minor, may not be prosecuted or sued for a
violation of this section, a conspiracy to violate this
section, or an offense under section 2 or 3 based on a
violation of this section.
``(c) Affirmative Defense.--It is an affirmative defense to
a prosecution for an offense, or to a civil action, based on
a violation of this section that the defendant reasonably
believed, based on information the defendant obtained
directly from a parent of the minor or other compelling
facts, that before the minor obtained the abortion, the
parental consent or notification, or judicial authorization
took place that would have been required by the law requiring
parental involvement in a minor's abortion decision, had the
abortion been performed in the State where the minor resides.
``(d) Civil Action.--Any parent who suffers harm from a
violation of subsection (a) may obtain appropriate relief in
a civil action.
``(e) Definitions.--For the purposes of this section--
``(1) a `law requiring parental involvement in a minor's
abortion decision' means a law--
``(A) requiring, before an abortion is performed on a
minor, either--
``(i) the notification to, or consent of, a parent of that
minor; or
``(ii) proceedings in a State court; and
``(B) that does not provide as an alternative to the
requirements described in subparagraph (A) notification to or
consent of any person or entity who is not described in that
subparagraph;
``(2) the term `parent' means--
``(A) a parent or guardian;
``(B) a legal custodian; or
``(C) a person standing in loco parentis who has care and
control of the minor, and with whom the minor regularly
resides,
who is designated by the law requiring parental involvement
in the minor's abortion decision as a person to whom
notification, or from whom consent, is required;
``(3) the term `minor' means an individual who is not older
than the maximum age requiring parental notification or
consent, or proceedings in a State court, under the law
requiring parental involvement in a minor's abortion
decision; and
``(4) the term `State' includes the District of Columbia
and any commonwealth, possession, or other territory of the
United States.''.
(b) Clerical Amendment.--The table of chapters for part I
of title 18, United States Code, is amended by inserting
after the item relating to chapter 117 the following new
item:
``117A. Transportation of minors in circumvention of certain laws
relating to abortion..........................................2431''.
Mr. HATCH. Mr. President, I rise today to join with my colleagues in
introducing the Child Custody Protection Act and express my strong
support for this important piece of legislation. Similar legislation
was previously introduced in past sessions of Congress but, and I am
sad to say, never was signed into law. However, I hope that today is
the beginning of a new day to help protect the health and safety of
children while safeguarding the rights and responsibilities of parents.
This bill is a reasonable effort to build upon two basic points with
which many agree--despite other longstanding differences. The first is
the desirability of parental involvement in a minor's abortion
decision, and the other is the need to protect a pregnant minor's
physical health.
This bill does not supersede, override, or in any way alter existing
State parental consent or notification laws. Nor does this bill require
States to implement their own parental involvement laws. The Child
Custody Protection Act simply makes it a Federal offense to knowingly
transport a female minor across a state line, with the intent that she
obtain an abortion, in circumvention of State laws requiring parental
consent or notification.
This bill, I would emphasize, is not a Federal parental involvement
law; it merely ensures that State laws are not evaded through
interstate activity. The Federal Government is not trying to tell the
States how they must act and when, and this bill is not forcing parents
to be good parents. This legislation strengthens the effectiveness of
State laws, which is where the issue is best addressed and enforced. If
we fail to pass this bill, we would be choosing to ignore the
legitimacy and constitutionality of States to create and pass laws that
specifically address the needs and desires of its citizens, especially
when it comes to the health and safety of children.
The Child Custody Protection Act is a reasonable and rational
approach to fixing a serious problem. In most places, a school nurse
cannot provide an aspirin to a student for a headache without
permission from the parent. Students cannot go on field trips without
parental approval. Some report cards need a parent's signature to
verify the parent knows how their child is performing academically.
This bill is not addressing something relatively trivial; it is
drawing attention to a very serious medical procedure and protecting
the health and safety of young girls. States that choose to implement
parental notification laws because of their concerns with the well-
being and safety of children should have every tool necessary to
enforce their own laws.
An abortion is a risky medical procedure, especially for young
teenagers. This bill is designed to protect children from the health
and safety risks associated with abortion. In many cases, only a young
girl's parents know of her prior psychological and medical history,
including allergies to medication and anesthesia. Many other medical
procedures in this country require the
[[Page S5177]]
consent of parents before they are performed. Also, parents are usually
the only people who can provide authorization for post-abortion medical
procedures or even release important information from family
physicians. Given all of these other important medical situations that
require parental consent, it is only reasonable and logical to
recognize and enforce a States law asking for parental consent or
notification for certain abortions.
We all know how contentious the issue of abortion can get around
here, and across the country. But this matter is not really even about
abortion. This bill is simply about protecting the health and safety of
minor children and the rights that their own States have concluded
their parents should have.
I would urge all of my colleagues to support this legislation and
prevent circumvention of State laws, especially when the health and
safety of children is involved.
______
By Mr. DeWINE (for himself, Mr. Daschle, Mr. Smith, and Mr.
Leahy):
S. 852. A bill to amend title 10, United States Code, to provide
limited TRICARE program eligibility for members of the Ready Reserve of
the Armed Forces, to provide financial support for continuation of
health insurance for mobilized members of reserve components of the
Armed Forces, and for other purposes; to the Committee on Armed
Services.
Mr. DASCHLE. Mr. President, today I join with a bipartisan group of
colleagues from the Senate Guard Caucus to introduce the National Guard
and Reserve Comprehensive Health Benefits Act of 2003. This bill will
allow reservists and their families to receive health coverage through
Tricare by paying a modest premium.
These dedicated men and women deserve a better benefit package, given
the dramatic expansion of their role within our military. Indeed, there
is concern that the high rate of mobilizations--which no one expects to
abate--will erode this force's ability to recruit and retain top-notch
personnel. South Dakota Guard leaders tell me this bill would be
perhaps the most powerful tool we could give them for recruiting and
retention. By providing access to quality affordable health care for
reservists and their families, this bill will also ensure that when
they are mobilized, they are healthy and ready to go.
As I stand before you today, nearly 2,000 members of South Dakota's
Guard and Reserves are deployed throughout the world--from force-
protection missions at home to assignments in Europe and the Persian
Gulf. Most of these reservists will be mobilized for 6 months, and some
will stay activated for up to 2 years. And while South Dakota has one
of the highest per-capita mobilization rates in the country, it is not
unique. As the U.S. role as an international leader evolves, the
National Guard and Reserves are being called upon at unprecedented
rates to bolster our Nation's defense.
Indeed, since the 1991 gulf war, and particularly since the
terrorists attacks of September 11, the demands on Reserve and Guard
units have increased steadily. Not only are more reservists deployed
more often, they are also activated for increasingly diverse tasks.
Historically, this force has helped address a wide variety of social
needs--from enforcing civil rights laws to fighting forest fires--and
homeland defense is shaping us a major new duty that will require its
sustained engagement.
While the demands we place on reservists have grown markedly in the
last decade, the Federal Government's commitment to this dedicated
group of men and women has not kept pace. In fact, the basic pay and
benefit structure that was established during the cold war--when
reservists could see their entire career pass by without being
activated--remains in place today. As a result, leaders of the National
Guard and Reserves are increasingly worried about their ability to
recruit and retain new members.
The legislation we are introducing today takes a major step toward
providing the men and women of our Reserve components with the support
they need to carry out their new, vital role in the total force
structure. It will offer Reserve and National Guard members the
opportunity to participate for themselves and their family members in
the same Tricare program available to active-duty service members and
their families. Reservists and their families will share the cost of
premium payments with the Department of Defense, with the same cost
distribution as used in the Federal Employees Health Benefit Plan. This
program will help the National Guard and Reserves attract and keep the
best and brightest men and women in the Nation.
The National Guard Association of the United States reports that the
average cost of a family health care plan through a civilian HMO is
$7,541 per year. In contrast, it estimates that the Tricare cost per
family is only $5,173 per year, even without the Government sharing any
of the cost. With Government cost-sharing, this will be an attractively
priced option for securing health coverage.
Beyond recruitment and retention, this program will improve
readiness. More than 20 percent of the Ready Reserve--and as much as 40
percent of young enlisted personnel--do not currently have health
insurance. Providing access to quality health care during all phases of
service can drastically reduce the occurrence of situations in which
large portions of a unit are unable to deploy because of medical
reasons. Maintaining a healthy force is absolutely essential to
maintaining a prepared force.
Our legislation will also reduce the incidence of problems that
invariably occur during mobilization, when families leave their
private-sector health plan and enter a wholly new plan, Tricare. Last
month, I worked with Secretary of Defense Donald Rumsfeld to end a
nationwide problem among families of mobilized reservists. Simply put,
they were being forced, unfairly and improperly, to join a more
expensive Tricare plan. We did solve that problem, but many families
had to wait weeks without knowing whether they should try to extend
their private coverage or whether they could afford Tricare. That is
simply unacceptable. It is the last thing a reservist should have to
worry about when preparing, possibly, for deployment to a war zone.
Another challenge for families going through mobilization is learning
the Tricare benefit structure and understanding its system for helping
those with problems or questions. Again, all this would be eliminated
if families could enroll in Tricare before mobilization. If a family
believes its employer's civilian plan is superior, they would be free
to remain, and, during periods of mobilization, those premiums would be
partially subsidized.
We have developed this bill in consultation with leaders of the
National Guard and Reserves at the State and National levels. I
appreciate their concern for this problem and their work to help
develop a solution. In this regard, I would particularly like to
acknowledge the efforts and strong support of the South Dakota National
Guard, as well as the Military Officers Association of America, the
Enlisted Association of the National Guard, the National Guard
Association of the United States, the Reserve Officers Association, the
Marine Corps Reserve Officers Association, the National Military Family
Association, the National Association for Uniformed Services, and the
National Military/Veterans Association.
I would like also to thank my cosponsors, Senator Leahy, Senator
DeWine, and Senator Gordon Smith, for helping advance this project.
Guaranteeing that all reservists have access to health care--either
through civilian employers or Tricare--will ensure that this force is
ready to fight at a moment's notice. The bill we are introducing today
will not only improve the readiness of the current Reserve Force, but
will pay dividends in the future by improving our ability to recruit
and retain the best and brightest men and women for the National Guard
and Reserves.
The Senate has set aside time each day for the last 3 weeks to honor
and support the dedicated service of our troops in Iraq. Surely we can
agree that one of our high priorities should be to ensure that, as long
as they continue their service to our country, they will always have
access to high-quality affordable health care.
Mr. LEAHY. Mr. President, today I am joined by Senator DeWine, by our
minority leader, Senator Daschle, and
[[Page S5178]]
by Senator Smith in introducing legislation that will boost the
readiness of our Nation's military Reserve.
Never has our Nation relied more heavily on the Selected Reserve--
more than 875,000 men and women, who stand ready for deployments at
home or abroad, at a moment's notice. More than 54 percent of the U.S.
Army's and 34 percent of the U.S. Air Force's end strength resides in
the Selected Reserve. Both the Army and the Marine Corps rely on these
Reserve forces for almost 20 percent of their manpower strength. The
skill, experience and professionalism of these dedicated citizens often
meet and exceed those of their brave counterparts in the active force.
It is no wonder that more than 200,000 reservists have been called to
duty for service that is related to the war in Iraq. Many States have
thousands of their citizens who have temporarily dropped their civilian
jobs and left their families for deployments halfway across the globe.
More than 300 citizen-soldiers, sailors, airmen, and marines in my home
State of Vermont are serving proudly at the moment, here and abroad.
When you include the call-ups since the September 11 attacks, the
number of activated reservists across the country far exceeds those in
the first gulf war.
These deployments have spotlighted some specific and solvable
problems that have affected the readiness of the reserves and, in turn,
our entire military. Some of the troops who have been called up have
not been as healthy as possible. Others have faced the stress of
leaving their families behind while looking back in concern as their
families try to navigate the sometimes arcane military health care
system. While often experiencing a loss of income, reserve family
members also have had to leave their civilian doctors and join the
military's TRICARE program.
More troubling, many of the members of the Guard and Reserve who
might be activated any day do not currently have access to affordable
health insurance. A recent General Accounting Office report underscores
the fact that most of these uninsured Guard and Reservists reside in
the lower enlisted ranks, where the reserve soldiers, sailors, airmen,
and marines oftentimes are unemployed or switch jobs frequently. It is
unfair to them and their families, and it is unwise for the
preparedness of our military, to expect someone to deploy anywhere at
the drop of a hat, but then to disregard whether they will be as
healthy as possible when we need to call them to active duty.
These men and women are ready to make the ultimate sacrifice for
their country, and so are their families. But they are performing as
full-time soldiers with part-time benefits.
This situation is preventing the National Guard and the Reserve from
being as ready as possible for action. At the same time, the stress and
strain that activations place on families has hurt recruiting and
retention. To ensure the strongest and most effective reserve and the
strongest and most effective military capability, it is critical that
we address these issues and provide comprehensive health insurance
coverage.
The National Guard and Reserve Comprehensive Health Benefits Act of
2003 will provide seamless health coverage to our reserve forces at all
phases of their service. Under our plan, if one of 876,000 members of
the Selected is in a drill status, that reservist and his or her family
will become eligible to join the TRICARE military health insurance
program. The reservist will pay an annual premium, around 30 percent of
the annual cost of providing care. For a single reservist, the premium
would be about $420 per year, while for a family the annual payment
would be about $1,450. This is not rock-bottom-cheap health care, but
our aim is to ensure affordable health insurance for hard-working
families that may not otherwise have access to coverage.
If a reservist is activated, he or she will continue to have free
health care through the military health system. But under our
legislation, the reservist's family will be able to avoid the
considerable difficulties of switching doctors and health insurance.
They also can apply to have their civilian health insurance reimbursed.
The program will not cost any more to the Federal Government than the
current arrangement because the per capita costs are capped to ensure
that they are no more than the cost of TRICARE. And when a reservist
comes off active duty, he or she will be able to enter the new premium-
based TRICARE program, just as before deployment.
Because reservists will be able to have access to affordable
insurance whatever their deployment status, this legislation is being
supported by several leading organizations, including the National
Guard Association of the United States, NGAUS, the Enlisted National
Guard Association of the United States, EANGUS, the Reserve Officers
Association, ROA, the Naval Reserve Association, NRA, the National
Military Family Association, NMFA, Marine Corps Reserve Officers
Association, the National Association for Uniformed Services, the
National Military/Veterans Association, and the Military Officers
Association, MOA. This legislation is the top priority of The Military
Coalition's Guard/Reserve Committee.
We have worked hard to fully understand the existing problems and to
construct this efficient and effective solution. I would particularly
like to thank former Undersecretary of Defense Fred Pang and former
House Armed Services Committee Professional Staff Member Karen Heath
for their sage counsel and guidance in developing this legislation. We
are part of a strong, bipartisan coalition that will push for enactment
of this long-overdue legislation. In the coming weeks we plan to
welcome additional cosponsors for this comprehensive bill as we begin
the process of moving it without delay through the legislative process
and to the President's desk.
______
By Ms. SNOWE (for herself and Mr. Kerry):
S. 853. A bill to amend title XVIII of the Social Security Act to
eliminate discriminatory copayment rates for outpatient psychiatric
services under the medicare program; to the Committee on Finance.
Ms. SNOWE. Mr. President, I rise today to introduce the Medicare
Mental Health Copayment Equity Act with my colleague on the Finance
Committee, Senator John Kerry.
In brief, my bill would a correct a serious disparity in payment for
treatment of mental disorders under Medicare law. Medicare
beneficiaries typically pay 20 percent copayment for outpatient
services, including doctor's visits and Medicare pays the remaining 80
percent. But for treatment of mental disorders, Medicare law requires
patients pay a 50-percent copayment. Under my bill, this copayment will
be reduced over a six year period, starting in 2004, from the current
50 percent to 20 percent. This means that in 2010, patients seeking
outpatient treatment for mental illness will pay the same 20 percent
copayment required of Medicare patients that receive treatment for any
other illness.
Let's look at this issue in another way. If a Medicare patient has an
office visit for treatment for cancer or heart disease, the patient is
responsible for 20 percent of the doctor's fee. But if a Medicare
patient has an office visit with a psychiatrist, psychologist, social
worker, or other professional for treatment for depression,
schizophrenia, or any other condition diagnosed as a mental illness,
the copayment for the outpatient visit for treatment of the mental
illness is 50 percent. What sense does this make?
Indeed, my bill has a larger purpose, to help end an outdated
distinction between physical and mental disorders, and ensure that
Medicare beneficiaries have equal access to treatment for all health
conditions. Perhaps this disparity would matter less if mental
disorders were not so prevalent. But the Surgeon General has told us
otherwise.
The importance of access to treatment for mental disorders is
emphasized in a landmark report on mental health released by the
Surgeon General in 1999. The Surgeon General reported mental illness
was second only to cardiovascular diseases in years of healthy life
lost to either premature death or disability. And the occurrence of
mental illness among older adults is widespread with a substantial
proportion of the population 55 and older--almost 20 percent of this
age group--experiencing specific mental disorders that are not part of
``normal'' aging.
Further, older Americans have the highest rate of suicide in the
country,
[[Page S5179]]
and the risk of suicide increases with age. In fact, in the State of
Maine, the suicide rate for seniors is three times as high as the rate
for adolescents. Untreated depression among the elderly substantially
increases the risk of death by suicide.
There is another sad irony. While Medicare often is viewed as health
insurance for people over age 65, Medicare also provides health
insurance coverage for people with severe disabilities. The single most
frequent cause of disability for Social Security and Medicare benefits
is mental disorders--affecting almost 1.4 million of 6 million
Americans who receive Social Security disability benefits. Yet, at the
same time, Medicare pays less for critical mental health services
needed by these beneficiaries than if they had a non-mental disability.
But there also is very good news that there are increasingly
effective treatments for mental illnesses. With proper treatment, the
majority of people with a mental illness can lead productive lives. By
removing financial barriers that inhibit access to treatment services,
we will be able to eliminate stigmas and overcome a lack of
understanding of mental disorders.
I urge my colleagues to join with me to bring Medicare payment policy
for mental disorders into the 21st century.
Mr. KERRY. Mr. President, I am pleased to join my colleague Senator
Snowe in introducing the Medicare Mental Health Copayment Equity Act.
This legislation will establish mental health care parity in the
Medicare program.
Medicare currently requires patients to pay a 20 percent co-payment
for all Part B services except mental health care services, for which
patients are assessed a 50 percent co-payment. Thus, under the current
system, if a Medicare patient sees an endocrinologist for diabetes
treatment, an oncologist for cancer treatment, a cardiologist for heart
disease treatment or an internist for treatment of the flu, the co-
payment is 20 percent of the cost of the visit. If, however, a Medicare
patient visits a psychiatrist for treatment of mental illness, the co-
payment is 50 percent of the cost of the visit. This disparity in
outpatient co-payments represents blatant discrimination against
Medicare beneficiaries with mental illness.
The prevalence of mental illness in older adults is considerable.
According to the U.S. Surgeon General, 20 percent of older adults in
the community and 40 percent of older adults in primary care settings
experience symptoms of depression, while as many as one out of every
two residents in nursing homes are at risk of depression. The elderly
have the highest rate of suicide in the United States, and there is a
clear correlation between major depression and suicide: 60 to 70
percent of suicides among patients 75 and older have diagnosable
depression. In addition to our seniors, 400,000 non-elderly disabled
Medicare beneficiaries become Medicare-eligible by virtue of severe and
persistent mental disorders. To subject the mentally disabled to
discriminatory costs in coverage for the very conditions for which they
became Medicare eligible is illogical and unfair.
There is ample evidence that mental illness can be treated.
Unfortunately, those in need of treatment often do not seek it because
they are ashamed of their condition. Among our Medicare population, the
mentally ill face a double burden: not only must they overcome the
stigma about their illness, but once they seek treatment they must pay
one-half of the cost of care out of their own pocket. The Medicare
Mental Health Copayment Equity Act will phase-down the 50 percent co-
payment for mental health care services to 20 percent over six years.
By applying the same co-payment rate to mental health services to which
all other outpatient services are subjected, the Medicare Mental Health
Copayment Equity Act will bring parity to the Medicare program and
improve access to care for our senior and disabled beneficiaries who
are living with mental illness. I urge my colleagues to join with us to
pass this critical legislation.
I ask unanimous consent that several letters of support be printed in
the Record.
There being no objection, the letters were ordered to be printed in
the Record, as follows:
Maine Osteopathic Association,
Manchester, ME, April 9, 2003.
Hon. Olympia Snowe,
U.S. Senate, Washington, DC.
Dear Senator Snowe: On behalf of the osteopathic physicians
(D.O.'s) in Maine, I want to applaud your leadership efforts
in sponsoring the Medicare Mental Health Co-payment Equity
Act of 2003. This bill would end Medicare's unfortunate
discrimination against patients with mental illness.
We support this legislation that would end this
discrimination because it requires that Medicare patients pay
only the same 20 percent co-payment for mental illness
treatment that they pay when seeking other medical treatment,
such as treatment for diabetes, asthma or influenza.
The Maine Osteopathic Association appreciates your
thoughtfulness, commitment and compassion in equitably
treating persons with mental illness.
Your sponsorship of this most important bill is a major
step to end Medicare's discrimination coverage of mental
illness treatment.
Sincerely,
Daniel M. Pierce, D.O.
President.
____
April 9, 2003.
Hon. John Kerry,
U.S. Senate, Washington, DC.
Dear Senator Kerry: On behalf of the American Association
for Geriatric Psychiatry (AAGP), I am writing to add AAGP's
endorsement to legislation which you are planning to
introduce with Senator Snowe to end the discriminatory
copayment required by Medicare for treatment of mental
illness.
Medicare coverage of mental health services is fragmented
and subject to arbitrary and discriminatory limitations.
Although coinsurance for most services covered by Medicare is
20 percent, current law requires a 50 percent co-payment for
mental health services furnished by psychiatrists and other
health care professionals who specialize in the treatment of
mental illness. This limit, which dates back to the inception
of the Medicare program in 1965, is based on the outmoded
assumption that all mental illness is chronic and requires
unlimited therapeutic services. Advances in treatment have
made this assumption highly inaccurate. Your bill would
establish copayment parity between mental health benefits and
other medical benefits under the Medicare program.
Your legislation stands to dramatically improve the lives
of Medicare beneficiaries by providing them with the access
to mental health care that they deserve.
AAGP commends you for your dedication to ensuring that all
Americans have adequate access to effective mental health
treatments, and we look forward to working with you to
achieve the enactment of this legislation.
Sincerely,
Joel E. Streim, M.D.,
President.
____
American Psychiatric Association,
Arlington, VA, April 9, 2003.
Hon. Olympia Snowe,
U.S. Senate, Washington, DC.
Dear Senator Snowe: On behalf of the 38,000 physician
members of the American Psychiatric Association (APA), and
most particularly on behalf of the patients they treat,
please accept my thanks for your House sponsorship of the
Medicare Mental Health Copayment Equity Act of 2003.
As you know, Medicare Part B requires by statute that
beneficiaries pay a copayment of 20 percent, except for the
discriminatory 50 percent copayment charged for outpatient
mental health treatment. It is time for Congress to end what
amounts to cost-sharing discrimination by diagnosis. The bill
you are introducing with Representative Richard Neal would
ultimately require Medicare beneficiaries to pay the same 20
percent copayment amount for outpatient mental health
treatment as they would otherwise pay for other Part B
services. Asking our Medicare beneficiaries to pay half the
cost of their mental health care out of pocket is simply
unjust, and is a significant barrier to necessary treatment.
Thank you for your foresight and leadership in your lead
sponsorship of the Medicare Mental Health Copayment Equity
Act of 2003. Thanks are also due to the outstanding work by
Catherine Finely, who ably represents you. The APA looks
forward to working with you to make your bill a reality this
year.
Sincerely,
Paul S. Appelbaum, M.D.,
President.
____
NAMI,
The Nation's Voice on
Mental Health,
Arlington, VA, April 9, 2003.
Hon. Olympia Snowe,
U.S. Senate, Washington, DC.
Dear Senator Snowe: On behalf of NAMI's 210,000 members and
1,200 affiliates I am writing to offer our strong support for
the Medicare Mental Illness Nondiscrimination Act. Thank you
for bringing forward this important legislation to bring a
discrimination in outpatient treatment services in the
Medicare program. As the nation's largest organization
representing persons with severe mental illness and their
families, we are extremely grateful for your leadership on
this important issue.
Perhaps the most glaring shortcoming in the Medicare
program is the discriminatory
[[Page S5180]]
co-payment for most outpatient mental illness treatment
services. As you know, outpatient psychotherapy services are
covered at 50 percent under Medicare, with a 50 percent
beneficiary co-payment requirement. This is stark contrast to
the 80 percent payment, and 20 percent co-payment for all
other outpatient services. In NAMI's view, this is a clear
form of discrimination in one of the federal government's
most important health care programs--providing coverage to
more than 39 million Americans--both seniors and non-elderly
people with severe disabilities such as serious mental
illnesses. We know that treatment makes a tremendous
difference in the lives of persons with mental illness. Your
legislation removes a significant financial barrier to such
necessary care for the Medicare population.
Thank you for once again leading the way in the Congress in
bringing an end to discrimination against persons living with
severe mental illness.
Sincerely,
Richard C. Birkel,
Executive Director.
____
American Association for
Geriatric Psychiatry,
Bethesda, MD, April 9, 2003.
Hon. Olympia Snowe,
U.S. Senate, Washington, DC.
Dear Senator Snowe: On behalf of the American Association
for Geriatric Psychiatry (AAGP), I writing to add AAGP's
endorsement to legislation which you are planning to
introduce with Senator Kerry to end the discriminatory
copayment required by Medicare for treatment of mental
illness.
Medicare coverage of mental health services is fragmented
and subject to arbitrary and discriminatory limitations.
Although coinsurance for most services by Medicare is 20
percent, current law requires a 50 percent co-payment for
mental health services furnished by psychiatrists and other
health care professionals who specialize in the treatment of
mental illness. This limit, which dates back to the inception
of the Medicare program in 1965, is based on the outmoded
assumption that all mental illness is chronic and requires
unlimited therapeutic services. Advances in treatment have
made this assumption highly inaccurate. Your bill would
establish copayment parity between mental health benefits and
other medical benefits under the Medicare program.
Your legislation stands to dramatically improve the lives
of Medicare beneficiaries by providing them with the access
to mental health care that they deserve.
AAGP commends you for your dedication to ensuring that all
Americans have adequate access to effective mental health
treatments, and we look forward to working with you to
achieve the enactment of this legislation.
Sincerely,
Joel E. Streim, M.D.,
President.
____
Maine Psychiatric Association,
Manchester, ME, March 19, 2003.
Hon. Olympia Snowe,
U.S. Senate, Washington, DC.
Dear Senator Snowe, on behalf of the psychiatric physicians
of the Maine Psychiatric Society, I want to offer you my
sincere appreciation for your leadership in sponsoring the
Medicare Mental Health Copayment Equity Act of 2003, working
to end Medicare's historic discrimination against patients
with mental illness.
Your legislation would end this discrimination by requiring
that discriminatory copayments required of Medicare patients
for mental illness treatment would eventually be reduced from
the current 50 percent level to the 20 percent level patients
pay for other medical treatment, such as treatment for
diabetes, heart disease, or the flu. This legislation
promotes parity for mental health benefits and improves
access to mental health care for all Medicare beneficiaries
in Maine and across the country.
The Maine Psychiatric Association appreciates your ongoing
commitment to persons with mental illness, and your
sponsorship of this most important bill to end Medicare's
discriminatory coverage of mental illness treatment.
Sincerely,
Edward Pontius, M.D.,
Chair, Legislative Affairs Committee,
Maine Psychiatric Association.
____
Maine Medical Association,
April 9, 2003.
Hon. Olympia Snowe,
U.S. Senate, Washington, DC.
Dear Senator Snowe: I am writing to you on behalf of the
Maine Medical Association and the Maine Psychiatric
Association, representing over 2500 Maine-licensed
physicians, to thank you sincerely for assuming the
leadership in sponsoring the Medicare Mental Health Co-
payment Equity Act of 2003, that would end Medicare's
historic discrimination against patients with mental illness.
As you know, mental health illness and treatment are very
often complicated by concurrent major physical illnesses,
like cancer, heart disease, and diabetes. Unfortunately, co-
payment for treatment of mental illnesses are two and a half
times higher than that for physical illnesses. Your
legislation would end this discrimination by requiring that
Medicare patients pay only the same 20 percent co-payment for
mental illness treatment that they would pay when seeking
other medical treatment.
The Maine Medical Association and the Maine Psychiatric
Association appreciate your ongoing commitment to persons
with mental illness and your sponsorship of this most
important bill to end Medicare's discriminatory coverage of
mental illness treatment.
Sincerely,
Krishna Bhatta, M.D.,
President.
____
American Psychiatric Association,
Arlington, VA, April 9, 2003.
Hon. John Kerry,
U.S. Senate, Washington, DC.
Dear Senator Kerry: On behalf of the 38,000 physician
members of the American Psychiatric Association (APA), and
most particularly on behalf of the patients they treat,
please accept my thanks for your House sponsorship of the
Medicare Mental Health Copayment Equity Act of 2003.
As you know, Medicare Part B requires by statute that
beneficiaries pay a copayment of 20 percent, except for the
discriminatory 50 percent copayment charged for outpatient
mental health treatment. It is time for Congress to end what
amounts to cost-sharing discrimination by diagnosis. The bill
you are introducing with Representative Richard Neal would
ultimately require Medicare beneficiaries to pay the same 20
percent copayment amount for outpatient mental health
treatment as they would otherwise pay for other Part B
services. Asking our Medicare beneficiaries to pay half the
cost of their mental health care out of pocket is simply
unjust, and is a significant barrier to necessary treatment.
Thank you for your foresight and leadership in your lead
sponsorship of the Medicare Mental Health Copayment Equity
Act of 2003. Thanks are also due to the outstanding work by
Kelly Bovio, who ably represented you. The APA looks forward
to working with you to make your bill a reality this year.
Sincerely,
Paul S. Applebaum, M.D.,
President.
______
By Mr. COLEMAN (for himself and Mr. Dayton):
S. 854. A bill to authorize a comprehensive program of support for
victims of torture, and for other purposes; to the Committee on Foreign
Relations.
Mr. COLEMAN. Mr. President, I ask unanimous consent that the bill I
introduce today to authorize a comprehensive program of support for
victims of torture be printed in the Record.
There being on objection, the bill was ordered to be printed in the
Record, as follows:
S. 854
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 ``Torture Victims Relief
Reauthorization Act of 2003''.
SEC. 2. AUTHORIZATION OF APPROPRIATIONS FOR FOREIGN TREATMENT
CENTERS FOR VICTIMS OF TORTURE.
(a) Authorization of Appropriations.--Section 4(b)(1) of
the Torture Victims Relief Act of 1998 (22 U.S.C. 2152 note)
is amended to read as follows:
``(1) Authorization of appropriations.--Of the amounts
authorized to be appropriated for fiscal years 2004, 2005,
and 2006 pursuant to chapter 1 of part I of the Foreign
Assistance Act of 1961 (22 U.S.C. 2151 et seq.) there are
authorized to be appropriated to the President to carry out
section 130 of such Act $11,000,000 for fiscal year 2004,
$12,000,000 for fiscal year 2005, and $13,000,000 for fiscal
year 2006.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect October 1, 2003.
SEC. 3. AUTHORIZATION OF APPROPRIATIONS FOR THE UNITED STATES
CONTRIBUTION TO THE UNITED NATIONS VOLUNTARY
FUND FOR VICTIMS OF TORTURE.
Of the amounts authorized to be appropriated for fiscal
years 2004, 2005, and 2006 pursuant to chapter 3 of part I of
the Foreign Assistance Act of 1961 (22 U.S.C. 2221 et seq.),
there are authorized to be appropriated to the President for
a voluntary contribution to the United Nations Voluntary Fund
for Victims of Torture $6,000,000 for fiscal year 2004,
$7,000,000 for fiscal year 2005, and $8,000,000 for fiscal
year 2006.
SEC. 4. AUTHORIZATION OF APPROPRIATIONS FOR DOMESTIC
TREATMENT CENTERS FOR VICTIMS OF TORTURE.
(a) Authorization of Appropriations.--Section 5(b)(1) of
the Torture Victims Relief Act of 1998 (22 U.S.C. 2152 note)
is amended to read as follows:
``(1) Authorization of appropriations.--Of the amounts
authorized to be appropriated for the Department of Health
and Human Services for fiscal years 2004, 2005, and 2006,
there are authorized to be appropriated to carry out
subsection (a) $20,000,000 for fiscal year 2004, $25,000,000
for fiscal year 2005, and $30,000,000 for fiscal year
2006.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect October 1, 2003.
[[Page S5181]]
______
By Ms. SNOWE (for herself, Mr. Bond, and Mr. Grassley):
S. 855. A bill to amend the Internal Revenue Code of 1986 to modify
the unrelated business income limitation on investment in certain debt-
financed properties; to the Committee on Finance.
Ms. SNOWE. Mr. President, I rise today to introduce the Small
Business Investment Company Capital Access Act of 2003 whose purpose is
to increase the amount of venture capital available to small
businesses. As the chair of the Committee on Small Business and
Entrepreneurship, I am pleased that my good friend and former chairman
of the Committee, Senator Bond, and the chairman of the Senate Finance
Committee, Senator Grassley, have agreed to be the principal cosponsors
of this important bill.
During the past 2 years, there has been a significant contraction of
the private equity market. During this same period, the Small Business
Administration's Small Business Investment Company program has taken on
a significant role in providing venture capital to small businesses
seeking investments in the range of $500,000 to $3 million.
Small Business Investment Companies are government-licensed,
government-regulated, privately managed venture capital firms created
to invest only in original issue debt or equity securities of U.S.
small businesses that meet size standards set by law. In the current
economic environment, the SBIC program represents an increasingly
important source of capital for small enterprises.
While debenture SBICs qualify for SBA-guaranteed borrowed capital,
the Government guarantee forces a number of potential investors, namely
pension funds and university endowment funds, to avoid investing in
SBICs because they would be subject to tax liability for unrelated
business taxable income. More often than not, tax-exempt investors opt
to invest in venture capital funds that do not create UBTI. As a result
an estimated 60 percent of the private capital potentially available to
these SBICs is effectively off limits.
The Small Business Investment Company Capital Access Act of 2003
would correct this problem by excluding government-guaranteed capital
of debenture SBICs from debt for purposes of the UBTI rules. This
change would permit tax-exempt organizations to invest in SBICs without
the burdens of UBTI recordkeeping or tax liability.
In 1958, Congress created the SBIC program to assist small business
owners in obtaining investment capital. More than 40 years later, small
businesses continue to experience difficulty in obtaining investment
capital from banks and traditional investment sources. Although
investment capital is readily available to large businesses from
traditional Wall Street investment firms, small businesses seeking
investments in the range of $500,000 to $3 million have to look
elsewhere. SBICs are frequently the only sources of investment capital
for growing small businesses.
Often we are reminded that the SBIC program has helped some of our
Nation's best known companies. It has provided a financial boost at
critical points in the early growth period for many companies that are
familiar to all of us. For example, when Federal Express needed help
from reluctant credit markets, it received a needed infusion of capital
from two SBA-licensed SBICs at a critical juncture in its development
stage. The SBIC program also helped other well-known companies, when
they were not so well known, such as Intel, Outback Steakhouse, America
Online, and Callaway Golf.
What is not well known is the extraordinary help the SBIC program
provides to main street America small businesses. These are companies
we know from hometowns all over the United States. Main street
companies provide both stability and growth in our local business
communities.
In 1991, the SBIC program was experiencing major losses, and the
future of the program was in doubt. Consequently, in 1992 and 1996, the
Committee on Small Business worked closely with the Small Business
Administration to correct deficiencies in the law in order to ensure
the future of the program.
Today, the SBIC program is expanding rapidly in an effort to meet the
growing demands of small business owners for debt and equity investment
capital. And it is important to focus on the significant role that is
played by the SBIC program in support of growing small businesses. When
Fortune Small Business compiled its list of 100 fastest growing small
companies in 2000, six of the top 12 businesses on the list received
SBIC financing during their critical growth year.
The Small Business Investment Company Capital Access Act of 2003 is
important for one simple reason: once enacted it paves the way for more
investment capital to be available for more small businesses that are
seeking to grow and hire new employees. According to the National
Association of Small Business Investment Companies, a conservative
estimate of the effect of this bill would be to increase investments in
debenture SBICs by $200 million per year from tax-exempt investors.
Together with SBA-guaranteed leverage, that will mean as much as $500
million per year in new capital assets for debenture SBICs to invest in
U.S. small businesses.
According to the SBA, one job is created for every $36,000 invested
in a small company. At that rate, this bill could be responsible for
the creation or support of as many as 16,600 jobs--within companies
receiving investments directly as well as within those firms
benefitting indirectly through increased sales of goods and services to
the former companies. In short, this bill is a jobs creator.
And the cost? The Joint Committee on Taxation estimated in the last
Congress that this bill would result in tax revenue loss of only $1
million per year for the next 10 years.
Mr. President, the cost is low and the potential for economic gain is
great. Passage of the bill will make the Government's existing SBIC
program more effective in providing growth capital for America's small
business entrepreneurs.
And most importantly, it will provide sorely needed capital for the
sector of our economy that provides a majority of the net new jobs in
this country--small businesses. That is a real stimulus that would
cause new investments to be made and the creation of critically needed
new jobs. Our economy is primed for this kind of support, and I urge my
colleagues to support this important bill.
I ask unanimous consent that the text of the bill and a summary of
its provisions be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
``Small Business Investment Company Capital Access Act of 2003''
description of provisions
The bill amends section 514 of the Internal Revenue Code to
exclude government-guaranteed capital borrowed by Debenture
Small Business Investment Companies (SBICs) from debt for
purposes of the Unrelated Business Taxable Income (UBTI)
rules. This change would permit tax-exempt organizations to
invest in SBICs without the burdens of UBTI record keeping or
tax liability.
Currently, while Debenture SBICs qualify for borrowed
capital guaranteed by the Small Business Administration, the
government guarantee forces a number of potential investors,
namely pension funds and university endowment funds, to avoid
investing in SBICs because they would be subject to tax
lability for UBTI. Frequently, tax-exempt investors generally
opt to invest in venture capital funds that do not create
UBTI. As a result, an estimated 60% of the private-capital
potentially available to these SBICs is effectively ``off
limits.''
S. 855
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 ``Small Business Investment
Company Capital Access Act of 2003''.
SEC. 2. MODIFICATION OF UNRELATED BUSINESS INCOME LIMITATION
ON INVESTMENT IN CERTAIN DEBT-FINANCED
PROPERTIES.
(a) In General.--Section 514(c)(6) of the Internal Revenue
Code of 1986 (relating to acquisition indebtedness) is
amended--
(1) by striking ``include an obligation'' and inserting
``include--
``(A) an obligation'',
(2) by striking the period at the end and inserting ``,
or'', and
(3) by adding at the end the following:
``(B) indebtedness incurred by a small business investment
company licensed under the Small Business Investment Act of
1958 which is evidenced by a debenture--
``(i) issued by such company under section 303(a) of such
Act, or
[[Page S5182]]
``(ii) held or guaranteed by the Small Business
Administration.''.
(b) Effective Date.--The amendments made by subsection (a)
shall apply to acquisitions made on or after the date of the
enactment of this Act.
______
By Mr. ROCKEFELLER (for himself, Mr. Harkin, Mr. Daschle, and Mr.
Johnson):
S. 856. A bill to amend the Internal Revenue Code of 1986 to expand
the incentives for the construction and renovation of public schools;
to the Committee on Finance.
______
By Mr. ROCKEFELLER (for himself, Mr. DeWine, Ms. Landrieu, and
Mr. Cochran):
S. 857. A bill to amend the Internal Revenue Code of 1986 to provide
a tax incentive to individuals teaching in elementary and secondary
schools located in rural or high unemployment areas and to individuals
who achieve certification from the National Board for Professional
Teaching Standards, and for other purposes; to the Committee on
Finance.
Mr. ROCKEFELLER. Mr. President, today I am introducing two key
education initiatives designed to promote quality education across our
country and respond to the compelling needs in our schools. When I meet
with teachers and parents, and even business leaders in West Virginia,
everyone is concerned about the condition of our school buildings and
the importance of qualified committed teachers working in those
classrooms.
To address these clear and compelling needs, I am introducing two
education bills. The first initiative, America's Better Classroom Act
of 2003, is a school construction initiative to respond to the
overwhelming needs for school construction. The Department of Education
reports that the average public school building is 42 years old. In
1995, GAO estimated that we needed $112 billion for school construction
and renovations. A more recent survey in 2001 in the Journal of
Education Finance indicates that the need is increasing, and the unmet
need for school infrastructure over the next decade is over $200
billion. My State of West Virginia will need as much as $2 billion for
school construction and renovations.
America's Better Classroom Act provides the financial tools to help
build and renovate our schools. It will continue the Qualified Zone
Academy Bonding, QZAB, Program that has helped economically
disadvantaged communities. This provision would provide $2.8 billion to
continue and expand the successful QZAB Program. In recent years, this
program has provided $4.2 million for support school construction and
renovations in disadvantaged communities. Effective programs have
earned continued support.
But the truth is that many schools districts need help with school
construction and renovations, which is why the America's Better
Classroom Act creates a $22 billion Qualified School Bonding Program.
Funding will be allocated to the states based on the Title 1 formula so
it is targeted, but the states will have flexibility in allocating
support among school districts.
Last summer, I toured two schools in Berkeley County, WV--Martinsburg
High School and South Middle School. The high school was built in 1928,
but it had been renovated. The middle school was built in 1954, and
needed serious work. The cafeteria had to serve as a part-time
classroom, and they used portable trailers. These schools are in our
eastern panhandle which is the region of the greatest population
growth, so Berkeley County predicts that it will need to build or
renovate nine schools over the next 10 years. Given the current state
fiscal crisis, states and communities need the America's Better
Classroom Act so that we can make needed investments. Also school
construction can play a positive role in helping to stimulate our
economy and create needed jobs. School construction is a more reliable
economic stimulus, and an important investment in our children's
education. I am proud to have Senators Tom Harkin, Tom Daschle, and Tim
Johnson as cosponsors of this important initiative. Senator Harkin has
been a true leader on education issues throughout this career,
including school construction and renovations.
The next initiative to improve education is a bipartisan bill, known
as Incentives to Educate American Children Act, or I TEACH. I am proud
to have Senators DeWine, Landrieu, and Cochran as cosponsors.
Under No Child Left Behind, every classroom should have a qualified
teacher. Studies suggest that an estimated 2 million new teachers will
be needed in our classrooms over the next decade. It will be important
to ensure that we recruit and retain good teachers in every classroom,
including our most disadvantaged schools and our rural schools, which
often have more trouble recruiting and keeping teachers.
Unfortunately, without our help, America's disadvantaged and rural
schools may not be able to attract the qualified teachers required by
the No Child Left Behind Act. Isolated and impoverished, competing
against higher paying and well-funded school districts for scarce
classroom talent, they are already facing a desperate shortage of
qualified teachers. As pressure to hire increases, that shortage could
become a crisis, and children already at a disadvantage in relation to
their more affluent and less isolated peers will be the ones who suffer
most. Principals in West Virginia already are reporting shortages of
trained teachers.
To help bring dedicated and qualified teaching professionals into our
schools, the I TEACH Act will provide teachers a $1000 refundable tax
credit every year they practice their profession in the public schools
where they are needed most. In addition to this incentive for
disadvantage and rural schools, every public school teacher has the
ability to earn a $1000 refundable tax credit if a teacher achieves the
National Board for Professional Teaching Standards certification. Under
the bill, every teacher willing to work in underserved schools will
earn a tax credit. Every teacher who gets Board certification will earn
a tax credit. Teachers who work in rural or poor schools and get
certified will have both credits, worth $2000. Schools who desperately
need help attracting teachers will get a boost. And children educated
in poor and rural schools will benefit most.
One-fourth of America's children attend public schools in rural
areas, and of the 250 poorest counties in the United States, 244 are
rural. West Virginia has rural schools scattered throughout 36 of its
55 counties, and these schools face real challenges in recruiting and
retaining teachers, as well as dealing with other issues related to
their rural location. Attracting teachers to these schools is difficult
in large part due to the vast gap between what rural districts are able
to offer and the salaries paid by more affluent school districts--as
wide as $20,000 a year, according to one study. Poor urban schools must
overcome similar difficulties. It is often a challenge for these
schools to attract and keep qualified teachers. Yet, according to the
2001 No Child Left Behind Act, every school must have qualified
teachers by the end of the 2005-2006 school year.
In my State of West Virginia, as in over 30 other States, there is
already a state fiscal incentive for teachers who earn National Board
certification. My legislation builds upon the West Virginia program;
together, they add up to a powerful tax incentive for teachers to
remain in the classroom and to use their skills where they are most
needed.
Education should be among our top national priorities, essential for
every family with a child and vital for our economic and national
security. I supported the bold goals and higher standards of the 2001
No Child Left Behind Act, but they won't be met unless we invest in
quality schools and good teachers. I am committed to working closely
with my Senate colleagues this fall to secure as much funding as
possible for our children's education.
______
By Mr. CORZINE (for himself, Ms. Snowe, Ms. Cantwell, Mr. Smith,
Mr. Dodd, Mr. Leahy, Mrs. Murray, Mr. Durbin, Mr. Lautenberg,
and Mr. Bingaman):
S. 859. A bill to amend the Public Health Service Act with respect to
facilitating the development of microbicides for preventing
transmission of HIV and other diseases; to the Committee on Health,
Education, Labor, and Pensions.
Mr. CORZINE. Mr. President, I rise today to introduce legislation,
the
[[Page S5183]]
Microbicides Development Act of 2003. I am very pleased to be
introducing this bipartisan bill along with my colleagues, Senators
Snowe, Cantwell, Gordon Smith, Dodd, Leahy, Murray, Durbin, and
Lautenberg. I thank my colleagues for their support of this important
legislation, which we believe is vital to the pursuit of combating the
global HIV/AIDS crisis.
As you know, recently released UN reports paint the most horrendous
picture yet of the HIV epidemic, with AIDS continuing to kill more
people worldwide than any other infectious disease, and sparing no
corner of the world. According to the UN, China could have more than 10
million HIV-infected people by 2010. Infection rates in Russia and
Eastern Europe are rising faster than anywhere else. India may soon
have the largest number of people living with HIV/AIDS in the world.
And Sub-Saharan Africa remains devastated by an epidemic that has
lowered life expectancy from 62 years on average to just 47. In hard-
hit countries like Botswana, where 45 percent of women attending
prenatal clinics are HIV-positive, a 15-year old youth has an 80
percent chance of dying of AIDS.
The UN reports come on the heels of CIA assessments that the AIDS
pandemic is entering a ``stage of substantial increases in size and
scope.''
Despite alarm bells ringing from the organizations as diverse in
mandate as the UN and the CIA, little attention is paid to the reality
that the face of the HIV epidemic both at home and abroad is
increasingly female. As of the end of 2002, according to the Joint
United Nations/World Health Organization Programme on HIV/AIDS, half of
the world's HIV/AIDS-infected people were women. In Sub-Saharan Africa,
58 percent of all adult HIV/AIDS cases were found in women, and in
hard-hit nations such as Zambia, girls are five times more likely than
boys to be HIV positive.
Here in the United States, 30 percent of new HIV infections each year
occur among women, most of whom, 64 percent, are African-American. The
majority of U.S. women, 75 percent, acquire the disease through
heterosexual transmission. My own State of New Jersey has the Nation's
highest HIV/AIDS infection rate among women and the sixth highest
infection rate among all adults. And here in our Nation's capital, one
in three people with HIV now is a woman.
Biologically, women are four times more vulnerable to HIV infection.
Their vulnerability increases due to their lack of economic and social
power in many societies, where women often cannot control sexual
encounters or insist on protective measures such as abstinence or
mutual monogamy. The typical woman who gets infected with HIV has only
one partner--her husband. This trend devastates families and puts
children at risk.
This astounding reality bears restating: The single greatest risk
factor for a woman in the developing world of contracting the HIV virus
is being married.
Women need HIV-prevention tools that they can control to safeguard
their health and that of their families and communities. Unfortunately,
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 and many in our own country who
rely 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 expand federal
investments for microbicide research at the National Institutes for
Health, NIH, the Centers for Disease Control and Prevention, CDC, and
the United States Agency for International Development, USAID.
In addition to encouraging new investments in microbicide research,
the Microbicides Development Act will expedite the implementation of
the NIH's five-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.
Perhaps most importantly, the legislation calls for the establishment
of a Microbicide Research and Development Branch within the National
Institute of Allergy and Infectious Diseases.
The National Institutes of Health, principally through the National
Institute of Allergy and Infectious Diseases, NIAID, spends the
majority of Federal dollars in this area. However, microbicide research
at NIH is currently conducted with no single line of administrative
accountability or specific funding coordination. In addition, other
federal agencies such as CDC and USAID undertake microbicides research
and development activities. Because there is no federal coordination,
however, there is the risk that inefficiencies and duplication of
effort could result. Through a variety of committees Congress has
requested that NIH and its Office of AIDS Research provide Congress
with a ``federal coordination plan'' for research and development in
this area, but formal submission of this plan has been repeatedly
delayed.
A branch dedicated to microbicide research and development at the NIH
is essential to providing the appropriate staff and funding for the
coordination of these activities at the NIH and across agencies.
I ask unanimous consent that the text of the bill be printed in the
Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 859
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 ``Microbicide Development Act
of 2003''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) During 2002, AIDS caused the deaths of an estimated
3,100,000 people, including 1,200,000 women and 610,000
children under 15 years of age. An estimated 14,000,000
children living today have lost one or both parents due to
AIDS.
(2) Worldwide, heterosexual transmission is accounting for
an increasing share of new HIV infections, with adolescents,
women, and disadvantaged people at particular risk.
(3) In the United States, for example, African American and
Latina women account for 64 percent and 17 percent of all
reported HIV cases, respectively, even though they represent
only 25 percent of the total United States female population.
(4) Half of the 38,600,000 adults living today with HIV/
AIDS are women.
(5) Biological, cultural, economic, and social factors
combine to make women and girls particularly vulnerable to
HIV and other sexually transmitted diseases (referred to in
this section as ``STDs''). In the hardest hit areas of
Africa, almost one-quarter of 15 to 19 year-old girls are
already infected with HIV, compared to 4 percent of their
male peers.
(6) In addition to HIV, other STDs can cause serious,
costly, even deadly conditions for women and their children,
including infertility, pregnancy complications, cervical
cancer, infant mortality, and higher risk of contracting HIV.
When women become infected with HIV, they risk passing along
the infection to their infants, either through pregnancy,
childbirth, or breastfeeding.
(7) Regrettably, today's HIV prevention methods do not meet
the needs of the millions of women worldwide who, for
cultural, economic, and social reasons, cannot insist on
protective measures such as abstinence, condom use, or mutual
monogamy.
(8) A large majority of women become infected with HIV with
only one partner--their husbands. Women need prevention
options that they can use consistently within ongoing, long-
term relationships.
(9) Microbicides are a promising new technology,
complementary to vaccines, that could put the power of
prevention into women's hands. Formulated as gels, creams, or
films, microbicides inactivate, block, or otherwise interfere
with the pathogens that cause HIV/AIDS and other STDs.
(10) Even a moderately effective microbicide could have a
substantial impact on the HIV epidemic. The London School of
Hygiene and Tropical Medicine estimates that a 60 percent
efficacious microbicide introduced into the 73 poorest
countries could avert 2,500,000 HIV infections in men, women,
and children over 3 years.
(11) Microbicides would also benefit men, because their
protective effect is likely to be bidirectional.
(12) Numerous potential microbicides are poised for
successful development. Thirteen
[[Page S5184]]
products are in clinical trials and approximately 50
compounds exist that could be investigated further. There is
a backlog in the research and development pipeline, however,
so that innovative and promising product concepts are
languishing, while infection rates are growing.
(13) At present, there is insufficient economic incentive
for large pharmaceutical companies to become actively engaged
in microbicide research and development, thus, Federal
support is crucial. Three Federal agencies--the National
Institutes of Health, the Centers for Disease Control and
Prevention, and the United States Agency for International
Development--have played important roles in progress to date,
but strong, effective, well-coordinated, and visible public
sector leadership will be essential for the promise of
microbicides to be realized.
(14) A microbicide could be available within 5 to 7 years
if sufficient public sector funding were made available to
accelerate research and support the necessary clinical
trials.
(15) Microbicide research and development currently receive
only 2 percent of the AIDS research budget of the National
Institutes of Health, not nearly enough to keep pace with
public health need and scientific opportunity.
(16) The United States Agency for International Development
sustains strong partnerships with public and private
organizations working on microbicide research, importantly
including clinical trials in developing countries where its
experience is extensive. The long experience of such Agency
in logistics management, service delivery, provider training,
and social marketing position it well to prepare for and
implement the introduction of microbicides once they are
available.
(17) The Centers for Disease Control and Prevention also
engages in critical microbicide research and clinical
testing, and has a long history of conducting field trials in
developing countries.
(18) For the microbicide pipeline to advance significantly
and the essential clinical trials to be fielded soon, the
current amount of Federal investment needs to increase to
$130,000,000 in fiscal year 2004 and to $160,000,000 in
fiscal year 2005.
TITLE I--MICROBICIDE RESEARCH AT THE NATIONAL INSTITUTES OF HEALTH
SEC. 101. OFFICE OF AIDS RESEARCH; PROGRAM REGARDING
MICROBICIDES FOR PREVENTING TRANSMISSION OF HIV
AND OTHER DISEASES.
Subpart I of part D of title XXIII of the Public Health
Service Act (42 U.S.C. 300cc-40 et seq.) is amended by
inserting after section 2351 the following:
``SEC. 2351A. MICROBICIDES FOR PREVENTING TRANSMISSION OF HIV
AND OTHER DISEASES.
``(a) Federal Strategic Plan.--
``(1) in general.--The Director of the Office of AIDS
Research shall expedite the development and implementation of
a Federal strategic plan for the conduct and support of
microbicide research and shall biannually review and as
appropriate revise the plan.
``(2) Coordination.--In developing, implementing, and
reviewing the plan, the Director of the Office of AIDS
Research shall coordinate with--
``(A) other Federal agencies, including the Director of the
Centers for Disease Control and Prevention and the
Administrator of the United States Agency for International
Development, involved in microbicide research;
``(B) the microbicide research community; and
``(C) health advocates.
``(b) Expansion and Coordination of Activities.--The
Director of the Office of AIDS Research, acting in
coordination with other relevant institutes and offices,
shall expand, intensify, and coordinate the activities of all
appropriate institutes and components of the National
Institutes of Health with respect to research on the
development of microbicides to prevent the transmission of
HIV and other sexually transmitted diseases.
``(c) Microbicide Development Branch.--In carrying out
subsection (b), the Director of the National Institute of
Allergy and Infectious Diseases shall establish within the
Vaccine and Prevention Research Program of the Division of
AIDS in the Institute, a branch charged with carrying out
microbicide research and development. In establishing such
branch, the Director shall ensure that there are a sufficient
number of employees dedicated to carry out the mission of the
branch.
``(d) Report to Congress.--
``(1) In general.--Not later than 1 year after the date on
which the initial Federal strategic plan is developed under
subsection (a), and biannually thereafter, the Director of
the Office of AIDS Research shall submit to the appropriate
committees of Congress a report that describes the strategies
being implemented by the Federal Government regarding
microbicide research and development. Each such report shall
include--
``(A) a description of activities with respect to
microbicides conducted and supported by the Federal
Government;
``(B) a summary and analysis of expenditures, during the
period for which the report is prepared, for activities with
respect to microbicide-specific research and development,
including the number of employees involved in these
activities within each agency;
``(C) a description and evaluation of the progress made,
during the period for which such report is prepared, towards
the development of effective, reliable, and acceptable
microbicides;
``(D) a review of the remaining scientific and programmatic
obstacles with respect to microbicides; and
``(E) an updated Federal Strategic Plan, including
professional judgment funding projections.
``(2) Appropriate congressional committees definition.--For
the purposes of this subsection, the term `appropriate
committees of Congress' means the Committee on Energy and
Commerce and the Committee on Appropriations of the House of
Representatives and the Committee on Health, Education,
Labor, and Pensions and the Committee on Appropriations of
the Senate.
``(e) HIV Definition.--For purposes of this section, the
term `HIV' means the human immunodeficiency virus. Such term
includes acquired immune deficiency syndrome (AIDS).
``(f) Authorization of Appropriations.--For the purposes of
carrying out this section, there are authorized to be
appropriated such sums as may be necessary for each of fiscal
years 2004 and 2005, and such sums as may be necessary in
subsequent fiscal years to sustain multiyear funding at a
productive level.''.
TITLE II--MICROBICIDE RESEARCH AT THE CENTERS FOR DISEASE CONTROL AND
PREVENTION
SEC. 201. MICROBICIDES FOR PREVENTING TRANSMISSION OF HIV AND
OTHER DISEASES.
Part B of title III of the Public Health Service Act (42
U.S.C. 243 et seq.) is amended--
(1) by transferring section 317R so as to appear after
section 317Q; and
(2) by inserting after section 317R (as so transferred) the
following:
``SEC. 317S. MICROBICIDES FOR PREVENTING TRANSMISSION OF HIV
AND OTHER DISEASES.
``(a) Development and Implementation of the Microbicide
Agenda Supported by the Centers for Disease Control and
Prevention.--The Director of the Centers for Disease Control
and Prevention shall fully implement the Center's 5-year
topical microbicide agenda to support microbicide research
and development. Such an agenda shall include--
``(1) conducting laboratory research in preparation for,
and support of, clinical microbicide trials;
``(2) conducting behavioral research in preparation for,
and support of, clinical microbicide trials;
``(3) developing and characterizing domestic populations
and international cohorts appropriate for Phase I, II, and
III clinical trials of candidate topical microbicides;
``(4) conducting Phase I and II clinical trials to assess
the safety and acceptability of candidate microbicides;
``(5) conducting Phase III clinical trials to assess the
efficacy of candidate microbicides;
``(6) providing technical assistance to, and consulting
with, a wide variety of domestic and international entities
involved in developing and evaluating topical microbicides,
including health agencies, extramural researchers, industry,
health advocates, and nonprofit organizations; and
``(7) developing and evaluating the diffusion and effects
of implementation strategies for use of effective topical
microbicides.
``(b) Staffing.--In carrying out the microbicide agenda,
the Centers for Disease Control and Prevention shall ensure
that there are sufficient numbers of dedicated employees for
carrying out the agenda under subsection (a).
``(c) Report to Congress.--
``(1) In general.--Not later than 1 year after the date of
enactment of this section, and biannually thereafter, the
Director of the Centers for Disease Control and Prevention
shall submit to the appropriate committees of Congress, a
report on the strategies being implemented by the Centers for
Disease Control and Prevention with respect to microbicide
research and development. Such report shall be submitted
alone or as part of the overall Federal strategic plan on
microbicides compiled annually by the National Institutes of
Health Office of AIDS Research as required under section
2351A. Such report shall include--
``(A) a description of activities with respect to
microbicides conducted and supported by the Centers for
Disease Control and Prevention;
``(B) a summary and analysis of expenditures, during the
period for which the report is prepared, for activities with
respect to microbicide-specific research and development,
including the number of employees involved in these
activities;
``(C) a description and evaluation of the progress made,
during the period for which such report is prepared, towards
the development of effective, reliable, and acceptable
microbicides; and
``(D) a review of the remaining scientific and programmatic
obstacles with respect to microbicides.
``(2) Appropriate congressional committees definition.--For
the purposes of this subsection, the term `appropriate
committees of Congress' means the Committee on Energy and
Commerce and the Committee on Appropriations of the House of
Representatives and the Committee on Health, Education,
Labor, and Pensions and the Committee on Appropriations of
the Senate.
``(d) Definition.--For the purposes of this section, the
term `HIV' means the human
[[Page S5185]]
immunodeficiency virus. Such term includes acquired immune
deficiency syndrome (AIDS).
``(e) Authorization of Appropriations.--For the purposes of
carrying out this section, there are authorized to be
appropriated such sums as may be necessary for each of fiscal
years 2004 and 2005, and such sums as may be necessary in
subsequent fiscal years to sustain multiyear funding at a
productive level.''.
TITLE III--MICROBICIDE RESEARCH AT THE UNITED STATES AGENCY FOR
INTERNATIONAL DEVELOPMENT
SEC. 301. MICROBICIDES FOR PREVENTING TRANSMISSION OF HIV AND
OTHER DISEASES.
Chapter 1 of part I of the Foreign Assistance Act of 1961
(22 U.S.C. 2151 et seq.) is amended by inserting after
section 104 the following:
``SEC. 104A. MICROBICIDES FOR PREVENTING TRANSMISSION OF HIV
AND OTHER DISEASES.
``(a) Development and Implementation of the Microbicide
Agenda Supported by the Agency for International
Development.--The Office of HIV/AIDS of the Agency for
International Development, in conjunction with other offices
within the Agency for International Development, shall fully
implement the Agency's microbicide agenda to support the
development of microbicides, and facilitate wide-scale
introduction once microbicide products are available. Such an
agenda shall include--
``(1) support for the discovery, development, and
preclinical evaluation of topical microbicides;
``(2) support for the conduct of clinical studies of
candidate microbicides to assess safety, acceptability, and
effectiveness in reducing HIV and other sexually transmitted
diseases;
``(3) support for behavioral and social science research
relevant to microbicide development, testing, acceptability,
and use;
``(4) support for preintroductory and introductory studies
of safe and effective microbicides in developing countries;
and
``(5) facilitation of access to microbicides as they become
available to women at highest risk of HIV and other sexually
transmitted diseases as soon as possible.
``(b) Staffing.--The Office of HIV/AIDS of the Agency for
International Development shall ensure that there are
sufficient numbers of dedicated employees for purposes of
carrying out the agenda under subsection (a).
``(c) Report to Congress.--
``(1) In general.--Not later than 1 year after the date of
enactment of this section, and biannually thereafter, the
Administrator of the Agency for International Development
shall submit to the appropriate committees of Congress a
report on the strategies being implemented by the Agency for
International Development with respect to microbicide
research and development. Such report shall be submitted
alone or as part of the overall Federal strategic plan on
microbicides compiled annually by the National Institutes of
Health Office of AIDS Research as required under section
2351A. Such report shall include--
``(1) a description of activities with respect to
microbicides conducted and supported by the Agency for
International Development;
``(2) a summary and analysis of expenditures, during the
period for which the report is prepared, for activities with
respect to microbicide-specific research and development,
including the number of employees involved in these
activities;
``(3) a description and evaluation of the progress made,
during the period for which such report is prepared, towards
the development of effective, reliable, and acceptable
microbicides;
``(4) a review of the remaining scientific and programmatic
obstacles with respect to microbicides; and
``(5) a description of the steps being taken to increase
access and availability of approved microbicides to prevent
HIV and other sexually transmitted diseases.
``(2) Appropriate congressional committees definition.--For
the purposes of this subsection, the term `appropriate
committees of Congress' means the Committee on International
Relations and the Committee on Appropriations of the House of
Representatives and the Committee on Foreign Relations and
the Committee on Appropriations of the Senate.
``(d) Definition.--For the purposes of this section, the
term `HIV' means the human immunodeficiency virus. Such term
includes acquired immune deficiency syndrome (AIDS).
``(e) Authorization of Appropriations.--For the purposes of
carrying out this section, there are authorized to be
appropriated such sums as may be necessary for each of fiscal
years 2004 and 2005, and such sums as may be necessary in
subsequent fiscal years to sustain multiyear funding at a
productive level.''.
Mr. DURBIN. Mr. President, I am honored to be a cosponsor of the
Microbicides Development Act of 2003. The legislation calls for a
redoubling of the effort at the National Institutes of Health and the
Centers for Disease Control to develop microbicides, a class of
products that can prevent transmission of HIV and other sexually
transmitted diseases in women and their partners.
As this Congress continues to fight AIDS, taking tiny steps in
pursuit of a challenge racing away from us, I see the development of
microbicides as another ``tiny'' step forward. I believe microbicides
are an important addition to the arsenal to fighting AIDS, and indeed
the Global AIDS bill I introduced, The Global CARE Act of 2003, S. 250,
includes microbicides among the preventative measures the U.S. should
support.
I, and the other cosponsors of this important legislation, see a real
need and urgency to expand the range of preventive interventions for
HIV transmission. The ABC options for preventing HIV infection, which
remain a key part of our response and contribute to the world's ability
to slow the spread of HIV/AIDS, have not changed since the 1980s: A,
abstinence when it comes to sexual activity; B, be faithful to one
partner; C, if you are going to ignore the other two, use a condom.
Despite the effectiveness of the ABCs in many areas, HIV/AIDS continues
to spread. We urgently need more prevention options.
Microbicides, defined as antimicrobial products that can be applied
topically for the prevention of sexually transmitted diseases, STDs,
including HIV, may offer one of the most promising preventive
interventions. They could prove to be safe, effective, inexpensive,
readily available, and widely acceptable. Microbicides will add to the
range of options available. Most importantly, microbicides offer an
additional method of prevention that can be controlled by women.
Notwithstanding the knowledge of successful HIV prevention
strategies--condom use, reduction in the number of sexual partners,
diagnosis and treatment of sexually transmitted infections--HIV
continues to spread at an alarming rate especially among women in
developing countries.
In sub-Saharan Africa, the area hardest hit by the pandemic, women
and girls account for 58 percent of those living with AIDS. Worldwide,
women represent 50 percent of those infected, an increase of 9 percent
in five years. In some of the hardest hit countries in southern Saharan
Africa, HIV prevalence among girls aged 15 to 19 is four to seven times
higher than among boys their age. Attitudes, beliefs, and taboos
surrounding sex, the status of women and children, and the source and
causes of AIDS also complicate attempts to control transmission and
provide appropriate prevention and treatment.
In the United States, more than 30 percent of newly reported HIV
cases diagnosed are occurring in women, according to the most recent
data collected by the Centers of Disease Control. As in the rest of the
world, the majority of these reported HIV infections among U.S. women
result from heterosexual transmission, and the data suggest that
younger women are disproportionately at risk for acquiring HIV.
Microbicides will be particularly attractive to those who do not wish
to draw attention to the fact that they are using a prevention method.
Unlike male or female condoms, microbicides are a potential preventive
option that women can easily control and that does not require the
cooperation, consent or even knowledge of the partner. Microbicides are
likely to be cheaper than condoms and, in the future, microbicides
could be used to prevent mother-to-child transmission of HIV.
Microbicides have been under development for more than a decade. Yet,
it is unlikely that they will be available before 2007, which leads to
the general perception that there has been insufficient progress in
this area. Three versions are currently in the final stages of clinical
trials to determine whether they are safe and effective. Many factors
contribute to this slow progress. The National Institutes of Health,
NIH, reports that microbicide research requires huge and complex
efficacy and effectiveness studies that must be conducted in areas with
high HIV incidence rates. Such rates occur predominantly in developing
countries where the research infrastructure is underdeveloped. Given
this dependency on poorer, developing nations, it is not surprising
that no large pharmaceutical company is interested in funding
microbicide development. A second obstacle lies in the ethical
obligation to provide counseling and make condoms available to the
study subjects, which adds to the complexity and
[[Page S5186]]
size of the trials. As a result, NIH explains, few Phase III efficacy
trials have been completed. Of those completed, few have yielded
promising results.
Reflecting on the reality of the global epidemic, United Nations
Secretary General Kofi Annan stated that the face of the HIV epidemic
is that of a woman. ``If you want to save Africa,'' Annan says, ``you
must save the African woman first. It is they who care for the young,
the old, the sick and the dying. It is they who nurture social networks
that help societies share burdens.''
Lack of access to treatment and care means that for the majority of
HIV-positive women throughout the world, HIV infection is a death
sentence. In Haiti, for example, AIDS is now the leading cause of death
for women of childbearing age.
Microbicides will never become a viable option for prevention unless
a serious amount of money is invested in their development. Senator
Corzine's legislation will make microbicide research a priority,
calling for the expansion and coordination of microbicide activities at
the National Institutes of Health and other agencies working in this
field. The bill requires the Centers for Disease Control to implement a
5-year topical research plan and requires the U.S. Agency for
International Development to develop and implement a microbicide
agenda.
I am proud to join Senator Corzine as a cosponsor of this legislation
and hope that my colleagues will join us as we determine the next steps
in our battle against AIDS, including the development of prevention
efforts that may help women take control of their lives and their
survival.
______
By Mr. HOLLINGS (for himself, Mr. Gregg, Mr. Kerry, Ms. Snowe,
Mr. Inouye, Mr. Reed, Mr. Breaux, Mr. DeWine, Mr. Sarbanes, Mr.
Biden, Mr. Kennedy, Ms. Mikulski, Mr. Cochran, Mrs. Murray, Mr.
Corzine, Ms. Collins, Mr. Dodd, Mr. Levin, Mr. Nelson of
Florida, Mr. Wyden, Mr. Lieberman, Mrs. Feinstein, Mr.
Lautenberg, Ms. Cantwell, and Mr. Chafee):
S. 861. A bill to authorize the acquisition of interests in
undeveloped coastal areas in order to better ensure their protection
from development; to the Committee on Commerce, Science, and
Transportation.
Mr. HOLLINGS. Mr. President, I rise today with my colleague Senator
Gregg to introduce the Coastal and Estuarine Land Protection Act of
2003. Senator Gregg and I introduced this bill last session, and it was
reported favorably by the Commerce Committee, but time did not permit
action to be completed on the bill before the end of the Congress. My
colleagues and I will work hard to pass this important piece of
legislation during the 108th Congress.
I would like to thank our cosponsors, 24 in all, Senators Kerry,
Snowe, Inouye, Jack Reed, Breaux, DeWine, Sarbanes, Biden, Kennedy,
Mikulski, Cochran, Murray, Corzine, Collins, Dodd, Levin, Bill Nelson,
Wyden, Lieberman, Feinstein, Lautenberg, Cantwell, and Chafee for their
strong support of this bill, which marks another important chapter of
our thirty year effort to put coastal and ocean issues at the forefront
of environmental policy.
I am also proud to say that the bill is strongly supported by The
Trust for Public Land, Coastal States Organization, The Nature
Conservancy, Land Trust Alliance, International Association of Fish and
Wildlife Agencies, American Sportfishing Association, and the South
Carolina Wildlife Federation. I understand that the U.S. Commission on
Ocean Policy will also endorse this approach.
When I was Governor of South Carolina over 30 years ago, I
experienced first hand the need for Federal direction and assistance to
the States to enable them to effectively and sustainably manage coastal
development. My experiences during a series of coastal hearings and
continued research in the Senate led me to write the Coastal Zone
Management Act of 1972, which provided clear policy objectives for
states to establish coordinated coastal zone management programs to
help balance coastal development with protection.
But we appear to need more tools to help States continue the job we
started in 1972. In the year 2003, as our population grows, more and
more people are moving to the coast to enjoy its beauty and
recreational opportunities. In fact, by 2010, an estimated 60 percent
of Americans will live along our coasts, which represent less than 17
percent of our land area. More than 3,000 people move to coastal areas
everyday, and 14 of the Nation's 20 largest cities are on the coast,
and are five times more densely populated than the interior of the
country. As these good folks move to take advantage of coastal living,
we have to be careful that we don't destroy the natural resources and
quality of life that draw them to our shores. Big changes are coming to
all of our coastal counties, and we must make some careful and smart
decisions if we want to keep the very resources we depend on.
In particular, estuaries and wetlands have many unique attributes
that make them important to both our natural resources and our economy.
Estuaries, and the watersheds that flow into them, support fisheries
and wildlife and contribute immensely to the coastal area economies.
But these ecologically and economically important watersheds are also
under the most threat from land development and conversion away from
their natural state. Coastal urbanization trends are particularly
strong in the southeastern areas. In my State alone, the Forest Service
has estimated natural forests of the coastal plain will decrease by 1.9
million acres in the next 40 years--a 35 percent loss of South
Carolina's forests. These findings and future trends tell me that for
the good of our coastal communities we need some fast, targeted action
to protect ecologically important coastal areas most threatened with
development or conversion.
Now more than ever, the pressures of urbanization and pollution along
our nation's coasts threaten to impair watersheds, impact wildlife
habitat and cause irreparable damage to the fragile coastal ecology.
The Environmental Protection Agency has reported that some areas of the
country are seeing some improvement from the heavily polluted status of
the past, but predicts that the more pristine areas like the Southeast,
which has some of the best water quality in the Nation, will experience
degradation of water quality due primarily to runoff of pollutants from
rapid development in our coastal watersheds. This is very bad news for
the shrimpers, oystermen, and recreational users who depend on these
waters for their livelihood and quality of life.
We see strong signals of what continuing down this path will bring
us: beach and shellfish closings, fish kills, and human health impacts.
The National Research Council reports that over the next 20 years over
70 percent of our estuaries will experience more low oxygen--or
``eutrophic''--conditions, such as the Gulf ``Dead Zone.'' If this
trend continues, our coastal economies will suffer and perhaps never
recover. I know in my state the economy would falter greatly from the
lack of fishing, shrimping and tourism opportunities, and this is true
up and down the Atlantic coast, which contains 37 percent of the
Nation's estuarine areas.
The good news is that there are ways we can make a difference, and we
have some good models we can turn to. I am proud to say my home State
of South Carolina is a leader in this area. The past decade I have led
an extensive cooperative conservation effort, bringing together the
State of South Carolina, private landowners, groups like the Nature
Conservancy, Ducks Unlimited and federal partners like NOAA and the
Fish and Wildlife Service to protect the ACE Basin. It is now the
largest pristine estuarine reserve on the East Coast, a 350,000-acre
area at the convergence of the Edisto, Ashepoo and Combahee Rivers,
which comprises many ecologically important habitats that are home to
many fish and bird species, including a number of endangered species.
An outcome of these efforts is that the ACE Basin, already home to a
National Wildlife Refuge, was declared a National Estuarine Research
Reserve in 1992, and has been growing in size ever since. In building
the ACE Basin, the partners worked creatively and in a coordinated
manner, and we successfully obtained land acquisition funds through a
variety of
[[Page S5187]]
federal sources, including the Forest Legacy Program.
What became clear, however, is that there is no Federal program
explicitly setting aside funding for conservation of coastal lands,
where the needs are clearly the greatest. That is exactly what the
Coastal and Estuarine Land Protection Act of 2003 will do. It
authorizes a competitive matching grant program in NOAA to enable
states to permanently protect important coastal areas.
Under this NOAA program, coastal states can compete for matching
funds of up to 75 percent to acquire land or easements for the
protection of endangered coastal areas that have considerable
conservation, recreation, ecological, historical or aesthetic values
threatened by development or conversion. The bill also provides funding
for a regional watershed demonstration project that can be used as a
model for future watershed-scale programs. The program is authorized at
$60 million for fiscal year 2004 and beyond, with an additional $5
million for the regional watershed demonstration project.
By establishing a plan for the preservation of our coastal areas, the
Coastal and Estuarine Land Protection Act will build on the foundation
laid down by the CZMA, all in stride with the changing times, growing
number of people, and limited resources available today. When it comes
to the environment, rules and regulations sometimes can't do it all.
Sometimes cooperative actions work better and we can turn to models
that encourage joint conservation projects among folks who all want the
same thing--sustainable coasts.
Partnership programs among federal government, state agencies, local
governments, private landowners and non-profits, like the ACE Basin
Project, work and we need to encourage these partnerships in all our
coastal areas if we are to prevent degradation of our coastal
resources. The good news is that we can make a difference today by
providing the funding for land conservation partnerships provided for
by the Coastal and Estuarine Land Protection Act. I am proud to be a
sponsor of this bill, which will not only improve the quality of the
coastal areas and marine life it supports, but also sustain surrounding
communities and their way of life.
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. 861
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 ``Coastal and Estuarine Land
Protection Act''.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Coastal and estuarine areas provide important nursery
habitat for two-thirds of the nation's commercial fish and
shellfish, provide nesting and foraging habitat for coastal
birds, harbor significant natural plant communities, and
serve to facilitate coastal flood control and pollutant
filtration.
(2) The Coastal Zone Management Act of 1972 (16 U.S.C. 1451
et seq.) recognizes the national importance of these areas
and their ecological vulnerability to anthropogenic
activities by establishing a comprehensive Federal-State
partnership for protecting natural reserves and managing
growth in these areas.
(3) The National Estuarine Research Reserve system
established under that Act relies on the protection of
pristine designated areas for long-term protection and for
the conduct of education and research critical to the
protection and conservation of coastal and estuarine
resources.
(4) Intense development pressures within the coastal zone
are driving the need to provide coastal managers with a wider
range of tools to protect and conserve important coastal and
estuarine areas.
(5) Protection of undeveloped coastal lands through the
acquisition of interests in property from a willing seller
are a cost-effective means of providing these areas with
permanent protection from development.
(6) Permanent protection of lands in the coastal zone is a
necessary component of any program to maintain and enhance
coastal and estuarine areas for the benefit of the Nation,
including protection of water quality, access to public
beachfront, conserving wildlife habitat, and sustaining sport
and commercial fisheries.
(7) Federal-State-nongovernmental organization pilot land
acquisition projects have already substantially contributed
to the long-term health and viability of coastal and
estuarine systems.
(8) Enhanced protection of estuarine and coastal areas can
be attained through watershed-based acquisition strategies
coordinated through Federal, State, regional, and local
efforts.
SEC. 3. ESTABLISHMENT OF COASTAL AND ESTUARINE LAND
PROTECTION PROGRAM.
(a) In General.--The Secretary of Commerce shall establish
a Coastal and Estuarine Land Protection Program, in
cooperation with appropriate State, regional, and other units
of government for the purposes of protecting the
environmental integrity of important coastal and estuarine
areas, including wetlands and forests, that have significant
conservation, recreation, ecological, historical, or
aesthetic values, and that are threatened by conversion from
their natural, undeveloped, or recreational state to other
uses. The program shall be administered by the National Ocean
Service of the National Oceanic and Atmospheric
Administration through the Office of Ocean and Coastal
Resource Management.
(b) Property Acquisition Grants.--The Secretary shall make
grants under the program to coastal States, except coastal
States that have lost less than 1 percent of their wetlands
to development or conversion to other land uses by the date
of enactment of this Act, with approved coastal zone
management plans or National Estuarine Research Reserve units
for the purpose of acquiring property or interests in
property described in subsection (a) that will further the
goals of--
(1) a Coastal Zone Management Plan or Program approved
under the Coastal Zone Management Act of 1972 (16 U.S.C. 1451
et seq.); or
(2) a National Estuarine Research Reserve management plan;
or
(3) a regional or State watershed protection plan involving
coastal States with approved coastal zone management plans.
(c) Grant Process.--The Secretary shall allocate funds to
coastal States or National Estuarine Research Reserves under
this section through a competitive grant process in
accordance with guidelines that meet the following
requirements:
(1) The Secretary shall consult with the State's coastal
zone management program, any National Estuarine Research
Reserve in that State, and the lead agency designated by the
Governor for coordinating the establishment and
implementation of this Act (if different from the coastal
zone management program).
(2) Each participating State shall identify priority
conservation needs within the State, the values to be
protected by inclusion of lands of the program, and the
threats to those values that should be avoided.
(3) Each participating State shall evaluate how the
acquisition of property or easements might impact working
waterfront needs.
(4) The applicant shall identify the values to be protected
by inclusion of the lands in the programs, management
activities that are planned and the manner in which they may
affect the values identified, and any other information from
the landowner relevant to administration and management of
the land.
(5) Awards shall be based on demonstrated need for
protection and ability to successfully leverage funds among
participating entities, including Federal programs, regional
organizations, State and other governmental units,
landowners, corporations, or private organizations.
(6) Applications must be determined to be consistent with
the State's or territory's approved coastal zone plan,
program and policies prior to submittal to the Secretary.
(7) Priority shall be given to lands described in
subsection (a) that can be effectively managed and protected
and that have significant ecological or watershed protection
value.
(8) In developing guidelines under this section, the
Secretary shall consult with other Federal agencies and non-
governmental entities expert in land acquisition and
conservation procedures.
(9) Eligible States or National Estuarine Research Reserves
may allocate grants to local governments or agencies eligible
for assistance under section 306A(e) of the Coastal Zone
Management Act of 1972 (16 U.S.C. 1455a) and may acquire
lands in cooperation with nongovernmental entities and
Federal agencies.
(10) The Secretary shall develop performance measures that
will allow periodic evaluation of the program's effectiveness
in meeting the purposes of this section and such evaluation
shall be reported to Congress.
(d) Matching Requirements.--
(1) In general.--The Secretary may not make a grant under
the program unless the Federal funds are matched by non-
Federal funds in accordance with this subsection.
(2) Maximum federal share.--
(A) 75 percent federal funds.--No more than 75 percent of
the funding for any grant under this section shall be derived
from Federal sources, unless such requirement is specifically
waived by the Secretary.
(B) Waiver of requirement.--The Secretary may grant a
waiver of the limitation in subparagraph (A) for underserved
communities, communities that have an inability to draw on
other sources of funding because of the small population or
low income of the community, or for other reasons the
Secretary deems appropriate.
(3) Other federal funds.--Where financial assistance
awarded under this section represents only a portion of the
total cost of a project, funding from other Federal sources
[[Page S5188]]
may be applied to the cost of the project. Each portion shall
be subject to match requirements under the applicable
provision of law.
(4) Source of matching cost share.--For purposes of
paragraph (2)(A), the non-Federal cost share for a project
may be determined by taking into account the following:
(A) Land value may be used as non-Federal match if the
lands are identified in project plans and acquired within
three years prior to the submission of the project
application or after the submission of a project application
until the project grant is closed (not to exceed 3 years).
The appraised value of the land at the time of project
closing will be considered the non-Federal cost share.
(B) Costs associated with land acquisition, land management
planning, remediation, restoration, and enhancement may be
used as non-Federal match if the activities are identified in
the plan and expenses are incurred within the period of
the grant award. These costs may include either case or
in-kind contributions.
(e) Regional Watershed Demonstration Project.--The
Secretary may provide up to $5,000,000 for a regional
watershed protection demonstration project that will meet the
requirements of this section, and--
(1) leverages land acquisition funding from other Federal
land conservation or acquisition programs such that other
Federal contributions, at a minimum, equal the amounts
provided by the Secretary;
(2) involves partnerships from a broad spectrum of Federal,
State, and non-governmental entities;
(3) provides for the creation of conservation corridors and
preservation of unique coastal habitat;
(4) protects largely unfragmented habitat under imminent
threat of development or conversion;
(5) provides water quality protection for areas set aside
for research under the National Estuarine Research Reserve
program; and
(6) provides a model for future regional watershed
protection projects.
(f) Reservation of Funds for National Estuarine Research
Reserve Sites.--No less than 15 percent of funds made
available under this section shall be available for
acquisitions benefiting National Estuarine Research Reserve
acquisitions.
(g) Limit on Administrative Costs.--No more than 5 percent
of the funds made available to the Secretary under this
section shall be used by the Secretary for planning or
administration of the program. The Secretary shall provide a
report to Congress with an account of all expenditures under
this section for fiscal year 2004, fiscal year 2005, and
triennially thereafter.
(h) Title and Management of Acquired Property.--
(1) In general.--If any property is acquired in whole or in
part with funds made available through a grant under this
section, the grant recipient shall provide such assurances as
the Secretary may require that--
(A) the title to the property will be held by the grant
recipient or other appropriate public agency designated by
the recipient in perpetuity;
(B) the property will be managed in a manner that is
consistent with the purposes for which the land entered into
the program and shall not convert such property to other
uses; and
(C) if the property or interest in land is sold, exchanged,
or divested, funds equal to the correct value will be
returned to the Secretary, for re-distribution in the grant
process.
(2) Conservation easement.--In this subsection, the term
``conservation easement'' includes an easement, recorded
deed, or interest deed where the grantee acquires all rights,
title, and interest in a property, that do not conflict with
the goals of this Act except those rights, title, and
interests that may run with the land that are expressly
reserved by a grantor and are agreed to at the time of
purchase.
(d) Definitions.--In this section, the term ``coastal
State'' has the meaning given that term by section 304(4) of
the Coastal Zone Management Act of 1972 (16 U.S.C. 1453(4)),
and any other term used in this section that is defined in
section 304 of that Act has the meaning given that term in
that section.
(j) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary--
(1) $60,000,000 for each of fiscal years 2004 through 2007
to carry out this section (other than subsection (e)); and
(2) $5,000,000 for fiscal year 2004 to carry out subsection
(e), such sum to remain available without fiscal year
limitation.
SEC. 4. ASSISTANCE FROM OTHER AGENCIES.
Section 310(a) of the Coastal Zone Management Act of 1972
(16 U.S.C. 1456c(a)) is amended by striking ``any qualified
person for the purposes of carrying out this subsection.''
and inserting ``any other Federal agencies (including
interagency financing of Coastal America activities) and any
other qualified person for the purposes of carrying out this
section.''.
Mr. GREGG. Mr. President, I rise today along with Senator Hollings to
introduce the Coastal and Estuarine Land Protection Act. We are
introducing this much needed coastal protection act along with Senators
Kerry, Snowe, Inouye, Reed, Breaux, DeWine, Sarbanes, Biden, Kennedy,
Mikulski, Cochran, Murray, Corzine, Collins, Dodd, Levin, Nelson,
Wyden, Lieberman, Feinstein, Lautenberg, Cantwell, and Chafee. In
addition, this legislation is supported by the Trust for Public Land,
the Coastal States Organization, the Nature Conservancy, International
Association of Fish and Wildlife Agencies, American Sportfishing
Association, and the Land Trust Alliance.
The Coastal and Estuarine Land Protection Act promotes coordinated
land acquisition and protection efforts in coastal and estuarine areas
by fostering partnerships between non-governmental organizations and
Federal, State, and local governments. With Americans rapidly moving to
the coast, pressures to develop critical coastal ecosystems are
increasing. There are fewer and fewer undeveloped and pristine areas
left in the Nation's coastal and estuarine watersheds. These areas
provide important nursery habitat for two-thirds of the Nation's
commercial fish and shellfish, provide nesting and foraging habitat for
coastal birds, harbor significant natural plant communities, and serve
to facilitate coastal flood control and pollutant filtration.
The Coastal and Estuarine Land Protection Act pairs willing sellers
through community-based initiatives with sources of Federal funds to
enhance environmental protection. Lands can be acquired in full or
through easements, and none of the lands purchased through this program
would be held by the Federal Government. This bill puts land
conservation initiatives in the hands of state and local communities.
This new program, authorized through the National Oceanic and
Atmospheric Administration at $60,000,000 per year, would provide
Federal matching funds to States with approved coastal management
programs or to National Estuarine Research Reserves through a
competitive grant process. Federal matching funds may not exceed 75
percent of the cost of a project under this program, and non-Federal
sources may count in-kind support toward their portion of the cost
share.
This coastal land protection program provides much needed support for
local coastal conservation initiatives throughout the country. In my
role on the Commerce, Justice, State Appropriations Subcommittee, I
have been able to secure significant funds for the Great Bay estuary in
New Hampshire. This estuary is the jewel of the seacoast region, and is
home to a wide variety of plants and animal species that are
particularly threatened by encroaching development and environmental
pollutants. By working with local communities to purchase lands or
easements on these valuable parcels of land, New Hampshire has been
able to successfully conserve the natural and scenic heritage of this
vital estuary.
Programs like the Coastal and Estuarine Land Protection Program will
now enable other States to participate in these community-based
conservation efforts in coastal areas. This program was modeled after
the U.S. Department of Agriculture's successful Forest Legacy Program,
which has conserved millions of acres of productive and ecologically
significant forest land around the country.
I welcome the opportunity to offer this important legislation, with
my close friend, Senator Hollings. I am thankful for his strong
leadership on this issue, and look forward to working with him to make
the vision for this legislation a reality, and to successfully conserve
our coastal lands for their ecological, historical, recreational, and
aesthetic values.
______
By Mr. ROCKEFELLER (for himself, Mr. DeWine, Ms. Landrieu, Ms.
Collins, Mr. Levin, and Mr. Johnson):
S. 862. A bill to promote the adoption of children with special
needs; to the Committee on Finance.
Mr. ROCKEFELLER. Mr. President, I rise today to introduce the
Adoption Equality Act of 2003. I am proud to have a bipartisan group of
cosponsors including Senators DeWine, Landrieu, Collins, Levin and
Johnson. Work on this legislation is based on the bipartisan work of
the Senate coalition that supported the 1997 Adoption and Safe Families
Act, an historic effort to ensure that a child's safety and health are
paramount, and that every child should have a permanent home.
[[Page S5189]]
The Adoption and Safe Families Act was the most sweeping and
comprehensive piece of child welfare legislation passed in over a
decade, and since its enactment, adoptions from our foster care system
have nearly doubled. In my State of West Virginia, adoptions have
nearly tripled. Those adopted children now have a permanent home. But
there are still 131,000 in foster care nationwide who have the goal of
adoption but are still waiting. In West Virginia, we have 520 children
in foster care waiting for adoption, but only 343 children might
qualify for support. I believe each child with special needs who is
waiting for adoption deserves help but under current law only some do.
They are the innocent ones who were victims of abuse and neglect.
Clearly we must do more for those children.
Throughout the process of developing the Adoption Act we heard about
the challenging circumstances facing children described as having
``special needs''. These include children who are the most difficult to
place into permanent homes, often due to their age, disability or
status as part of a group of siblings needing to be placed together.
One of the most significant provisions of ASFA was the assurance of
ongoing health care coverage for all children with special needs who
move from foster care to adoption. Parents willing to adopt such
children were promised health care coverage in 1997 which is essential.
While all special needs children that are adopted maintain health
care coverage, only half are eligible for adoption assistance payments.
Current law provides for the payment of federal adoption subsidies to
families who adopt only those special needs children whose biological
family would have qualified for welfare benefits under the old 1996
AFDC standards. Federal adoption subsidy payments provide essential
income support to help families finance the daily basic costs of
raising these special children, as well as support for special services
like therapy, tutoring, or special equipment for disabled children.
Federal adoption subsidies are a vital link in securing adoptive homes
for special needs children who by definition would not be adopted
without support.
Under current law, a child's eligibility for these important benefits
is dependent on the income of his or her biological parents even though
these parents' legal rights to the child have been terminated, and
these are the parents who either abused or neglected the child. This
is, simply, wrong. The Adoption Equality Act will eliminate this
anomaly in Federal law by making all special needs children eligible
for Federal adoption subsidies.
The Adoption Equality Act is the next logical step to streamline and
promote adoptions from foster care. The bill is designed to ``level the
playing field'' by ensuring that all children with special needs, and
the loving families who adopt them, have the support they need to grow
and develop.
First, the bill removes the requirement that an income eligibility
determination be made in regard to the child's biological parents, whom
the child is leaving, thereby allowing Federal adoption subsidy to be
paid to all families who adopt children who meet the definition of
special needs.
Second, the bill continues to give states flexibility to determine
the definition of a child with special needs, but it is clear that
adoption subsidies should only be provided if the child could not be
adopted without such assistance.
Third, the bill requires that States reinvest the monies they save as
a result of this bill back into their state child abuse and neglect
programs which should help promote prevention and family support.
When we talk about how to help abused and neglected children in this
country, many complex questions are raised about what constitutes best
policy, and how Federal tax dollars should be spent. Yet, at the heart
of all the questions are vulnerable children who desperately want a
safe, permanent home. The lack of modest financial resources to support
these adoptions is often the only barrier that stands between an abused
child and a safe, loving and permanent home.
Federal adoption subsidies are designed to encourage adoption of
children with special needs--those children who have the hardest time
finding permanent, adoptive families. It is an absurd policy to
discriminate against thousands of children with special needs based
upon the income of their biological, and often abusive, parents. It is
time to create a Federal policy that levels the playing field and gives
all children with special needs an equal and fair chance at being
adopted.
The Adoption Equality Act will treat every special needs child the
same. It is designed to encourage adoption and support those admirable
parents willing to help a child with special needs and a history of
abuse or neglect. Such children may have physical disabilities, or
other may have emotional challenges due to past abuse and neglect. Such
children and families often need special counseling or support
services, and that is why the adoption assistance payments are key. If
we want to truly help our most vulnerable children find a permanent
home, this is a wise investment.
______
By Mr. EDWARDS (for himself, Mr. Miller, Mr. Bingaman, Ms.
Mikulski, and Mrs. Murray):
S. 863. A bill to amend the Higher Education Act of 1965 to allow
soldiers to serve their country without being disadvantaged financially
by Federal student aid programs; to the Committee on Health, Education,
Labor, and Pensions.
______
By Mr. EDWARDS (for himself, Mr. Bingaman, Ms. Mikulski, and Mrs.
Murray):
S. 864. A bill to amend the Child Care and Development Block Grant
Act of 1990 to provide for grants to parents and guardians of certain
military dependents, in order to assist the parent and guardians in
paying for the cost of child care services provided to the dependents,
and for other purposes; to the Committee on Health, Education, Labor,
and Pensions.
Mr. EDWARDS. Mr. President, I rise today to introduce two important
pieces of legislation that offer a helping hand to the members and
families of the National Guard, the Reserves, and the regular active-
duty military.
The National Guard and Reserves used to be called ``forces of last
resort,'' but they have become much more. Between 1945 and 1989, the
Guard and Reserves were activated four times. Only four times in 45
years. Between 1990 and the present, in less than 15 years, the Guard
and Reserves were activated six times. They have become a central
element of our national defense.
We've come to rely on them to fight side-by-side with full-time
active duty soldiers. Each time our Nation has needed them, the Guard
and Reserves members have left their jobs, their homes, and their
families to serve this nation with pride and distinction. They view
activation as an opportunity for service, but the truth is that
activation does cause challenges at home. We should do right by them.
Over the past few weeks, this body has considered a number of
important measures for the Guard, the Reserves, and our entire
military. I was pleased to support Senator Landrieu's amendment to
raise combat and family separation pay and to modernize equipment. I
also supported Senator Lincoln's effort to make sure that all members
of the National Guard and Reserves can participate in the same health
program that's available to full-time soldiers and their families. It's
hard to believe, but 20 percent of the men and women in the Guard and
Reserves don't even have health insurance.
Today, I am introducing two new pieces of legislation to address
unique difficulties facing Guard and Reserve members and, in fact,
members of the regular military as well. I've traveled around the bases
in my State and, time and time again, soldiers and their families have
told me they need help.
My first proposal is for child care. A few weeks ago, I outlined my
ideas for addressing the growing challenges facing working families.
Parents are working longer hours, earning less, and spending less time
with their kids. One idea I offered was expanding afterschool programs
for kids of working parents.
The child care crunch is enormously exacerbated for military
families. When one parent is called away, the other must take on all
the responsibilities around the home. And at the same time, many
members of the Guard and
[[Page S5190]]
Reserves take a pay cut, making it more difficult to hire help.
Families can get child care on a military base, which is great for
some families. But members of the Guard in North Wilkesboro, for
example, live 173 miles away from the nearest military installation.
Those families are totally left out.
My National Guard and Reserves Child Care Relief Act would give
families financial help for child care in their hometown. We would help
families with a mom or dad called away on active duty. This is a
concrete, practical way to make a difference in people's lives.
I also have a bill to provide some help paying for education for the
men and women who serve our country in the military. Nearly a quarter
of Guardsmen and Reservists are college students, and many more are
graduates with student loans.
While these patriots are fighting for their country overseas, we
charge them interest on their student loans here at home. This happens
even if they're serving on the frontlines in Iraq; even if they took a
huge pay cut because they're in the Guard or Reserves; even if they
have a very low income to begin with.
For somebody with an average size loan of $17,000, this can add up to
as much as $1,400 in interest a year. That's not right. No one should
return to civilian life deeper in debt because they took time off to
serve their country. We should waive the interest on these Federal
loans.
The Secretary of Education has the authority to waive interest under
the HEROES Act of 2001, but he has chosen not to exercise it. My
Fairness for America's Soldiers in Higher Education Act would require
him to do just that.
It would also permanently end an Education Department policy-
suspended during the current conflict--that makes many guardsmen and
reservists who have to drop college courses when they are activated pay
back student aid.
As we consider trillion-dollar budgets, these are modest ideas, but
they would make a real difference in the lives of Americans serving
their country and signal our appreciation for their sacrifice.
I urge my colleagues to support these important bills. I ask
unanimous consent that the text of the bills be printed in the Record.
There being no objection, the texts of the bills were ordered to be
printed in the Record, as follows:
S. 863
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 ``Fairness for America's
Soldiers in Higher Education Act of 2003''.
SEC. 2. REFUND POLICY.
Section 484B(b)(2) of the Higher Education Act of 1965 (20
U.S.C. 1091b(b)(2)) is amended by adding at the end the
following:
``(D) Students on active duty during a war or national
emergency.--Notwithstanding subparagraphs (A), (B), and (C),
a student who withdraws from an institution of higher
education to serve on active duty during a war or national
emergency shall not be required to repay any grant assistance
that is otherwise required to be repayed under this
section.''.
SEC. 3. DEFERMENT DURING ACTIVE DUTY.
(a) FFEL and Direct Subsidized Loans.--Section 428(b)(1)(M)
of the Higher Education Act of 1965 (20 U.S.C. 1078(b)(1)(M))
is amended--
(1) in clause (ii), by striking ``or'' after the semicolon;
(2) in clause (iii), by inserting ``or'' after the
semicolon; and
(3) by inserting after clause (iii) the following:
``(iv) during which the borrower--
``(I) is a member of a regular component on active duty
during a war or during a national emergency declared by the
President or Congress, and receives compensation described in
section 112(a) of the Internal Revenue Code of 1986;
``(II) is on active duty under section 688, 12301(a),
12301(d), 12301(g), 12302, 12304, 12306, 12307, or 12406, or
chapter 15 of title 10, United States Code, or any other
provision of law, during a war or during a national emergency
declared by the President or Congress, regardless of the
location at which such active duty service is performed; or
``(III) in the case of a member of the National Guard, is
on full-time National Guard duty (as defined in section
101(d)(5) of title 10, United States Code) under a call to
active service authorized by the President or the Secretary
of Defense for a period of more than 30 consecutive days
under section 12402 of title 10, United States Code, or
section 502(f) of title 32, United States Code, for purposes
of responding to a national emergency declared by the
President and supported by Federal funds.''.
(b) Consolidation Loans.--Section 428C(b)(4)(C)(ii) of the
Higher Education Act of 1965 (20 U.S.C. 1078-3(b)(4)(C)(ii))
is amended--
(1) in subclause (II), by striking ``or'' after the
semicolon;
(2) in subclause (III), by striking ``or (II)'' and
inserting ``, (II) or (III)'';
(3) by redesignating subclause (III) (as so amended) as
subclause (IV); and
(4) by inserting after subclause (II) the following:
``(III) by the Secretary, in the case of a consolidation
loan of a student who is on an active duty deferment under
section 428(b)(1)(M)(iv); or''.
(c) FFEL and Direct Unsubsidized Loans.--Section 428H(e) of
the Higher Education Act of 1965 (20 U.S.C. 1078-8(e)) is
amended by adding at the end the following:
``(C) Notwithstanding subparagraph (A), interest on loans
made under this section for which payments of principal are
deferred because the student is on an active duty deferment
under section 428(b)(1)(M)(iv) shall be paid by the
Secretary.''.
(d) Perkins Loans.--Section 464(c)(2)(A) of the Higher
Education Act of 1965 (20 U.S.C. 1087dd(c)(2)(A)) is
amended--
(1) in clause (iii), by striking ``or'' after the
semicolon;
(2) in clause (iv), by inserting ``or'' after the
semicolon; and
(3) by inserting after clause (iv) the following:
``(v) during which the borrower--
``(I) is a member of a regular component on active duty
during a war or during a national emergency declared by the
President or Congress, and receives compensation described in
section 112(a) of the Internal Revenue Code of 1986;
``(II) is on active duty under section 688, 12301(a),
12301(d), 12301(g), 12302, 12304, 12306, 12307, or 12406, or
chapter 15 of title 10, United States Code, or any other
provision of law, during a war or during a national emergency
declared by the President or Congress, regardless of the
location at which such active duty service is performed; or
``(III) in the case of a member of the National Guard, is
on full-time National Guard duty (as defined in section
101(d)(5) of title 10, United States Code) under a call to
active service authorized by the President or the Secretary
of Defense for a period of more than 30 consecutive days
under section 12402 of title 10, United States Code, or
section 502(f) of title 32, United States Code, for purposes
of responding to a national emergency declared by the
President and supported by Federal funds.''.
(e) Effective Date.--The amendments made by this section
shall apply with respect to loans for which the first
disbursement is made on or after July 1, 1993, to an
individual who is a new borrower (within the meaning of
section 103 of the Higher Education Act of 1965 (20 U.S.C.
1003)) on or after such date.
____
S. 864
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 ``National Guard and Reserves
Child Care Relief Act''.
SEC. 2. AUTHORIZATION OF APPROPRIATIONS.
Section 658B of the Child Care and Development Block Grant
Act of 1990 (42 U.S.C. 9858) is amended--
(1) by striking ``There is'' and inserting ``(a) In
General.--There is'';
(2) in subsection (a), as so designated, by inserting
``(except section 658T)'' after ``this subchapter''; and
(3) by adding at the end the following:
``(b) Child Care for Certain Military Dependents.--There is
authorized to be appropriated to carry out section 658T
$10,000,000 for each of fiscal years 2004 through 2008.''.
SEC. 3. CHILD CARE ASSISTANCE FOR MILITARY DEPENDENTS.
The Child Care and Development Block Grant Act of 1990 (42
U.S.C. 9858 et seq.) is amended by adding at the end the
following:
``SEC. 658T. CHILD CARE ASSISTANCE FOR MILITARY DEPENDENTS.
``(a) In General.--The Secretary shall make grants to
eligible persons to assist the persons in paying for the cost
of child care services provided to dependents by eligible
child care providers.
``(b) Eligible Person and Dependent.--In this section:
``(1) Dependent.--The term `dependent' means an individual
who is--
``(A) a dependent, as defined in section 401 of title 37,
United States Code, except that such term does not include a
person described in paragraph (1) or (3) of subsection (a) of
such section; and
``(B) an individual described in subparagraphs (A) and (B)
of section 658P(4).
``(2) Eligible person.--The term `eligible person' means a
person who--
``(A) is a parent of one or more dependents of--
``(i) a member of a reserve component of the Armed Forces
serving on active duty for a period of more than 30 days in
support of a military operation pursuant to a call or order
to active duty under a provision of law referred to in
section 101(a)(13)(B) of title 10, United States Code; or
``(ii) any other member of the Armed Forces on active duty
who, as determined by
[[Page S5191]]
the Secretary of the military department concerned, is
involved in a military operation;
``(B) has the primary responsibility for the care of one or
more such dependents; and
``(C) resides permanently at a location at least 50 miles
from--
``(i) the nearest military installation of the Department
of Defense where child care facilities and programs are
available for use by dependents of the member; and
``(ii) the nearest child development center or family child
care home that is funded in whole or in part with
appropriations available to the Department of Defense and is
available for use by dependents of the member.
``(3) Military operation.--The term `military operation'
means--
``(A) Operation Enduring Freedom;
``(B) Operation Iraqi Freedom;
``(C) Operation Noble Eagle; or
``(D) any successor operation of the United States Armed
Forces to an operation named in subparagraph (A), (B), or
(C).
``(c) Applications.--To be eligible to receive a grant
under this section, a person shall submit an application to
the Secretary, at such time, in such manner, and containing
such information as the Secretary may require, including a
description of the eligible child care provider who provides
the child care services assisted through the grant.
``(d) Rule.--The provisions of this subchapter, other than
section 658P and provisions referenced in section 658P, that
apply to assistance provided under this subchapter shall not
apply to assistance provided under this section.''.
SEC. 4. CONFORMING AMENDMENTS.
Section 658O of the Child Care and Development Block Grant
Act of 1990 (42 U.S.C. 9858m) is amended--
(1) in subsection (a)--
(A) in paragraph (1), by striking ``appropriated under this
subchapter'' and inserting ``appropriated under section
658B(a)''; and
(B) in paragraph (2), by striking ``appropriated under
section 658B'' and inserting ``appropriated under section
658(a)''; and
(2) in subsection (b)(1), by striking ``appropriated under
section 658B'' and inserting ``appropriated under section
658(a)''.
______
By Mr. McCAIN (for himself, Mr. Dorgan, Mr. Brownback, and Mr.
Ensign):
S. 865. A bill to amend the National Telecommunications and
Information Administration Organization Act to facilitate the
reallocation of spectrum from governmental to commercial users; to the
Committee on Commerce, Science, and Transportation.
Mr. McCAIN. Mr. President, today I am joined by Senators Dorgan,
Brownback, and Ensign in introducing the Commercial Spectrum
Enhancement Act. This bill is designed to streamline the process of
relocating government users from spectrum reallocated for commercial
use.
The bill would establish a separate fund on the books of the United
States Treasury called the Spectrum Relocation Fund. When spectrum
occupied by a Federal agency is auctioned, the proceeds from the
auction would be deposited into the fund. Federal agencies would be
able to withdraw from the fund the estimated expenses associated with
the relocation, with additional expenses being approved by the Office
of Management and Budget, with notice provided to Congress and the
General Accounting Office, GAO, as necessary.
Currently, when spectrum assigned to a Government agency is
auctioned, the law requires the agency to negotiate with the winning
bidder to determine the cost of purchasing or returning new equipment
necessary for the agency to transfer out of the spectrum band. These
negotiations would be time-consuming and difficult for both parties.
This bill would eliminate the need for lengthy negotiations between
these parties. Thus it would accelerate the pace of introduction of new
services using the spectrum.
Spectrum is a critical resource of our armed services. It is
important that any relocation process consider the needs of our
military operations. I believe that this bill would allow our military
to have confidence that its relocation costs will be fully and timely
reimbursed, while providing commercial bidders with certainty regarding
the full cost of the right to use the spectrum and the ability to use
it in a timely fashion.
Finally, the bill provides important oversight functions for Congress
and the GAO to ensure that the fund is used in a manner that is fair
and justified. In this way, American taxpayers are assured that their
resources are used most efficiently.
Mr. President, 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:
(The bill will be printed in a future edition of the Record.)
______
By Mr. KOHL (for himself, Mr. Durbin, Mr. Schumer, Mr. Corzine,
Mrs. Feinstein, Mr. Reed, and Mr. Lautenberg):
S. 866. A bill to amend chapter 44 of title 18, United States Code,
to require the provision of a child safety lock in connection with the
transfer of a handgun and provide safety standards for child safety
locks; to the Committee on the Judiciary.
Mr. KOHL. Mr. President, I rise today to introduce the Child Safety
Lock Act of 2003, on behalf of myself, Senator Durbin, Senator Schumer,
Senator Corzine, and Senator Feinstein. Our measure will save
children's lives by reducing the senseless tragedies that result when
children get their hands on improperly stored and unlocked handguns.
Each year, children and teenagers are involved in more than 10,000
accidental shootings in which close to 800 of them die. In addition,
each year more than 1,000 young people killed themselves with a
firearm--that is almost three per day. Safety locks can be effective in
deterring or preventing many of these incidents.
The sad truth is that we are inviting disaster every time an unlocked
gun is stored in a place that is still accessible to children. Parents
take a number of precautions to ensure their children's safety, from
equipping them with bike helmets, to securing them in automobiles, to
changing smoke detector batteries. Unfortunately, not all parents are
as safety conscious about child proofing their firearms.
Guns are kept in 43 percent of American households with children. In
23 percent of these households, the guns are kept loaded. And
alarmingly, in one out of every eight of those homes the loaded guns
are left unlocked.
This is wrong and unacceptable.
Such startlingly cold statistics cannot even begin to describe in
human terms the daily tragedies that could be prevented by the use of a
safety lock.
For example, in January a 21-month-old little boy was fatally shot
when he tipped over a laundry hamper containing a loaded handgun. The
handgun did not have a lock. The boy had no supervision. The result was
tragic. A lock would have also saved the life of a four-year-old in
Florida who shot himself playing with his grandfather's gun while the
rest of his family was sleeping. Last September, a Detroit mother lost
her son because he accidentally shot himself with a gun she had
borrowed to protect herself. And, of course, no one will ever forget
the Santana High School shooting two years ago, when a high school
freshman opened fire on his classmates, killing two and injuring 13
others with a handgun and multiple rounds of ammunition he found at
home.
Our legislation will help prevent tragedies like these. It is simple,
effective, and straightforward. It requires that a child safety
device--or trigger lock--be sold with every handgun. These devices vary
in form, but the most common resemble a padlock that wraps around the
gun trigger and immobilizes it. Trigger locks can be purchased in
virtually any gun store for less than ten dollars. They are already
used by tens of thousands of responsible gun owners to protect their
firearms from unauthorized use and have surely saved many lives.
Protection is only as good as the safety lock itself, therefore the
Child Safety Lock Act of 2003 includes standards for the safety locks.
Studies by the Consumer Product Safety Commission and recalls by safety
lock manufacturers conclusively demonstrate the child safety locks are
often not made well enough. A lock that is easily picked or one that
breaks apart with little force defeats the purpose of this bill. We
would not use a lock that is less than foolproof to guard our most
valuable possessions. We should not use defective locks to protect what
is most valuable to us--our children.
Support for this simple, common sense proposal is widespread. In
1999, a child safety lock provision passed the Senate by an
overwhelming vote of 78 to 20 as an amendment during the juvenile
justice debate. This proposal is as popular with the rest of the
country
[[Page S5192]]
and the law enforcement community as it was with the 106th Senate.
Polls show that between 75 and 80 percent of the American public,
including gun owners, favor the mandatory sale of child safety locks
with guns. When I surveyed almost 500 of Wisconsin's police chiefs and
sheriffs last summer, 90 percent of respondents agreed that child
safety locks should be sold with each gun.
During his campaign, President Bush indicated that if Congress passes
a bill making child safety locks mandatory he would sign it into law.
Two years ago, Attorney General Ashcroft affirmed the Administration's
support of the mandatory sale of child safety locks during his
confirmation hearings before the Senate Judiciary Committee.
Mr. President, this legislation is necessary to ensure that safety
locks are provided with all handguns so that numerous lives are not
lost in easily preventable accidents. We already protect children by
requiring that seat belts be installed in all automobiles and that
childproof safety caps be provided on medicine bottles. We should be no
less vigilant when it comes to gun safety. I hope that the Senate will
move to pass the Child Safety Lock Act of 2003 so that further
unnecessary death and injury can be avoided.
Mr. President, 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. 866
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 ``Child Safety Lock Act of
2003''.
SEC. 2. REQUIREMENT OF CHILD HANDGUN SAFETY LOCKS.
(a) Definitions.--Section 921(a) of title 18, United States
Code, is amended by adding at the end the following:
``(36) The term `locking device' means a device or locking
mechanism that is approved by a licensed firearms
manufacturer for use on the handgun with which the device or
locking mechanism is sold, delivered, or transferred and
that--
``(A) if installed on a firearm and secured by means of a
key or a mechanically, electronically, or electromechanically
operated combination lock, is designed to prevent the firearm
from being discharged without first deactivating or removing
the device by means of a key or mechanically, electronically,
or electromechanically operated combination lock;
``(B) if incorporated into the design of a firearm, is
designed to prevent discharge of the firearm by any person
who does not have access to the key or other device designed
to unlock the mechanism and thereby allow discharge of the
firearm; or
``(C) is a safe, gun safe, gun case, lock box, or other
device that is designed to store a firearm and that is
designed to be unlocked only by means of a key, a
combination, or other similar means.''.
(b) Unlawful Acts.--
(1) In general.--Section 922 of title 18, United States
Code, is amended by inserting at the end the following:
``(z) Locking Devices.--
``(1) In general.--Except as provided under paragraph (2),
it shall be unlawful for any licensed manufacturer, licensed
importer, or licensed dealer to sell, deliver, or transfer
any handgun to any person other than a licensed manufacturer,
licensed importer, or licensed dealer, unless the transferee
is provided with a locking device for that handgun.
``(2) Exceptions.--Paragraph (1) shall not apply to--
``(A) the manufacture for, transfer to, or possession by,
the United States or a State or a department or agency of the
United States, or a State or a department, agency, or
political subdivision of a State, of a firearm;
``(B) transfer to, or possession by, a law enforcement
officer employed by an entity referred to in subparagraph (A)
of a firearm for law enforcement purposes (whether on or off
duty); or
``(C) the transfer to, or possession by, a rail police
officer employed by a rail carrier and certified or
commissioned as a police officer under State law of a firearm
for purposes of law enforcement (whether on or off duty).''.
(2) Effective date.--Section 922(z) of title 18, United
States Code, as added by this subsection, shall take effect
180 days after the date of enactment of this Act.
(c) Liability; Evidence.--
(1) Liability.--Nothing in this section shall be construed
to--
(A) create a cause of action against any firearms dealer or
any other person for any civil liability; or
(B) establish any standard of care.
(2) Evidence.--Notwithstanding any other provision of law,
evidence regarding compliance or noncompliance with the
amendments made by this section shall not be admissible as
evidence in any proceeding of any court, agency, board, or
other entity, except with respect to an action to enforce
this section.
(3) Rule of construction.--Nothing in this subsection shall
be construed to bar a governmental action to impose a penalty
under section 924(p) of title 18, United States Code, for a
failure to comply with section 922(z) of that title.
(d) Civil Penalties.--Section 924 of title 18, United
States Code, is amended--
(1) in subsection (a)(1), by striking ``or (f)'' and
inserting ``(f), or (p)''; and
(2) by adding at the end the following:
``(p) Penalties Relating to Locking Devices.--
``(1) In general.--
``(A) Suspension or revocation of license; civil
penalties.--With respect to each violation of section
922(z)(1) by a licensee, the Attorney General may, after
notice and opportunity for hearing--
``(i) suspend or revoke any license issued to the licensee
under this chapter; or
``(ii) subject the licensee to a civil penalty in an amount
equal to not more than $10,000.
``(B) Review.--An action by the Attorney General under this
paragraph may be reviewed only as provided under section
923(f).
``(2) Administrative remedies.--The suspension or
revocation of a license or the imposition of a civil penalty
under paragraph (1) does not preclude any administrative
remedy that is otherwise available to the Attorney
General.''.
SEC. 3. AMENDMENT TO CONSUMER PRODUCT SAFETY ACT.
(a) In General.--The Consumer Product Safety Act (15 U.S.C.
2051 et seq.) is amended by adding at the end the following:
``SEC. 39. CHILD HANDGUN SAFETY LOCKS.
``(a) Establishment of Standard.--
``(1) Rulemaking required.--
``(A) Initiation of rulemaking.--Notwithstanding section
3(a)(1)(E), the Commission shall initiate a rulemaking
proceeding under section 553 of title 5, United States Code,
not later than 90 days after the date of enactment of the
Child Safety Lock Act of 2003 to establish a consumer product
safety standard for locking devices. The Commission may
extend the 90-day period for good cause.
``(B) Final rule.--Notwithstanding any other provision of
law, including chapter 5 of title 5, United States Code, the
Commission shall promulgate a final consumer product safety
standard under this paragraph not later than 12 months after
the date on which it initiated the rulemaking. The Commission
may extend that 12-month period for good cause.
``(C) Effective date.--The consumer product safety standard
promulgated under this paragraph shall take effect 6 months
after the date on which the final standard is promulgated.
``(D) Standard requirements.--The standard promulgated
under this paragraph shall require locking devices that--
``(i) are sufficiently difficult for children to de-
activate or remove; and
``(ii) prevent the discharge of the handgun unless the
locking device has been de-activated or removed.
``(2) Inapplicable provisions.--
``(A) Provisions of this act.--Sections 7, 9, and 30(d)
shall not apply to the rulemaking proceeding described under
paragraph (1). Section 11 shall not apply to any consumer
product safety standard promulgated under paragraph (1).
``(B) Chapter 5 of title 5.--Except for section 553,
chapter 5 of title 5, United States Code, shall not apply to
this section.
``(C) Chapter 6 of title 5.--Chapter 6 of title 5, United
States Code, shall not apply to this section.
``(D) National environmental policy act.--The National
Environmental Policy Act of 1969 (42 U.S.C. 4321) shall not
apply to this section.
``(b) No Effect on State Law.--
``(1) In general.--Notwithstanding section 26, this section
shall not annul, alter, impair, affect, or exempt any person
subject to the provisions of this section from complying with
any provision of law of any State or any political
subdivision thereof, except to the extent that such
provisions of State law are inconsistent with any provision
of this section, and then only to the extent of such
inconsistency.
``(2) Clarification.--A provision of State law is not
inconsistent with this section if such provision affords
greater protection to children from handguns than is afforded
by this section.
``(c) Enforcement.--Notwithstanding subsection (a)(2)(A),
the consumer product safety standard promulgated by the
Commission pursuant to subsection (a) shall be enforced under
this Act as if it were a consumer product safety standard
described under section 7(a).
``(d) Definitions.--In this section, the following
definitions shall apply:
``(1) Child.--The term `child' means an individual who has
not attained the age of 13 years.
``(2) Locking device.--The term `locking device' has the
meaning given that term in clauses (i) and (iii) of section
921(a)(36) of title 18, United States Code.''.
(b) Conforming Amendment.--Section 1 of the Consumer
Product Safety Act is amended by adding at the end of the
table of contents the following:
``Sec. 39. Child handgun safety locks.''.
(c) Authorization of Appropriations.--
(1) In general.--There are authorized to be appropriated to
the Consumer Product Safety Commission $2,000,000 to carry
out the
[[Page S5193]]
provisions of section 39 of the Consumer Product Safety Act,
as added by this Act.
(2) Availability.--Any amounts appropriated pursuant to
paragraph (1) shall remain available until expended.
______
By Mr. BURNS:
S. 867. A bill to designate the facility of the United States Postal
Service located at 710 Wick Lane in Billings, Montana, as the ``Ronald
Reagan Post Office Building''; to the Committee on Governmental
Affairs.
Mr. BURNS. Mr. President, I would like to introduce a bill which
names one of our post offices in Billings, Montana, after one of this
Nation's greatest leaders and true patriot: former President Ronald
Reagan. His legacy extends far beyond his Presidency. I think it's only
fitting that I introduce this legislation today, since President Reagan
worked tirelessly to end the Cold War and liberate millions of people,
and we see the same dedication today to free the people of Iraq.
President Reagan spoke about the threat of Saddam Hussein, and asked,
``will we be ready to respond?'' He went on to answer this question by
saying, ``In the end, it all comes down to leadership. This is what
this country is looking for now. It was leadership here at home that
gave us strong American influence abroad and the collapse of imperial
communism. Great nations have responsibilities to lead and we should
always be cautious of those who would lower our profile because they
might just wind up lowering our flag.'' He made these comments not two
weeks ago, and not even two months ago. President Reagan, already
sensitive to the threat posed by Saddam Hussein, asked this rhetorical
question in 1994. This foresight was evident during President Reagan's
tenure in the White House. President Reagan played a significant role
in framing the modern political landscape, and I am proud to do what I
can to commemorate his contribution to America and the world. I can
clearly remember President Reagan's visit to Big Sky Country in 1982
for the Centennial celebration for Billings and Yellowstone County. He
arrived in the Billings Metra Arena, one of the largest venues in the
State, riding in a stagecoach. He embraced the ideals that Montana
stood for, and said he was trying to bring a little of it to
Washington. I feel much the same way as President Reagan did when he
said, ``What we're trying to do in Washington is reawaken the
government to the very values that you here in Billings represent--
determination, responsibility, confidence, and common sense--the kind
of common sense that says if it ain't broke, don't fix it. We are
reintroducing the idea that progress is still an American word and that
optimism is still an American trait. I believe if we cling to our hopes
and dreams, I believe the future will flower just as it did for the
founders of Billings, Montana.'' Now more than ever, we need to
remember that ``progress'' and ``optimism'' are part of the American
vocabulary. The wisdom of President Reagan helped guide us in the right
direction, and I am pleased and honored to introduce this legislation
today so that we may dedicate a piece of Montana to a great visionary
and statesman.
______
By Mr. SMITH:
S. 868. A bill to amend the Coos, Lower Umpqua, and Siuslaw
Restoration Act to provide for the cultural restoration and economic
self-sufficiency of the Confederation Tribes of Coos, Lower Umpqua, and
Siuslaw Indians of Oregon, and for other purposes; to the Committee on
Indian Affairs.
Mr. SMITH. Mr. President, I rise today to introduce legislation that
will restore to the members of the Confederated Tribes of the Coos,
Lower Umpqua and Siuslaw Indians a small portion of their ancestral
homelands.
The story of these Tribes' experience is well worth hearing. For many
of my colleagues, parts of it will sound familiar, as it reflects the
history of the early west. In 1850, gold was discovered at a place
known as Eight Dollar Bar, near what we now call Cave Junction, OR.
Within months thousands of miners with gold fever moved into the area.
Indians struggled to protect their land while miners aggressively
pursued their vision of the American dream.
In 1855, Joel Palmer, an Indian Agent for the Oregon Territory was
sent in by the Federal Government to negotiate treaties with Oregon
tribes. Treaties with the tribes of the Rogue River, Umpqua/Cow Creek,
and Calapooyas were established, but not the tribes of the central and
southern Oregon coast. Much of this land is now in the Siuslaw National
Forest.
The Coos, Lower Umpqua and Siuslaw Indians were not a warring people.
They were prepared to share their ancestral homelands, which
approximated about 1.6 million acres in the coast mountain range,
living on a small portion of the land and receiving compensation for
the balance. In 1855 and in good faith the tribes signed the Empire
Treaty with the Federal Government. But, somewhere between Empire,
Oregon and the floor of the U.S. Senate the treaty was lost. No land
was allotted for their reservation and no compensation given.
In 1856 the Rogue River War began and the Coos, Lower Umpqua and
Siuslaw Indians were marched north and held prisoner in what was called
the Coast Reservation. They were held against their will until the mid-
1870s. It was during this dark period in their history that over half
their population died.
With their release, tribal members returned to their homelands, only
to find they had neither land nor resources left. At this point, the
three tribes formed a Confederation. In 1954, by Presidential order the
Confederation's tribal status was terminated. These decades were
difficult ones for members of this Tribe. Lack of education and
economic opportunities in the area, and racism by some of their white
neighbors took a heavy toll.
In 1984, the Oregon congressional delegation sought and achieved
federal recognition for the Confederated Tribes of the Coos, Lower
Umpqua and Siuslaw Indians. At the same time, no reservation lands were
granted to the tribe and no compensation offered. The Tribe received a
donation of approximately 6 acres in Empire, Oregon. This is now the
site of their tribal hall where services are provided to their members
and tribal council meetings and tribal events are held. Small,
additional tracts have been purchased over time.
The Indian Self-Determination Act encourages tribes to develop plans
to achieve the goals of cultural restoration, economic self-sufficiency
and attain the standard of living enjoyed by other citizens of the
United States. The Confederated Tribes have been working diligently
since 1954 to attain those goals.
An essential component in this effort is the Reservation Plan and
Forest Land Restoration Proposal. It will provide a long-term source of
revenue and lessen dependence on federal funding to operate Tribal
government programs and to provide economic benefits to local
communities. The Plan will revitalize Tribal culture by reconnecting
Tribal people to their ancestral homelands and it will provide a net
benefit to the environment by improving the health of ancestral
watersheds.
My staff and I began meeting with Tribal members soon after I was
first elected to the Senate. Years of work with local citizens,
communities and governments to gain understanding and support for the
land restoration proposal have been successful. Hundreds of individual
meetings, workshops and open forums have been held by the Tribes.
Development of the Reservation Plan and Forest Land Restoration
Proposal has led to a clear understanding of what activities can occur
on these lands which is reflected in the legislation that I have
introduced today.
I am proud to introduce legislation today that will return
approximately 63,000 acres of their ancestral homeland to the
Confederated Tribes of the Coos, Lower Umpqua and Siuslaw Indians.
These U.S. Forest Service lands encompass a portion of the Siuslaw
National Forest. Under the legislation, management of the restored
lands would be transferred to the Bureau of Indian Affairs with title
held in trust by the Secretary of the Interior for the Confederated
Tribes.
These lands contain significant cultural sites: encampments,
spiritual and burial sites. My proposal will allow these people to meet
their cultural goals, and provide economic and environmental benefits
to all of the citizens of the region. The legislation ensures continued
public access to these lands for hunting and fishing, recreation and
transportation. Applicable
[[Page S5194]]
State and Federal laws will be followed. Payments to county governments
will not be impacted under this proposal. Timber harvested from this
land will be processed domestically by local mills. Twenty percent of
the revenues from the land will be reinvested in watershed management
activities to restore habitat. These lands contain some significant
environmental sites. They will be preserved. These lands are not
suitable for nor will the laws allow gaming to occur on them.
Revenue gained from activities on these lands will help meet the
self-sufficiency goals of the Confederated Tribes. It will be used to
assist seniors through elder housing programs, youth through
scholarships, low income housing for those in need and provide health
care benefits for all of the Tribal members.
The Confederated Tribes of the Coos, Lower Umpqua and Siuslaw are the
only federally recognized tribe in Oregon that has never received any
land or compensation for the loss of their homeland from the United
States Government. This legislation works to right that wrong, to
restore a Tribe, to restore a forest, and to restore a very special
relationship between the two.
______
By Mr. HARKIN (for himself, Ms. Snowe, Mr. Inouye, Mr. Graham of
South Carolina, Mrs. Murray, Mr. Corzine, Mr. Biden, Mr.
Specter, Ms. Landrieu, Mr. Johnson, Mrs. Lincoln, Mr. Hollings,
Ms. Mikulski, Mrs. Clinton, and Ms. Collins):
S. 869. A bill to amend title XVIII of the Social Security Act to
provide for enhanced reimbursement under the medicare program for
screening and diagnostic mammography services, and for other purposes;
to the Committee on Finance.
Mr. HARKIN. Mr. President. Today I am introducing legislation, the
Assure Access to Mammography Act of 2003, on behalf of myself and my
colleagues, Senators Snowe, Inouye, Graham of South Carolina, Murray,
Corzine, Biden, Specter, Landrieu, Johnson, Lincoln, Hollings,
Mikulski, Clinton, and Ms. Collins to ensure women have full and timely
access to preventive breast cancer screenings. As you know, the earlier
a woman is diagnosed with breast cancer, the earlier she can begin to
receive treatment and the more likely she will survive.
Unfortunately, due to inadequate reimbursement rates for mammograms,
women increasingly are having problems getting the mammograms they
need. Across the nation, there have been reports of women waiting up to
six months for an appointment for this simple procedure. While
mammograms often cost up to $150 to administer, Medicare's
reimbursement rate is currently set at about $82, barely over half the
actual cost of the procedure. This disparity increasingly makes access
a real problem, forcing many private centers to shut down and creating
a shortage of providers willing to provide services significantly below
cost.
The Assure Access to Mammography Act would reverse this growing and
alarming trend by correcting the two primary causes of the problem.
First, it would increase Medicare reimbursement to radiologists to a
reasonable level to ensure health care providers are reimbursed fairly
for mammography services. Second, the bill would increase the number of
radiologists by increasing the Graduate Medical Education payments to
provide for three additional radiologists in each teaching hospital.
Finally, the Assure Access to Mammography Act would provide a MEDPAC
study on the Medicare reimbursement structure for gender specific
medical procedures so that Congress and CMS have the tools we need to
make appropriate health policy decisions.
This is an issue that hits close to home for me. Both of my sisters
died of breast cancer, at a time when mammograms were not readily
available. While imperfect, mammograms are the best-known way to
diagnose breast cancer at an early stage in order to reduce mortality.
As our society ages, one million additional women each year are needing
regular mammograms. The Assure Access to Mammography Act will provide
the resources our health care system needs to guarantee all women
access to the mammograms they need to ensure that breast cancer is
detected early enough to apply appropriate treatments effectively. I
look forward to working with my colleagues to pass this needed
bipartisan legislation.
______
By Mr. BIDEN (for himself, Mr. Lugar, Mr. Kennedy, Mr. Hagel, Mr.
Domenici, and Mr. Feingold):
S. 871. A bill to provide for global pathogen surveillance and
response, to the Committee on Foreign Relations.
Mr. President, I am pleased to re-introduce today the ``Global
Pathogen Surveillance Act''.
Last year, this bill passed the Senate by unanimous consent on August
1st, but died when the House of Representatives failed to take timely
action.
The Global Pathogen Surveillance Act authorizes $150 million over the
next two years to help developing nations improve global disease
surveillance.
That will go a long way to prevent and contain both biological
weapons attacks, if, God forbid, it happens, and naturally occurring
infectious disease outbreaks around the world.
I'm happy to announce that Senators Lugar, Kennedy, Hagel, Domenici,
and Feingold are joining me in co-sponsoring this bill.
The mysterious global outbreak of severe acute respiratory syndrome,
or SARS, is an unfortunate reminder of why this bill is so important.
We've heard a lot about it. We don't know much about it yet.
We know it's a contagious respiratory illness which apparently
originated in the Guangdong province of China last November, has
stricken more than 2600 individuals in 17 countries, taking the lives
of at least 100 individuals.
The World Health Organization is concerned. They've issued a rare
global health alert and discouraged travel to certain nations as
authorities struggle to determine the cause of this flu-like illness
and what viral or infectious agent is involved.
The WHO has not ruled out bioterrorism as a potential cause for the
epidemic, although it is unlikely that a disease with only a 4 to 5
percent mortality would be used.
What's so scary about this outbreak is that doctors and nurses taking
care of sick patients have fallen ill themselves; initial tests have
not revealed evidence of infection with any previously known virus or
bacterial agent; and patients are not being cured by standard
treatments, although the vast majority do recover.
How would better disease surveillance have helped in dealing with
this kind of crisis?
Experts suspect this epidemic first originated in the Guangdong
province in southern China in November, but peaked in early February.
A comprehensive surveillance network might have picked up the unique
symptoms of this epidemic earlier . . . might have led to quicker
diagnosis and better containment measures.
We would have had a better chance to keep this epidemic contained
within China, before the pathogen spread to neighboring nations, and
now to Canada and the United States.
Over the last eighteen months, Americans have become all too familiar
with the threat of bioterrorism and the army of deadly agents capable
of spreading death and disease--anthrax, Ebola, and smallpox are only
the most sensational examples.
We've had to strengthen our homeland defenses--not just against
terrorists armed with bombs and explosives--but against shadowy figures
carrying vials of deadly pathogens.
But all in all, this country is making important advances on the
domestic front in bioterrorism defense.
Last year, the President signed into law the Bioterrorism Prevention
Act of 2002, a comprehensive domestic initiative co-sponsored by
Senators Kennedy and Frist.
In January, the Centers for Disease Control announced an initiative
to establish electronic surveillance systems in eight American cities
as the cornerstone of an eventual national network.
In Delaware, we're developing the very first, comprehensive, state-
wide electronic reporting system for infectious diseases.
It'll serve as a prototype for other states by enabling much earlier
detection of infectious disease outbreaks.
But a domestic defense against biological weapons isn't sufficient
alone.
[[Page S5195]]
Biological weapons are a global threat with no respect for borders. A
dangerous pathogen released on another continent can quickly spread to
the United States in a matter of days, if not hours.
A terrorist group could launch a biological weapons attacks in Mexico
in the expectation that the epidemic would quickly spread to the United
States.
A rogue state might experiment with new disease strains in another
country, intending later to release them here.
And international trade, travel, and migration patterns offer
unlimited opportunities for pathogens to spread across national borders
and to move from one continent to another.
We should make no mistake: in today's world, all infectious disease
epidemics, wherever they occur and whether they are deliberately
engineered or are naturally occurring, are a potential threat to all
nations, including the United States. Such a threat need not begin in
the United States to reach our shores.
For that reason, our response cannot be limited to the United States
alone.
Global disease surveillance, a systematic approach to tracking
disease outbreaks as they occur and evolve around the world, is
essential to any real international response.
Why is disease surveillance so important? A biological weapons attack
succeeds partly through the element of surprise.
As Dr. Alan P. Zelicoff of the Sandia National Laboratory testified
before the Senate Foreign Relations Committee last spring, early
warning of a biological weapons attack can prevent illness and death in
all but a small fraction of those infected.
A cluster of flu-like symptoms in a city or region may be dismissed
by doctors as just the flu when in fact it may be anthrax, plague, or
another biological weapon.
But armed with the knowledge that a suspicious epidemic has emerged,
doctors and nurses can examine their patients in a different light and,
in many cases, effectively treat them.
Disease surveillance is a fancy phrase for a comprehensive reporting
system to quickly identify and communicate abnormal patterns of
symptoms and illnesses that can quickly alert doctors across a region
that a suspicious disease outbreak has occurred.
Epidemiological specialists can then investigate and combat the
outbreak.
And if it's a new disease or strain, we can begin to develop
treatments that much earlier.
An effective disease surveillance system helps even in the absence of
biological weapons attacks. Bubonic plague is bubonic plague, whether
it is deliberately engineered or naturally occurring.
Just as disease surveillance can help contain a biological weapons
attack, it can also help contain a naturally occurring outbreak of
infectious disease.
According to the World Health Organization, thirty new infectious
diseases have emerged over the past thirty years; between 1996 and 2001
alone, more than 800 infectious disease outbreaks occurred around the
world, on every continent.
The SARS epidemic is only the most recent such outbreak. With better
surveillance, we can do a better job of mitigating the consequences of
these disease outbreaks.
A good surveillance system requires trained epidemiological
personnel, adequate laboratory tools for quick diagnosis, and working
communications equipment to circulate information.
Even here, in the most advanced Nation in the world, many States and
cities rely on old-fashioned pencil and paper methods of tracking
disease patterns.
Thankfully, the comprehensive bioterrorism legislation enacted into
law last year is beginning to correct that.
Now, it is vitally important that we extend these initiatives into
the international arena.
In 2000, the World Health Organization established the first truly
global disease surveillance system, the Global Alert and Response
Network, to monitor and track infectious disease outbreaks everywhere.
The WHO has done an impressive job so far with this initiative,
working on a shoestring budget. But this global network is only as good
as its components--individual nations.
Unfortunately, developing nations--those nations most likely to
experience rapid disease outbreaks--simply don't have the trained
personnel, the laboratory equipment, or the public health
infrastructure to do the job. . . to track evolving disease patterns or
detect emerging pathogens.
According to a January 2000 report by the National Intelligence
Council, developing nations in Africa and Asia have established only
rudimentary systems, if any at all, for disease surveillance, response,
and prevention.
The World Health Organization reports that more than 60 percent of
laboratory equipment in developing countries is either outdated or non-
functioning.
This lack of preparedness can lead to tragic results. In August 1994
in Surat, a city in western India, a surge of complaints about flea
infestation and a growing rat population was followed by a cluster of
reports about patients exhibiting the symptoms of pneumonic plague.
But authorities were unable to connect the dots and warn people until
the plague had spread to seven states across India, ultimately killing
56 people and costing the Indian economy $600 million.
Had the Indian authorities possessed better surveillance tools, they
may well have contained the epidemic, limited the loss of life, and
avoided the panic that led to economically disastrous embargoes on
trade and travel.
Thanks to improved surveillance, an outbreak of pneumonic plague in
India last year was detected more quickly and contained with only few
deaths--with no costly panic.
In short, developing nations are the weak links in any comprehensive
global disease surveillance network.
Unless we take action to shore up their capabilities to detect and
contain disease outbreaks, we leave the entire world vulnerable to a
deliberate biological weapons attack or a virulent natural epidemic.
It's for these reasons that I'm reintroducing the Global Pathogen
Surveillance Act. This bill will authorize $150 million in FY 2004 and
FY 2005 to strengthen the disease surveillance capabilities of
developing nations.
First, the bill seeks to ensure in developing nations a greater
number of personnel trained in basic epidemiological techniques.
It offers enhances in-country training for medical and laboratory
personnel and the opportunity for select personnel to come to the
United States to receive training in our Centers for Disease Control
laboratories and Master of Public Health programs in American
universities.
Second, it provides assistance to developing nations to acquire basic
laboratory equipment, including items as basic as microscopes, so they
can quickly diagnose pathogens.
Third, it enables developing nations to obtain communications
equipment to quickly transmit data on disease patterns and pathogen
diagnoses, both inside a nation and to regional organizations and the
WHO.
Again, we're not talking about fancy high-tech equipment, but basics
like fax machines and internet-equipped computers.
Finally--to create a real incentive for nations to promptly report
suspicious disease outbreaks and offer international health authorities
prompt access--the bill gives preference to those countries that agree
to let international health experts investigate any suspicious disease
outbreaks.
If passed, the Global Pathogen Surveillance Act will go a long way in
ensuring that developing nations acquire the basic disease surveillance
capabilities to link up effectively with the WHO's global network.
It's an inexpensive and common sense solution to a problem of global
proportions--the dual threat of biological weapons and naturally
occurring infectious diseases.
Make no mistake--this bill will contribute to our homeland security.
The funding authorized is only a tiny fraction of what we will spend
domestically on bioterrorism defenses, but this investment will pay
enormous dividends in terms of our national security.
In a report released only last month on global infectious disease,
the National Academies' Institute of Medicine said, ``The United States
should
[[Page S5196]]
take a leadership role in promoting the implementation of a
comprehensive system of surveillance for global infectious diseases
that builds on the current global capacity of infectious disease
monitoring.'' By introducing this bill, I hope that our nation can
begin to assume that mantle of leadership in this critical area.
Let me close with an excerpt of testimony from a Foreign Relations
Committee hearing held on September 5, 2001. Dr. D.A. Henderson, the
man who spearheaded the successful international campaign to eradicate
smallpox in the 1970's, most recently served as the principal advisor
to Secretary of Health and Human Services Tommy Thompson in organizing
the nation's defenses against bioterrorism.
Dr. Henderson, who at the time of the hearing was a private citizen,
was very clear on the value of global disease surveillance: ``In
cooperation with the WHO and other countries, we need to strengthen
greatly our intelligence gathering capability.
A focus on international surveillance and on scientist-to-scientist
communication will be necessary if we are to have an early warning
about the possible development and production of biological weapons by
rogue nations or groups.''
Dr. Henderson is exactly right. We cannot leave the rest of the world
to fend for itself in combating biological weapons and infectious
diseases if we are to ensure America's security.
I ask unanimous consent that the text of the ``Global Pathogen
Surveillance Act'' be printed in the Record.
There being no objection, the text of the bill was ordered to be
printed in the Record, as follows:
S. 871
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 ``Global Pathogen Surveillance
Act of 2003''.
SEC. 2. FINDINGS; PURPOSE.
(a) Findings.--Congress makes the following findings:
(1) Bioterrorism poses a grave national security threat to
the United States. The insidious nature of the threat, the
likely delayed recognition in the event of an attack, and the
underpreparedness of the domestic public health
infrastructure may produce catastrophic consequences
following a biological weapons attack upon the United States.
(2) A contagious pathogen engineered as a biological weapon
and developed, tested, produced, or released in another
country can quickly spread to the United States. Given the
realities of international travel, trade, and migration
patterns, a dangerous pathogen released anywhere in the world
can spread to United States territory in a matter of days,
before any effective quarantine or isolation measures can be
implemented.
(3) To effectively combat bioterrorism and ensure that the
United States is fully prepared to prevent, diagnose, and
contain a biological weapons attack, measures to strengthen
the domestic public health infrastructure and improve
domestic surveillance and monitoring, while absolutely
essential, are not sufficient.
(4) The United States should enhance cooperation with the
World Health Organization, regional health organizations, and
individual countries, including data sharing with appropriate
United States departments and agencies, to help detect and
quickly contain infectious disease outbreaks or bioterrorism
agents before they can spread.
(5) The World Health Organization (WHO) has done an
impressive job in monitoring infectious disease outbreaks
around the world, including the recent emergence of the
Severe Acute Respiratory Syndrome (SARS) epidemic,
particularly with the establishment in April 2000 of the
Global Outbreak Alert and Response network.
(6) The capabilities of the World Health Organization are
inherently limited by the quality of the data and information
it receives from member countries, the narrow range of
diseases (plague, cholera, and yellow fever) upon which its
disease surveillance and monitoring is based, and the
consensus process it uses to add new diseases to the list.
Developing countries in particular often cannot devote the
necessary resources to build and maintain public health
infrastructures.
(7) In particular, developing countries could benefit
from--
(A) better trained public health professionals and
epidemiologists to recognize disease patterns;
(B) appropriate laboratory equipment for diagnosis of
pathogens;
(C) disease reporting is based on symptoms and signs (known
as ``syndrome surveillance''), enabling the earliest possible
opportunity to conduct an effective response;
(D) a narrowing of the existing technology gap in syndrome
surveillance capabilities and real-time information
dissemination to public health officials; and
(E) appropriate communications equipment and information
technology to efficiently transmit information and data
within national and regional health networks, including
inexpensive, Internet-based Geographic Information Systems
(GIS) and relevant telephone-based systems for early
recognition and diagnosis of diseases.
(8) An effective international capability to monitor and
quickly diagnose infectious disease outbreaks will offer
dividends not only in the event of biological weapons
development, testing, production, and attack, but also in the
more likely cases of naturally occurring infectious disease
outbreaks that could threaten the United States. Furthermore,
a robust surveillance system will serve to deter terrorist
use of biological weapons, as early detection will help
mitigate the intended effects of such malevolent uses.
(b) Purpose.--The purposes of this Act are as follows:
(1) To enhance the capability and cooperation of the
international community, including the World Health
Organization and individual countries, through enhanced
pathogen surveillance and appropriate data sharing, to
detect, identify, and contain infectious disease outbreaks,
whether the cause of those outbreaks is intentional human
action or natural in origin.
(2) To enhance the training of public health professionals
and epidemiologists from eligible developing countries in
advanced Internet-based and other electronic syndrome
surveillance systems, in addition to traditional epidemiology
methods, so that they may better detect, diagnose, and
contain infectious disease outbreaks, especially those due to
pathogens most likely to be used in a biological weapons
attack.
(3) To provide assistance to developing countries to
purchase appropriate public health laboratory equipment
necessary for infectious disease surveillance and diagnosis.
(4) To provide assistance to developing countries to
purchase appropriate communications equipment and information
technology, including, as appropriate, relevant computer
equipment, Internet connectivity mechanisms, and telephone-
based applications to effectively gather, analyze, and
transmit public health information for infectious disease
surveillance and diagnosis.
(5) To make available greater numbers of United States
Government public health professionals to international
health organizations, regional health networks, and United
States diplomatic missions where appropriate.
(6) To establish ``lab-to-lab'' cooperative relationships
between United States public health laboratories and
established foreign counterparts.
(7) To expand the training and outreach activities of
overseas United States laboratories, including Centers for
Disease Control and Prevention and Department of Defense
entities, to enhance the disease surveillance capabilities of
developing countries.
(8) To provide appropriate technical assistance to existing
regional health networks and, where appropriate, seed money
for new regional networks.
SEC. 3. DEFINITIONS.
In this Act:
(1) Eligible developing country.--The term ``eligible
developing country'' means any developing country that--
(A) has agreed to the objective of fully complying with
requirements of the World Health Organization on reporting
public health information on outbreaks of infectious
diseases;
(B) has not been determined by the Secretary, for purposes
of section 40 of the Arms Export Control Act (22 U.S.C.
2780), section 620A of the Foreign Assistance Act of 1961 (22
U.S.C. 2371), or section 6(j) of the Export Administration
Act of 1979 (50 U.S.C. App. 2405), to have repeatedly
provided support for acts of international terrorism, unless
the Secretary exercises a waiver certifying that it is in the
national interest of the United States to provide assistance
under the provisions of this Act; and
(C) is a state party to the Biological Weapons Convention.
(2) Eligible national.--The term ``eligible national''
means any citizen or national of an eligible developing
country who is eligible to receive a visa under the
provisions of the Immigration and Nationality Act (8 U.S.C.
1101 et seq.).
(3) International health organization.--The term
``international health organization'' includes the World
Health Organization and the Pan American Health Organization.
(4) Laboratory.--The term ``laboratory'' means a facility
for the biological, microbiological, serological, chemical,
immuno-hematological, hematological, biophysical,
cytological, pathological, or other examination of materials
derived from the human body for the purpose of providing
information for the diagnosis, prevention, or treatment of
any disease or impairment of, or the assessment of the health
of, human beings.
(5) Secretary.--Unless otherwise provided, the term
``Secretary'' means the Secretary of State.
(6) Select agent.--The term ``select agent'' has the
meaning given such term for purposes of section 72.6 of title
42, Code of Federal Regulations.
(7) Syndrome surveillance.--The term ``syndrome
surveillance'' means the recording of symptoms (patient
complaints) and signs (derived from physical examination)
combined with simple geographic locators to track the
emergence of a disease in a population.
[[Page S5197]]
SEC. 4. PRIORITY FOR CERTAIN COUNTRIES.
Priority in the provision of United States assistance for
eligible developing countries under all the provisions of
this Act shall be given to those countries that permit
personnel from the World Health Organization and the Centers
for Disease Control and Prevention to investigate outbreaks
of infectious diseases on their territories, provide early
notification of disease outbreaks, and provide pathogen
surveillance data to appropriate United States departments
and agencies in addition to international health
organizations.
SEC. 5. RESTRICTION.
Notwithstanding any other provision of this Act, no foreign
nationals participating in programs authorized under this Act
shall have access, during the course of such participation,
to select agents that may be used as, or in, a biological
weapon, except in a supervised and controlled setting.
SEC. 6. FELLOWSHIP PROGRAM.
(a) Establishment.--There is established a fellowship
program (in this section referred to as the ``program'')
under which the Secretary, in consultation with the Secretary
of Health and Human Services, and, subject to the
availability of appropriations, award fellowships to eligible
nationals to pursue public health education or training, as
follows:
(1) Master of public health degree.--Graduate courses of
study leading to a master of public health degree with a
concentration in epidemiology from an institution of higher
education in the United States with a Center for Public
Health Preparedness, as determined by the Centers for Disease
Control and Prevention.
(2) Advanced public health epidemiology training.--Advanced
public health training in epidemiology to be carried out at
the Centers for Disease Control and Prevention (or equivalent
State facility), or other Federal facility (excluding the
Department of Defense or United States National
Laboratories), for a period of not less than 6 months or more
than 12 months.
(b) Specialization in Bioterrorism.--In addition to the
education or training specified in subsection (a), each
recipient of a fellowship under this section (in this section
referred to as a ``fellow'') may take courses of study at the
Centers for Disease Control and Prevention or at an
equivalent facility on diagnosis and containment of likely
bioterrorism agents.
(c) Fellowship Agreement.--
(1) In general.--In awarding a fellowship under the
program, the Secretary, in consultation with the Secretary of
Health and Human Services, shall require the recipient to
enter into an agreement under which, in exchange for such
assistance, the recipient--
(A) will maintain satisfactory academic progress (as
determined in accordance with regulations issued by the
Secretary and confirmed in regularly scheduled updates to the
Secretary from the institution providing the education or
training on the progress of the recipient's education or
training);
(B) will, upon completion of such education or training,
return to the recipient's country of nationality or last
habitual residence (so long as it is an eligible developing
country) and complete at least four years of employment in a
public health position in the government or a
nongovernmental, not-for-profit entity in that country or,
with the approval of the Secretary in an international health
organization; and
(C) agrees that, if the recipient is unable to meet the
requirements described in subparagraph (A) or (B), the
recipient will reimburse the United States for the value of
the assistance provided to the recipient under the
fellowship, together with interest at a rate determined in
accordance with regulations issued by the Secretary but not
higher than the rate generally applied in connection with
other Federal loans.
(2) Waivers.--The Secretary may waive the application of
paragraph (1)(B) and (1)(C) if the Secretary determines that
it is in the national interest of the United States to do so.
(d) Implementation.--The Secretary, in consultation with
the Secretary of Health and Human Services, is authorized to
enter into an agreement with any eligible developing country
under which the country agrees--
(1) to establish a procedure for the nomination of eligible
nationals for fellowships under this section;
(2) to guarantee that a fellow will be offered a
professional public health position within the country upon
completion of his studies; and
(3) to certify to the Secretary when a fellow has concluded
the minimum period of employment in a public health position
required by the fellowship agreement, with an explanation of
how the requirement was met.
(e) Participation of United States Citizens.--On a case-by-
case basis, the Secretary may provide for the participation
of United States citizens under the provisions of this
section if the Secretary determines that it is in the
national interest of the United States to do so. Upon
completion of such education or training, a United States
recipient shall complete at least five years of employment in
a public health position in an eligible developing country or
the World Health Organization.
SEC. 7. IN-COUNTRY TRAINING IN LABORATORY TECHNIQUES AND
SYNDROME SURVEILLANCE.
(a) In General.--In conjunction with the Centers for
Disease Control and Prevention and the Department of Defense,
the Secretary shall, subject to the availability of
appropriations, support short training courses in-country
(not in the United States) to laboratory technicians and
other public health personnel from eligible developing
countries in laboratory techniques relating to the
identification, diagnosis, and tracking of pathogens
responsible for possible infectious disease outbreaks.
Training under this section may be conducted in overseas
facilities of the Centers for Disease Control and Prevention
or in Overseas Medical Research Units of the Department of
Defense, as appropriate. The Secretary shall coordinate such
training courses, where appropriate, with the existing
programs and activities of the World Health Organization.
(b) Training in Syndrome Surveillance.--In conjunction with
the Centers for Disease Control and Prevention and the
Department of Defense, the Secretary shall, subject to the
availability of appropriations, establish and support short
training courses in-country (not in the United States) for
public health personnel from eligible developing countries in
techniques of syndrome surveillance reporting and rapid
analysis of syndrome information using Geographic Information
System (GIS) and other Internet-based tools. Training under
this subsection may be conducted via the Internet or in
appropriate facilities as determined by the Secretary. The
Secretary shall coordinate such training courses, where
appropriate, with the existing programs and activities of the
World Health Organization.
SEC. 8. ASSISTANCE FOR THE PURCHASE AND MAINTENANCE OF PUBLIC
HEALTH LABORATORY EQUIPMENT.
(a) Authorization.--The President is authorized, on such
terms and conditions as the President may determine, to
furnish assistance to eligible developing countries to
purchase and maintain public health laboratory equipment
described in subsection (b).
(b) Equipment Covered.--Equipment described in this
subsection is equipment that is--
(1) appropriate, where possible, for use in the intended
geographic area;
(2) necessary to collect, analyze, and identify
expeditiously a broad array of pathogens, including mutant
strains, which may cause disease outbreaks or may be used as
a biological weapon;
(3) compatible with general standards set forth, as
appropriate, by the World Health Organization and the Centers
for Disease Control and Prevention, to ensure
interoperability with regional and international public
health networks; and
(4) not defense articles or defense services as those terms
are defined under section 47 of the Arms Export Control Act.
(c) Rule of Construction.--Nothing in this section shall be
construed to exempt the exporting of goods and technology
from compliance with applicable provisions of the Export
Administration Act of 1979 (or successor statutes).
(d) Limitation.--Amounts appropriated to carry out this
section shall not be made available for the purchase from a
foreign country of equipment that, if made in the United
States, would be subject to the Arms Export Control Act or
likely be barred or subject to special conditions under the
Export Administration Act of 1979 (or successor statutes).
(e) Host Country's Commitments.--The assistance provided
under this section shall be contingent upon the host
country's commitment to provide the resources,
infrastructure, and other assets required to house, maintain,
support, secure, and maximize use of this equipment and
appropriate technical personnel.
SEC. 9. ASSISTANCE FOR IMPROVED COMMUNICATION OF PUBLIC
HEALTH INFORMATION.
(a) Assistance for Purchase of Communication Equipment and
Information Technology.--The President is authorized to
provide, on such terms and conditions as the President may
determine, assistance to eligible developing countries for
the purchase and maintenance of communications equipment and
information technology described in subsection (b), and
supporting equipment, necessary to effectively collect,
analyze, and transmit public health information.
(b) Covered Equipment.--Equipment (and information
technology) described in this subsection is equipment that--
(1) is suitable for use under the particular conditions of
the area of intended use;
(2) meets appropriate World Health Organization standards
to ensure interoperability with like equipment of other
countries and international health organizations; and
(3) is not defense articles or defense services as those
terms are defined under section 47 of the Arms Export Control
Act.
(c) Rule of Construction.--Nothing in this section shall be
construed to exempt the exporting of goods and technology
from compliance with applicable provisions of the Export
Administration Act of 1979 (or successor statutes).
(d) Limitation.--Amounts appropriated to carry out this
section shall not be made available for the purchase from a
foreign country of equipment that, if made in the United
States, would be subject to the Arms Export Control Act or
likely be barred or subject to special conditions under the
Export Administration Act of 1979 (or successor statutes).
(e) Assistance for Standardization of Reporting.--The
President is authorized to provide, on such terms and
conditions as the
[[Page S5198]]
President may determine, technical assistance and grant
assistance to international health organizations to
facilitate standardization in the reporting of public health
information between and among developing countries and
international health organizations.
(f) Host Country's Commitments.--The assistance provided
under this section shall be contingent upon the host
country's commitment to provide the resources,
infrastructure, and other assets required to house, support,
maintain, secure, and maximize use of this equipment and
appropriate technical personnel.
SEC. 10. ASSIGNMENT OF PUBLIC HEALTH PERSONNEL TO UNITED
STATES MISSIONS AND INTERNATIONAL
ORGANIZATIONS.
(a) In General.--Upon the request of a United States chief
of diplomatic mission or an international health
organization, and with the concurrence of the Secretary of
State, the head of a Federal agency may assign to the
respective United States mission or organization any officer
or employee of the agency occupying a public health position
within the agency for the purpose of enhancing disease and
pathogen surveillance efforts in developing countries.
(b) Reimbursement.--The costs incurred by a Federal agency
by reason of the detail of personnel under subsection (a) may
be reimbursed to that agency out of the applicable
appropriations account of the Department of State if the
Secretary determines that the relevant agency may otherwise
be unable to assign such personnel on a non-reimbursable
basis.
SEC. 11. EXPANSION OF CERTAIN UNITED STATES GOVERNMENT
LABORATORIES ABROAD.
(a) In General.--Subject to the availability of
appropriations, the Centers for Disease Control and
Prevention and the Department of Defense shall each--
(1) increase the number of personnel assigned to
laboratories of the Centers or the Department, as
appropriate, located in eligible developing countries that
conduct research and other activities with respect to
infectious diseases; and
(2) expand the operations of those laboratories, especially
with respect to the implementation of on-site training of
foreign nationals and regional outreach efforts involving
neighboring countries.
(b) Cooperation and Coordination between Laboratories.--
Subsection (a) shall be carried out in such a manner as to
foster cooperation and avoid duplication between and among
laboratories.
(c) Relation to Core Missions and Security.--The expansion
of the operations of overseas laboratories of the Centers or
the Department under this section shall not--
(1) detract from the established core missions of the
laboratories; or
(2) compromise the security of those laboratories, as well
as their research, equipment, expertise, and materials.
SEC. 12. ASSISTANCE FOR REGIONAL HEALTH NETWORKS AND
EXPANSION OF FOREIGN EPIDEMIOLOGY TRAINING
PROGRAMS.
(a) Authority.--The President is authorized, on such terms
and conditions as the President may determine, to provide
assistance for the purposes of--
(1) enhancing the surveillance and reporting capabilities
for the World Health Organization and existing regional
health networks; and
(2) developing new regional health networks.
(b) Expansion of Foreign Epidemiology Training Programs.--
The Secretary of Health and Human Services is authorized to
establish new country or regional Foreign Epidemiology
Training Programs in eligible developing countries.
SEC. 13. AUTHORIZATION OF APPROPRIATIONS.
(a) Authorization of Appropriations.--
(1) In general.--Subject to subsection (c), there are
authorized to be appropriated $70,000,000 for the fiscal year
2004 and $80,000,000 for fiscal year 2005, to carry out this
Act.
(2) Allocation of funds.--Of the amounts made available
under paragraph (1)--
(A) $50,000,000 for the fiscal year 2004 and $50,000,000
for the fiscal year 2005 are authorized to be available to
carry out sections 6, 7, 8, and 9;
(B) $2,000,000 for the fiscal year 2004 and $2,000,000 for
the fiscal year 2005 are authorized to be available to carry
out section 10;
(C) $8,000,000 for the fiscal year 2004 and $18,000,000 for
the fiscal year 2005 are authorized to be available to carry
out section 11; and
(D) $10,000,000 for the fiscal year 2004 and $10,000,000
for the fiscal year 2005 are authorized to be available to
carry out section 12.
(b) Availability of Funds.--The amount appropriated
pursuant to subsection (a) is authorized to remain available
until expended.
(c) Reporting Requirement.--
(1) Report.--Not later than 90 days after the date of
enactment of this Act, the Secretary shall submit a report,
in conjunction with the Secretary of Health and Human
Services and the Secretary of Defense, containing--
(A) a description of the implementation of programs under
this Act; and
(B) an estimate of the level of funding required to carry
out those programs at a sufficient level.
(2) Limitation on obligation of funds.--Not more than 10
percent of the amount appropriated pursuant to subsection (a)
may be obligated before the date on which a report is
submitted, or required to be submitted, whichever first
occurs, under paragraph (1).
______
By Mr. BINGAMAN:
S. 873. A bill to authorize funding for catalysis science and
engineering research and development at the Department of Energy for
fiscal years 2004 through 2009; and for other purposes; to the
Committee on Energy and Natural Resources.
Mr. BINGAMAN. Mr. President, I rise today to introduce a bill
entitled the Department of Energy Catalysis Research and Development
Act.
Catalysis is at the heart of fuels production in the petroleum and
chemical industries. Catalytic converters help reduce emissions of
cars. Catalysis can help reduce carbon dioxide from industrial plants,
which can contribute to global warming. The science of catalysis can
help our pharmaceutical industry by one day mimicking nature's enzymes
which are nature's catalysts. The industries I just mentioned
contribute $500 billion to our gross national product; they all rely on
catalysis to produce new compounds as efficiently as possible.
The catalysis science program is one of the hidden gems at the
Department of Energy's Office of Science. The Department supports over
60 percent of the catalysis research in the Federal Government. I feel
it is important that our energy bill highlights its basic research, and
recommends a steady increase in funding levels for it.
The bill seeks to help the Department meet what it called the ''grand
challenge'' in catalytic chemistry. The ``grand challenge'' which this
bill seeks to address is first, the ability to design, at the atom
level, catalytic structures to control ``catalytic activity'', or the
rate at which a chemical reaction proceeds. The second part of this
``grand challenge'' is to control the ``selectivity'' of a catalytic
reaction, or the ability of a catalytic compound to precisely seek out
other chemicals through which to start a reaction. To achieve this
`'grand challenge'', this bill directs the Department to design new
catalytic compounds using the latest advancements in scientific
computing. Today's computers are rapidly approaching a point where we
can model a chemical reaction by simulating its atom level
constituents. This bill directs the Department to utilize its state-of-
the-art diagnostic equipment at its national laboratories and
universities to analyze catalytic reactions in real time, and at the
atomic level. These diagnostics will be used to validate computational
models being developed in the advanced scientific computing program.
This bill directs the Department to use the emerging field of
nanoscience to tailor new catalytic compounds atom by atom, so as to
accelerate reactions to produce clean fuels at rates that far exceed
what we know today. In that regard, I expect the Department to utilize
its nanoscience facilities to help design these new compounds. If we
are successful in meeting this grand challenge, we will bring fuels to
market quicker to meet increasing energy demands, while using less
overall energy to produce them.
Finally, the bill directs the Secretary fund these efforts in
multidisciplinary teams including computer scientists, chemists,
biochemists, materials scientists and physicists. It requires the
Department to transfer its catalysis research to industry so that they
can bring to market the full fruits of our Government's advanced energy
research in the shortest time possible.
We are currently debating an energy bill in the Energy and Natural
Resources Committee. We plan to shortly mark up the research and
development section, and, I think it is vitally important that this
section address the topic of catalysis to produce future fuels for our
Nation.
Mr. President, 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. 873
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 ``Department of Energy
Catalysis Research and Development Act''.
[[Page S5199]]
SEC. 2. FINDINGS.
The Congress finds that catalysis science is critical to
the production of fuels for energy generation, the reduction
of toxic waste streams, and the development of compounds to
reduce global warming.
SEC. 3. DEPARTMENT OF ENERGY PROGRAM.
(a) Establishment.--The Secretary of Energy, through the
Director of the Office of Science of the Department of
Energy, shall establish a program of research and development
in catalysis science consistent with the Secretary's
statutory authorities related to research and development.
(b) Scope of the Program.--The program shall include
efforts to--
(1) enable catalyst design using--
(i) combined experimental and mechanistic methodologies,
and
(ii) computational modeling of catalytic reactions at the
molecular level;
(2) develop techniques for--
(i) high throughout synthesis of catalysts and novel assays
for rapid throughout catalyst testing of small quantities of
catalysts on diverse processes,
(ii) reducing the analytical cycle time by parallel
operation and automation,
(iii) characterizing catalysts at the 0.1 to 2 nanometer
scale, and
(iv) characterizing catalysts in-situ under actual
operating conditions at high temperature and pressure,
(3) synthesize catalysts with specific site architecture,
(4) conduct research in the use of precious metals for
catalysis (excluding platinum, palladium, and rhodium),
(5) translate molecular (picoscale) and nanoscale
fundamentals to the design of catalytic compounds.
(c) Duties of the Director of the Office of Science.--In
carrying out the program under this Act, the Director of the
Office of Science shall--
(1) support both individual investigators and
multidisciplinary teams of investigators that include teams
drawing upon the expertise of homogeneous, heterogeneous, and
biocatalytic investigators to pioneer new approaches in
catalytic design;
(2) develop, plan, construct, acquire, share, or operate
special equipment or facilities for the use of investigators
conducting research and development in catalysis science in
collaboration with national user facilities such as
nanoscience and engineering centers;
(3) support technology transfer activities to benefit
industry and other users of catalysis science and
engineering; and
(4) coordinate research and development activities with
industry and other federal agencies.
(d) Merit Review Required.-- All grants, contracts,
cooperative agreements, or other financial assistance awards
under this Act shall be made only after independent merit
review.
(e) Triennal Assessment.--The National Academy of Sciences
shall review the catalysis program every three years to
report on gains made in the fundamental science of catalysis
and its progress made towards developing new fuels for energy
production, material fabrication processes and methods to
reduce global warming.
SEC. 4. AUTHORIZATION OF APPROPRIATIONS.
The following sums are authorized to be appropriated to the
Secretary of Energy, to remain available until expended, for
the purposes of carrying out this Act:
(1) $33,000,000 for fiscal year 2004.
(2) $35,000,000 for fiscal year 2005.
(3) $36,500,000 for fiscal year 2006.
(4) $38,200,000 for fiscal year 2007.
(5) $40,100,000 for fiscal year 2008.
(6) $42,100,000 for fiscal year 2009.
______
By Mr. TALENT (for himself, Mr. Schumer, and Mr. Graham of South
Carolina):
S. 874. A bill to amend title XIX of the Social Security Act to
include primary and secondary preventative medical strategies for
children and adults with Sickle Cell Disease as medical assistance
under the medicaid program, and for other purposes; to the Committee on
Finance.
Mr. TALENT. Mr. President, today I rise on behalf of myself and my
colleagues, Senators Charles Schumer and Lindsey Graham, in support of
the Sickle Cell Treatment Act of 2003, which will help hundreds of
thousands of people who suffer from Sickle Cell Disease. SCD, a genetic
disease that affects red blood cells. This bill has bipartisan and
bicameral support, as Representatives Danny K. Davis, a Democrat, and
Richard Burr, a Republican, will introduce the companion bill today.
Sickle Cell Disease is an inherited blood disorder that is a major
health problem in the United States, primarily affecting African
Americans. People with sickle cell disease have red blood cells that
contain an abnormal type of hemoglobin. Sometimes these red blood cells
become sickle-shaped--crescent shaped--and have difficulty passing
through small blood vessels. When sickle-shaped cells block small blood
vessels, less blood can reach that part of the body. Tissue that does
not receive a normal blood flow eventually becomes damaged. This is
what essentially causes the potentially life-threatening complications
of sickle cell disease. There is currently no cure.
More than 2,500,000 Americans, mostly African Americans, have the
sickle cell trait. Among newborn American infants, SCD occurs in
approximately 1, in 300 African Americans. The most feared complication
for children with SCD is a stroke, which may affect infants as young as
18 months of age. While some patients can remain without symptoms for
years, many others may not survive infancy or early childhood.
Many adults with SCD have severe physical problems, such as acute
lung complications that can result in death. Adults with SCD can also
develop chronic problems, including pulmonary disease, pulmonary
hypertension, and kidney failure. The average life span for an adult
with SCD is the mid-40s. Stroke in the adult SCD population commonly
results in both mental and physical disabilities for life.
The Sickle Cell Treatment Act of 2003 helps combat SCD by providing
Federal matching funds for SCD-related services under Medicaid, and by
allowing States to receive a Federal 50-50 match for nonmedical
expenses related to SCD treatment such as genetic counseling. This bill
also authorizes a grant program in the amount of $10 million per year
for 5 years to fund 40 health centers nationwide. Although I will go
into detail about the bill, its focus is to encourage States to partner
with SCD providers, who have historically been on the frontlines of
this issue, to treat and find a cure for SCD patients.
With regard to the Federal matching funds, this bill allows states to
reimburse SCD services beyond current Medicaid law, which only covers
physician and laboratory services. For example, if a State wanted to
increase reimbursement rates for SCD blood transfusions, it could do so
through rate setting for the new SCD benefit without having to increase
reimbursement for all Medicaid blood transfusions, therefore, making it
easier for a State to reimburse at a higher rate for SCD-related
treatment.
The bill also provides Federal reimbursement for education and other
services related to the prevention and treatment of SCD. This will
allow States to get a Federal 50-50 match for nonmedical,
administrative expenses to include outreach and genetic counseling
about SCD and its treatment for SCD patients of any age. This is
critical to helping this historically underserved population, many of
who may not know about SCD or its symptoms until it is too late.
This bill also allows hospitals and clinics to do outreach with non-
medical personnel to educate high-risk communities about recognizing
SCD. It would also allow nonmedical personnel like counselors to spend
time with SCD families to discuss how to manage the disease. Providing
this one-stop shop will centralize SCD-related treatment and counseling
services to better serve those with SCD.
In addition to the diagnosis and treatment components, this bill
creates a grant program for 40 health centers nationally. Specifically,
the U.S. Department of Health and Human Services is authorized to
distribute grants to up to 40 eligible health centers nationwide for $5
million for the next 5 fiscal years. Grants may be used for purposes
including the education, treatment--i.e., genetic counseling and
testing--and continuity of care for individuals with SCD, for training
health professionals, and to identify and secure additional Federal
funds to continue SCD treatment.
This bill also creates a National Coordinating Center to collect,
monitor and distribute information on new and innovative practices to
prevent and treat SCD, establish a model protocol for the grant
recipients to follow as a quality control mechanism, develop
educational materials regarding the prevention and treatment of SCD,
and submit a report to Congress to ensure fiscal accountability and
provide information of recent developments towards a cure for SCD.
The Sickle Cell Treatment Act of 2003 provides tremendous benefits to
States. The approach taken in this bill is to add services related to
SCD to the list of services covered by Medicaid for those people who
are eligible for Medicaid under current eligibility rules.
[[Page S5200]]
For example, the bill allows States to use Medicaid funds to work with
providers to better serve areas with a high prevalence of SCD in fields
such as education and counseling,which are currently not reimbursed by
Medicaid. This bill also allows the States to create opportunities to
partner with providers to determine ``best practices'' to encourage the
most effective and efficient use of medical resources toward SCD
treatment and education.
In introducing the Sickle Cell Treatment Act of 2003, we are trying
to help thousands of Americans who live with this disease. This
legislation will provide many of these patients with access to the
essential treatments that they need. It has the support of many
important groups representing the SCD, African-American and children's
health care communities as well as the providers and researchers who
are working to treat and find a cure for this disease. For example,
Allan Platt, Program Coordinator, The Georgia Comprehensive Sickle Cell
Center at Grady Health System in Atlanta, GA has written me the
following letter, which states in part, ``You did a wonderful thing for
sickle cell patients and for those who are caring for them. Let us know
how we can rally support for this.''
I want to offer my appreciation to the Sickle Cell Disease
Association of American Inc., SCDAA, for its vigilant efforts to help
find a cure for SCD, and working with my office to help craft this
critical piece of legislation. SCDAA President and Chief Operating
Officer, Lynda K. Anderson, has provided tireless support on behalf of
this effort. Also I would like to acknowledge the efforts of SCDAA
Board Member Michael R. DeBaun, M.D., M.P.H, Assistant Professor of
Pediatrics and Biostatistics at the Washington University School of
Medicine in St. Louis, MO. Lynda and Michael have brought the issues
addressed in this bill to my attention and helped to bring the
introduction of this bill to fruition.
The SCDAA was founded in 1971 to provide an effective coordinated
community-based approach to developing and implementing strategies to
resolve issues surrounding sickle cell disease. Through three decades,
SCDAA and its member organizations have demonstrated how community-
based organizations and comprehensive health and research centers can
work with local, State and Federal agencies in furtherance of national
health care objectives. To this day, SCDAA continues to pursue
legislative initiatives to secure additional government funding for
research and community-based services. Moreover, it has demonstrated
its capacity to provide continued leadership in this area as a
potential national coordinator center, and I look forward to the
organization applying for such a designation, once this measure has
been enacted into law. My colleagues and I on both sides of the aisle
and in both legislative bodies look forward to working with SCDAA to
fight this good fight and to secure the resources required to address
the very unique needs of patients, families and communities affected by
SCD.
I ask that my colleagues in the Senate join Senators Schumer and
Graham, and Representatives Davis and Burr in helping us to find a cure
to help the approximately 70,000 Americans who have SCD and the
approximately 1,800 American babies who are born with this disease each
year in supporting the Sickle Cell Treatment Act of 2003.
I ask unanimous consent that the text of the bill printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 874
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 ``Sickle Cell Treatment Act of
2003''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) Sickle Cell Disease (in this section referred to as
``SCD'') is an inherited disease of red blood cells that is a
major health problem in the United States.
(2) Approximately 70,000 Americans have SCD and
approximately 1,800 American babies are born with the disease
each year. SCD also is a global problem with close to 300,000
babies born annually with the disease.
(3) In the United States, SCD is most common in African-
Americans and in those of Hispanic, Mediterranean, and Middle
Eastern ancestry. Among newborn American infants, SCD occurs
in approximately 1 in 300 African-Americans, 1 in 36,000
Hispanics, and 1 in 80,000 Caucasians.
(4) More than 2,500,000 Americans, mostly African-
Americans, have the sickle cell trait. These Americans are
healthy carriers of the sickle cell gene who have inherited
the normal hemoglobin gene from 1 parent and the sickle gene
from the other parent. A sickle cell trait is not a disease,
but when both parents have the sickle cell trait, there is a
1 in 4 chance with each pregnancy that the child will be born
with SCD.
(5) Children with SCD may exhibit frequent pain episodes,
entrapment of blood within the spleen, severe anemia, acute
lung complications, and priapism. During episodes of severe
pain, spleen enlargement, or acute lung complications, life
threatening complications can develop rapidly. Children with
SCD are also at risk for septicemia, meningitis, and stroke.
Children with SCD at highest risk for stroke can be
identified and, thus, treated early with regular blood
transfusions for stroke prevention.
(6) The most feared complication for children with SCD is a
stroke (either overt or silent) occurring in 30 percent of
the children with sickle cell anemia prior to their 18th
birthday and occurring in infants as young as 18 months of
age. Students with SCD and silent strokes may not have any
physical signs of such disease or strokes but may have a
lower educational attainment when compared to children with
SCD and no strokes. Approximately 60 percent of students with
silent strokes have difficulty in school, require special
education, or both.
(7) Many adults with SCD have acute problems, such as
frequent pain episodes and acute lung complications that can
result in death. Adults with SCD can also develop chronic
problems, including pulmonary disease, pulmonary
hypertension, degenerative changes in the shoulder and hip
joints, poor vision, and kidney failure.
(8) The average life span for an adult with SCD is the mid-
40s. While some patients can remain without symptoms for
years, many others may not survive infancy or early
childhood. Causes of death include bacterial infection,
stroke, and lung, kidney, heart, or liver failure. Bacterial
infections and lung injuries are leading causes of death in
children and adults with SCD.
(9) As a complex disorder with multisystem manifestations,
SCD requires specialized comprehensive and continuous care to
achieve the best possible outcome. Newborn screening, genetic
counseling, and education of patients and family members are
critical preventative measures that decrease morbidity and
mortality, delaying or preventing complications, in-patient
hospital stays, and increased overall costs of care.
(10) Stroke in the adult SCD population commonly results in
both mental and physical disabilities for life.
(11) Currently, one of the most effective treatments to
prevent or treat an overt stroke or a silent stroke for a
child with SCD is at least monthly blood transfusions
throughout childhood for many, and throughout life for some,
requiring removal of sickle blood and replacement with normal
blood.
(12) With acute lung complications, transfusions are
usually required and are often the only therapy demonstrated
to prevent premature death.
SEC. 3. INCLUSION OF PRIMARY AND SECONDARY PREVENTATIVE
MEDICAL STRATEGIES FOR CHILDREN AND ADULTS WITH
SICKLE CELL DISEASE AS MEDICAL ASSISTANCE UNDER
THE MEDICAID PROGRAM.
(a) In General.--Section 1905 of the Social Security Act
(42 U.S.C. 1396d) is amended--
(1) in subsection (a)--
(A) by striking ``and'' at the end of paragraph (26);
(B) by redesignating paragraph (27) as paragraph (28); and
(C) by inserting after paragraph (26), the following:
``(27) subject to subsection (x), primary and secondary
preventative medical strategies, including prophylaxes, and
treatment and services for individuals who have Sickle Cell
Disease; and''; and
(2) by adding at the end the following:
``(x) For purposes of subsection (a)(27), the strategies,
treatment, and services described in that subsection include
the following:
``(1) Chronic blood transfusion (with deferoxamine
chelation) to prevent stroke in individuals with Sickle Cell
Disease who have been identified as being at high risk for
stroke.
``(2) Genetic counseling and testing for individuals with
Sickle Cell Disease or the sickle cell trait.
``(3) Other treatment and services to prevent individuals
who have Sickle Cell Disease and who have had a stroke from
having another stroke.''.
(b) Federal Reimbursement for Education and Other Services
Related to the Prevention and Treatment of Sickle Cell
Disease.--Section 1903(a)(3) of the Social Security Act (42
U.S.C. 1396b(a)(3)) is amended--
(1) in subparagraph (D), by striking ``plus'' at the end
and inserting ``and''; and
(2) by adding at the end the following:
``(E) 50 percent of the sums expended with respect to costs
incurred during such quarter as are attributable to
providing--
``(i) services to identify and educate individuals who have
Sickle Cell Disease or who
[[Page S5201]]
are carriers of the sickle cell gene, including education
regarding how to identify such individuals; or
``(ii) education regarding the risks of stroke and other
complications, as well as the prevention of stroke and other
complications, in individuals who have Sickle Cell Disease;
plus''.
(c) Effective Date.--The amendments made by this section
take effect on the date of enactment of this Act and apply to
medical assistance and services provided under title XIX of
the Social Security Act (42 U.S.C. 1396 et seq.) on or after
that date, without regard to whether final regulations to
carry out such amendments have been promulgated by such date.
SEC. 4. DEMONSTRATION PROGRAM FOR THE DEVELOPMENT AND
ESTABLISHMENT OF SYSTEMIC MECHANISMS FOR THE
PREVENTION AND TREATMENT OF SICKLE CELL
DISEASE.
(a) Authority To Conduct Demonstration Program.--
(1) In general.--The Administrator, through the Bureau of
Primary Health Care and the Maternal and Child Health Bureau,
shall conduct a demonstration program by making grants to up
to 40 eligible entities for each fiscal year in which the
program is conducted under this section for the purpose of
developing and establishing systemic mechanisms to improve
the prevention and treatment of Sickle Cell Disease,
including through--
(A) the coordination of service delivery for individuals
with Sickle Cell Disease;
(B) genetic counseling and testing;
(C) bundling of technical services related to the
prevention and treatment of Sickle Cell Disease;
(D) training of health professionals; and
(E) identifying and establishing other efforts related to
the expansion and coordination of education, treatment, and
continuity of care programs for individuals with Sickle Cell
Disease.
(2) Grant award requirements.--
(A) Geographic diversity.--The Administrator shall, to the
extent practicable, award grants under this section to
eligible entities located in different regions of the United
States.
(B) Priority.--In awarding grants under this section, the
Administrator shall give priority to awarding grants to
eligible entities that are--
(i) Federally-qualified health centers that have a
partnership or other arrangement with a comprehensive Sickle
Cell Disease treatment center that does not receive funds
from the National Institutes of Health; or
(ii) Federally-qualified health centers that intend to
develop a partnership or other arrangement with a
comprehensive Sickle Cell Disease treatment center that does
not receive funds from the National Institutes of Health.
(b) Additional Requirements.--An eligible entity awarded a
grant under this section shall use funds made available under
the grant to carry out, in addition to the activities
described in subsection (a)(1), the following activities:
(1) To facilitate and coordinate the delivery of education,
treatment, and continuity of care for individuals with Sickle
Cell Disease under--
(A) the entity's collaborative agreement with a community-
based Sickle Cell Disease organization or a nonprofit entity
that works with individuals who have Sickle Cell Disease;
(B) the Sickle Cell Disease newborn screening program for
the State in which the entity is located; and
(C) the maternal and child health program under title V of
the Social Security Act (42 U.S.C. 701 et seq.) for the State
in which the entity is located.
(2) To train nursing and other health staff who specialize
in pediatrics, obstetrics, internal medicine, or family
practice to provide health care and genetic counseling for
individuals with the sickle cell trait.
(3) To enter into a partnership with adult or pediatric
hematologists in the region and other regional experts in
Sickle Cell Disease at tertiary and academic health centers
and State and county health offices.
(4) To identify and secure resources for ensuring
reimbursement under the medicaid program, State children's
health insurance program, and other health programs for the
prevention and treatment of Sickle Cell Disease, including
the genetic testing of parents or other appropriate relatives
of children with Sickle Cell Disease and of adults with
Sickle Cell Disease.
(c) National Coordinating Center.--
(1) Establishment.--The Administrator shall enter into a
contract with an entity to serve as the National Coordinating
Center for the demonstration program conducted under this
section.
(2) Activities described.--The National Coordinating Center
shall--
(A) collect, coordinate, monitor, and distribute data, best
practices, and findings regarding the activities funded under
grants made to eligible entities under the demonstration
program;
(B) develop a model protocol for eligible entities with
respect to the prevention and treatment of Sickle Cell
Disease;
(C) develop educational materials regarding the prevention
and treatment of Sickle Cell Disease; and
(D) prepare and submit to Congress a final report that
includes recommendations regarding the effectiveness of the
demonstration program conducted under this section and such
direct outcome measures as--
(i) the number and type of health care resources utilized
(such as emergency room visits, hospital visits, length of
stay, and physician visits for individuals with Sickle Cell
Disease); and
(ii) the number of individuals that were tested and
subsequently received genetic counseling for the sickle cell
trait.
(d) Application.--An eligible entity desiring a grant under
this section shall submit an application to the Administrator
at such time, in such manner, and containing such information
as the Administrator may require.
(e) Definitions.--In this section:
(1) Administrator.--The term ``Administrator'' means the
Administrator of the Health Resources and Services
Administration.
(2) Eligible entity.--The term ``eligible entity'' means a
Federally-qualified health center, a nonprofit hospital or
clinic, or a university health center that provides primary
health care, that--
(A) has a collaborative agreement with a community-based
Sickle Cell Disease organization or a nonprofit entity with
experience in working with individuals who have Sickle Cell
Disease; and
(B) demonstrates to the Administrator that either the
Federally-qualified health center, the nonprofit hospital or
clinic, the university health center, the organization or
entity described in subparagraph (A), or the experts
described in subsection (b)(3), has at least 5 years of
experience in working with individuals who have Sickle Cell
Disease.
(3) Federally-qualified health center.--The term
``Federally-qualified health center'' has the meaning given
that term in section 1905(l)(2)(B) of the Social Security Act
(42 U.S.C. 1396d(l)(2)(B)).
(f) Authorization of Appropriations.--There is authorized
to be appropriated to carry out this section, $10,000,000 for
each of fiscal years 2004 through 2009.
______
By Mr. KERRY (for himself, Mr. Santorum, Mr. Sarbanes, Mr.
Allard, Mr. Daschle, Mr. Kennedy, Ms. Stabenow, and Mrs.
Clinton):
S. 875. A bill to amend the Internal Revenue Code of 1986 to allow an
income tax credit for the provision of homeownership and community
development, and for other purposes; to the Committee on Finance.
Mr. KERRY. Mr. President, owning your own home is the
foundation of the American dream. It encourages personal
responsibility, improves child development, provides economic security
and gives families a greater stake in the development of their
communities. Communities where homeownership rates are highest have
lower crime rates, better schools and provide a better quality of life
for families to raise their children.
However, too many low- and moderate-income families living in urban
and rural areas across our nation have not been able to share in the
dream and benefits of homeownership due to the lack of available
housing or the high cost of what housing is available.
Today, I am introducing the Community Development Homeownership Tax
Credit Act, along with Senators Santorum, Sarbanes, Allard, Daschle,
Kennedy, Stabenow and Clinton to encourage the construction and
substantial rehabilitation of 500,000 homes over the next ten years for
low- and moderate-income families in economically distressed areas.
The bill will increase the supply of affordable homes for sale in
inner-cities, rural areas and low- and moderate-income neighborhoods
across the United States. It will bridge the gap that exists today
between the cost of developing-affordable housing and the price at
which these homes can be sold in many low-income neighborhoods by
providing investors with a tax credit of up to 50 percent of the cost
of home construction or rehabilitation.
By facing the mounting challenge of producing affordable housing, I
strongly believe we can help provide critically needed economic
development low- and moderate-income communities across our country and
provide an important stimulus in the development of our nation's
economy. The production of new homes provided in this legislation will
create both construction and construction-related jobs which will both
increase economic growth and lower the unemployment rate. New Economic
activity can revitalize many inner-city neighborhoods and rural areas
where unemployment and crime have been a fact of life for too long.
Buying a new home also leads to the purchase of new appliances and
furnishings. Average new homebuyers spend almost $5,000 on appliances
and
[[Page S5202]]
furnishings during the first year of living in their new home. This
will help stimulate the manufacturing section of our economy. It is
clear that building new homes creates jobs and moves our economy
forward.
Over the past decade, we have made substantial progress in increasing
the homeownership rate in the United States. In 2000, the U.S.
homeownership rate reached a record high of 67.1 percent with some 71
million U.S. households owning their own home. However, many working
families have been struggling to find an affordable home in our
nation's cities. Over the past two generations, many families have
moved out of cities and into the suburbs, which has depressed the
development of housing in the inner-city. In 1999, the homeownership
rate in the central-city areas was 50.4 percent, this is more than 20
percent lower than the suburban homeownership rate of 73.6 percent.
Working families with low- and moderate-income have also had
difficulties buying a home. Currently, 83.3 percent of households with
family income higher than the median family income are homeowners,
while only 52.4 percent of households with family income below the
median income are homeowners.
Too many communities face a lack of available homes because
developers are concerned that the new houses may not be sold for the
cost of construction. Many properties or sites that could be developed
into affordable homes now sit vacant, and neighborhoods remain
undeveloped because the gap between development costs and market prices
has not been filled. The lack of affordable single-family homes affect
many urban and rural areas where a majority of residents earn less than
the median income.
Today, too many minority families face barriers in their attempts to
reach the American Dream of homeownership. According to Census data for
the fourth quarter of 2002, non-Hispanic whites have a 74.8 percent
homeownership rate, while minority groups have just a 55.4 percent
homeownership rate. African Americans have only a 47.5 percent
homeownership rate, and Hispanics have a 49.5 percent homeownership
rate in the same study. The gap between white and African American
homeownership rates has been approximately 25 percent to 30 percent for
most of the last century. These numbers are simply unacceptable.
Despite our efforts at the federal level to promote homeownership,
many minorities also face higher than average denial rates for mortgage
applications. A recent study by the University of Massachusetts shows
that racial and ethnic lending disparities continue in Boston. For
example, African Americans were 2.73 times as likely as whites to be
denied in their mortgage applications. Latinos were 2.25 times as
likely as whites to be denied in their mortgage applications. Finally,
Asians were 1.55 times as likely as whites to be denied in their
mortgage applications.
Along with a lack of available homes in urban and rural areas, our
nation is also facing an affordable rental housing crisis. Thousands of
low-income families with children, the disabled, and the elderly are
finding it difficult to obtain or afford privately owned affordable
rental housing units. Recent changes in the housing market have limited
the availability of affordable housing across the country, while the
growth in our economy in the last decade has dramatically increased the
cost of the housing that remains. Constructing new housing will help
many families move out of rental housing and help increase the number
of available rental housing units and help ease the affordable housing
crisis we now face.
The story of Benjamin and Rita Okafor shows how working families in
Massachusetts have great difficulty obtaining a decent home of their
own. For many years, the Okafor's and their two young children were
forced to live in a one-bedroom apartment. Benjamin Okafor, who worked
full time as a cab driver in Boston, spent days and months looking for
a bigger apartment for his family. However, the lack of affordable
housing in the Boston area made it impossible for him to find anything
appropriate. When his wife Rita became pregnant with their third child,
the Okafor's knew something had to change in their living situation.
Luckily, Ben was accepted into the Habitat for Humanity program and
worked 300 sweat equity hours constructing a house. In August 2000, the
Okafor family moved into a new home of their own in Dorchester. Ben
says that this new home gives them the hope and stability they need.
Yet, there are still far too many working families living a substandard
housing and many more families that desperately need assistance to
become homeowners. A new tax incentive for developers to build
affordable homes in distressed areas will help working families like
the Okafor's to afford a home for the first time.
The benefits of owning a home can bring families financial rewards
and personal satisfaction with a deep sense of security. Real estate
values have historically risen over time. Homeowners may deduct
mortgage interest and property taxes as an expense against income. Real
estate has generally been seen as marketable, allowing for property to
be sold at a predictable price to a dependable group of available
buyers.
We know that owning a home instead of renting leads to a better
quality of life for its residents, but we are now learning more and
more about the impact homeownership has on the cognitive and behavioral
outcomes for children. A recent study by Ohio State University shows
that children of families who own their home have fewer behavioral
problems and are able to learn more effectively. Specifically, a
child's cognitive abilities are 9 percent higher in math and 7 percent
higher in reading for children living in their own homes. The study
also shows that these children also experienced up to 3 percent lower
behavioral problems than other children. This study proves that the
national goal of homeownership has an added benefit of helping
America's children learn and behave better, which helps our schools
produce better citizens and will help our economy develop in the long
term.
The Community Development Tax Credit Act, which I am introducing
today, bridges the gap between development costs and market value to
enable the development of new or refurbished homes in urban and rural
areas to blossom. The tax credit would be available to developers or
investors that build or substantially rehabilitate homes for sale to
low- or moderate-income buyers in low-income areas. The credit would
generate equity investment sufficient to cover the gap between the cost
of development and the price at which the home can be sold to an
eligible buyer.
The tax credit volume would be limited to $1.75 per capita for each
State and allocated by the States themselves. Credits would be claimed
over 5 years, starting when homes are sold. I believe this legislation
will result in approximately 50,000 homes built or refurbished
annually, assuming about $40,000 per home.
The maximum tax credit equals 50 percent of the cost of construction,
substantial rehabilitation, and building acquisition. The eligible cost
may not exceed the Federal Housing Administration single-family
mortgage limits. The minimum rehabilitation costs is $25,000. Eligible
building acquisition costs are limited to one-half of rehabilitation
costs. States will allocate only the level of tax credits necessary for
financial feasibility of individual projects. Ten percent of the
available credit will be set aside for nonprofit organizations.
The eligible areas for the tax credit are defined as Census Tracts
with median income below 80 percent of the area or state median. Rural
areas that are currently eligible for USDA housing programs will be
eligible for the tax credit. Indian tribal lands will be eligible for
the tax credit. State-identified areas of chronic economic distress
will also be eligible for tax credit, subject to disapproval by the
Department of Housing and Urban Development.
Those eligible to buy homes built or refurbished using the tax credit
include: individuals with incomes up to 80 percent of the area or state
median and up to 100 percent of area median income in low-income/high-
poverty Census Tracts.
Individual states will write plans to allocate the available tax
credits using the following selection criteria: contribution of the
development to community stability and revitalization; community and
local government support; need for homeownership development in the
area; sponsor capability; and the long-term sustainability of the
[[Page S5203]]
project as owner-occupied residences. Then individual developers along
with investors can apply to the state to be awarded a tax credit for
developing a property in a low- or moderate-income area. If chosen by
the state, investors can start to claim the tax credit as the homes are
sold to eligible buyers. They can continue to claim the tax credit for
five years. Investors are not subject to recapture. If the home owner
sells the residence within five years, a scale would determine the
percentage of the gain that would be recaptured by the Federal
Government. In the first two years, 100 percent of the gain and 80, 70
and 60 percent in the third, fourth, and fifth years, respectively,
would be recaptured.
The Community Development Homeownership Tax Credit Act that I am
introducing today will positively affect the lives for approximately
500,000 families over the next 10 years, help resolve the affordable
rental housing crisis we face, and help create jobs and grow our
economy. I ask all of my colleagues to help expand the foundation of
the American Dream by supporting this new tax incentive to encourage
the construction and rehabilitation of homes for low- and moderate-
income families in economically distressed areas.
This legislation is supported by the U.S. Conference of Mayors,
Fannie Mae, Freddie Mac, the Enterprise Foundation, Local Initiatives
Support Coalition, Mortgage Bankers Association of America, National
Association of Home Builders, National Low Income Housing Coalition,
National Association of Local Housing Finance Agencies, National
Association of Realtors, National Council of La Raza, National Hispanic
Housing Conference, Habitat for Humanity International and
others.
______
By Mr. WYDEN (for himself, Ms. Collins, and Mrs. Clinton):
S. 876. A bill to require public disclosure of noncompetitive
contracting for the reconstruction of the infrastructure of Iraq, and
for other purposes; to the Committee on Governmental Affairs.
Mr. WYDEN. Mr. President, Senators Collins, Clinton, Byrd, Lieberman
and I want the rebuilding of Iraq to be done in the best way possible--
for the Iraqi people and for the American taxpayers who will foot the
bill. To ensure that happens, we're introducing bipartisan legislation
today to ensure accountability in the awarding of U.S. contracts to
rebuild Iraq.
Usually in situations like this, open and competitive bidding is used
to get the best deal for the taxpayers. The same needs to hold true
here. Contracts to rebuild Iraq should be awarded in the sunshine--not
behind a smokescreen. If the Federal Government chooses not to use free
market competition to get the most reasonable price from the most
qualified contractor, then, at a minimum, they should have to tell the
American people why.
The bill we're introducing today is called the Sunshine in Iraq
Reconstruction Contracting Act. It's intended to shine light into the
secretive practices the United States Agency for International
Development, USAID, and other Federal agencies are using to hand out in
Iraqi work.
There are dollars-and-cents reasons for doing this. The potential
cost of rebuilding Iraq has been estimated at around $100 billion.
That's a lot of taxpayer money. And the U.S. General Accounting Office,
GAO, reports that sole-source and limited-source contracts aren't
usually the best buy. Investigator found that Army officials often just
took whatever level of services the contractor gave, without ever
asking if it could be done more efficiently or at a lower cost.
Despite that, sole-source and limited-source contracts look like the
rule, not the exception, for rebuilding Iraq. And these are costing
some big cash. Contracts awarded for oil fire fighting and other
projects are so-called ``cost-plus'' contracts. They pay a company's
expenses, plus a guaranteed profit of one to eight percent. There are
no limits on total costs, so the more a firm charges in expenses, the
more profit it makes. If the Federal Government's going to spend my
constituents' money that way, without asking for competitive bids, I
think my constituents deserve to know why.
Let me give you two concrete examples of the kind of secrecy I'm
talking about. A lot of the known details come from press reports. In
February and March, USAID invited a handful of companies to bid on $1.7
billion in Iraqi projects--rebuilding highways, bridges, schools.
Competition for one $600 million contract was limited to seven large
U.S. engineering firms. USAID apparently put out some bid invitations
before the war even started.
On March 24, the Army Corps of Engineers announced a sole-source,
unlimited contract to two American companies to control Iraqi oil
fires. The no-bid contract is still classified. Information that should
be available to the public was finalized on March 8 but is still under
wraps. What we know is that other firms that had experience putting out
oil well fires in Kuwait in 1991 were left out of the process
altogether. And we also know that as early as last fall, the parent
company of these contractors got an exclusive contract to study how to
supply oil services during an invasion of Iraq.
Anybody looking to find an explanation for this closed-door
contracting is likely to come up short. So far the agencies haven't
said much. Last month, USAID announced that it would limit competition
to companies with demonstrated technical ability, proven accounting
mechanisms, ability to field a qualified technical team on short
notice, and authority to handle classified national security material.
The USAID Director told The New York Times that to work in Iraq you
have to have a security clearance, and only these few American
companies have that clearance.
I sit on the Intelligence Committee, and don't know of any good
reason why a contractor bidding to rebuild a school, hospital, sewer
system or any other part of Iraq's infrastructure would need a security
clearance. In any case, four of USAID's eight reconstruction projects
will allow subcontracting to companies that don't have to meet the
security requirements. So that argument doesn't hold up.
Our bill has a simple premise to ensure accountability in the
awarding process. It says that any Federal entity bypassing competitive
bidding for Iraqi reconstruction projects has to disclose some key
information. Most importantly, that means revealing the documents used
to justify a sole-source or limited contract. Agencies are already
required by law to prepare this rationale for sole source bidding. Our
bill just makes the information accessible. We've written provisions to
protect classified information, while still giving Congress full
oversight over the billions in taxpayer money that Americans are being
asked to commit in Iraq.
There are too many questions and the stakes are too high for Congress
not to demand public disclosure of this information. I am pleased that
Senators Collins, Clinton, Byrd and Lieberman are joining me in
introducing this legislation to bring greater accountability and
openness to the contracting for Iraq reconstruction.
I ask unanimous consent that a copy of our bill be printed in the
Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 876
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 ``Sunshine in Iraq
Reconstruction Contracting Act of 2003''.
SEC. 2. PUBLIC DISCLOSURE OF NONCOMPETITIVE CONTRACTING FOR
THE RECONSTRUCTION OF INFRASTRUCTURE IN IRAQ.
(a) Disclosure Required.--
(1) Publication and public availability.--The head of an
executive agency of the United States that enters into a
contract for the repair, maintenance, rehabilitation, or
construction of infrastructure in Iraq without full and open
competition shall publish in the Federal Register or Commerce
Business Daily and otherwise make available to the public,
not later than 30 days after the date on which the contract
is entered into, the following information:
(A) The amount of the contract.
(B) A brief description of the scope of the contract.
(C) A discussion of how the executive agency identified,
and solicited offers from, potential contractors to perform
the contract, together with a list of the potential
contractors that were issued solicitations for the offers.
(D) The justification and approval documents on which was
based the determination
[[Page S5204]]
to use procedures other than procedures that provide for full
and open competition.
(2) Inapplicability to contracts after fiscal year 2013.--
Paragraph (1) does not apply to a contract entered into after
September 30, 2013.
(b) Classified Information.--
(1) Authority to withhold.--The head of an executive agency
may--
(A) withhold from publication and disclosure under
subsection (a) any document that is classified for restricted
access in accordance with an Executive order in the interest
of national defense or foreign policy; and
(B) redact any part so classified that is in a document not
so classified before publication and disclosure of the
document under subsection (a).
(2) Availability to congress.--In any case in which the
head of an executive agency withholds information under
paragraph (1), the head of such executive agency shall make
available an unredacted version of the document containing
that information to the chairman and ranking member of each
of the following committees of Congress:
(A) The Committee on Governmental Affairs of the Senate and
the Committee on Government Reform of the House of
Representatives.
(B) The Committees on Appropriations of the Senate and the
House of Representatives.
(C) Each committee that the head of the executive agency
determines has legislative jurisdiction for the operations of
such department or agency to which the information relates.
(c) Fiscal Year 2003 Contracts.--This section shall apply
to contracts entered into on or after October 1, 2002, except
that, in the case of a contract entered into before the date
of the enactment of this Act, subsection (a) shall be applied
as if the contract had been entered into on the date of the
enactment of this Act.
(d) Relationship to Other Disclosure Laws.--Nothing in this
section shall be construed as affecting obligations to
disclose United States Government information under any other
provision of law.
(e) Definitions.--In this section, the terms ``executive
agency'' and ``full and open competition'' have the meanings
given such terms in section 4 of the Office of Federal
Procurement Policy Act (41 U.S.C. 403).
______
By Mr. BURNS (for himself, Mr. Wyden, Mr. Stevens, Mr. Breaux, Mr.
Thomas, Ms. Landrieu, and Mr. Schumer):
S. 877. A bill to regulate interstate commerce by imposing
limitations and penalties on the transmission of unsolicited commercial
electronic mail via the Internet; to the Committee on Commerce,
Science, and Transportation.
Mr. BURNS. Thank you, Mr. President. I rise today to introduce the
CAN-SPAM bill along with my good friend and colleague Senator Wyden.
The CAN-SPAM bill addresses an issue of critical importance to the
further development of commerce on the Internet: how to control the
explosion of unsolicited commercial e-mail. I also want to thank the
additional original cosponsors of the bill, Senator Stevens, Senator
Breaux, Senator Thomas, Senator Landrieu and Senator Schumer.
While it is obvious to anyone with an e-mail account that the scourge
of ``spam'' has continued to worsen, the numbers and the trends they
represent paint an even more disturbing picture. According to an
article in the Washington Post less than a month ago, spam currently
accounts for 40 percent of all e-mail traffic. Spam has become more
than just an inconvenience that we have learned to live with; it has
now become a fundamental part of any e-mail inbox with serious economic
consequences. According to one study done by a consulting group, spam
will cost U.S. businesses more than $10 billion this year alone.
Spam also makes working on the Internet less efficient, by clogging
up servers on one end and inboxes on the other. I want some
accountability brought to bear on this issue, and feel that by
introducing this legislation today, we have taken an appropriate and
meaningful step to tame a horse we can't seem to break just yet. This
problem continues to escalate, and experts warn that more than half of
e-mail traffic will be spam by this summer. This point bears repeating:
within months, you will waste more than half of your time with
unsolicited e-mail.
The CAN-SPAM bill would require e-mail marketers to comply with a
straightforward set of workable, common-sense rules designed to give
consumers more control over spam. Specifically, the bill would require
a sender of marketing e-mail to include a clear and conspicuous ``opt-
out'' mechanism so that they could ``unsubscribe'' from further
unwanted e-mail. Also, the bill would prohibit e-mail marketers from
using deceptive headers or subject lines, so that consumers will be
able to tell who initiated the solicitation.
The bill includes strong enforcement provisions to ensure compliance.
The Federal Trade Commission would have authority to impose steep civil
fines of up to $500,000 on spammers. This fine could be tripled if the
violation is found to be intentional. In short, this bill provides
broad consumer protection against bad actors, while still allowing
Internet advertising a justified means of flourishing.
Spamming is a serious economic problem and I believe it is absolutely
critical that we address this now, so that the Internet is allowed to
reach its full potential. Because of the vast distances in Montana,
many of my constituents are forced to pay long-distance charges for
their time on the Internet. Spam makes it nearly impossible for these
people to enjoy the experience, and it makes it even harder for them to
see how this will help rural America flourish in the 21st century.
Also, Internet service providers are bombarded with spam that often
corrupts or shuts down their systems. In today's information age where
beating the competitor to the next sale is absolutely critical to
survival, these shutdowns can cause real economic damage. We may be in
a downturn in the American economy and especially in the high
technology sector, but the efficiencies created through vast
information sharing are here to stay and will help propel our economy
to levels beyond our imagination, but in order to reach this potential
we must eliminate the bad actors who threaten these efficiencies.
The fact that this bill is strongly supported by pillars of the
Internet age such as Yahoo, America Online and eBay is a testament to
its common-sense approach. I think these companies for their critical
expertise in perfecting this bill which would help to address this
scourge of the digital age. I also appreciate the numerous valuable
suggestions from the many concerned cyber-citizens who want to see this
Pandora's box of digital dreck closed once and for all.
Mr. President, 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. 877
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 ``Controlling the Assault of
Non-Solicited Pornography and Marketing Act of 2003'', or the
``CAN-SPAM Act of 2003''.
SEC. 2. CONGRESSIONAL FINDINGS AND POLICY.
(a) Findings.--The Congress finds the following:
(1) There is a right of free speech on the Internet.
(2) The Internet has increasingly become a critical mode of
global communication and now presents unprecedented
opportunities for the development and growth of global
commerce and an integrated worldwide economy.
(3) In order for global commerce on the Internet to reach
its full potential, individuals and entities using the
Internet and other online services should be prevented from
engaging in activities that prevent other users and Internet
service providers from having a reasonably predictable,
efficient, and economical online experience.
(4) Unsolicited commercial electronic mail can be a
mechanism through which businesses advertise and attract
customers in the online environment.
(5) The receipt of unsolicited commercial electronic mail
may result in costs to recipients who cannot refuse to accept
such mail and who incur costs for the storage of such mail,
or for the time spent accessing, reviewing, and discarding
such mail, or for both.
(6) Unsolicited commercial electronic mail may impose
significant monetary costs on providers of Internet access
services, businesses, and educational and nonprofit
institutions that carry and receive such mail, as there is a
finite volume of mail that such providers, businesses, and
institutions can handle without further investment in
infrastructure.
(7) Some unsolicited commercial electronic mail contains
material that many recipients may consider vulgar or
pornographic in nature.
(8) While some senders of unsolicited commercial electronic
mail messages provide simple and reliable ways for recipients
to reject (or ``opt-out'' of) receipt of unsolicited
commercial electronic mail from such senders in the future,
other senders provide no
[[Page S5205]]
such ``opt-out'' mechanism, or refuse to honor the requests
of recipients not to receive electronic mail from such
senders in the future, or both.
(9) An increasing number of senders of unsolicited
commercial electronic mail purposefully disguise the source
of such mail so as to prevent recipients from responding to
such mail quickly and easily.
(10) An increasing number of senders of unsolicited
commercial electronic mail purposefully include misleading
information in the message's subject lines in order to induce
the recipients to view the messages.
(11) In legislating against certain abuses on the Internet,
Congress should be very careful to avoid infringing in any
way upon constitutionally protected rights, including the
rights of assembly, free speech, and privacy.
(b) Congressional Determination of Public Policy.--On the
basis of the findings in subsection (a), the Congress
determines that--
(1) there is a substantial government interest in
regulation of unsolicited commercial electronic mail;
(2) senders of unsolicited commercial electronic mail
should not mislead recipients as to the source or content of
such mail; and
(3) recipients of unsolicited commercial electronic mail
have a right to decline to receive additional unsolicited
commercial electronic mail from the same source.
SEC. 3. DEFINITIONS.
In this Act:
(1) Affirmative consent.--The term ``affirmative consent'',
when used with respect to a commercial electronic mail
message, means that the recipient has expressly consented to
receive the message, either in response to a clear and
conspicuous request for such consent or at the recipient's
own initiative.
(2) Commercial electronic mail message.--
(A) In general.--The term ``commercial electronic mail
message'' means any electronic mail message the primary
purpose of which is the commercial advertisement or promotion
of a commercial product or service (including content on an
Internet website operated for a commercial purpose).
(B) Reference to company or website.--The inclusion of a
reference to a commercial entity or a link to the website of
a commercial entity in an electronic mail message does not,
by itself, cause such message to be treated as a commercial
electronic mail message for purposes of this Act if the
contents or circumstances of the message indicate a primary
purpose other than commercial advertisement or promotion of a
commercial product or service.
(3) Commission.--The term ``Commission'' means the Federal
Trade Commission.
(4) Domain name.--The term ``domain name'' means any
alphanumeric designation which is registered with or assigned
by any domain name registrar, domain name registry, or other
domain name registration authority as part of an electronic
address on the Internet.
(5) Electronic mail address.--The term ``electronic mail
address'' means a destination, commonly expressed as a string
of characters, consisting of a unique user name or mailbox
(commonly referred to as the ``local part'') and a reference
to an Internet domain (commonly referred to as the ``domain
part''), to which an electronic mail message can be sent or
delivered.
(6) Electronic mail message.--The term ``electronic mail
message'' means a message sent to an electronic mail address.
(7) FTC act.--The term ``FTC Act'' means the Federal Trade
Commission Act (15 U.S.C. 41 et seq.).
(8) Header information.--The term ``header information''
means the source, destination, and routing information
attached to an electronic mail message, including the
originating domain name and originating electronic mail
address.
(9) Implied consent.--The term ``implied consent'', when
used with respect to a commercial electronic mail message,
means that--
(A) within the 3-year period ending upon receipt of such
message, there has been a business transaction between the
sender and the recipient (including a transaction involving
the provision, free of charge, of information, goods, or
services requested by the recipient); and
(B) the recipient was, at the time of such transaction or
thereafter in the first electronic mail message received from
the sender after the effective date of this Act, provided a
clear and conspicuous notice of an opportunity not to receive
unsolicited commercial electronic mail messages from the
sender and has not exercised such opportunity.
If a sender operates through separate lines of business or
divisions and holds itself out to the recipient, both at the
time of the transaction described in subparagraph (A) and at
the time the notice under subparagraph (B) was provided to
the recipient, as that particular line of business or
division rather than as the entity of which such line of
business or division is a part, then the line of business or
the division shall be treated as the sender for purposes of
this paragraph.
(10) Initiate.--The term ``initiate'', when used with
respect to a commercial electronic mail message, means to
originate such message or to procure the origination of such
message, but shall not include actions that constitute
routine conveyance of such message.
(11) Internet.--The term ``Internet'' has the meaning given
that term in the Internet Tax Freedom Act (47 U.S.C. 151 nt).
(12) Internet access service.--The term ``Internet access
service'' has the meaning given that term in section
231(e)(4) of the Communications Act of 1934 (47 U.S.C.
231(e)(4)).
(13) Protected computer.--The term ``protected computer''
has the meaning given that term in section 1030(e)(2) of
title 18, United States Code.
(14) Recipient.--The term ``recipient'', when used with
respect to a commercial electronic mail message, means an
authorized user of the electronic mail address to which the
message was sent or delivered. If a recipient of a commercial
electronic mail message has 1 or more electronic mail
addresses in addition to the address to which the message was
sent or delivered, the recipient shall be treated as a
separate recipient with respect to each such address. If an
electronic mail address is reassigned to a new user, the new
user shall not be treated as a recipient of any commercial
electronic mail message sent or delivered to that address
before it was reassigned.
(15) Routine conveyance.--The term ``routine conveyance''
means the transmission, routing, relaying, handling, or
storing, through an automatic technical process, of an
electronic mail message for which another person has provided
and selected the recipient addresses.
(16) Sender.--The term ``sender'', when used with respect
to a commercial electronic mail message, means a person who
initiates such a message and whose product, service, or
Internet web site is advertised or promoted by the message.
(17) Transactional or relationship messages.--The term
``transactional or relationship message'' means an electronic
mail message the primary purpose of which is to facilitate,
complete, confirm, provide, or request information
concerning--
(A) a commercial transaction that the recipient has
previously agreed to enter into with the sender;
(B) an existing commercial relationship, formed with or
without an exchange of consideration, involving the ongoing
purchase or use by the recipient of products or services
offered by the sender; or
(C) an existing employment relationship or related benefit
plan.
(18) Unsolicited commercial electronic mail message.--The
term ``unsolicited commercial electronic mail message'' means
any commercial electronic mail message that--
(A) is not a transactional or relationship message; and
(B) is sent to a recipient without the recipient's prior
affirmative or implied consent.
SEC. 4. CRIMINAL PENALTY FOR UNSOLICITED COMMERCIAL
ELECTRONIC MAIL CONTAINING FRAUDULENT ROUTING
INFORMATION.
(a) In General.--Chapter 63 of title 18, United States
Code, is amended by adding at the end the following:
``Sec. 1351. Unsolicited commercial electronic mail
containing fraudulent transmission information
``(a) In General.--Any person who initiates the
transmission, to a protected computer in the United States,
of an unsolicited commercial electronic mail message, with
knowledge and intent that the message contains or is
accompanied by header information that is materially false or
materially misleading shall be fined or imprisoned for not
more than 1 year, or both, under this title. For purposes of
this subsection, header information that is technically
accurate but includes an originating electronic mail address
the access to which for purposes of initiating the message
was obtained by means of false or fraudulent pretenses or
representations shall be considered materially misleading.
``(b) Definitions.--Any term used in subsection (a) that is
defined in section 3 of the CAN-SPAM Act of 2003 has the
meaning given it in that section.''.
(b) Conforming Amendment.--The chapter analysis for chapter
63 of title 18, United States Code, is amended by adding at
the end the following:
``1351. Unsolicited commercial electronic mail containing fraudulent
routing information''.
SEC. 5. OTHER PROTECTIONS AGAINST UNSOLICITED COMMERCIAL
ELECTRONIC MAIL.
(a) Requirements for Transmission of Messages.--
(1) Prohibition of false or misleading transmission
information.--It is unlawful for any person to initiate the
transmission, to a protected computer, of a commercial
electronic mail message that contains, or is accompanied by,
header information that is materially or intentionally false
or materially or intentionally misleading. For purposes of
this paragraph, header information that is technically
accurate but includes an originating electronic mail address
the access to which for purposes of initiating the message
was obtained by means of false or fraudulent pretenses or
representations shall be considered materially misleading.
(2) Prohibition of deceptive subject headings.--It is
unlawful for any person to initiate the transmission to a
protected computer of a commercial electronic mail message
with a subject heading that such person
[[Page S5206]]
knows would be likely to mislead a recipient, acting
reasonably under the circumstances, about a material fact
regarding the contents or subject matter of the message.
(3) Inclusion of return address or comparable mechanism in
unsolicited commercial electronic mail.--
(A) In general.--It is unlawful for any person to initiate
the transmission to a protected computer of an unsolicited
commercial electronic mail message that does not contain a
functioning return electronic mail address or other Internet-
based mechanism, clearly and conspicuously displayed, that--
(i) a recipient may use to submit, in a manner specified by
the sender, a reply electronic mail message or other form of
Internet-based communication requesting not to receive any
future unsolicited commercial electronic mail messages from
that sender at the electronic mail address where the message
was received; and
(ii) remains capable of receiving such messages or
communications for no less than 30 days after the
transmission of the original message.
(B) More detailed options possible.--The sender of an
unsolicited commercial electronic mail message may comply
with subparagraph (A)(i) by providing the recipient a list or
menu from which the recipient may choose the specific types
of commercial electronic mail messages the recipient wants to
receive or does not want to receive from the sender, if the
list or menu includes an option under which the recipient may
choose not to receive any unsolicited commercial electronic
mail messages from the sender.
(C) Temporary inability to receive messages or process
requests.--A return electronic mail address or other
mechanism does not fail to satisfy the requirements of
subparagraph (A) if it is unexpectedly and temporarily unable
to receive messages or process requests due to technical or
capacity problems, if the problem with receiving messages or
processing requests is corrected within a reasonable time
period.
(4) Prohibition of transmission of unsolicited commercial
electronic mail after objection.--If a recipient makes a
request to a sender, using a mechanism provided pursuant to
paragraph (3), not to receive some or any unsolicited
commercial electronic mail messages from such sender, then it
is unlawful--
(A) for the sender to initiate the transmission to the
recipient, more than 10 business days after the receipt of
such request, of an unsolicited commercial electronic mail
message that falls within the scope of the request;
(B) for any person acting on behalf of the sender to
initiate the transmission to the recipient, more than 10
business days after the receipt of such request, of an
unsolicited commercial electronic mail message that such
person knows or consciously avoids knowing falls within the
scope of the request; or
(C) for any person acting on behalf of the sender to assist
in initiating the transmission to the recipient, through the
provision or selection of addresses to which the message will
be sent, of an unsolicited commercial electronic mail message
that the person knows, or consciously avoids knowing, would
violate subparagraph (A) or (B).
(5) Inclusion of identifier, opt-out, and physical address
in unsolicited commercial electronic mail.--It is unlawful
for any person to initiate the transmission of any
unsolicited commercial electronic mail message to a protected
computer unless the message provides--
(A) clear and conspicuous identification that the message
is an advertisement or solicitation;
(B) clear and conspicuous notice of the opportunity under
paragraph (3) to decline to receive further unsolicited
commercial electronic mail messages from the sender; and
(C) a valid physical postal address of the sender.
(b) Prohibition of Transmission of Unlawful Unsolicited
Commercial Electronic Mail to Certain Harvested Electronic
Mail Addresses.--
(1) In general.--It is unlawful for any person to initiate
the transmission, to a protected computer, of an unsolicited
commercial electronic mail message that is unlawful under
subsection (a), or to assist in the origination of such a
message through the provision or selection of addresses to
which the message will be sent, if such person knows that, or
acts with reckless disregard as to whether--
(A) the electronic mail address of the recipient was
obtained, using an automated means, from an Internet website
or proprietary online service operated by another person; or
(B) the website or proprietary online service from which
the address was obtained included, at the time the address
was obtained, a notice stating that the operator of such a
website or proprietary online service will not give, sell, or
otherwise transfer addresses maintained by such site or
service to any other party for the purpose of initiating, or
enabling others to initiate, unsolicited electronic mail
messages.
(2) Disclaimer.--Nothing in this subsection creates an
ownership or proprietary interest in such electronic mail
addresses.
(c) Compliance Procedures.--An action for violation of
paragraph (2), (3), (4), or (5) of subsection (a) may not
proceed if the person against whom the action is brought
demonstrates that --
(1) the person has established and implemented, with due
care, reasonable practices and procedures to effectively
prevent violations of such paragraph; and
(2) the violation occurred despite good faith efforts to
maintain compliance with such practices and procedures.
SEC. 6. ENFORCEMENT BY FEDERAL TRADE COMMISSION.
(a) Violation Is Unfair or Deceptive Act or Practice.--
Except as provided in subsection (b), this Act shall be
enforced by the Commission as if the violation of this Act
were an unfair or deceptive act or practice proscribed under
section 18(a)(1)(B) of the Federal Trade Commission Act (15
U.S.C. 57a(a)(1)(B)).
(b) Enforcement by Certain Other Agencies.--Compliance with
this Act shall be enforced--
(1) under section 8 of the Federal Deposit Insurance Act
(12 U.S.C. 1818), in the case of--
(A) national banks, and Federal branches and Federal
agencies of foreign banks, and any subsidiaries of such
entities (except brokers, dealers, persons providing
insurance, investment companies, and investment advisers), by
the Office of the Comptroller of the Currency;
(B) member banks of the Federal Reserve System (other than
national banks), branches and agencies of foreign banks
(other than Federal branches, Federal agencies, and insured
State branches of foreign banks), commercial lending
companies owned or controlled by foreign banks, organizations
operating under section 25 or 25A of the Federal Reserve Act
(12 U.S.C. 601 and 611), and bank holding companies and their
nonbank subsidiaries or affiliates (except brokers, dealers,
persons providing insurance, investment companies, and
investment advisers), by the Board;
(C) banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System) insured State branches of foreign banks, and any
subsidiaries of such entities (except brokers, dealers,
persons providing insurance, investment companies, and
investment advisers), by the Board of Directors of the
Federal Deposit Insurance Corporation; and
(D) savings associations the deposits of which are insured
by the Federal Deposit Insurance Corporation, and any
subsidiaries of such savings associations (except brokers,
dealers, persons providing insurance, investment companies,
and investment advisers), by the Director of the Office of
Thrift Supervision;
(2) under the Federal Credit Union Act (12 U.S.C. 1751 et
seq.) by the Board of the National Credit Union
Administration with respect to any Federally insured credit
union, and any subsidiaries of such a credit union;
(3) under the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.) by the Securities and Exchange Commission with
respect to any broker or dealer;
(4) under the Investment Company Act of 1940 (15 U.S.C.
80a-1 et seq.) by the Securities and Exchange Commission with
respect to investment companies;
(5) under the Investment Advisers Act of 1940 (15 U.S.C.
80b-1 et seq.) by the Securities and Exchange Commission with
respect to investment advisers registered under that Act;
(6) under State insurance law in the case of any person
engaged in providing insurance, by the applicable State
insurance authority of the State in which the person is
domiciled, subject to section 104 of the Gramm-Bliley-Leach
Act (15 U.S.C. 6701);
(7) under part A of subtitle VII of title 49, United States
Code, by the Secretary of Transportation with respect to any
air carrier or foreign air carrier subject to that part;
(8) under the Packers and Stockyards Act, 1921 (7 U.S.C.
181 et seq.) (except as provided in section 406 of that Act
(7 U.S.C. 226, 227)), by the Secretary of Agriculture with
respect to any activities subject to that Act;
(9) under the Farm Credit Act of 1971 (12 U.S.C. 2001 et
seq.) by the Farm Credit Administration with respect to any
Federal land bank, Federal land bank association, Federal
intermediate credit bank, or production credit association;
and
(10) under the Communications Act of 1934 (47 U.S.C. 151 et
seq.) by the Federal Communications Commission with respect
to any person subject to the provisions of that Act.
(c) Exercise of Certain Powers.--For the purpose of the
exercise by any agency referred to in subsection (b) of its
powers under any Act referred to in that subsection, a
violation of this Act is deemed to be a violation of a
requirement imposed under that Act. In addition to its powers
under any provision of law specifically referred to in
subsection (b), each of the agencies referred to in that
subsection may exercise, for the purpose of enforcing
compliance with any requirement imposed under this Act, any
other authority conferred on it by law.
(d) Actions by the Commission.--The Commission shall
prevent any person from violating this Act in the same
manner, by the same means, and with the same jurisdiction,
powers, and duties as though all applicable terms and
provisions of the Federal Trade Commission Act (15 U.S.C. 41
et seq.) were incorporated into and made a part of this Act.
Any entity that violates any provision of that subtitle is
subject to the penalties
[[Page S5207]]
and entitled to the privileges and immunities provided in the
Federal Trade Commission Act in the same manner, by the same
means, and with the same jurisdiction, power, and duties as
though all applicable terms and provisions of the Federal
Trade Commission Act were incorporated into and made a part
of that subtitle.
(e) Enforcement by States.--
(1) Civil action.--In any case in which the attorney
general of a State has reason to believe that an interest of
the residents of that State has been or is threatened or
adversely affected by any person engaging in a practice that
violates section 5 of this Act, the State, as parens patriae,
may bring a civil action on behalf of the residents of the
State in a district court of the United States of appropriate
jurisdiction or in any other court of competent
jurisdiction--
(A) to enjoin further violation of section 5 of this Act by
the defendant; or
(B) to obtain damages on behalf of residents of the State,
in an amount equal to the greater of--
(i) the actual monetary loss suffered by such residents; or
(ii) the amount determined under paragraph (2).
(2) Statutory damages.--
(A) In general.--For purposes of paragraph (1)(B)(ii), the
amount determined under this paragraph is the amount
calculated by multiplying the number of willful, knowing, or
negligent violations by an amount, in the discretion of the
court, of up to $10 (with each separately addressed unlawful
message received by such residents treated as a separate
violation). In determining the per-violation penalty under
this subparagraph, the court shall take into account the
degree of culpability, any history of prior such conduct,
ability to pay, the extent of economic gain resulting from
the violation, and such other matters as justice may require.
(B) Limitation.--For any violation of section 5 (other than
section 5(a)(1)), the amount determined under subparagraph
(A) may not exceed $500,000, except that if the court finds
that the defendant committed the violation willfully and
knowingly, the court may increase the limitation established
by this paragraph from $500,000 to an amount not to exceed
$1,500,000.
(3) Attorney fees.--In the case of any successful action
under paragraph (1), the State shall be awarded the costs of
the action and reasonable attorney fees as determined by the
court.
(4) Rights of Federal regulators.--The State shall serve
prior written notice of any action under paragraph (1) upon
the Federal Trade Commission or the appropriate Federal
regulator determined under subsection (b) and provide the
Commission or appropriate Federal regulator with a copy of
its complaint, except in any case in which such prior notice
is not feasible, in which case the State shall serve such
notice immediately upon instituting such action. The Federal
Trade Commission or appropriate Federal regulator shall have
the right--
(A) to intervene in the action;
(B) upon so intervening, to be heard on all matters arising
therein;
(C) to remove the action to the appropriate United States
district court; and
(D) to file petitions for appeal.
(5) Construction.--For purposes of bringing any civil
action under paragraph (1), nothing in this Act shall be
construed to prevent an attorney general of a State from
exercising the powers conferred on the attorney general by
the laws of that State to--
(A) conduct investigations;
(B) administer oaths or affirmations; or
(C) compel the attendance of witnesses or the production of
documentary and other evidence.
(6) Venue; service of process.--
(A) Venue.--Any action brought under paragraph (1) may be
brought in the district court of the United States that meets
applicable requirements relating to venue under section 1391
of title 28, United States Code.
(B) Service of process.--In an action brought under
paragraph (1), process may be served in any district in which
the defendant--
(i) is an inhabitant; or
(ii) maintains a physical place of business.
(7) Limitation on state action while federal action is
pending.--If the Commission or other appropriate Federal
agency under subsection (b) has instituted a civil action or
an administrative action for violation of this Act, no State
attorney general may bring an action under this subsection
during the pendency of that action against any defendant
named in the complaint of the Commission or the other agency
for any violation of this Act alleged in the complaint.
(f) Action by Provider of Internet Access Service.--
(1) Action authorized.--A provider of Internet access
service adversely affected by a violation of section 5 may
bring a civil action in any district court of the United
States with jurisdiction over the defendant, or in any other
court of competent jurisdiction, to--
(A) enjoin further violation by the defendant; or
(B) recover damages in an amount equal to the greater of--
(i) actual monetary loss incurred by the provider of
Internet access service as a result of such violation; or
(ii) the amount determined under paragraph (2).
(2) Statutory damages.--
(A) In general.--For purposes of paragraph (1)(B)(ii), the
amount determined under this paragraph is the amount
calculated by multiplying the number of willful, knowing, or
negligent violations by an amount, in the discretion of the
court, of up to $10 (with each separately addressed unlawful
message carried over the facilities of the provider of
Internet access service or sent to an electronic mail address
obtained from the provider of Internet access service in
violation of section 5(b) treated as a separate violation).
In determining the per-violation penalty under this
subparagraph, the court shall take into account the degree of
culpability, any history of prior such conduct, ability to
pay, the extent of economic gain resulting from the
violation, and such other matters as justice may require.
(B) Limitation.--For any violation of section 5 (other than
section 5(a)(1)), the amount determined under subparagraph
(A) may not exceed $500,000, except that if the court finds
that the defendant committed the violation willfully and
knowingly, the court may increase the limitation established
by this paragraph from $500,000 to an amount not to exceed
$1,500,000.
(3) Attorney fees.--In any action brought pursuant to
paragraph (1), the court may, in its discretion, require an
undertaking for the payment of the costs of such action, and
assess reasonable costs, including reasonable attorneys'
fees, against any party.
SEC. 7. EFFECT ON OTHER LAWS.
(a) Federal Law.--
(1) Nothing in this Act shall be construed to impair the
enforcement of section 223 or 231 of the Communications Act
of 1934 (47 U.S.C. 223 or 231, respectively), chapter 71
(relating to obscenity) or 110 (relating to sexual
exploitation of children) of title 18, United States Code, or
any other Federal criminal statute.
(2) Nothing in this Act shall be construed to affect in any
way the Commission's authority to bring enforcement actions
under FTC Act for materially false or deceptive
representations in commercial electronic mail messages.
(b) State Law.--
(1) In general.--This Act supersedes any State or local
government statute, regulation, or rule regulating the use of
electronic mail to send commercial messages.
(2) Exceptions.--Except as provided in paragraph (3), this
Act does not supersede or pre-empt--
(A) State trespass, contract, or tort law or any civil
action thereunder; or
(B) any provision of Federal, State, or local criminal law
or any civil remedy available under such law that relates to
acts of fraud or theft perpetrated by means of the
unauthorized transmission of commercial electronic mail
messages.
(3) Limitation on exceptions.--Paragraph (2) does not apply
to a State or local government statute, regulation, or rule
that directly regulates unsolicited commercial electronic
mail and that treats the mere sending of unsolicited
commercial electronic mail in a manner that complies with
this Act as sufficient to constitute a violation of such
statute, regulation, or rule or to create a cause of action
thereunder.
(c) No Effect on Policies of Providers of Internet Access
Service.--Nothing in this Act shall be construed to have any
effect on the lawfulness or unlawfulness, under any other
provision of law, of the adoption, implementation, or
enforcement by a provider of Internet access service of a
policy of declining to transmit, route, relay, handle, or
store certain types of electronic mail messages.
SEC. 8. STUDY OF EFFECTS OF UNSOLICITED COMMERCIAL ELECTRONIC
MAIL.
(a) In general.--Not later than 24 months after the date of
the enactment of this Act, the Commission, in consultation
with the Department of Justice and other appropriate
agencies, shall submit a report to the Congress that provides
a detailed analysis of the effectiveness and enforcement of
the provisions of this Act and the need (if any) for the
Congress to modify such provisions.
(b) Required Analysis.--The Commission shall include in the
report required by subsection (a) an analysis of the extent
to which technological and marketplace developments,
including changes in the nature of the devices through which
consumers access their electronic mail messages, may affect
the practicality and effectiveness of the provisions of this
Act.
SEC. 9 SEPARABILITY.
If any provision of this Act or the application thereof to
any person or circumstance is held invalid, the remainder of
this Act and the application of such provision to other
persons or circumstances shall not be affected.
SEC. 10. EFFECTIVE DATE.
The provisions of this Act shall take effect 120 days after
the date of the enactment of this Act.
Mr. WYDEN. Mr. President, I am pleased today to be teaming up again
with my good friend Senator Burns to reintroduce legislation to address
the rising tide of unsolicited commercial e-mail, commonly known as
``spam.''
In the last Congress, our anti-spam legislation was approved
unanimously by the Senate Commerce Committee. Since that time--nearly a
year ago now--the problem of spam has been increasing at an alarming
rate. Roughly
[[Page S5208]]
40 percent of all e-mail traffic in the United States is spam, up from
8 percent in late 2001 and nearly doubling in the past six months. By
2004, according to some estimates, a typical company that fails to take
defensive action could find that over 50 percent of its e-mail messages
will be spam. This isn't just annoying, it's costly: one consulting
group has estimated that spam will cost U.S. organizations more than
$10 billion this year, due to expenses for anti-spam equipment and
manpower and lost productivity.
If nothing is done, the situation is only likely to get worse. The
fundamental problem--and what makes spam different from other types of
marketing--is that it is so cheap to send huge volumes of messages.
With the stroke of a key, the spammer can let fly a massive torrent of
e-mails. And since the sender doesn't pay any per-message postage, the
incentive is to send as many as possible. The cost of all these extra
messages is borne by the Internet service providers, ISPs, and the
recipients, not by the sender. So as far as the spammer is concerned,
the sky is the limit.
Anyone who uses e-mail should be deeply concerned about this trend.
In a few short years, e-mail quickly went from a novelty to a core
medium of communication for millions of Americans. They came to rely on
it daily, for business and personal communications alike. But just as
quickly as e-mail rose to prominence, its usefulness could dwindle--
buried under an avalanche of endless ``Get Rich Quick,'' ``Lose Weight
Fast,'' and offensive pornographic marketing pitches. As consumers grow
frustrated with bloated in-boxes, and as ISP networks and e-commerce
websites are slowed by mounting junk e-mail traffic jams, enthusiasm
for the entire medium of e-mail and e-commerce could sour.
Right now, e-mail users and ISPs are trying to manage the problem as
best they can. They use filtering software, or lists of known spammers,
or sign up for special anti-spam services. But these tactics can be
burdensome, costly, and only partially effective. The fact is, existing
laws do not provide sufficient tools. More help is needed.
Many States have moved to address the issue. But e-mail is not a
medium that respects, or even recognizes, State borders. Indeed, e-mail
addresses tell nothing about which State the user is located in, so the
sender and recipient of an e-mail message may have no clue where the
other is located. Therefore, this is one area where a State-by-State
patchwork of rules makes no sense. It is time for a nationwide
approach.
That is why Senator Burns and I are reintroducing the ``Controlling
the Assault of Non-Solicited Pornography and Marketing Act''--the CAN
SPAM Act, for short. This bipartisan legislation says that if you want
to send unsolicited marketing e-mail, you've got to play by a set of
rules--rules that allow the recipient to see where the messages are
coming from, and to tell the sender to stop. The basic goal is simple:
give the consumer more control.
Specifically, the bill would prohibit the use of falsified or
deceptive headers or subject lines, so that consumers will be able to
identify the true source of the message. A sender of unsolicited
marketing e-mail would also be required to provide the recipient with a
return address or similar mechanism that can be used to tell the
sender, ``no more.'' And once a consumer says ``no more,'' a sender
would be required to honor that request. Senders of unsolicited
commercial messages would also be required to include a clear
notification that the message is an advertisement or solicitation, and
a valid physical postal address.
The bill includes strong enforcement provisions to ensure compliance.
Spammers that intentionally disguise their identities would be subject
to misdemeanor criminal penalties. The Federal Trade Commission would
have authority to impose civil fines. State attorneys general would be
able to bring suit on behalf of the citizens of their states. And ISPs
would be able to bring suit to keep unlawful spam off their networks.
In all cases, particularly high penalties would be available for true
``bad actors''--the shady, high-volume spammers who have no intention
of behaving in a lawful and responsible manner.
Our goal here is not to discourage legitimate online communications
between businesses and their customers. Senator Burns and I have no
intention of interfering with a company's ability to use e-mail to
inform customers of warranty information, provide account holders with
monthly account statements, and so forth. Rather, we want to go after
those unscrupulous individuals who use e-mail in an annoying and
misleading fashion. I believe this bill strikes that important balance.
Senator Burns and I have been at this for three years now, and have
worked with many different groups in shaping the legislation. We
believe we have made real progress in addressing some of the legitimate
concerns that were raised about previous versions of the bill.
Naturally, there are interested parties who have additional ideas for
measures they would like to see. We will be happy to continue to work
with them, and I would also point out that the bill calls for a study
to evaluate this initial Federal step against spam and to determine
whether further provisions are needed. But the bill we are introducing
today offers a workable, common-sense approach that should be
politically viable this year.
I am pleased that Senators Breaux, Landrieu, Schumer, and Thomas are
joining Senator Burns and me in cosponsoring this legislation. I urge
the rest of my Senate colleagues to join with us on moving it forward
as promptly as possible, so that the Senate won't still be debating the
issue, with no action taken, several years from now.
______
By Mr. Smith.
S. 879. A bill to amend the Internal Revenue Code of 1986 to increase
and extend the special depreciation allowance, and for other purpose;
to the Committee on Finance.
Mr. SMITH. Mr. President, I rise today to introduce the Economic
Stimulus Act of 2003, legislation that will allow a 50 percent bonus
depreciation over a 5 year period. Last year I was proud to introduce
and pass a 30 percent bonus depreciation incentive as part of
legislation signed into law in March 2002. We had great bipartisan
support on this issue and I hope that similar action will take place
during consideration of this year's tax bill.
I introduce the Economic Stimulus Act of 2003 in order to build on
last year's effort by both increasing that bonus to 50 percent and
extending it through 2008. Our economy clearly needs a boost, and this
provision will complement many of the provisions in President Bush's
economic growth package.
Recently, U.S. Department of Commerce data revealed that private
investment in high tech equipment ended it's decline as this provision
went into effect last year and has begun to increase modestly in the
past year. A significant increase in that bonus along with an extension
of its effective date can only boost business investment even further.
By extending the effective date past next year, businesses will be able
to better plan for sustained increases in technology investment.
This legislation will provide an immediate and broad stimulus to the
U.S. economy by encouraging business investment. In my own state of
Oregon I can look to both heavy industry and the hi tech sector and see
the real return this legislation will have on our economy. Heavy
industry in my state will have an ability to save family-wage jobs and
put additional employees to work in Oregon. For example, the rail
supply industry has been hard hit, and though there is a need for
investment, there has been a reluctance to invest significant sums that
are necessary to sustain this industry. Bonus depreciation provisions
is an additional incentive that will lead institutional investors,
leasing companies, shippers and railroads to invest in new rail
equipment.
In Oregon's high-tech sector the strong increase in the first year
depreciation amount will have a real and positive impact on the
investment environment for high-tech equipment, such as computer
hardware, software and broadband network infrastructure. This
legislation will definitely stimulate the demand for the software and
the whole high-tech sector. In Oregon, the hi-tech sector has been a
major component of economic growth and I am intent that this engine of
growth continue to provide stimulus to the economy.
[[Page S5209]]
I note that there are a myriad of bonus depreciation proposals out
there. Most don't provide enough lead time however to make real and
substantive business decisions. The current downturn is caused in part
by a decline in business investment. So what kind of investment can be
stimulated by a year-long depreciation incentive? It probably gives
business people time to buy a chair and some new wastebaskets.
But a year is not enough time to start a major project that could
employ thousands of people. It doesn't allow time to build heavy
equipment, modernize a lumber mill, revamp a corporate computer system,
repair a railbed, or construct an airplane. It doesn't allow enough
time to obtain building permits, perform environmental reviews, or
complete architectural or engineering studies.
We need to create a booming economy not just for today, but for the
next several years. So I must emphasize that short depreciation
proposals lack economic weight.
Bonus depreciation is probably the best idea of any stimulus
proposal. I ask that all my colleagues consider and support the
Economic Stimulus Act of 2003. I ask unanimous consent 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. 879
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 ``Economic Stimulus Act of
2003''.
SEC. 2. EXPANSION OF SPECIAL DEPRECIATION ALLOWANCE.
(a) In General.--Subsection (k) of section 168 (relating to
accelerated cost recovery system) is amended--
(1) by adding at the end of paragraph (1) the following new
flush sentence:
``In the case of any qualified property acquired by the
taxpayer pursuant to a written binding contract which was
entered into after the date of the enactment of the Economic
Stimulus Act of 2003, subparagraph (A) shall be applied by
substituting `50 percent' for `30 percent'.'',
(2) by redesignating subclauses (III) and (IV) of paragraph
(2)(A)(i) as subclauses (IV) and (V), respectively,
(3) by inserting after subclause (II) of paragraph
(2)(A)(i) the following new subclause:
``(III) which is a motion picture film or videotape (as
defined in section 167(f)(1)(B) for which a deduction is
allowable under section 167 without regard to this
subsection,'',
(4) by striking clause (iv) of paragraph (2)(A) and
inserting the following new clause:
``(iv) which is placed in service by the taxpayer--
``(I) except as provided in subclauses (II) and (III),
before April 1, 2010,
``(II) in the case of transportation property described in
subparagraph (B), before the later of the date which is 90
days after delivery of such property or which is 10 years
after the date of the enactment of the Economic Stimulus Act
of 2003, or
``(III) in the case of other property described in
subparagraph (B), before January 1, 2011.'',
(5) by inserting ``transportation property which meets the
requirements of clauses (i), (ii), and (iii) of subparagraph
(A), or other'' before ``property'' in the matter preceding
subclause (I) of paragraph (2)(B)(i),
(6) by striking ``production before September 11, 2004.''
in paragraph (2)(B)(ii) and inserting ``production--
``(I) with respect to transportation property, before the
earlier of the date which is 90 days after delivery of such
property or which is 10 years after the date of the enactment
of the Economic Stimulus Act of 2003, and
``(II) with respect to other property, before January 1,
2010.'',
(7) by striking ``September 11, 2004'' in the heading of
clause (ii) of paragraph (2)(B) and inserting ``certain'',
(8) by striking ``subparagraph'' in paragraph (2)(B)(iii)
and inserting ``paragraph'',
(9) by striking ``September 11, 2004'' each place it
appears in the subsection and inserting ``January 1, 2010'',
and
(10) by striking ``September 11, 2004'' in the heading
thereof and inserting ``January 1, 2010''.
(b) Conforming Amendments.--
(1) The heading for clause (i) of section 1400L(b)(2)(C) of
the Internal Revenue Code of 1986 is amended by striking ``30
percent additional'' and inserting ``Additional''.
(2) Section 1400L(b)(2)(D) of such Code is amended by
inserting ``(as in effect on the day after the date of the
enactment of this section)'' after ``section 168(k)(2)(D)''.
(c) Effective Date.--The amendments made by this section
shall apply to property acquired after the date of the
enactment of this Act, in taxable years ending after such
date.
______
By Mr. BINGAMAN (for himself, Mr. Cochran, Mrs. Lincoln, Mr.
Hatch, Mr. Jeffords, Ms. Landrieu, and Mr. Dayton):
S. 881. A bill to amend title XVIII of the Social Security Act to
establish a minimum geographic cost-of-practice index value for
physicians' services furnished under the Medicare program; to the
Committee on Finance.
Mr. Bingaman. Mr. President, the legislation I am introducing today
with Senators Cochran, Lincoln, Hatch, Jeffords, Landrieu, and Dayton
entitled the ``Rural Equity Payment Index Reform Act of 2003'' is
designed to reduce the work payment inequity between urban and rural
localities under the Medicare physician fee schedule. This legislation
is a companion bill to HR 33, introduced by Representative Doug
Bereuter, which now has over 65 House cosponsors.
In my own State of New Mexico, recruitment and retention of
physicians in rural areas is an ongoing problem, which is contributed
to, in a part, by inequities in payments these physicians receive in
comparison to their urban counterparts. With only 170 physicians per
100,000 people, New Mexico ranks well behind the national average with
regard to primary care and specialist physicians.
Lack of adequate reimbursement, in the face of increasing costs, is a
critical factor leading to the shortage of physician services in my
state, and in other rural areas. The State of New Mexico ranks 32nd in
the nation in terms of Medicare reimbursement, as defined by the
geographic adjustment factor used to set reimbursement rates. Yet, an
office visit to a rural physician is no different in time, effort, or
workload compared to an office visit to an urban physician.
Geographically adjusting the quantifiable workload simply makes no
sense; physician work should be valued equally, irrespective of where a
physician works.
This inequity unfairly ``punishes'' physicians in non-metropolitan
areas, where there are often proportionately larger populations of
Medicare beneficiaries. In effect, the rural areas subsidize healthcare
in urban areas, while they struggle to attract health care
professionals. Since Medicare beneficiaries pay into the program on the
basis of income and wages, and beneficiaries pay the same premium for
part B services, these inequitable physician fee payments result in
substantial cross-subsidies from people living in low payment States to
people living in higher payment States.
Targeted efforts to provide relief to rural doctors in low payment
localities with more equitable payments would improve access to primary
and tertiary services. The bill I am introducing would lessen the
disparity that currently exists between rural and urban areas. It
gradually phases in a floor that upwardly adjusts reimbursement rates
for rural providers, without lowering the reimbursement for urban
providers, so that the discrepancy will progressively be corrected.
This bill would phase-in a floor of 1.000 for the Medicare
``physician work adjuster'', thereby raising all localities with a work
adjuster below 1.000 to that level. This proposed change would be put
in place without regard to the budget neutrality agreement in the
present law. The phase-in approach softens the budgetary implications
by spreading it out over four years.
It is estimated that payment rates to New Mexico physicians will
increase by 2.8 million dollars over a 4-year period. In my state, this
represents an important increase in reimbursements for physicians, but
it also represents a tangible acknowledgement of the hard work and
efforts that our physicians commit to patient care, particularly rural
based physicians.
Some of the following organizations, which have expressed support for
this legislation, include the National Rural Health Association, the
American College of Physicians/American Society of Internal Medicine,
and the American Physical Therapy association.
I ask unanimous consent that letters of support and the text of the
bill be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 881
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; FINDINGS.
(a) Short Title.--This Act may be cited as the ``Rural
Equity Payment Index Reform Act of 2003''.
[[Page S5210]]
(b) Findings.--Congress makes the following findings:
(1) Variations in the physician work adjustment factors
under section 1848(e) of the Social Security Act (42 U.S.C.
1395w-4w(e)) result in a physician work payment inequity
between urban and rural localities under the medicare
physician fee schedule.
(2) The amount the medicare program spends on its
beneficiaries varies substantially across the country, far
more than can be accounted for by differences in the cost of
living or differences in health status.
(3) Since beneficiaries and others pay into the program on
the basis of income and wages and beneficiaries pay the same
premium for part B services, these payments result in
substantial cross-subsidies from people living in low payment
States with conservative practice styles or beneficiary
preferences to people living in higher payment States with
aggressive practice styles or beneficiary preferences.
(4) Congress has been mindful of these variations when it
comes to capitation payments made to managed care plans under
the Medicare+Choice program and has put in place floors that
increase monthly payments by more than one-third in some of
the lowest payment counties over what would otherwise occur.
But this change addresses only a very small fraction of
medicare beneficiaries who are presently enrolled in
Medicare+Choice plans operating in low payment counties.
(5) Unfortunately, Congress has only begun to address the
underlying problem of substantial geographic variations in
fee-for-service spending under traditional medicare.
(6) Improvements in rural hospital payment systems under
the medicare program help to reduce aggregate per capita
payment variation as rural hospitals are in large part
located in low payment counties.
(7) Many rural communities have great difficulty attracting
and retaining physicians and other skilled health
professionals.
(8) Targeted efforts to provide relief to rural doctors in
low payment localities would further reduce variation by
improving access to primary and tertiary services along with
more equitable payment.
(9) Geographic adjustment factors in the medicare program's
resource-based relative value scale unfairly suppress fee-
for-service payments to rural providers.
(10) Actual costs are not presently being measured
accurately and payments do not reflect the costs of providing
care.
(11) Unless something is done about medicare payment in
rural areas, as the baby boom cohort ages into medicare, the
financial demands on rural communities to subsidize care for
their aged and disabled medicare beneficiaries will progress
from difficult to impossible in another 10 years.
(12) The impact on rural health care infrastructure will be
first felt in economically depressed rural areas where the
ability to shift costs is already limited.
SEC. 2. PHYSICIAN FEE SCHEDULE WAGE INDEX REVISION.
Section 1848(e)(1) of the Social Security Act (42 U.S.C.
1395w-4(e)(1)) is amended--
(1) in subparagraph (A), by striking ``subparagraphs (B)
and (C)'' and inserting ``subparagraphs (B), (C), and (E)'';
and
(2) by adding at the end the following new subparagraph:
``(E) Floor for work geographic indices.--
``(i) In general.--Notwithstanding the work geographic
index otherwise calculated under subparagraph (A)(iii), in no
case may the work geographic index applied for payment under
this section be less than--
``(I) 0.976 for services furnished during 2004;
``(II) 0.987 for services furnished during 2005;
``(III) 0.995 for services furnished during 2006; and
``(IV) 1.000 for services furnished during 2007 and
subsequent years.
``(ii) Exemption from limitation on annual adjustments.--
The increase in expenditures attributable to clause (i) shall
not be taken into account in applying subsection
(c)(2)(B)(ii)(II).''.
____
NRHA Supports ``Equal Pay for Equal Work''
Washington, DC., Jan. 7.--The National Rural Health
Association (NRHA) today strongly endorsed legislation
introduced by Representative Doug Bereuter (R.-Neb) that
would provide rural physicians with Medicare payments closer
to those of their urban counterparts. The Rural Equity
Payment Index Reform Act addresses the little known fact that
the federal government pays rural doctors at a lower rate.
``An office visit to a rural physician is no different than
an office visit to an urban physician,'' NRHA President Wayne
Myers, M.D., said. ``The idea that physicians are reimbursed
for their work and their skills at a lower rate simply on the
basis that they choose to practice in a rural area and serve
our rural communities is completely ludicrous.''
The Bereuter bill would lessen the disparity that currently
exists between urban and rural areas. By gradually phasing in
a floor that upwardly adjusts reimbursement rates for rural
providers, without lowering the reimbursement in urban areas,
the discrepancy in payment will progressively be corrected.
``These health care providers put as much or even more time,
skill and intensity into a patient visit as their urban
counterparts,'' Rep. Bereuter said, ``yet they are paid less
for their work under the Medicare program. This is a formula
that is punishing non-metropolitan areas.''
Under the current Medicare physician payment formula,
residents of non-metropolitan areas essentially subsidize the
delivery of health care in metropolitan areas. Even though
rural areas tend to have larger populations of Medicare
beneficiaries, they are subsidizing health care in urban
areas, while their own communities are struggling to attract
health care professionals.
``This is a top priority issue for the NRHA,'' Myers said.
``In fact, this disparity in health care is among the basic
reasons the NRHA exists. ``For far too long, rural American
health care has been overlooked in Washington. We applaud
Congressman Bereuter for his efforts and look forward to
working with him to ensure rural physicians--and rural
residents alike--receive an equitable deal.''
The NRHA is a national nonprofit membership organization
that provides leadership on rural health issues. The
association's mission is to improve the health of rural
Americans and to provide leadership on rural health issues
through advocacy, communications, education and research. The
NRHA membership is made up of a diverse collection of
individuals and organizations.
____
American Physical Therapy Association,
March 25, 2003.
Hon. Doug Bereuter (R-NE),
Rayburn House Office Building,
Washington, DC.
Dear congressman Bereuter: The American Physical Therapy
Association (APTA) would like to express its appreciation for
your legislation to correct an inequity in Medicare payments
to rural health care providers. APTA strongly supports HR 33,
The Rural Equity Payment Index Reform (REPaIR) Act. This
legislation is a positive step to ensuring improved access to
quality health care services, including those delivered by
licensed physical therapists, in rural America. The current
inequity of payment to health care providers under the
Medicare physician fee schedule and its Geographic Medical
Practice Index needs to be corrected to ensure that qualified
providers continue to serve the needs of our rural
communities.
Physical therapists are highly qualified and recognized
providers under Medicare who bill for their services under
the Medicare Physician Fee Schedule. Your legislation (HR 33)
would improve access and payment for appropriate physical
therapy services in rural and underserved areas. This
legislation would also go a long way to attract and retain
physical therapist to consider rural areas for practice and
service. Access to qualified health care providers is a
growing problem in rural America and your legislation is one
of many steps to reverse this trend.
We applaud your dedication to rural health and express our
support that Congress pass HR 33, The Rural Equity Payment
Index Reform (REPaIR) Act in this Congress. If you have
questions, please feel free to contact Justin Moore at 703-
706-3162 or [email protected].
Sincerely,
G. David Mason,
Vice President, Government Affairs.
______
By Mr. BAUCUS (for himself and Mr. Grassley):
S. 882. A bill to amend the Internal Revenue Code of 1986 to provide
improvements in tax administration and taxpayer safeguards, and for
other purposes; to the Committee on Finance.
Mr. GRASSLEY. Mr. President, today we are introducing the Tax
Administration Good Government Act.
The legislation contains five major components. First, it provides
additional safeguards for taxpayers. Second, the legislation
significantly simplifies the current interest and penalty regimes.
Third, the Act also includes the proposals passed out of the Finance
Committee on April 2, 2003 and included in a bill introduced by
Senators Hatch and Breaux to modernize the United States Tax Court.
Fourth, our legislation also includes several provisions, some of
which were requested by the Treasury Department and the Joint Committee
on Taxation, to strike an appropriate balance in protecting taxpayer
confidentiality through disclosure reforms. Finally, the legislation
takes a small, but important step toward simplification of the tax code
through the elimination of obsolete provisions.
We have worked closely with the Treasury Department, the Internal
Revenue Service, the National Taxpayer Advocate and the Joint Committee
on Taxation to develop this package of proposals to promote good
government in the administration of our tax code.
Congress's responsibility for the tax system does not stop after we
pass tax law changes. We have an oversight responsibility to ensure
that taxpayer rights are protected, that our tax laws are not
administered counter to Congressional intent, that the judicial
[[Page S5211]]
body with primary jurisdiction over the tax laws has the tools
necessary to provide independent review of controversies between
taxpayers and the Internal Revenue Service, and to take steps to
simplify the tax code whenever possible.
It is our intention to pass a package of tax administration good
government proposals out of the Finance Committee in the coming months.
We urge our colleagues to support this important legislation.
We also submit for the Record a more detailed description of the
specific provisions included in the Tax Administration Good Government
Act.
I ask unanimous consent that the text of the bill and the description
be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 882
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Tax
Administration Good Government Act''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; etc.
TITLE I--IMPROVEMENTS IN TAX ADMINISTRATION AND TAXPAYER SAFEGUARDS
Subtitle A--Improving Efficiency and Safeguards in Internal Revenue
Service Collection
Sec. 101. Waiver of user fee for installment agreements using automated
withdrawals.
Sec. 102. Partial payment of tax liability in installment agreements.
Sec. 103. Termination of installment agreements.
Sec. 104. Office of Chief Counsel review of offers in compromise.
Sec. 105. Seven-day threshold on tolling of statute of limitations
during National Taxpayer Advocate review.
Sec. 106. Increase in penalty for bad checks or money orders.
Sec. 107. Financial management service fees.
Sec. 108. Elimination of restriction on offsetting refunds from former
residents.
Subtitle B--Processing and Personnel
Sec. 111. Explanation of statute of limitations and consequences of
failure to file.
Sec. 112. Disclosure of tax information to facilitate combined
employment tax reporting.
Sec. 113. Expansion of declaratory judgment remedy to tax-exempt
organizations.
Sec. 114. Amendment to Treasury auction reforms.
Sec. 115. Revisions relating to termination of employment of Internal
Revenue Service employees for misconduct.
Sec. 116. IRS Oversight Board approval of use of critical pay
authority.
Sec. 117. Low-income taxpayer clinics.
Sec. 118. Enrolled agents.
Sec. 119. Establishment of disaster response team.
Sec. 120. Accelerated tax refunds.
Sec. 121. Study on clarifying record-keeping responsibilities.
Sec. 122. Streamline reporting process for National Taxpayer Advocate.
Subtitle C--Other Provisions
Sec. 131. Penalty on failure to report interests in foreign financial
accounts.
Sec. 132. Repeal of personal holding company tax.
TITLE II--REFORM OF PENALTY AND INTEREST
Sec. 201. Individual estimated tax.
Sec. 202. Corporate estimated tax.
Sec. 203. Increase in large corporation threshold for estimated tax
payments.
Sec. 204. Abatement of interest.
Sec. 205. Deposits made to suspend running of interest on potential
underpayments.
Sec. 206. Freeze of provision regarding suspension of interest where
Secretary fails to contact taxpayer.
Sec. 207. Expansion of interest netting.
Sec. 208. Clarification of application of Federal tax deposit penalty.
Sec. 209. Frivolous tax submissions.
TITLE III--UNITED STATES TAX COURT MODERNIZATION
Subtitle A--Tax Court Procedure
Sec. 301. Jurisdiction of Tax Court over collection due process cases.
Sec. 302. Authority for special trial judges to hear and decide certain
employment status cases.
Sec. 303. Confirmation of authority of Tax Court to apply doctrine of
equitable recoupment.
Sec. 304. Tax Court filing fee in all cases commenced by filing
petition.
Sec. 305. Amendments to appoint employees.
Sec. 306. Expanded use of Tax Court practice fee for pro se taxpayers.
Subtitle B--Tax Court Pension and Compensation
Sec. 311. Annuities for survivors of Tax Court judges who are
assassinated.
Sec. 312. Cost-of-living adjustments for Tax Court judicial survivor
annuities.
Sec. 313. Life insurance coverage for Tax Court judges.
Sec. 314. Cost of life insurance coverage for Tax Court judges age 65
or over.
Sec. 315. Modification of timing of lump-sum payment of judges' accrued
annual leave.
Sec. 316. Participation of Tax Court judges in the Thrift Savings Plan.
Sec. 317. Exemption of teaching compensation of retired judges from
limitation on outside earned income.
Sec. 318. General provisions relating to magistrate judges of the Tax
Court.
Sec. 319. Annuities to surviving spouses and dependent children of
magistrate judges of the Tax Court.
Sec. 320. Retirement and annuity program.
Sec. 321. Incumbent magistrate judges of the Tax Court.
Sec. 322. Provisions for recall.
Sec. 323. Effective date.
TITLE IV--CONFIDENTIALITY AND DISCLOSURE
Sec. 401. Clarification of definition of church tax inquiry.
Sec. 402. Collection activities with respect to joint return
disclosable to either spouse based on oral request.
Sec. 403. Taxpayer representatives not subject to examination on sole
basis of representation of taxpayers.
Sec. 404. Prohibition of disclosure of taxpayer identifying number with
respect to disclosure of accepted offers-in-compromise.
Sec. 405. Compliance by contractors and other agents with
confidentiality safeguards.
Sec. 406. Higher standards for requests for and consents to disclosure.
Sec. 407. Civil damages for unauthorized inspection or disclosure.
Sec. 408. Expanded disclosure in emergency circumstances.
Sec. 409. Disclosure of taxpayer identity for tax refund purposes.
Sec. 410. Disclosure to State officials of proposed actions related to
section 501(c) organizations.
Sec. 411. Treatment of public records.
Sec. 412. Investigative disclosures.
Sec. 413. TIN matching.
Sec. 414. Form 8300 disclosures.
Sec. 415. Technical amendment.
TITLE V--SIMPLIFICATION THROUGH ELIMINATION OF INOPERATIVE PROVISIONS
Sec. 501. Simplification through elimination of inoperative provisions.
TITLE I--IMPROVEMENTS IN TAX ADMINISTRATION AND TAXPAYER SAFEGUARDS
Subtitle A--Improving Efficiency and Safeguards in Internal Revenue
Service Collection
SEC. 101. WAIVER OF USER FEE FOR INSTALLMENT AGREEMENTS USING
AUTOMATED WITHDRAWALS.
(a) In General.--Section 6159 (relating to agreements for
payment of tax liability in installments) is amended by
redesignating subsection (e) as subsection (f) and by
inserting after subsection (d) the following:
``(e) Waiver of User Fees for Installment Agreements Using
Automated Withdrawals.--In the case of a taxpayer who enters
into an installment agreement in which automated installment
payments are agreed to, the Secretary shall waive the fee (if
any) for entering into the installment agreement.''.
(b) Effective Date.--The amendments made by this section
shall apply to agreements entered into on or after the date
of the enactment of this Act.
SEC. 102. PARTIAL PAYMENT OF TAX LIABILITY IN INSTALLMENT
AGREEMENTS.
(a) In General.--
(1) Section 6159(a) (relating to authorization of
agreements) is amended--
(A) by striking ``satisfy liability for payment of'' and
inserting ``make payment on'', and
(B) by inserting ``full or partial'' after ``facilitate''.
(2) Section 6159(c) (relating to Secretary required to
enter into installment agreements in certain cases) is
amended in the matter preceding paragraph (1) by inserting
``full'' before ``payment''.
(b) Requirement To Review Partial Payment Agreements Every
Two Years.--Section 6159, as amended by this Act, is amended
by redesignating subsections (d), (e), and (f) as subsections
(e), (f), and (g), respectively, and inserting after
subsection (c) the following new subsection:
``(d) Secretary Required To Review Installment Agreements
for Partial Collection Every Two Years.--In the case of
[[Page S5212]]
an agreement entered into by the Secretary under subsection
(a) for partial collection of a tax liability, the Secretary
shall review the agreement at least once every 2 years.''.
(c) Effective Date.--The amendments made by this section
shall apply to agreements entered into on or after the date
of the enactment of this Act.
SEC. 103. TERMINATION OF INSTALLMENT AGREEMENTS.
(a) In General.--Section 6159(b)(4) (relating to failure to
pay an installment or any other tax liability when due or to
provide requested financial information) is amended by
striking ``or'' at the end of subparagraph (B), by
redesignating subparagraph (C) as subparagraph (E), and by
inserting after subparagraph (B) the following:
``(C) to make a Federal tax deposit under section 6302 at
the time such deposit is required to be made,
``(D) to file a return of tax imposed under this title by
its due date (including extensions), or''.
(b) Conforming Amendment.--Section 6159(b)(4) is amended by
striking ``Failure to pay an installment or any other tax
liability when due or to provide requested financial
information'' and inserting ``Failure to make payments or
deposits or file returns when due or to provide requested
financial information''.
(c) Effective Date.--The amendments made by this section
shall apply to failures occurring on or after the date of the
enactment of this Act.
SEC. 104. OFFICE OF CHIEF COUNSEL REVIEW OF OFFERS IN
COMPROMISE.
(a) In General.--Section 7122(b) (relating to record) is
amended by striking ``Whenever a compromise'' and all that
follows through ``his delegate'' and inserting ``If the
Secretary determines that an opinion of the General Counsel
for the Department of the Treasury, or the Counsel's
delegate, is required with respect to a compromise, there
shall be placed on file in the office of the Secretary such
opinion''.
(b) Conforming Amendments.--Section 7122(b) is amended by
striking the second and third sentences.
(c) Effective Date.--The amendments made by this section
shall apply to offers-in-compromise submitted or pending on
or after the date of the enactment of this Act.
SEC. 105. SEVEN-DAY THRESHOLD ON TOLLING OF STATUTE OF
LIMITATIONS DURING NATIONAL TAXPAYER ADVOCATE
REVIEW.
(a) In General.--Section 7811(d)(1) (relating to suspension
of running of period of limitation) is amended by inserting
after ``application,'' the following: ``but only if the date
of such decision is at least 7 days after the date of the
taxpayer's application''.
(b) Effective Date.--The amendment made by this section
shall apply to applications filed after the date of the
enactment of this Act.
SEC. 106. INCREASE IN PENALTY FOR BAD CHECKS OR MONEY ORDERS.
(a) In General.--Section 6657 (relating to bad checks) is
amended--
(1) by striking ``$750'' and inserting ``$1,250'', and
(2) by striking ``$15'' and inserting ``$25''.
(b) Effective Date.--The amendments made by this section
apply to checks or money orders received after December 31,
2003.
SEC. 107. FINANCIAL MANAGEMENT SERVICE FEES.
Notwithstanding any other provision of law, the Financial
Management Service may charge the Internal Revenue Service,
and the Internal Revenue Service may pay the Financial
Management Service, a fee sufficient to cover the full cost
of implementing a continuous levy program under subsection
(h) of section 6331 of the Internal Revenue Code of 1986. Any
such fee shall be based on actual levies made and shall be
collected by the Financial Management Service by the
retention of a portion of amounts collected by levy pursuant
to that subsection. Amounts received by the Financial
Management Service as fees under that subsection shall be
deposited into the account of the Department of the Treasury
under section 3711(g)(7) of title 31, United States Code, and
shall be collected and accounted for in accordance with the
provisions of that section. The amount credited against the
taxpayer's liability on account of the continuous levy shall
be the amount levied, without reduction for the amount paid
to the Financial Management Service as a fee.
SEC. 108. ELIMINATION OF RESTRICTION ON OFFSETTING REFUNDS
FROM FORMER RESIDENTS.
Section 6402(e) (relating to collection of past-due,
legally enforceable State income tax obligations) is amended
by striking paragraph (2) and by redesignating paragraphs
(3), (4), (5), (6), and (7) as paragraphs (2), (3), (4), (5),
and (6), respectively.
Subtitle B--Processing and Personnel
SEC. 111. EXPLANATION OF STATUTE OF LIMITATIONS AND
CONSEQUENCES OF FAILURE TO FILE.
The Secretary of the Treasury or the Secretary's delegate
shall, as soon as practicable but not later than 180 days
after the date of the enactment of this Act, revise the
statement required by section 6227 of the Omnibus Taxpayer
Bill of Rights (Internal Revenue Service Publication No. 1),
and any instructions booklet accompanying a general income
tax return form for taxable years beginning after 2001
(including forms 1040, 1040A, 1040EZ, and any similar or
successor forms relating thereto), to provide for an
explanation of--
(1) the limitations imposed by section 6511 of the Internal
Revenue Code of 1986 on credits and refunds; and
(2) the consequences under such section 6511 of the failure
to file a return of tax.
SEC. 112. DISCLOSURE OF TAX INFORMATION TO FACILITATE
COMBINED EMPLOYMENT TAX REPORTING.
Section 6103(d)(5) is amended to read as follows:
``(5) Disclosure for combined employment tax reporting.--
The Secretary may disclose taxpayer identity information and
signatures to any agency, body, or commission of any State
for the purpose of carrying out with such agency, body, or
commission a combined Federal and State employment tax
reporting program approved by the Secretary. Subsections
(a)(2) and (p)(4) and sections 7213 and 7213A shall not apply
with respect to disclosures or inspections made pursuant to
this paragraph.''.
SEC. 113. EXPANSION OF DECLARATORY JUDGMENT REMEDY TO TAX-
EXEMPT ORGANIZATIONS.
(a) In General.--Paragraph (1) of section 7428(a) (relating
to creation of remedy) is amended--
(1) in subparagraph (B) by inserting after ``509(a))'' the
following: ``or as a private operating foundation (as defined
in section 4942(j)(3))''; and
(2) by amending subparagraph (C) to read as follows:
``(C) with respect to the initial qualification or
continuing qualification of an organization as an
organization described in section 501(c) (other than
paragraph (3)) or 501(d) which is exempt from tax under
section 501(a), or''.
(b) Court Jurisdiction.--Subsection (a) of section 7428 is
amended in the material following paragraph (2) by striking
``United States Tax Court, the United States Claims Court, or
the district court of the United States for the District of
Columbia'' and inserting the following: ``United States Tax
Court (in the case of any such determination or failure) or
the United States Claims Court or the district court of the
United States for the District of Columbia (in the case of a
determination or failure with respect to an issue referred to
in subparagraph (A) or (B) of paragraph (1)),''.
(c) Effective Date.--The amendments made by this section
shall apply to pleadings filed with respect to determinations
(or requests for determinations) made after December 31,
2003.
SEC. 114. AMENDMENT TO TREASURY AUCTION REFORMS.
(a) In General.--Clause (i) of section 202(c)(4)(B) of the
Government Securities Act Amendments of 1993 (31 U.S.C. 3121
note) is amended by inserting before the semicolon ``(or, if
earlier, at the time the Secretary releases the minutes of
the meeting in accordance with paragraph (2))''.
(b) Effective Date.--The amendment made by this section
shall apply to meetings held after the date of the enactment
of this Act.
SEC. 115. REVISIONS RELATING TO TERMINATION OF EMPLOYMENT OF
INTERNAL REVENUE SERVICE EMPLOYEES FOR
MISCONDUCT.
(a) In General.--Subchapter A of chapter 80 (relating to
application of internal revenue laws) is amended by inserting
after section 7804 the following new section:
``SEC. 7804A. TERMINATION OF EMPLOYMENT FOR MISCONDUCT.
``(a) In General.--Subject to subsection (c), the
Commissioner shall terminate the employment of any employee
of the Internal Revenue Service if there is a final
administrative or judicial determination that such employee
committed any act or omission described under subsection (b)
in the performance of the employee's official duties. Such
termination shall be a removal for cause on charges of
misconduct.
``(b) Acts or Omissions.--The acts or omissions described
under this subsection are--
``(1) willful failure to obtain the required approval
signatures on documents authorizing the seizure of a
taxpayer's home, personal belongings, or business assets,
``(2) providing a false statement under oath with respect
to a material matter involving a taxpayer or taxpayer
representative,
``(3) with respect to a taxpayer or taxpayer
representative, the violation of--
``(A) any right under the Constitution of the United
States, or
``(B) any civil right established under--
``(i) title VI or VII of the Civil Rights Act of 1964,
``(ii) title IX of the Education Amendments of 1972,
``(iii) the Age Discrimination in Employment Act of 1967,
``(iv) the Age Discrimination Act of 1975,
``(v) section 501 or 504 of the Rehabilitation Act of 1973,
or
``(vi) title I of the Americans with Disabilities Act of
1990,
``(4) falsifying or destroying documents to conceal
mistakes made by any employee with respect to a matter
involving a taxpayer or taxpayer representative,
``(5) assault or battery on a taxpayer or taxpayer
representative, but only if there is a criminal conviction,
or a final judgment by a court in a civil case, with respect
to the assault or battery,
``(6) violations of this title, Department of the Treasury
regulations, or policies of the Internal Revenue Service
(including the Internal Revenue Manual) for the purpose of
[[Page S5213]]
retaliating against, or harassing, a taxpayer or taxpayer
representative,
``(7) willful misuse of the provisions of section 6103 for
the purpose of concealing information from a congressional
inquiry,
``(8) willful failure to file any return of tax required
under this title on or before the date prescribed therefor
(including any extensions) when a tax is due and owing,
unless such failure is due to reasonable cause and not due to
willful neglect,
``(9) willful understatement of Federal tax liability,
unless such understatement is due to reasonable cause and not
due to willful neglect, and
``(10) threatening to audit a taxpayer for the purpose of
extracting personal gain or benefit.
``(c) Determinations of Commissioner.--
``(1) In general.--The Commissioner may take a personnel
action other than termination for an act or omission
described under subsection (b).
``(2) Discretion.--The exercise of authority under
paragraph (1) shall be at the sole discretion of the
Commissioner and may not be delegated to any other officer.
The Commissioner, in the Commissioner's sole discretion, may
establish a procedure which will be used to determine whether
an individual should be referred to the Commissioner for a
determination by the Commissioner under paragraph (1).
``(3) No appeal.--Any determination of the Commissioner
under this subsection may not be appealed in any
administrative or judicial proceeding.
``(d) Definition.--For the purposes of the provisions
described in clauses (i), (ii), and (iv) of subsection
(b)(3)(B), references to a program or activity regarding
Federal financial assistance or an education program or
activity receiving Federal financial assistance shall include
any program or activity conducted by the Internal Revenue
Service for a taxpayer.''.
(b) Clerical Amendment.--The table of sections for chapter
80 is amended by inserting after the item relating to section
7804 the following new item:
``Sec. 7804A. Termination of employment for misconduct.''.
(c) Repeal of Superseded Section.--Section 1203 of the
Internal Revenue Service Restructuring and Reform Act of 1998
(Public Law 105-206; 112 Stat. 720) is repealed.
(d) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 116. IRS OVERSIGHT BOARD APPROVAL OF USE OF CRITICAL PAY
AUTHORITY.
(a) In General.--Section 7802(d)(3) (relating to
management) is amended by striking ``and'' at the end of
subparagraph (B), by striking the period at the end of
subparagraph (C) and inserting ``; and'', and by adding at
the end the following new subparagraph:
``(D) review and approve the Commissioner's use of critical
pay authority under section 9502 of title 5, United States
Code, and streamlined critical pay authority under section
9503 of such title.''.
(b) Effective Date.--The amendments made by this section
shall apply to personnel hired after the date of the
enactment of this Act.
SEC. 117. LOW-INCOME TAXPAYER CLINICS.
(a) Grants for Return Preparation Clinics.--
(1) In general.--Chapter 77 (relating to miscellaneous
provisions) is amended by inserting after section 7526 the
following new section:
``SEC. 7526A. RETURN PREPARATION CLINICS FOR LOW-INCOME
TAXPAYERS.
``(a) In General.--The Secretary may, subject to the
availability of appropriated funds, make grants to provide
matching funds for the development, expansion, or
continuation of qualified return preparation clinics.
``(b) Definitions.--For purposes of this section--
``(1) Qualified return preparation clinic.--
``(A) In general.--The term `qualified return preparation
clinic' means a clinic which--
``(i) does not charge more than a nominal fee for its
services (except for reimbursement of actual costs incurred),
and
``(ii) operates programs which assist low-income taxpayers
in preparing and filing their Federal income tax returns,
including schedules reporting sole proprietorship or farm
income.
``(B) Assistance to low-income taxpayers.--A clinic is
treated as assisting low-income taxpayers under subparagraph
(A)(ii) if at least 90 percent of the taxpayers assisted by
the clinic have incomes which do not exceed 250 percent of
the poverty level, as determined in accordance with criteria
established by the Director of the Office of Management and
Budget.
``(2) Clinic.--The term `clinic' includes--
``(A) a clinical program at an eligible educational
institution (as defined in section 529(e)(5)) which satisfies
the requirements of paragraph (1) through student assistance
of taxpayers in return preparation and filing, and
``(B) an organization described in section 501(c) and
exempt from tax under section 501(a) which satisfies the
requirements of paragraph (1).
``(c) Special Rules and Limitations.--
``(1) Aggregate limitation.--Unless otherwise provided by
specific appropriation, the Secretary shall not allocate more
than $10,000,000 per year (exclusive of costs of
administering the program) to grants under this section.
``(2) Other applicable rules.--Rules similar to the rules
under paragraphs (2) through (7) of section 7526(c) shall
apply with respect to the awarding of grants to qualified
return preparation clinics.''.
(2) Clerical amendment.--The table of sections for chapter
77 is amended by inserting after the item relating to section
7526 the following new item:
``Sec. 7526A. Return preparation clinics for low-income taxpayers.''.
(b) Grants for Taxpayer Representation and Assistance
Clinics.--
(1) Increase in authorized grants.--Section 7526(c)(1)
(relating to aggregate limitation) is amended by striking
``$6,000,000'' and inserting ``$10,000,000''.
(2) Use of grants for overhead expenses prohibited.--
(A) In general.--Section 7526(c) (relating to special rules
and limitations) is amended by adding at the end the
following new paragraph:
``(6) Use of grants for overhead expenses prohibited.--No
grant made under this section may be used for the overhead
expenses of any clinic or of any institution sponsoring such
clinic.''.
(B) Conforming amendments.--Section 7526(c)(5) is amended--
(i) by inserting ``qualified'' before ``low-income'', and
(ii) by striking the last sentence.
(3) Promotion of Clinics.--Section 7526(c), as amended by
paragraph (2), is amended by adding at the end the following
new paragraph:
``(7) Promotion of clinics.--The Secretary is authorized to
promote the benefits of and encourage the use of low-income
taxpayer clinics through the use of mass communications,
referrals, and other means.''.
(c) Effective Date.--The amendments made by this section
shall apply to grants made after the date of the enactment of
this Act.
SEC. 118. ENROLLED AGENTS.
(a) In General.--Chapter 77 (relating to miscellaneous
provisions) is amended by adding at the end the following new
section:
``SEC. 7527. ENROLLED AGENTS.
``(a) In General.--The Secretary may prescribe such
regulations as may be necessary to regulate the conduct of
enrolled agents in regards to their practice before the
Internal Revenue Service.
``(b) Use of Credentials.--Any enrolled agents properly
licensed to practice as required under rules promulgated
under section (a) herein shall be allowed to use the
credentials or designation as `enrolled agent', `EA', or
`E.A.'.''.
(b) Clerical Amendment.--The table of sections for chapter
77 is amended by adding at the end the following new item:
``Sec. 7527. Enrolled agents.''.
(c) Prior Regulations.--Nothing in the amendments made by
this section shall be construed to have any effect on part 10
of title 31, Code of Federal Regulations, or any other
Federal rule or regulation issued before the date of the
enactment of this Act.
SEC. 119. ESTABLISHMENT OF DISASTER RESPONSE TEAM.
(a) In General.--Section 7508A (relating to authority to
postpone certain tax-related deadlines by reason of
presidentially declared disaster) is amended by adding at the
end the following new subsection:
``(c) Duties of Disaster Response Team.--
``(1) Response to disasters.--The Secretary shall--
``(A) establish as a permanent office in the national
office of the Internal Revenue Service a disaster response
team composed of members, who in addition to their regular
responsibilities, shall assist taxpayers in clarifying and
resolving Federal tax matters associated with or resulting
from any Presidentially declared disaster (as so defined),
and
``(B) respond to requests by such taxpayers for filing
extensions and technical guidance expeditiously.
``(2) Personnel of disaster response team.--The disaster
response team shall be composed of--
``(A) personnel from the Office of the Taxpayer Advocate,
and
``(B) personnel from the national office of the Internal
Revenue Service with expertise in individual, corporate, and
small business tax matters.
``(3) Coordination with fema.--The disaster response team
shall operate in coordination with the Director of the
Federal Emergency Management Agency.
``(4) Toll-free telephone number.--The Commissioner of
Internal Revenue shall establish and maintain a toll-free
telephone number for taxpayers to use to receive assistance
from the disaster response team.
``(5) Internet webpage site.--The Commissioner of Internal
Revenue shall establish and maintain a site on the Internet
webpage of the Internal Revenue Service for information for
taxpayers described in paragraph (1)(A).''.
(b) FEMA.--The Director of the Federal Emergency Management
Agency shall work in coordination with the disaster response
team established under section 7804(c)(1)(A) of the Internal
Revenue Code of 1986 to provide timely assistance to disaster
victims described in such section, including--
(1) informing the disaster response team regarding any tax-
related problems or issues arising in connection with the
disaster,
[[Page S5214]]
(2) providing the toll-free telephone number established
and maintained by the Internal Revenue Service for the
disaster victims in all materials provided to such victims,
and
(3) providing the information described in section
7804(c)(5) of such Code on the Internet webpage of the
Federal Emergency Management Agency or through a link on such
webpage to the Internet webpage site of the Internal Revenue
Service described in such section.
(c) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 120. ACCELERATED TAX REFUNDS.
(a) Study.--The Secretary of the Treasury shall study the
implementation of an accelerated refund program for taxpayers
who--
(1) maintain the same filing characteristics from year to
year, and
(2) elect the direct deposit option for any refund under
the program.
(b) Report.--Not later than the date which is 1 year after
the date of the enactment of this Act, the Secretary of the
Treasury shall transmit a report of the study described in
subsection (a), including recommendations, to the Committee
on Finance of the Senate and the Committee on Ways and Means
of the House of Representatives.
SEC. 121. STUDY ON CLARIFYING RECORD-KEEPING
RESPONSIBILITIES.
(a) Study.--The Secretary of the Treasury shall study--
(1) the scope of the records required to be maintained by
taxpayers under section 6001 of the Internal Revenue Code of
1986,
(2) the utility of requiring taxpayers to maintain all
records indefinitely,
(3) such requirement given the necessity to upgrade
technological storage for outdated records,
(4) the number of negotiated records retention agreements
requested by taxpayers and the number entered into by the
Internal Revenue Service, and
(5) proposals regarding taxpayer record-keeping.
(b) Report.--Not later than the date which is 1 year after
the date of the enactment of this Act, the Secretary of the
Treasury shall transmit a report of the study described in
subsection (a), including recommendations, to the Committee
on Finance of the Senate and the Committee on Ways and Means
of the House of Representatives.
SEC. 122. STREAMLINE REPORTING PROCESS FOR NATIONAL TAXPAYER
ADVOCATE.
(a) One Annual Report.--Subparagraph (B) of section
7803(c)(2) (relating to functions of Office) is amended--
(1) by striking all matter preceding subclause (I) of
clause (ii) and inserting the following:
``(B) Annual report.--
``(i) In general.--Not later than December 31 of each
calendar year, the National Taxpayer Advocate shall report to
the Committee of Ways and Means of the House of
Representatives and the Committee on Finance of the Senate on
the objectives of the Office of the Taxpayer of Advocate for
the fiscal year beginning in such calendar year and the
activities of such Office during the fiscal year ending
during such calendar year. Any such report shall contain full
and substantive analysis, in addition to statistical
information, and shall--'',
(2) by striking ``clause (ii)'' in clause (iv) and
inserting ``clause (i)'', and
(3) by redesignating clauses (iii) and (iv) as clauses (ii)
and (iii), respectively.
(b) Effective Date.--The amendments made by this section
shall apply to reports in calendar year 2003 and thereafter.
Subtitle C--Other Provisions
SEC. 131. PENALTY ON FAILURE TO REPORT INTERESTS IN FOREIGN
FINANCIAL ACCOUNTS.
(a) In General.--Section 5321(a)(5) of title 31, United
States Code, is amended to read as follows:
``(5) Foreign financial agency transaction violation.--
``(A) Penalty authorized.--The Secretary of the Treasury
may impose a civil money penalty on any person who violates,
or causes any violation of, any provision of section 5314.
``(B) Amount of penalty.--
``(i) In general.--Except as provided in subparagraph (C),
the amount of any civil penalty imposed under subparagraph
(A) shall not exceed $5,000.
``(ii) Reasonable cause exception.--No penalty shall be
imposed under subparagraph (A) with respect to any violation
if--
``(I) such violation was due to reasonable cause, and
``(II) the amount of the transaction or the balance in the
account at the time of the transaction was properly reported.
``(C) Willful violations.--In the case of any person
willfully violating, or willfully causing any violation of,
any provision of section 5314--
``(i) the maximum penalty under subparagraph (B)(i) shall
be increased to the greater of--
``(I) $25,000, or
``(II) the amount (not exceeding $100,000) determined under
subparagraph (D), and
``(ii) subparagraph (B)(ii) shall not apply.
``(D) Amount.--The amount determined under this
subparagraph is--
``(i) in the case of a violation involving a transaction,
the amount of the transaction, or
``(ii) in the case of a violation involving a failure to
report the existence of an account or any identifying
information required to be provided with respect to an
account, the balance in the account at the time of the
violation.''
(b) Effective Date.--The amendment made by this section
shall apply to violations occurring after the date of the
enactment of this Act.
SEC. 132. REPEAL OF PERSONAL HOLDING COMPANY TAX.
(a) In General.--Part II of subchapter G of chapter 1
(relating to personal holding companies) is hereby repealed.
(b) Conforming Amendments.--
(1) Section 12(2) is amended to read as follows:
``(2) For accumulated earnings tax, see part I of
subchapter G (sec. 531 and following).''.
(2) Section 26(b)(2) is amended by striking subparagraph
(G) and by redesignating the succeeding subparagraphs
accordingly.
(3) Section 30A(c) is amended by striking paragraph (3) and
by redesignating paragraph (4) as paragraph (3).
(4) Section 41(e)(7)(E) is amended by adding ``and'' at the
end of clause (i), by striking clause (ii), and by
redesignating clause (iii) as clause (ii).
(5) Section 56(b)(2) is amended by striking subparagraph
(C) and by redesignating subparagraph (D) as subparagraph
(C).
(6) Section 170(e)(4)(D) is amended by adding ``and'' at
the end of clause (i), by striking clause (ii), and by
redesignating clause (iii) as clause (ii).
(7) Section 111(d) is amended to read as follows:
``(d) Special Rules for Accumulated Earnings Tax.--In
applying subsection (a) for the purpose of determining the
accumulated earnings tax under section 531--
``(1) any excluded amount under subsection (a) allowed for
purposes of this subtitle (other than section 531) shall be
allowed whether or not such amount resulted in a reduction of
the tax under section 531 for the prior taxable year, and
``(2) where any excluded amount under subsection (a) was
not allowed as a deduction for the prior taxable year for
purposes of this subtitle other than section 531 but was
allowable for the same taxable year under section 531, then
such excluded amount shall be allowable if it did not result
in a reduction of the tax under section 531.''.
(8)(A) Section 316(b) is amended by striking paragraph (2)
and by redesignating paragraph (3) as paragraph (2).
(B) Section 331(b) is amended by striking ``(other than a
distribution referred to in paragraph (2)(B) of section
316(b))''.
(9) Section 341(d) is amended--
(A) by striking ``section 544(a)'' and inserting ``section
465(f)'', and
(B) by inserting before the period at the end of the next
to the last sentence ``and such paragraph (2) shall be
applied by inserting `by or for his partner' after `his
family' ''.
(10) Section 381(c) is amended by striking paragraphs (14)
and (17).
(11) Section 443(e) is amended by striking paragraph (2)
and by redesignating paragraphs (3), (4), and (5) as
paragraphs (2), (3), and (4), respectively.
(12) Section 447(g)(4)(A) is amended by striking ``other
than--'' and all that follows and inserting ``other than an S
corporation.''
(13)(A) Section 465(a)(1)(B) is amended to read as follows:
``(B) a C corporation which is closely held,''.
(B) Section 465(a)(3) is amended to read as follows:
``(3) Closely held determination.--For purposes of
paragraph (1), a corporation is closely held if, at any time
during the last half of the taxable year, more than 50
percent in value of its outstanding stock is owned, directly
or indirectly, by or for not more than 5 individuals. For
purposes of this paragraph, an organization described in
section 401(a), 501(c)(17), or 509(a) or a portion of a trust
permanently set aside or to be used exclusively for the
purposes described in section 642(c) shall be considered an
individual.''
(C) Section 465 is amended by adding at the end the
following new subsection:
``(f) Constructive Ownership Rules.--For purposes of
subsection (a)(3)--
``(1) Stock not owned by individual.--Stock owned, directly
or indirectly, by or for a corporation, partnership, estate,
or trust shall be considered as being owned proportionately
by its shareholders, partners, or beneficiaries.
``(2) Family ownership.--An individual shall be considered
as owning the stock owned, directly or indirectly, by or for
his family. For purposes of this paragraph, the family of an
individual includes only his brothers and sisters (whether by
the whole or half blood), spouse, ancestors, and lineal
descendants.
``(3) Options.--If any person has an option to acquire
stock, such stock shall be considered as owned by such
person. For purposes of this paragraph, an option to acquire
such an option, and each one of a series of such options,
shall be considered as an option to acquire such stock.
``(4) Application of family and option rules.--Paragraphs
(2) and (3) shall be applied if, but only if, the effect is
to make the corporation closely held under subsection (a)(3).
``(5) Constructive ownership as actual ownership.--Stock
constructively owned by
[[Page S5215]]
a person by reason of the application of paragraph (1) or
(3), shall, for purposes of applying paragraph (1) or (2), be
treated as actually owned by such person; but stock
constructively owned by an individual by reason of the
application of paragraph (2) shall not be treated as owned by
him for purposes of again applying such paragraph in order to
make another the constructive owner of such stock.
``(6) Option rule in lieu of family rule.--If stock may be
considered as owned by an individual under either paragraph
(2) or (3) it shall be considered as owned by him under
paragraph (3).
``(7) Convertible securities.--Outstanding securities
convertible into stock (whether or not convertible during the
taxable year) shall be considered as outstanding stock if the
effect of the inclusion of all such securities is to make the
corporation closely held under subsection (a)(3). The
requirement under the preceding sentence that all convertible
securities must be included if any are to be included shall
be subject to the exception that, where some of the
outstanding securities are convertible only after a later
date than in the case of others, the class having the earlier
conversion date may be included although the others are not
included, but no convertible securities shall be included
unless all outstanding securities having a prior conversion
date are also included.''
(D) Section 465(c)(7)(B) is amended by striking clause (i)
and by redesignating clauses (ii) and (iii) as clauses (i)
and (ii), respectively.
(E) Section 465(c)(7)(G) is amended to read as follows:
``(G) Loss of 1 member of affiliated group may not offset
income of personal service corporation.--Nothing in this
paragraph shall permit any loss of a member of an affiliated
group to be used as an offset against the income of any other
member of such group which is a personal service corporation
(as defined in section 269A(b) but determined by substituting
`5 percent' for `10 percent' in section 269A(b)(2)).''
(14) Sections 508(d), 4947, and 4948(c)(4) are each amended
by striking ``545(b)(2),'' each place it appears.
(15) Section 532(b) is amended by striking paragraph (1)
and by redesignating paragraphs (2), (3), and (4) as
paragraphs (1), (2), and (3), respectively.
(16) Sections 535(b)(1) and 556(b)(1) are each amended by
striking ``section 541'' and inserting ``section 541 (as in
effect before its repeal)''.
(17)(A) Section 553(a)(1) is amended by striking ``section
543(d)'' and inserting ``subsection (c)''.
(B) Section 553 is amended by adding at the end the
following new subsection:
``(c) Active Business Computer Software Royalties.--
``(1) In general.--For purposes of subsection (a), the term
`active business computer software royalties' means any
royalties--
``(A) received by any corporation during the taxable year
in connection with the licensing of computer software, and
``(B) with respect to which the requirements of paragraphs
(2), (3), (4), and (5) are met.
``(2) Royalties must be received by corporation actively
engaged in computer software business.--The requirements of
this paragraph are met if the royalties described in
paragraph (1)--
``(A) are received by a corporation engaged in the active
conduct of the trade or business of developing,
manufacturing, or producing computer software, and
``(B) are attributable to computer software which--
``(i) is developed, manufactured, or produced by such
corporation (or its predecessor) in connection with the trade
or business described in subparagraph (A), or
``(ii) is directly related to such trade or business.
``(3) Royalties must constitute at least 50 percent of
income.--The requirements of this paragraph are met if the
royalties described in paragraph (1) constitute at least 50
percent of the ordinary gross income of the corporation for
the taxable year.
``(4) Deductions under sections 162 and 174 relating to
royalties must equal or exceed 25 percent of ordinary gross
income.--
``(A) In general.--The requirements of this paragraph are
met if--
``(i) the sum of the deductions allowable to the
corporation under sections 162, 174, and 195 for the taxable
year which are properly allocable to the trade or business
described in paragraph (2) equals or exceeds 25 percent of
the ordinary gross income of such corporation for such
taxable year, or
``(ii) the average of such deductions for the 5-taxable
year period ending with such taxable year equals or exceeds
25 percent of the average ordinary gross income of such
corporation for such period.
If a corporation has not been in existence during the 5-
taxable year period described in clause (ii), then the period
of existence of such corporation shall be substituted for
such 5-taxable year period.
``(B) Deductions allowable under section 162.--For purposes
of subparagraph (A), a deduction shall not be treated as
allowable under section 162 if it is specifically allowable
under another section.
``(C) Limitation on allowable deductions.--For purposes of
subparagraph (A), no deduction shall be taken into account
with respect to compensation for personal services rendered
by the 5 individual shareholders holding the largest
percentage (by value) of the outstanding stock of the
corporation. For purposes of the preceding sentence
individuals holding less than 5 percent (by value) of the
stock of such corporation shall not be taken into account.''
(18) Section 561(a) is amended by striking paragraph (3),
by inserting ``and'' at the end of paragraph (1), and by
striking '', and'' at the end of paragraph (2) and inserting
a period.
(19) Section 562(b) is amended to read as follows:
``(b) Distributions in Liquidation.--Except in the case of
a foreign personal holding company described in section 552--
``(1) in the case of amounts distributed in liquidation,
the part of such distribution which is properly chargeable to
earnings and profits accumulated after February 28, 1913,
shall be treated as a dividend for purposes of computing the
dividends paid deduction, and
``(2) in the case of a complete liquidation occurring
within 24 months after the adoption of a plan of liquidation,
any distribution within such period pursuant to such plan
shall, to the extent of the earnings and profits (computed
without regard to capital losses) of the corporation for the
taxable year in which such distribution is made, be treated
as a dividend for purposes of computing the dividends paid
deduction.
For purposes of paragraph (1), a liquidation includes a
redemption of stock to which section 302 applies. Except to
the extent provided in regulations, the preceding sentence
shall not apply in the case of any mere holding or investment
company which is not a regulated investment company.''
(20) Section 563 is amended by striking subsection (b).
(21) Section 564 is hereby repealed.
(22) Section 631(c) is amended by striking ``or section
545(b)(5)''.
(23) Section 852(b)(1) is amended by striking ``which is a
personal holding company (as defined in section 542) or''.
(24)(A) Section 856(h)(1) is amended to read as follows:
``(1) In general.--For purposes of subsection (a)(6), a
corporation, trust, or association is closely held if the
stock ownership requirement of section 465(a)(3) is met.''
(B) Section 856(h)(3)(A)(i) is amended by striking
``section 542(a)(2)'' and inserting ``section 465(a)(3)''.
(C) Paragraph (3) of section 856(h) is amended by striking
subparagraph (B) and by redesignating subparagraphs (C) and
(D) as subparagraphs (B) and (C), respectively.
(D) Subparagraph (C) of section 856(h)(3), as redesignating
by the preceding subparagraph, is amended by striking
``subparagraph (C)'' and inserting ``subparagraph (B)''.
(25) The last sentence of section 882(c)(2) is amended to
read as follows:
``The preceding sentence shall not be construed to deny the
credit provided by section 33 for tax withheld at source or
the credit provided by section 34 for certain uses of
gasoline.''.
(26) Section 936(a)(3) is amended by striking subparagraph
(C), by inserting ``or'' at the end of subparagraph (B), and
by redesignating subparagraph (D) as subparagraph (C).
(27) Section 992(d) is amended by striking paragraph (2)
and by redesignating succeeding paragraphs accordingly.
(28) Section 992(e) is amended by striking ``and section
541 (relating to personal holding company tax)''.
(29) Section 1202(e)(8) is amended by striking ``section
543(d)(1)'' and inserting ``section 553(c)(1)''.
(30) Section 1362(d)(3)(C)(iii) is amended by adding at the
end the following new sentence: ``References to section 542
in the preceding sentence shall be treated as references to
such section as in effect on the day before its repeal.''
(31) Section 1504(c)(2)(B) is amended by adding ``and'' at
the end of clause (i), by striking clause (ii), and by
redesignating clause (iii) as clause (ii).
(32) Section 2057(e)(2)(C) is amended by adding at the end
the following new sentence: ``References to sections 542 and
543 in the preceding sentence shall be treated as references
to such sections as in effect on the day before their
repeal.''
(33) Sections 6422 is amended by striking paragraph (3) and
by redesignating paragraphs (4) through (12) and paragraphs
(3) through (11), respectively.
(34) Section 6501 is amended by striking subsection (f).
(35) Section 6503(k) is amended by striking paragraph (1)
and by redesignating paragraphs (2) through (5) as paragraphs
(1) through (4), respectively.
(36) Section 6515 is amended by striking paragraph (1) and
by redesignating paragraphs (2) through (6) as paragraphs (1)
through (5), respectively.
(37) Subsections (d)(1)(B) and (e)(2) of section 6662 are
each amended by striking ``or a personal holding company (as
defined in section 542)''.
(38) Section 6683 is hereby repealed.
(c) Clerical Amendments.--
(1) The table of parts for subchapter G of chapter 1 is
amended by striking the item relating to part II.
(2) The table of sections for part IV of such subchapter G
is amended by striking the item relating to section 564.
(3) The table of sections for part I of subchapter B of
chapter 68 is amended by striking the item relating to
section 6683.
[[Page S5216]]
(d) Effective Date.--The amendments made by this Act shall
apply to taxable years beginning after December 31, 2003.
TITLE II--REFORM OF PENALTY AND INTEREST
SEC. 201. INDIVIDUAL ESTIMATED TAX.
(a) Increase in Exception for Individuals Owing Small
Amount of Tax.--Section 6654(e)(1) (relating to exception
where tax is small amount) is amended by striking ``$1,000''
and inserting ``$2,000''.
(b) Computation of Addition to Tax.--Subsections (a) and
(b) of section 6654 (relating to failure by individual to pay
estimated taxes) are amended to read as follows:
``(a) Addition to the Tax.--
``(1) In general.--Except as otherwise provided in this
section, in the case of any underpayment of estimated tax by
an individual for a taxable year, there shall be added to the
tax under chapters 1 and 2 for the taxable year the amount
determined under paragraph (2) for each day of underpayment.
``(2) Amount.--The amount of the addition to tax for any
day shall be the product of the underpayment rate established
under subsection (b)(2) multiplied by the amount of the
underpayment.
``(b) Amount of Underpayment; Interest Rate.--For purposes
of subsection (a)--
``(1) Amount.--The amount of the underpayment on any day
shall be the excess of--
``(A) the sum of the required installments for the taxable
year the due dates for which are on or before such day, over
``(B) the sum of the amounts (if any) of estimated tax
payments made on or before such day on such required
installments.
``(2) Determination of interest rate.--
``(A) In general.--The underpayment rate with respect to
any day in an installment underpayment period shall be the
underpayment rate established under section 6621 for the
first day of the calendar quarter in which such installment
underpayment period begins.
``(B) Installment underpayment period.--For purposes of
subparagraph (A), the term `installment underpayment period'
means the period beginning on the day after the due date for
a required installment and ending on the due date for the
subsequent required installment (or in the case of the 4th
required installment, the 15th day of the 4th month following
the close of a taxable year).
``(C) Daily rate.--The rate determined under subparagraph
(A) shall be applied on a daily basis and shall be based on
the assumption of 365 days in a calendar year.
``(3) Termination of estimated tax interest.--No day after
the end of the installment underpayment period for the 4th
required installment specified in paragraph (2)(B) for a
taxable year shall be treated as a day of underpayment with
respect to such taxable year.''
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2003.
SEC. 202. CORPORATE ESTIMATED TAX.
(a) Increase in Small Tax Amount Exception.--Section
6655(f) (relating to exception where tax is small amount) is
amended by striking ``$500'' and inserting ``$1,000''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2003.
SEC. 203. INCREASE IN LARGE CORPORATION THRESHOLD FOR
ESTIMATED TAX PAYMENTS.
(a) In General.--Section 6655(g)(2) (defining large
corporation) is amended--
(1) by striking ``$1,000,000'' in subparagraph (A) and
inserting ``the applicable amount'',
(2) by redesignating subparagraph (B) as subparagraph (C),
and
(3) by inserting after subparagraph (A) the following new
subparagraph:
``(B) Applicable amount.--For purposes of subparagraph (A),
the applicable amount is $1,000,000 increased (but not above
$1,500,000) by $50,000 for each taxable year beginning after
2004.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2003.
SEC. 204. ABATEMENT OF INTEREST.
(a) Abatement of Interest for Periods Attributable to Any
Unreasonable IRS Error or Delay.--Section 6404(e)(1) is
amended--
(1) by striking ``in performing a ministerial or managerial
act'' in subparagraphs (A) and (B),
(2) by striking ``deficiency'' in subparagraph (A) and
inserting ``underpayment of any tax, addition to tax, or
penalty imposed by this title'', and
(3) by striking ``tax described in section 6212(a)'' in
subparagraph (B) and inserting ``tax, addition to tax, or
penalty imposed by this title''.
(b) Abatement of Interest to Extent Interest Is
Attributable to Taxpayer Reliance on Written Statements of
the IRS.--Subsection (f) of section 6404 is amended--
(1) in the subsection heading, by striking ``Penalty or
Addition'' and inserting ``Interest, Penalty, or Addition'';
and
(2) in paragraph (1) and in subparagraph (B) of paragraph
(2), by striking ``penalty or addition'' and inserting
``interest, penalty, or addition''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to interest accruing on or after the
date of the enactment of this Act.
SEC. 205. DEPOSITS MADE TO SUSPEND RUNNING OF INTEREST ON
POTENTIAL UNDERPAYMENTS.
(a) In General.--Subchapter A of chapter 67 (relating to
interest on underpayments) is amended by adding at the end
the following new section:
``SEC. 6603. DEPOSITS MADE TO SUSPEND RUNNING OF INTEREST ON
POTENTIAL UNDERPAYMENTS, ETC.
``(a) Authority To Make Deposits Other Than As Payment of
Tax.--A taxpayer may make a cash deposit with the Secretary
which may be used by the Secretary to pay any tax imposed
under subtitle A or B or chapter 41, 42, 43, or 44 which has
not been assessed at the time of the deposit. Such a deposit
shall be made in such manner as the Secretary shall
prescribe.
``(b) No Interest Imposed.--To the extent that such deposit
is used by the Secretary to pay tax, for purposes of section
6601 (relating to interest on underpayments), the tax shall
be treated as paid when the deposit is made.
``(c) Return of Deposit.--Except in a case where the
Secretary determines that collection of tax is in jeopardy,
the Secretary shall return to the taxpayer any amount of the
deposit (to the extent not used for a payment of tax) which
the taxpayer requests in writing.
``(d) Payment of Interest.--
``(1) In general.--For purposes of section 6611 (relating
to interest on overpayments), a deposit which is returned to
a taxpayer shall be treated as a payment of tax for any
period to the extent (and only to the extent) attributable to
a disputable tax for such period. Under regulations
prescribed by the Secretary, rules similar to the rules of
section 6611(b)(2) shall apply.
``(2) Disputable tax.--
``(A) In general.--For purposes of this section, the term
`disputable tax' means the amount of tax specified at the
time of the deposit as the taxpayer's reasonable estimate of
the maximum amount of any tax attributable to disputable
items.
``(B) Safe harbor based on 30-day letter.--In the case of a
taxpayer who has been issued a 30-day letter, the maximum
amount of tax under subparagraph (A) shall not be less than
the amount of the proposed deficiency specified in such
letter.
``(3) Other definitions.--For purposes of paragraph (2)--
``(A) Disputable item.--The term `disputable item' means
any item of income, gain, loss, deduction, or credit if the
taxpayer--
``(i) has a reasonable basis for its treatment of such
item, and
``(ii) reasonably believes that the Secretary also has a
reasonable basis for disallowing the taxpayer's treatment of
such item.
``(B) 30-day letter.--The term `30-day letter' means the
first letter of proposed deficiency which allows the taxpayer
an opportunity for administrative review in the Internal
Revenue Service Office of Appeals.
``(4) Rate of interest.--The rate of interest allowable
under this subsection shall be the Federal short-term rate
determined under section 6621(b), compounded daily.
``(e) Use of Deposits.--
``(1) Payment of tax.--Except as otherwise provided by the
taxpayer, deposits shall be treated as used for the payment
of tax in the order deposited.
``(2) Returns of deposits.--Deposits shall be treated as
returned to the taxpayer on a last-in, first-out basis.''.
(b) Clerical Amendment.--The table of sections for
subchapter A of chapter 67 is amended by adding at the end
the following new item:
``Sec. 6603. Deposits made to suspend running of interest on potential
underpayments, etc.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to deposits made after December 31, 2003.
(2) Coordination with deposits made under revenue procedure
84-58.--In the case of an amount held by the Secretary of the
Treasury or his delegate on the date of the enactment of this
Act as a deposit in the nature of a cash bond deposit
pursuant to Revenue Procedure 84-58, the date that the
taxpayer identifies such amount as a deposit made pursuant to
section 6603 of the Internal Revenue Code (as added by this
Act) shall be treated as the date such amount is deposited
for purposes of such section 6603.
SEC. 206. FREEZE OF PROVISIONS REGARDING SUSPENSION OF
INTEREST WHERE SECRETARY FAILS TO CONTACT
TAXPAYER.
(a) In General.--Section 6404(G) (relating to suspension of
interest and certain penalties where secretary fails to
contact taxpayer) is amended by striking ``1-year period (18-
month period in the case of taxable years beginning before
January 1, 2004)'' both places it appears and inserting ``18-
month period''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2003.
SEC. 207. EXPANSION OF INTEREST NETTING.
(a) In General.--Subsection (d) of section 6621 (relating
to elimination of interest on overlapping periods of tax
overpayments and underpayments) is amended by adding at the
end the following: ``Solely for purposes of the preceding
sentence, section 6611(e) shall not apply.''.
(b) Effective Date.--The amendment made by this section
shall apply to interest accrued after December 31, 2003.
[[Page S5217]]
SEC. 208. CLARIFICATION OF APPLICATION OF FEDERAL TAX DEPOSIT
PENALTY.
Nothing in section 6656 of the Internal Revenue Code of
1986 shall be construed to permit the percentage specified in
subsection (b)(1)(A)(iii) thereof to apply other than in a
case where the failure is for more than 15 days.
SEC. 209. FRIVOLOUS TAX SUBMISSIONS.
(a) Civil Penalties.--Section 6702 is amended to read as
follows:
``SEC. 6702. FRIVOLOUS TAX SUBMISSIONS.
``(a) Civil Penalty for Frivolous Tax Returns.--A person
shall pay a penalty of $5,000 if--
``(1) such person files what purports to be a return of a
tax imposed by this title but which--
``(A) does not contain information on which the substantial
correctness of the self-assessment may be judged, or
``(B) contains information that on its face indicates that
the self-assessment is substantially incorrect; and
``(2) the conduct referred to in paragraph (1)--
``(A) is based on a position which the Secretary has
identified as frivolous under subsection (c), or
``(B) reflects a desire to delay or impede the
administration of Federal tax laws.
``(b) Civil Penalty for Specified Frivolous Submissions.--
``(1) Imposition of penalty.--Except as provided in
paragraph (3), any person who submits a specified frivolous
submission shall pay a penalty of $5,000.
``(2) Specified frivolous submission.--For purposes of this
section--
``(A) Specified frivolous submission.--The term `specified
frivolous submission' means a specified submission if any
portion of such submission--
``(i) is based on a position which the Secretary has
identified as frivolous under subsection (c), or
``(ii) reflects a desire to delay or impede the
administration of Federal tax laws.
``(B) Specified submission.--The term `specified
submission' means--
``(i) a request for a hearing under--
``(I) section 6320 (relating to notice and opportunity for
hearing upon filing of notice of lien), or
``(II) section 6330 (relating to notice and opportunity for
hearing before levy), and
``(ii) an application under--
``(I) section 7811 (relating to taxpayer assistance
orders),
``(II) section 6159 (relating to agreements for payment of
tax liability in installments), or
``(III) section 7122 (relating to compromises).
``(3) Opportunity to withdraw submission.--If the Secretary
provides a person with notice that a submission is a
specified frivolous submission and such person withdraws such
submission promptly after such notice, the penalty imposed
under paragraph (1) shall not apply with respect to such
submission.
``(c) Listing of Frivolous Positions.--The Secretary shall
prescribe (and periodically revise) a list of positions which
the Secretary has identified as being frivolous for purposes
of this subsection. The Secretary shall not include in such
list any position that the Secretary determines meets the
requirement of section 6662(d)(2)(B)(ii)(II).
``(d) Reduction of Penalty.--The Secretary may reduce the
amount of any penalty imposed under this section if the
Secretary determines that such reduction would promote
compliance with and administration of the Federal tax laws.
``(e) Penalties in Addition to Other Penalties.--The
penalties imposed by this section shall be in addition to any
other penalty provided by law.''
(b) Treatment of Frivolous Requests for Hearings Before
Levy.--
(1) Frivolous requests disregarded.--Section 6330 (relating
to notice and opportunity for hearing before levy) is amended
by adding at the end the following new subsection:
``(g) Frivolous Requests for Hearing, etc.--Notwithstanding
any other provision of this section, if the Secretary
determines that any portion of a request for a hearing under
this section or section 6320 meets the requirement of clause
(i) or (ii) of section 6702(b)(2)(A), then the Secretary may
treat such portion as if it were never submitted and such
portion shall not be subject to any further administrative or
judicial review.''
(2) Preclusion from raising frivolous issues at hearing.--
Section 6330(c)(4) is amended--
(A) by striking ``(A)'' and inserting ``(A)(i)'';
(B) by striking ``(B)'' and inserting ``(ii)'';
(C) by striking the period at the end of the first sentence
and inserting ``; or''; and
(D) by inserting after subparagraph (A)(ii) (as so
redesignated) the following:
``(B) the issue meets the requirement of clause (i) or (ii)
of section 6702(b)(2)(A).''
(3) Statement of grounds.--Section 6330(b)(1) is amended by
striking ``under subsection (a)(3)(B)'' and inserting ``in
writing under subsection (a)(3)(B) and states the grounds for
the requested hearing''.
(c) Treatment of Frivolous Requests for Hearings Upon
Filing of Notice of Lien.--Section 6320 is amended--
(1) in subsection (b)(1), by striking ``under subsection
(a)(3)(B)'' and inserting ``in writing under subsection
(a)(3)(B) and states the grounds for the requested hearing'',
and
(2) in subsection (c), by striking ``and (e)'' and
inserting ``(e), and (g)''.
(d) Treatment of Frivolous Applications for Offers-in-
Compromise and Installment Agreements.--Section 7122 is
amended by adding at the end the following new subsection:
``(e) Frivolous Submissions, etc.--Notwithstanding any
other provision of this section, if the Secretary determines
that any portion of an application for an offer-in-compromise
or installment agreement submitted under this section or
section 6159 meets the requirement of clause (i) or (ii) of
section 6702(b)(2)(A), then the Secretary may treat such
portion as if it were never submitted and such portion shall
not be subject to any further administrative or judicial
review.''
(e) Clerical Amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by striking the item
relating to section 6702 and inserting the following new
item:
``Sec. 6702. Frivolous tax submissions.''
(f) Effective Date.--The amendments made by this section
shall apply to submissions made and issues raised after the
date on which the Secretary first prescribes a list under
section 6702(c) of the Internal Revenue Code of 1986, as
amended by subsection (a).
TITLE III--UNITED STATES TAX COURT MODERNIZATION
Subtitle A--Tax Court Procedure
SEC. 301. JURISDICTION OF TAX COURT OVER COLLECTION DUE
PROCESS CASES.
(a) In General.--Paragraph (1) of section 6330(d) (relating
to proceeding after hearing) is amended to read as follows:
``(1) Judicial review of determination.--The person may,
within 30 days of a determination under this section, appeal
such determination to the Tax Court (and the Tax Court shall
have jurisdiction with respect to such matter).''.
(b) Effective Date.--The amendment made by this section
shall apply to determinations made after the date of the
enactment of this Act.
SEC. 302. AUTHORITY FOR SPECIAL TRIAL JUDGES TO HEAR AND
DECIDE CERTAIN EMPLOYMENT STATUS CASES.
(a) In General.--Section 7443A(b) (relating to proceedings
which may be assigned to special trial judges) is amended by
striking ``and'' at the end of paragraph (4), by
redesignating paragraph (5) as paragraph (6), and by
inserting after paragraph (4) the following new paragraph:
``(5) any proceeding under section 7436(c), and''.
(b) Conforming Amendment.--Section 7443A(c) is amended by
striking ``or (4)'' and inserting ``(4), or (5)''.
(c) Effective Date.--The amendments made by this section
shall apply to any proceeding under section 7436(c) of the
Internal Revenue Code of 1986 with respect to which a
decision has not become final (as determined under section
7481 of such Code) before the date of the enactment of this
Act.
SEC. 303. CONFIRMATION OF AUTHORITY OF TAX COURT TO APPLY
DOCTRINE OF EQUITABLE RECOUPMENT.
(a) Confirmation of Authority of Tax Court To Apply
Doctrine of Equitable Recoupment.--Section 6214(b) (relating
to jurisdiction over other years and quarters) is amended by
adding at the end the following new sentence:
``Notwithstanding the preceding sentence, the Tax Court may
apply the doctrine of equitable recoupment to the same extent
that it is available in civil tax cases before the district
courts of the United States and the United States Court of
Federal Claims.''.
(b) Effective Date.--The amendment made by this section
shall apply to any action or proceeding in the United States
Tax Court with respect to which a decision has not become
final (as determined under section 7481 of the Internal
Revenue Code of 1986) as of the date of the enactment of this
Act.
SEC. 304. TAX COURT FILING FEE IN ALL CASES COMMENCED BY
FILING PETITION.
(a) In General.--Section 7451 (relating to fee for filing a
Tax Court petition) is amended by striking all that follows
``petition'' and inserting a period.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 305. AMENDMENTS TO APPOINT EMPLOYEES.
(a) In General.--Subsection (a) of section 7471 (relating
to Tax Court employees) is amended to read as follows:
``(a) Appointment and Compensation.--
``(1) Clerk.--The Tax Court may appoint a clerk without
regard to the provisions of title 5, United States Code,
governing appointments in the competitive service. The clerk
shall serve at the pleasure of the Tax Court.
``(2) Law clerks and secretaries.--
``(A) In general.--The judges and special trial judges of
the Tax Court may appoint law clerks and secretaries, in such
numbers as the Tax Court may approve, without regard to the
provisions of title 5, United States Code, governing
appointments in the competitive service. Any such law clerk
or secretary shall serve at the pleasure of the appointing
judge.
``(B) Exemption from federal leave provisions.--A law clerk
appointed under this subsection shall be exempt from the
provisions of subchapter I of chapter 63 of title 5, United
States Code. Any unused sick leave or annual leave standing
to the employee's
[[Page S5218]]
credit as of the effective date of this subsection shall
remain credited to the employee and shall be available to the
employee upon separation from the Federal Government.
``(3) Deputies and other employees.--The clerk may appoint
necessary deputies and employees without regard to the
provisions of title 5, United States Code, governing
appointments in the competitive service. Such deputies and
employees shall be subject to removal by the clerk.
``(4) Pay.--The Tax Court may fix and adjust the
compensation for the clerk and other employees of the Tax
Court without regard to the provisions of chapter 51,
subchapter III of chapter 53, or section 5373 of title 5,
United States Code. To the maximum extent feasible, the Tax
Court shall compensate employees at rates consistent with
those for employees holding comparable positions in the
judicial branch.
``(5) Programs.--The Tax Court may establish programs for
employee evaluations, incentive awards, flexible work
schedules, premium pay, and resolution of employee
grievances.
``(6) Discrimination prohibited.--The Tax Court shall--
``(A) prohibit discrimination on the basis of race, color,
religion, age, sex, national origin, political affiliation,
marital status, or handicapping condition; and
``(B) promulgate regulations providing procedures for
resolving complaints of discrimination by employees and
applicants for employment.
``(7) Experts and consultants.--The Tax Court may procure
the services of experts and consultants under section 3109 of
title 5, United States Code.
``(8) Rights to certain appeals reserved.--Notwithstanding
any other provision of law, an individual who is an employee
of the Tax Court on the day before the effective date of this
subsection and who, as of that day, was entitled to--
``(A) appeal a reduction in grade or removal to the Merit
Systems Protection Board under chapter 43 of title 5, United
States Code,
``(B) appeal an adverse action to the Merit Systems
Protection Board under chapter 75 of title 5, United States
Code,
``(C) appeal a prohibited personnel practice described
under section 2302(b) of title 5, United States Code, to the
Merit Systems Protection Board under chapter 77 of that
title,
``(D) make an allegation of a prohibited personnel practice
described under section 2302(b) of title 5, United States
Code, with the Office of Special Counsel under chapter 12 of
that title for action in accordance with that chapter, or
``(E) file an appeal with the Equal Employment Opportunity
Commission under part 1614 of title 29 of the Code of Federal
Regulations,
shall be entitled to file such appeal or make such an
allegation so long as the individual remains an employee of
the Tax Court.
``(9) Competitive status.--Notwithstanding any other
provision of law, any employee of the Tax Court who has
completed at least 1 year of continuous service under a non
temporary appointment with the Tax Court acquires a
competitive status for appointment to any position in the
competitive service for which the employee possesses the
required qualifications.
``(10) Merit system principles; prohibited personnel
practices; and preference eligibles.--Any personnel
management system of the Tax Court shall--
``(A) include the principles set forth in section 2301(b)
of title 5, United States Code;
``(B) prohibit personnel practices prohibited under section
2302(b) of title 5, United States Code; and
``(C) in the case of any individual who would be a
preference eligible in the executive branch, the Tax Court
will provide preference for that individual in a manner and
to an extent consistent with preference accorded to
preference eligibles in the executive branch.''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date the United States Tax Court
adopts a personnel management system after the date of the
enactment of this Act.
SEC. 306. EXPANDED USE OF TAX COURT PRACTICE FEE FOR PRO SE
TAXPAYERS.
(a) In General.--Section 7475(b) (relating to use of fees)
is amended by inserting before the period at the end ``and to
provide services to pro se taxpayers''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
Subtitle B--Tax Court Pension and Compensation
SEC. 311. ANNUITIES FOR SURVIVORS OF TAX COURT JUDGES WHO ARE
ASSASSINATED.
(a) Eligibility in Case of Death by Assassination.--
Subsection (h) of section 7448 (relating to annuities to
surviving spouses and dependent children of judges) is
amended to read as follows:
``(h) Entitlement to Annuity.--
``(1) In general.--
``(A) Annuity to surviving spouse.--If a judge described in
paragraph (2) is survived by a surviving spouse but not by a
dependent child, there shall be paid to such surviving spouse
an annuity beginning with the day of the death of the judge
or following the surviving spouse's attainment of the age of
50 years, whichever is the later, in an amount computed as
provided in subsection (m).
``(B) Annuity to child.--If such a judge is survived by a
surviving spouse and a dependent child or children, there
shall be paid to such surviving spouse an immediate annuity
in an amount computed as provided in subsection (m), and
there shall also be paid to or on behalf of each such child
an immediate annuity equal to the lesser of--
``(i) 10 percent of the average annual salary of such judge
(determined in accordance with subsection (m)), or
``(ii) 20 percent of such average annual salary, divided by
the number of such children.
``(C) Annuity to surviving dependent children.--If such a
judge leaves no surviving spouse but leaves a surviving
dependent child or children, there shall be paid to or on
behalf of each such child an immediate annuity equal to the
lesser of--
``(i) 20 percent of the average annual salary of such judge
(determined in accordance with subsection (m)), or
``(ii) 40 percent of such average annual salary, divided by
the number of such children.
``(2) Covered judges.--Paragraph (1) applies to any judge
electing under subsection (b)--
``(A) who dies while a judge after having rendered at least
5 years of civilian service computed as prescribed in
subsection (n), for the last 5 years of which the salary
deductions provided for by subsection (c)(1) or the deposits
required by subsection (d) have actually been made or the
salary deductions required by the civil service retirement
laws have actually been made, or
``(B) who dies by assassination after having rendered less
than 5 years of civilian service computed as prescribed in
subsection (n) if, for the period of such service, the salary
deductions provided for by subsection (c)(1) or the deposits
required by subsection (d) have actually been made.
``(3) Termination of annuity.--
``(A) In the case of a surviving spouse.--The annuity
payable to a surviving spouse under this subsection shall be
terminable upon such surviving spouse's death or such
surviving spouse's remarriage before attaining age 55.
``(B) In the case of a child.--The annuity payable to a
child under this subsection shall be terminable upon (i) the
child attaining the age of 18 years, (ii) the child's
marriage, or (iii) the child's death, whichever first occurs,
except that if such child is incapable of self-support by
reason of mental or physical disability the child's annuity
shall be terminable only upon death, marriage, or recovery
from such disability.
``(C) In the case of a dependent child after death of
surviving spouse.--In case of the death of a surviving spouse
of a judge leaving a dependent child or children of the judge
surviving such spouse, the annuity of such child or children
shall be recomputed and paid as provided in paragraph (1)(C).
``(D) Recomputation.--In any case in which the annuity of a
dependent child is terminated under this subsection, the
annuities of any remaining dependent child or children, based
upon the service of the same judge, shall be recomputed and
paid as though the child whose annuity was so terminated had
not survived such judge.
``(4) Special rule for assassinated judges.--In the case of
a survivor or survivors of a judge described in paragraph
(2)(B), there shall be deducted from the annuities otherwise
payable under this section an amount equal to--
``(A) the amount of salary deductions provided for by
subsection (c)(1) that would have been made if such
deductions had been made for 5 years of civilian service
computed as prescribed in subsection (n) before the judge's
death, reduced by
``(B) the amount of such salary deductions that were
actually made before the date of the judge's death.
(b) Definition of Assassination.--Section 7448(a) (relating
to definitions) is amended by adding at the end the following
new paragraph:
``(8) The terms `assassinated' and `assassination' mean the
killing of a judge that is motivated by the performance by
that judge of his or her official duties.''.
(c) Determination of Assassination.--Subsection (i) of
section 7448 is amended--
(1) by striking the subsection heading and inserting the
following:
``(i) Determinations by Chief Judge.--
``(1) Dependency and disability.--'',
(2) by moving the text 2 ems to the right, and
(3) by adding at the end the following new paragraph:
``(2) Assassination.--The chief judge shall determine
whether the killing of a judge was an assassination, subject
to review only by the Tax Court. The head of any Federal
agency that investigates the killing of a judge shall provide
information to the chief judge that would assist the chief
judge in making such a determination.''.
(d) Computation of Annuities.--Subsection (m) of section
7448 is amended--
(1) by striking the subsection heading and inserting the
following:
``(m) Computation of Annuities.--
``(1) In general.--'',
(2) by moving the text 2 ems to the right, and
(3) by adding at the end the following new paragraph:
``(2) Assassinated judges.--In the case of a judge who is
assassinated and who has served less than 3 years, the
annuity of the surviving spouse of such judge shall be based
[[Page S5219]]
upon the average annual salary received by such judge for
judicial service.''.
(e) Other Benefits.--Section 7448 is amended by adding at
the end the following:
``(u) Other Benefits.--In the case of a judge who is
assassinated, an annuity shall be paid under this section
notwithstanding a survivor's eligibility for or receipt of
benefits under chapter 81 of title 5, United States Code,
except that the annuity for which a surviving spouse is
eligible under this section shall be reduced to the extent
that the total benefits paid under this section and chapter
81 of that title for any year would exceed the current salary
for that year of the office of the judge.''.
SEC. 312. COST-OF-LIVING ADJUSTMENTS FOR TAX COURT JUDICIAL
SURVIVOR ANNUITIES.
(a) In General.--Subsection (s) of section 7448 (relating
to annuities to surviving spouses and dependent children of
judges) is amended to read as follows:
``(s) Increases in Survivor Annuities.--Each time that an
increase is made under section 8340(b) of title 5, United
States Code, in annuities payable under subchapter III of
chapter 83 of that title, each annuity payable from the
survivors annuity fund under this section shall be increased
at the same time by the same percentage by which annuities
are increased under such section 8340(b).''.
(b) Effective Date.--The amendments made by this section
shall apply with respect to increases made under section
8340(b) of title 5, United States Code, in annuities payable
under subchapter III of chapter 83 of that title, taking
effect after the date of the enactment of this Act.
SEC. 313. LIFE INSURANCE COVERAGE FOR TAX COURT JUDGES.
(a) In General.--Section 7447 (relating to retirement of
judges) is amended by adding at the end the following new
subsection:
``(j) Life insurance coverage.--For purposes of chapter 87
of title 5, United States Code (relating to life insurance),
any individual who is serving as a judge of the Tax Court or
who is retired under this section is deemed to be an employee
who is continuing in active employment.''.
(b) Effective Date.--The amendment made by this section
shall apply to any individual serving as a judge of the
United States Tax Court or to any retired judge of the United
States Tax Court on the date of the enactment of this Act.
SEC. 314. COST OF LIFE INSURANCE COVERAGE FOR TAX COURT
JUDGES AGE 65 OR OVER.
Section 7472 (relating to expenditures) is amended by
inserting after the first sentence the following new
sentence: ``Notwithstanding any other provision of law, the
Tax Court is authorized to pay on behalf of its judges, age
65 or over, any increase in the cost of Federal Employees'
Group Life Insurance imposed after April 24, 1999, including
any expenses generated by such payments, as authorized by the
chief judge in a manner consistent with such payments
authorized by the Judicial Conference of the United States
pursuant to section 604(a)(5) of title 28, United States
Code.''.
SEC. 315. MODIFICATION OF TIMING OF LUMP-SUM PAYMENT OF
JUDGES' ACCRUED ANNUAL LEAVE.
(a) In General.--Section 7443 (relating to membership of
the Tax Court) is amended by adding at the end the following
new subsection:
``(h) Lump-Sum Payment of Judges' Accrued Annual Leave.--
Notwithstanding the provisions of sections 5551 and 6301 of
title 5, United States Code, when an individual subject to
the leave system provided in chapter 63 of that title is
appointed by the President to be a judge of the Tax Court,
the individual shall be entitled to receive, upon appointment
to the Tax Court, a lump-sum payment from the Tax Court of
the accumulated and accrued current annual leave standing to
the individual's credit as certified by the agency from which
the individual resigned.''.
(b) Effective Date.--The amendment made by this section
shall apply to any judge of the United States Tax Court who
has an outstanding leave balance on the date of the enactment
of this Act and to any individual appointed by the President
to serve as a judge of the United States Tax Court after such
date.
SEC. 316. PARTICIPATION OF TAX COURT JUDGES IN THE THRIFT
SAVINGS PLAN.
(a) In General.--Section 7447 (relating to retirement of
judges), as amended by this Act, is amended by adding at the
end the following new subsection:
``(k) Thrift Savings Plan.--
``(1) Election to contribute.--
``(A) In general.--A judge of the Tax Court may elect to
contribute to the Thrift Savings Fund established by section
8437 of title 5, United States Code.
``(B) Period of election.--An election may be made under
this paragraph only during a period provided under section
8432(b) of title 5, United States Code, for individuals
subject to chapter 84 of such title.
``(2) Applicability of title 5 provisions.--Except as
otherwise provided in this subsection, the provisions of
subchapters III and VII of chapter 84 of title 5, United
States Code, shall apply with respect to a judge who makes an
election under paragraph (1).
``(3) Special rules.--
``(A) Amount contributed.--The amount contributed by a
judge to the Thrift Savings Fund in any pay period shall not
exceed the maximum percentage of such judge's basic pay for
such period as allowable under section 8440f of title 5,
United States Code. Basic pay does not include any retired
pay paid pursuant to this section.
``(B) Contributions for benefit of judge.--No contributions
may be made for the benefit of a judge under section 8432(c)
of title 5, United States Code.
``(C) Applicability of section 8433(b) of title 5 whether
or not judge retires.--Section 8433(b) of title 5, United
States Code, applies with respect to a judge who makes an
election under paragraph (1) and who either--
``(i) retires under subsection (b), or
``(ii) ceases to serve as a judge of the Tax Court but does
not retire under subsection (b).
Retirement under subsection (b) is a separation from service
for purposes of subchapters III and VII of chapter 84 of that
title.
``(D) Applicability of section 8351(b)(5) of title 5.--The
provisions of section 8351(b)(5) of title 5, United States
Code, shall apply with respect to a judge who makes an
election under paragraph (1).
``(E) Exception.--Notwithstanding subparagraph (C), if any
judge retires under this section, or resigns without having
met the age and service requirements set forth under
subsection (b)(2), and such judge's nonforfeitable account
balance is less than an amount that the Executive Director of
the Office of Personnel Management prescribes by regulation,
the Executive Director shall pay the nonforfeitable account
balance to the participant in a single payment.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act,
except that United States Tax Court judges may only begin to
participate in the Thrift Savings Plan at the next open
season beginning after such date.
SEC. 317. EXEMPTION OF TEACHING COMPENSATION OF RETIRED
JUDGES FROM LIMITATION ON OUTSIDE EARNED
INCOME.
(a) In General.--Section 7447 (relating to retirement of
judges), as amended by this Act, is amended by adding at the
end the following new subsection:
``(l) Teaching Compensation of Retired Judges.--For
purposes of the limitation under section 501(a) of the Ethics
in Government Act of 1978 (5 U.S.C. App.), any compensation
for teaching approved under subsection (a)(5) of that section
shall not be treated as outside earned income when received
by a judge of the Tax Court who has retired under subsection
(b) for teaching performed during any calendar year for which
such a judge has met the requirements of subsection (c), as
certified by the chief judge of the Tax Court.''.
(b) Effective Date.--The amendment made by this section
shall apply to any individual serving as a retired judge of
the United States Tax Court on or after the date of the
enactment of this Act.
SEC. 318. GENERAL PROVISIONS RELATING TO MAGISTRATE JUDGES OF
THE TAX COURT.
(a) Title of Special Trial Judge Changed to Magistrate
Judge of the Tax Court.--The heading of section 7443A is
amended to read as follows:
``SEC. 7443A. MAGISTRATE JUDGES OF THE TAX COURT.''.
(b) Appointment, Tenure, and Removal.--Subsection (a) of
section 7443A is amended to read as follows:
``(a) Appointment, Tenure, and Removal.--
``(1) Appointment.--The chief judge may, from time to time,
appoint and reappoint magistrate judges of the Tax Court for
a term of 8 years. The magistrate judges of the Tax Court
shall proceed under such rules as may be promulgated by
the Tax Court.
``(2) Removal.--Removal of a magistrate judge of the Tax
Court during the term for which he or she is appointed shall
be only for incompetency, misconduct, neglect of duty, or
physical or mental disability, but the office of a magistrate
judge of the Tax Court shall be terminated if the judges of
the Tax Court determine that the services performed by the
magistrate judge of the Tax Court are no longer needed.
Removal shall not occur unless a majority of all the judges
of the Tax Court concur in the order of removal. Before any
order of removal shall be entered, a full specification of
the charges shall be furnished to the magistrate judge of the
Tax Court, and he or she shall be accorded by the judges of
the Tax Court an opportunity to be heard on the charges.''.
(c) Salary.--Section 7443A(d) (relating to salary) is
amended by striking ``90'' and inserting ``92''.
(d) Exemption From Federal Leave Provisions.--Section 7443A
is amended by adding at the end the following new subsection:
``(f) Exemption From Federal Leave Provisions.--
``(1) In general.--A magistrate judge of the Tax Court
appointed under this section shall be exempt from the
provisions of subchapter I of chapter 63 of title 5, United
States Code.
``(2) Treatment of unused leave.--
``(A) After service as magistrate judge.--If an individual
who is exempted under paragraph (1) from the subchapter
referred to in such paragraph was previously subject to such
subchapter and, without a break in service, again becomes
subject to such subchapter on completion of the individual's
service as a magistrate judge, the unused annual leave and
sick leave standing to the individual's credit when such
individual was exempted from this subchapter is
[[Page S5220]]
deemed to have remained to the individual's credit.
``(B) Computation of annuity.--In computing an annuity
under section 8339 of title 5, United States Code, the total
service of an individual specified in subparagraph (A) who
retires on an immediate annuity or dies leaving a survivor or
survivors entitled to an annuity includes, without regard to
the limitations imposed by subsection (f) of such section
8339, the days of unused sick leave standing to the
individual's credit when such individual was exempted from
subchapter I of chapter 63 of title 5, United States Code,
except that these days will not be counted in determining
average pay or annuity eligibility.
``(C) Lump sum payment.--Any accumulated and current
accrued annual leave or vacation balances credited to a
magistrate judge as of the date of the enactment of this
subsection shall be paid in a lump sum at the time of
separation from service pursuant to the provisions and
restrictions set forth in section 5551 of title 5, United
States Code, and related provisions referred to in such
section.''.
(e) Conforming Amendments.--
(1) The heading of subsection (b) of section 7443A is
amended by striking ``Special Trial Judges'' and inserting
``Magistrate Judges of the Tax Court''.
(2) Section 7443A(b) is amended by striking ``special trial
judges of the court'' and inserting ``magistrate judges of
the Tax Court''.
(3) Subsections (c) and (d) of section 7443A are amended by
striking ``special trial judge'' and inserting ``magistrate
judge of the Tax Court'' each place it appears.
(4) Section 7443A(e) is amended by striking ``special trial
judges'' and inserting ``magistrate judges of the Tax
Court''.
(5) Section 7456(a) is amended by striking ``special trial
judge'' each place it appears and inserting ``magistrate
judge''.
(6) Subsection (c) of section 7471 is amended--
(A) by striking the subsection heading and inserting
``Magistrate Judges of the Tax Court.--'', and
(B) by striking ``special trial judges'' and inserting
``magistrate judges''.
SEC. 319. ANNUITIES TO SURVIVING SPOUSES AND DEPENDENT
CHILDREN OF MAGISTRATE JUDGES OF THE TAX COURT.
(a) Definitions.--Section 7448(a) (relating to
definitions), as amended by this Act, is amended by
redesignating paragraphs (5), (6), (7), and (8) as paragraphs
(7), (8), (9), and (10), respectively, and by inserting after
paragraph (4) the following new paragraphs:
``(5) The term `magistrate judge' means a judicial officer
appointed pursuant to section 7443A, including any individual
receiving an annuity under section 7443B, or chapters 83 or
84, as the case may be, of title 5, United States Code,
whether or not performing judicial duties under section
7443C.
``(6) The term `magistrate judge's salary' means the salary
of a magistrate judge received under section 7443A(d), any
amount received as an annuity under section 7443B, or
chapters 83 or 84, as the case may be, of title 5, United
States Code, and compensation received under section
7443C.''.
(b) Election.--Subsection (b) of section 7448 (relating to
annuities to surviving spouses and dependent children of
judges) is amended--
(1) by striking the subsection heading and inserting the
following:
``(b) Election.--
``(1) Judges.--'',
(2) by moving the text 2 ems to the right, and
(3) by adding at the end the following new paragraph:
``(2) Magistrate judges.--Any magistrate judge may by
written election filed with the chief judge bring himself or
herself within the purview of this section. Such election
shall be filed not later than the later of 6 months after--
``(A) 6 months after the date of the enactment of this
paragraph,
``(B) the date the judge takes office, or
``(C) the date the judge marries.''.
(c) Conforming Amendments.--
(1) The heading of section 7448 is amended by inserting
``AND MAGISTRATE JUDGES'' after ``JUDGES''.
(2) The item relating to section 7448 in the table of
sections for part I of subchapter C of chapter 76 is amended
by inserting ``and magistrate judges'' after ``judges''.
(3) Subsections (c)(1), (d), (f), (g), (h), (j), (m), (n),
and (u) of section 7448, as amended by this Act, are each
amended--
(A) by inserting ``or magistrate judge'' after ``judge''
each place it appears other than in the phrase ``chief
judge'', and
(B) by inserting ``or magistrate judge's'' after
``judge's'' each place it appears.
(4) Section 7448(c) is amended--
(A) in paragraph (1), by striking ``Tax Court judges'' and
inserting ``Tax Court judicial officers'',
(B) in paragraph (2)--
(i) in subparagraph (A), by inserting ``and section
7443A(d)'' after ``(a)(4)'', and
(ii) in subparagraph (B), by striking ``subsection (a)(4)''
and inserting ``subsections (a)(4) and (a)(6)''.
(5) Section 7448(g) is amended by inserting ``or section
7443B'' after ``section 7447'' each place it appears, and by
inserting ``or an annuity'' after ``retired pay''.
(6) Section 7448(j)(1) is amended--
(A) in subparagraph (A), by striking ``service or retired''
and inserting ``service, retired'', and by inserting ``, or
receiving any annuity under section 7443B or chapters 83 or
84 of title 5, United States Code,'' after ``section 7447'',
and
(B) in the last sentence, by striking ``subsections (a)(6)
and (7)'' and inserting ``paragraphs (8) and (9) of
subsection (a)''.
(7) Section 7448(m)(1), as amended by this Act, is
amended--
(A) by inserting ``or any annuity under section 7443B or
chapters 83 or 84 of title 5, United States Code'' after
``7447(d)'', and
(B) by inserting ``or 7443B(m)(1)(B) after ``7447(f)(4)''.
(8) Section 7448(n) is amended by inserting ``his years of
service pursuant to any appointment under section 7443A,''
after ``of the Tax Court,''.
(9) Section 3121(b)(5)(E) is amended by inserting ``or
magistrate judge'' before ``of the United States Tax Court''.
(10) Section 210(a)(5)(E) of the Social Security Act is
amended by inserting ``or magistrate judge'' before ``of the
United States Tax Court''.
SEC. 320. RETIREMENT AND ANNUITY PROGRAM.
(a) Retirement and Annuity Program.--Part I of subchapter C
of chapter 76 is amended by inserting after section 7443A the
following new section:
``SEC. 7443B. RETIREMENT FOR MAGISTRATE JUDGES OF THE TAX
COURT.
``(a) Retirement Based on Years of Service.--A magistrate
judge of the Tax Court to whom this section applies and who
retires from office after attaining the age of 65 years and
serving at least 14 years, whether continuously or otherwise,
as such magistrate judge shall, subject to subsection (f), be
entitled to receive, during the remainder of the magistrate
judge's lifetime, an annuity equal to the salary being
received at the time the magistrate judge leaves office.
``(b) Retirement Upon Failure of Reappointment.--A
magistrate judge of the Tax Court to whom this section
applies who is not reappointed following the expiration of
the term of office of such magistrate judge, and who retires
upon the completion of the term shall, subject to subsection
(f), be entitled to receive, upon attaining the age of 65
years and during the remainder of such magistrate judge's
lifetime, an annuity equal to that portion of the salary
being received at the time the magistrate judge leaves office
which the aggregate number of years of service, not to exceed
14, bears to 14, if--
``(1) such magistrate judge has served at least 1 full term
as a magistrate judge, and
``(2) not earlier than 9 months before the date on which
the term of office of such magistrate judge expires, and not
later than 6 months before such date, such magistrate judge
notified the chief judge of the Tax Court in writing that
such magistrate judge was willing to accept reappointment to
the position in which such magistrate judge was serving.
``(c) Service of at Least 8 Years.--A magistrate judge of
the Tax Court to whom this section applies and who retires
after serving at least 8 years, whether continuously or
otherwise, as such a magistrate judge shall, subject to
subsection (f), be entitled to receive, upon attaining the
age of 65 years and during the remainder of the magistrate
judge's lifetime, an annuity equal to that portion of the
salary being received at the time the magistrate judge leaves
office which the aggregate number of years of service, not to
exceed 14, bears to 14. Such annuity shall be reduced by \1/
6\ of 1 percent for each full month such magistrate judge was
under the age of 65 at the time the magistrate judge left
office, except that such reduction shall not exceed 20
percent.
``(d) Retirement for Disability.--A magistrate judge of the
Tax Court to whom this section applies, who has served at
least 5 years, whether continuously or otherwise, as such a
magistrate judge, and who retires or is removed from office
upon the sole ground of mental or physical disability shall,
subject to subsection (f), be entitled to receive, during the
remainder of the magistrate judge's lifetime, an annuity
equal to 40 percent of the salary being received at the time
of retirement or removal or, in the case of a magistrate
judge who has served for at least 10 years, an amount equal
to that proportion of the salary being received at the time
of retirement or removal which the aggregate number of years
of service, not to exceed 14, bears to 14.
``(e) Cost-of-Living Adjustments.--A magistrate judge of
the Tax Court who is entitled to an annuity under this
section is also entitled to a cost-of-living adjustment in
such annuity, calculated and payable in the same manner as
adjustments under section 8340(b) of title 5, United States
Code, except that any such annuity, as increased under this
subsection, may not exceed the salary then payable for the
position from which the magistrate judge retired or was
removed.
``(f) Election; Annuity in Lieu of Other Annuities.--
``(1) In general.--A magistrate judge of the Tax Court
shall be entitled to an annuity under this section if the
magistrate judge elects an annuity under this section by
notifying the chief judge of the Tax Court not later than the
later of--
``(A) 5 years after the magistrate judge of the Tax Court
begins judicial service, or
``(B) 5 years after the date of the enactment of this
subsection.
Such notice shall be given in accordance with procedures
prescribed by the Tax Court.
[[Page S5221]]
``(2) Annuity in lieu of other annuity.--A magistrate judge
who elects to receive an annuity under this section shall not
be entitled to receive--
``(A) any annuity to which such magistrate judge would
otherwise have been entitled under subchapter III of chapter
83, or under chapter 84 (except for subchapters III and VII),
of title 5, United States Code, for service performed as a
magistrate or otherwise,
``(B) an annuity or salary in senior status or retirement
under section 371 or 372 of title 28, United States Code,
``(C) retired pay under section 7447, or
``(D) retired pay under section 7296 of title 38, United
States Code.
``(3) Coordination with title 5.--A magistrate judge of the
Tax Court who elects to receive an annuity under this
section--
``(A) shall not be subject to deductions and contributions
otherwise required by section 8334(a) of title 5, United
States Code,
``(B) shall be excluded from the operation of chapter 84
(other than subchapters III and VII) of such title 5, and
``(C) is entitled to a lump-sum credit under section
8342(a) or 8424 of such title 5, as the case may be.
``(g) Calculation of Service.--For purposes of calculating
an annuity under this section--
``(1) service as a magistrate judge of the Tax Court to
whom this section applies may be credited, and
``(2) each month of service shall be credited as \1/12\ of
a year, and the fractional part of any month shall not be
credited.
``(h) Covered Positions and Service.--This section applies
to any magistrate judge of the Tax Court or special trial
judge of the Tax Court appointed under this subchapter, but
only with respect to service as such a magistrate judge or
special trial judge after a date not earlier than 9\1/2\
years before the date of the enactment of this subsection.
``(i) Payments Pursuant to Court Order.--
``(1) In general.--Payments under this section which would
otherwise be made to a magistrate judge of the Tax Court
based upon his or her service shall be paid (in whole or in
part) by the chief judge of the Tax Court to another person
if and to the extent expressly provided for in the terms of
any court decree of divorce, annulment, or legal separation,
or the terms of any court order or court-approved property
settlement agreement incident to any court decree of divorce,
annulment, or legal separation. Any payment under this
paragraph to a person bars recovery by any other person.
``(2) Requirements for payment.--Paragraph (1) shall apply
only to payments made by the chief judge of the Tax Court
after the date of receipt by the chief judge of written
notice of such decree, order, or agreement, and such
additional information as the chief judge may prescribe.
``(3) Court defined.--For purposes of this subsection, the
term `court' means any court of any State, the District of
Columbia, the Commonwealth of Puerto Rico, Guam, the Northern
Mariana Islands, or the Virgin Islands, and any Indian tribal
court or courts of Indian offense.
``(j) Deductions, Contributions, and Deposits.--
``(1) Deductions.--Beginning with the next pay period after
the chief judge of the Tax Court receives a notice under
subsection (f) that a magistrate judge of the Tax Court has
elected an annuity under this section, the chief judge shall
deduct and withhold 1 percent of the salary of such
magistrate judge. Amounts shall be so deducted and withheld
in a manner determined by the chief judge. Amounts deducted
and withheld under this subsection shall be deposited in the
Treasury of the United States to the credit of the Tax Court
Judicial Officers' Retirement Fund. Deductions under this
subsection from the salary of a magistrate judge shall
terminate upon the retirement of the magistrate judge or upon
completion of 14 years of service for which contributions
under this section have been made, whether continuously or
otherwise, as calculated under subsection (g), whichever
occurs first.
``(2) Consent to deductions; discharge of claims.--Each
magistrate judge of the Tax Court who makes an election under
subsection (f) shall be deemed to consent and agree to the
deductions from salary which are made under paragraph (1).
Payment of such salary less such deductions (and any
deductions made under section 7448) is a full and complete
discharge and acquittance of all claims and demands for all
services rendered by such magistrate judge during the period
covered by such payment, except the right to those benefits
to which the magistrate judge is entitled under this section
(and section 7448).
``(k) Deposits for Prior Service.--Each magistrate judge of
the Tax Court who makes an election under subsection (f) may
deposit, for service performed before such election for which
contributions may be made under this section, an amount equal
to 1 percent of the salary received for that service. Credit
for any period covered by that service may not be allowed for
purposes of an annuity under this section until a deposit
under this subsection has been made for that period.
``(l) Individual Retirement Records.--The amounts deducted
and withheld under subsection (j), and the amounts deposited
under subsection (k), shall be credited to individual
accounts in the name of each magistrate judge of the Tax
Court from whom such amounts are received, for credit to the
Tax Court Judicial Officers' Retirement Fund.
``(m) Annuities Affected in Certain Cases.--
``(1) 1-year forfeiture for failure to perform judicial
duties.--Subject to paragraph (3), any magistrate judge of
the Tax Court who retires under this section and who fails to
perform judicial duties required of such individual by
section 7443C shall forfeit all rights to an annuity under
this section for a 1-year period which begins on the 1st day
on which such individual fails to perform such duties.
``(2) Permanent forfeiture of retired pay where certain
non-government services performed.--Subject to paragraph (3),
any magistrate judge of the Tax Court who retires under this
section and who thereafter performs (or supervises or directs
the performance of) legal or accounting services in the field
of Federal taxation for the individual's client, the
individual's employer, or any of such employer's clients,
shall forfeit all rights to an annuity under this section for
all periods beginning on or after the first day on which the
individual performs (or supervises or directs the performance
of) such services. The preceding sentence shall not apply to
any civil office or employment under the Government of the
United States.
``(3) Forfeitures not to apply where individual elects to
freeze amount of annuity.--
``(A) In general.--If a magistrate judge of the Tax Court
makes an election under this paragraph--
``(i) paragraphs (1) and (2) (and section 7443C) shall not
apply to such magistrate judge beginning on the date such
election takes effect, and
``(ii) the annuity payable under this section to such
magistrate judge, for periods beginning on or after the date
such election takes effect, shall be equal to the annuity to
which such magistrate judge is entitled on the day before
such effective date.
``(B) Election requirements.--An election under
subparagraph (A)--
``(i) may be made by a magistrate judge of the Tax Court
eligible for retirement under this section, and
``(ii) shall be filed with the chief judge of the Tax
Court.
Such an election, once it takes effect, shall be irrevocable.
``(C) Effective date of election.--Any election under
subparagraph (A) shall take effect on the first day of the
first month following the month in which the election is
made.
``(4) Accepting other employment.--Any magistrate judge of
the Tax Court who retires under this section and thereafter
accepts compensation for civil office or employment under the
United States Government (other than for the performance of
functions as a magistrate judge of the Tax Court under
section 7443C) shall forfeit all rights to an annuity under
this section for the period for which such compensation is
received. For purposes of this paragraph, the term
`compensation' includes retired pay or salary received in
retired status.
``(n) Lump-Sum Payments.--
``(1) Eligibility.--
``(A) In general.--Subject to paragraph (2), an individual
who serves as a magistrate judge of the Tax Court and--
``(i) who leaves office and is not reappointed as a
magistrate judge of the Tax Court for at least 31 consecutive
days,
``(ii) who files an application with the chief judge of the
Tax Court for payment of a lump-sum credit,
``(iii) is not serving as a magistrate judge of the Tax
Court at the time of filing of the application, and
``(iv) will not become eligible to receive an annuity under
this section within 31 days after filing the application,
is entitled to be paid the lump-sum credit. Payment of the
lump-sum credit voids all rights to an annuity under this
section based on the service on which the lump-sum credit is
based, until that individual resumes office as a magistrate
judge of the Tax Court.
``(B) Payment to survivors.--Lump-sum benefits authorized
by subparagraphs (C), (D), and (E) of this paragraph shall be
paid to the person or persons surviving the magistrate judge
of the Tax Court and alive on the date title to the payment
arises, in the order of precedence set forth in subsection
(o) of section 376 of title 28, United States Code, and in
accordance with the last 2 sentences of paragraph (1) of that
subsection. For purposes of the preceding sentence, the term
`judicial official' as used in subsection (o) of such section
376 shall be deemed to mean `magistrate judge of the Tax
Court' and the terms `Administrative Office of the United
States Courts' and `Director of the Administrative Office of
the United States Courts' shall be deemed to mean `chief
judge of the Tax Court'.
``(C) Payment upon death of judge before receipt of
annuity.--If a magistrate judge of the Tax Court dies before
receiving an annuity under this section, the lump-sum credit
shall be paid.
``(D) Payment of annuity remainder.--If all annuity rights
under this section based on the service of a deceased
magistrate judge of the Tax Court terminate before the total
annuity paid equals the lump-sum credit, the difference shall
be paid.
``(E) Payment upon death of judge during receipt of
annuity.--If a magistrate judge of the Tax Court who is
receiving an annuity under this section dies, any accrued
annuity benefits remaining unpaid shall be paid.
[[Page S5222]]
``(F) Payment upon termination.--Any accrued annuity
benefits remaining unpaid on the termination, except by
death, of the annuity of a magistrate judge of the Tax Court
shall be paid to that individual.
``(G) Payment upon accepting other employment.--Subject to
paragraph (2), a magistrate judge of the Tax Court who
forfeits rights to an annuity under subsection (m)(4) before
the total annuity paid equals the lump-sum credit shall be
entitled to be paid the difference if the magistrate judge of
the Tax Court files an application with the chief judge of
the Tax Court for payment of that difference. A payment under
this subparagraph voids all rights to an annuity on which the
payment is based.
``(2) Spouses and former spouses.--
``(A) In general.--Payment of the lump-sum credit under
paragraph (1)(A) or a payment under paragraph (1)(G)--
``(i) may be made only if any current spouse and any former
spouse of the magistrate judge of the Tax Court are notified
of the magistrate judge's application, and
``(ii) shall be subject to the terms of a court decree of
divorce, annulment, or legal separation, or any court or
court approved property settlement agreement incident to such
decree, if--
``(I) the decree, order, or agreement expressly relates to
any portion of the lump-sum credit or other payment involved,
and
``(II) payment of the lump-sum credit or other payment
would extinguish entitlement of the magistrate judge's spouse
or former spouse to any portion of an annuity under
subsection (i).
``(B) Notification.--Notification of a spouse or former
spouse under this paragraph shall be made in accordance with
such procedures as the chief judge of the Tax Court shall
prescribe. The chief judge may provide under such procedures
that subparagraph (A)(i) may be waived with respect to a
spouse or former spouse if the magistrate judge establishes
to the satisfaction of the chief judge that the whereabouts
of such spouse or former spouse cannot be determined.
``(C) Resolution of 2 or more orders.--The chief judge
shall prescribe procedures under which this paragraph shall
be applied in any case in which the chief judge receives 2 or
more orders or decrees described in subparagraph (A).
``(3) Definition.--For purposes of this subsection, the
term `lump-sum credit' means the unrefunded amount consisting
of--
``(A) retirement deductions made under this section from
the salary of a magistrate judge of the Tax Court,
``(B) amounts deposited under subsection (k) by a
magistrate judge of the Tax Court covering earlier service,
and
``(C) interest on the deductions and deposits which, for
any calendar year, shall be equal to the overall average
yield to the Tax Court Judicial Officers' Retirement Fund
during the preceding fiscal year from all obligations
purchased by the Secretary during such fiscal year under
subsection (o); but does not include interest--
``(i) if the service covered thereby aggregates 1 year or
less, or
``(ii) for the fractional part of a month in the total
service.
``(o) Tax Court Judicial Officers' Retirement Fund.--
``(1) Establishment.--There is established in the Treasury
a fund which shall be known as the `Tax Court Judicial
Officers' Retirement Fund'. Amounts in the Fund are
authorized to be appropriated for the payment of annuities,
refunds, and other payments under this section.
``(2) Investment of Fund.--The Secretary shall invest, in
interest bearing securities of the United States, such
currently available portions of the Tax Court Judicial
Officers' Retirement Fund as are not immediately required for
payments from the Fund. The income derived from these
investments constitutes a part of the Fund.
``(3) Unfunded liability.--
``(A) In general.--There are authorized to be appropriated
to the Tax Court Judicial Officers' Retirement Fund amounts
required to reduce to zero the unfunded liability of the
Fund.
``(B) Unfunded liability.--For purposes of subparagraph
(A), the term `unfunded liability' means the estimated
excess, determined on an annual basis in accordance with the
provisions of section 9503 of title 31, United States Code,
of the present value of all benefits payable from the Tax
Court Judicial Officers' Retirement Fund over the sum of--
``(i) the present value of deductions to be withheld under
this section from the future basic pay of magistrate judges
of the Tax Court, plus
``(ii) the balance in the Fund as of the date the unfunded
liability is determined.
``(p) Participation in Thrift Savings Plan.--
``(1) Election to contribute.--
``(A) In general.--A magistrate judge of the Tax Court who
elects to receive an annuity under this section or under
section 321 of the Tax Administration Good Government Act may
elect to contribute an amount of such individual's basic pay
to the Thrift Savings Fund established by section 8437 of
title 5, United States Code.
``(B) Period of election.--An election may be made under
this paragraph only during a period provided under section
8432(b) of title 5, United States Code, for individuals
subject to chapter 84 of such title.
``(2) Applicability of title 5 provisions.--Except as
otherwise provided in this subsection, the provisions of
subchapters III and VII of chapter 84 of title 5, United
States Code, shall apply with respect to a magistrate judge
who makes an election under paragraph (1).
``(3) Special rules.--
``(A) Amount contributed.--The amount contributed by a
magistrate judge to the Thrift Savings Fund in any pay period
shall not exceed the maximum percentage of such judge's basic
pay for such pay period as allowable under section 8440f of
title 5, United States Code.
``(B) Contributions for benefit of judge.--No contributions
may be made for the benefit of a magistrate judge under
section 8432(c) of title 5, United States Code.
``(C) Applicability of section 8433(b) of title 5.--Section
8433(b) of title 5, United States Code, applies with respect
to a magistrate judge who makes an election under paragraph
(1) and--
``(i) who retires entitled to an immediate annuity under
this section (including a disability annuity under subsection
(d) of this section) or section 321 of the Tax Administration
Good Government Act,
``(ii) who retires before attaining age 65 but is entitled,
upon attaining age 65, to an annuity under this section or
section 321 of the Tax Administration Good Government Act, or
``(iii) who retires before becoming entitled to an
immediate annuity, or an annuity upon attaining age 65, under
this section or section 321 of the Tax Administration Good
Government Act.
``(D) Separation from service.--With respect to a
magistrate judge to whom this subsection applies, retirement
under this section or section 321 of the Tax Administration
Good Government Act is a separation from service for purposes
of subchapters III and VII of chapter 84 of title 5, United
States Code.
``(4) Definitions.--For purposes of this subsection, the
terms `retirement' and `retire' include removal from office
under section 7443A(a)(2) on the sole ground of mental or
physical disability.
``(5) Offset.--In the case of a magistrate judge who
receives a distribution from the Thrift Savings Fund and who
later receives an annuity under this section, that annuity
shall be offset by an amount equal to the amount which
represents the Government's contribution to that person's
Thrift Savings Account, without regard to earnings
attributable to that amount. Where such an offset would
exceed 50 percent of the annuity to be received in the first
year, the offset may be divided equally over the first 2
years in which that person receives the annuity.
``(6) Exception.--Notwithstanding clauses (i) and (ii) of
paragraph (3)(C), if any magistrate judge retires under
circumstances making such magistrate judge eligible to make
an election under subsection (b) of section 8433 of title 5,
United States Code, and such magistrate judge's
nonforfeitable account balance is less than an amount that
the Executive Director of the Office of Personnel Management
prescribes by regulation, the Executive Director shall pay
the nonforfeitable account balance to the participant in a
single payment.''.
(b) Conforming Amendment.--The table of section for part I
of subchapter C of chapter 76 is amended by inserting after
the item relating to section 7443A the following new item:
``Sec. 7443B. Retirement for magistrate judges of the Tax Court.''.
SEC. 321. INCUMBENT MAGISTRATE JUDGES OF THE TAX COURT.
(a) Retirement Annuity Under Title 5 and Section 7443B of
the Internal Revenue Code of 1986.--A magistrate judge of the
United States Tax Court in active service on the date of the
enactment of this Act shall, subject to subsection (b), be
entitled, in lieu of the annuity otherwise provided under the
amendments made by this title, to--
(1) an annuity under subchapter III of chapter 83, or under
chapter 84 (except for subchapters III and VII), of title 5,
United States Code, as the case may be, for creditable
service before the date on which service would begin to be
credited for purposes of paragraph (2), and
(2) an annuity calculated under subsection (b) or (c) and
subsection (g) of section 7443B of the Internal Revenue Code
of 1986, as added by this Act, for any service as a
magistrate judge of the United States Tax Court or special
trial judge of the United States Tax Court but only with
respect to service as such a magistrate judge or special
trial judge after a date not earlier than 9\1/2\ years prior
to the date of the enactment of this Act (as specified in the
election pursuant to subsection (b)) for which deductions and
deposits are made under subsections (j) and (k) of such
section 7443B, as applicable, without regard to the minimum
number of years of service as such a magistrate judge of the
United States Tax Court, except that--
(A) in the case of a magistrate judge who retired with less
than 8 years of service, the annuity under subsection (c) of
such section 7443B shall be equal to that proportion of the
salary being received at the time the magistrate judge leaves
office which the years of service bears to 14, subject to a
reduction in accordance with subsection (c) of such section
7443B if the magistrate judge is under age 65 at the time he
or she leaves office, and
(B) the aggregate amount of the annuity initially payable
on retirement under this subsection may not exceed the rate
of pay
[[Page S5223]]
for the magistrate judge which is in effect on the day before
the retirement becomes effective.
(b) Filing of Notice of Election.--A magistrate judge of
the United States Tax Court shall be entitled to an annuity
under this section only if the magistrate judge files a
notice of that election with the chief judge of the United
States Tax Court specifying the date on which service would
begin to be credited under section 7443B of the Internal
Revenue Code of 1986, as added by this Act, in lieu of
chapter 83 or chapter 84 of title 5, United States Code. Such
notice shall be filed in accordance with such procedures as
the chief judge of the United States Tax Court shall
prescribe.
(c) Lump-Sum Credit Under Title 5.--A magistrate judge of
the United States Tax Court who makes an election under
subsection (b) shall be entitled to a lump-sum credit under
section 8342 or 8424 of title 5, United States Code, as the
case may be, for any service which is covered under section
7443B of the Internal Revenue Code of 1986, as added by this
Act, pursuant to that election, and with respect to which any
contributions were made by the magistrate judge under the
applicable provisions of title 5, United States Code.
(d) Recall.--With respect to any magistrate judge of the
United States Tax Court receiving an annuity under this
section who is recalled to serve under section 7443C of the
Internal Revenue Code of 1986, as added by this Act--
(1) the amount of compensation which such recalled
magistrate judge receives under such section 7443C shall be
calculated on the basis of the annuity received under this
section, and
(2) such recalled magistrate judge of the United States Tax
Court may serve as a reemployed annuitant to the extent
otherwise permitted under title 5, United States Code.
Section 7443B(m)(4) of the Internal Revenue Code of 1986, as
added by this Act, shall not apply with respect to service as
a reemployed annuitant described in paragraph (2).
SEC. 322. PROVISIONS FOR RECALL.
(a) In General.--Part I of subchapter C of chapter 76, as
amended by this Act, is amended by inserting after section
7443B the following new section:
``SEC. 7443C. RECALL OF MAGISTRATE JUDGES OF THE TAX COURT.
``(a) Recalling of Retired Magistrate Judges.--Any
individual who has retired pursuant to section 7443B or the
applicable provisions of title 5, United States Code, upon
reaching the age and service requirements established
therein, may at or after retirement be called upon by the
chief judge of the Tax Court to perform such judicial duties
with the Tax Court as may be requested of such individual for
any period or periods specified by the chief judge; except
that in the case of any such individual--
``(1) the aggregate of such periods in any 1 calendar year
shall not (without such individual's consent) exceed 90
calendar days, and
``(2) such individual shall be relieved of performing such
duties during any period in which illness or disability
precludes the performance of such duties.
Any act, or failure to act, by an individual performing
judicial duties pursuant to this subsection shall have the
same force and effect as if it were the act (or failure to
act) of a magistrate judge of the Tax Court.
``(b) Compensation.--For the year in which a period of
recall occurs, the magistrate judge shall receive, in
addition to the annuity provided under the provisions of
section 7443B or under the applicable provisions of title 5,
United States Code, an amount equal to the difference between
that annuity and the current salary of the office to which
the magistrate judge is recalled. The annuity of the
magistrate judge who completes that period of service, who is
not recalled in a subsequent year, and who retired under
section 7443B, shall be equal to the salary in effect at the
end of the year in which the period of recall occurred for
the office from which such individual retired.
``(c) Rulemaking Authority.--The provisions of this section
may be implemented under such rules as may be promulgated by
the Tax Court.''.
(b) Conforming Amendment.--The table of sections for part I
of subchapter C of chapter 76, as amended by this Act, is
amended by inserting after the item relating to section 7443B
the following new item:
``Sec. 7443C. Recall of magistrate judges of the Tax Court.''.
SEC. 323. EFFECTIVE DATE.
Except as otherwise provided, the amendments made by this
subtitle shall take effect on the date of the enactment of
this Act.
TITLE IV--CONFIDENTIALITY AND DISCLOSURE
SEC. 401. CLARIFICATION OF DEFINITION OF CHURCH TAX INQUIRY.
Subsection (i) of section 7611 (relating to section not to
apply to criminal investigations, etc.) is amended by
striking ``or'' at the end of paragraph (4), by striking the
period at the end of paragraph (5) and inserting ``, or'',
and by inserting after paragraph (5) the following:
``(6) information provided by the Secretary related to the
standards for exemption from tax under this title and the
requirements under this title relating to unrelated business
taxable income.''.
SEC. 402. COLLECTION ACTIVITIES WITH RESPECT TO JOINT RETURN
DISCLOSABLE TO EITHER SPOUSE BASED ON ORAL
REQUEST.
(a) In General.--Paragraph (8) of section 6103(e) (relating
to disclosure of collection activities with respect to joint
return) is amended by striking ``in writing'' the first place
it appears.
(b) Elimination of Reporting Requirement.--Section
7803(d)(1) (relating to annual reporting) is amended by
striking subparagraph (B) and by redesignating subparagraphs
(C), (D), (E), (F), and (G) as subparagraphs (B), (C), (D),
(E), and (F), respectively.
(c) Effective Dates.--
(1) Subsection (a).--The amendment made by subsection (a)
shall apply to requests made after the date of the enactment
of this Act.
(2) Subsection (b).--The amendment made by subsection (b)
shall apply to reports made after the date of the enactment
of this Act.
SEC. 403. TAXPAYER REPRESENTATIVES NOT SUBJECT TO EXAMINATION
ON SOLE BASIS OF REPRESENTATION OF TAXPAYERS.
(a) In General.--Paragraph (1) of section 6103(h) (relating
to disclosure to certain Federal officers and employees for
purposes of tax administration, etc.) is amended--
(1) by striking ``treasury.--Returns and return
information'' and inserting ``treasury.--
``(A) In general.--Returns and return information'', and
(2) by adding at the end the following new subparagraph:
``(B) Taxpayer representatives.--Notwithstanding
subparagraph (A), the return or return information of the
representative of a taxpayer whose return is being examined
by an officer or employee of the Department of the Treasury
shall not be open to inspection by such officer or employee
on the sole basis of the representative's relationship to the
taxpayer unless a supervisor of such officer or employee has
approved the inspection of the return or return information
of such representative on a basis other than by reason of
such relationship.''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date which is 180 days after the
date of the enactment of this Act.
SEC. 404. PROHIBITION OF DISCLOSURE OF TAXPAYER IDENTIFYING
NUMBER WITH RESPECT TO DISCLOSURE OF ACCEPTED
OFFERS-IN-COMPROMISE.
(a) In General.--Paragraph (1) of section 6103(k) (relating
to disclosure of certain returns and return information for
tax administrative purposes) is amended by inserting ``(other
than the taxpayer's identifying number)'' after ``Return
information''.
(b) Effective Date.--The amendment made by this section
shall apply to disclosures made after the date of the
enactment of this Act.
SEC. 405. COMPLIANCE BY CONTRACTORS AND OTHER AGENTS WITH
CONFIDENTIALITY SAFEGUARDS.
(a) In General.--Section 6103(p) (relating to State law
requirements) is amended by adding at the end the following
new paragraph:
``(9) Disclosure to contractors and other agents.--
Notwithstanding any other provision of this section, no
return or return information shall be disclosed to any
contractor or other agent of a Federal, State, or local
agency unless such agency, to the satisfaction of the
Secretary--
``(A) has requirements in effect which require each such
contractor or other agent which would have access to returns
or return information to provide safeguards (within the
meaning of paragraph (4)) to protect the confidentiality of
such returns or return information,
``(B) agrees to conduct an on-site review every 3 years
(mid-point review in the case of contracts or agreements of
less than 1 year in duration) of each contractor or other
agent to determine compliance with such requirements,
``(C) submits the findings of the most recent review
conducted under subparagraph (B) to the Secretary as part of
the report required by paragraph (4)(E), and
``(D) certifies to the Secretary for the most recent annual
period that such contractor or other agent is in compliance
with all such requirements.
The certification required by subparagraph (D) shall include
the name and address of each contractor and other agent, a
description of the contract or agreement with such contractor
or other agent, and the duration of such contract or
agreement. The requirements of this paragraph shall not apply
to disclosures pursuant to subsection (n) for purposes of
Federal tax administration.''.
(b) Conforming Amendment.--Subparagraph (B) of section
6103(p)(8) is amended by inserting ``or paragraph (9)'' after
``subparagraph (A)''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to disclosures made after December 31, 2003.
(2) Certifications.--The first certification under section
6103(p)(9)(D) of the Internal Revenue Code of 1986, as added
by subsection (a), shall be made with respect to calendar
year 2004.
SEC. 406. HIGHER STANDARDS FOR REQUESTS FOR AND CONSENTS TO
DISCLOSURE.
(a) In General.--Subsection (c) of section 6103 (relating
to disclosure of returns and return information to designee
of taxpayer) is amended--
[[Page S5224]]
(1) by striking ``Taxpayer.--The Secretary'' and inserting
``Taxpayer.--
``(1) In General.--The Secretary'', and
(2) by adding at the end the following new paragraphs:
``(2) Restrictions on persons obtaining information.--The
return of any taxpayer, or return information with respect to
such taxpayer, disclosed to a person or persons under
paragraph (1) for a purpose specified in writing,
electronically, or orally may be disclosed or used by such
person or persons only for the purpose of, and to the extent
necessary in, accomplishing the purpose for disclosure
specified and shall not be disclosed or used for any other
purpose.
``(3) Requirements for form prescribed by secretary.--For
purposes of this subsection, the Secretary shall prescribe a
form for written requests and consents which shall--
``(A) contain a warning, prominently displayed, informing
the taxpayer that the form should not be signed unless it is
completed,
``(B) state that if the taxpayer believes there is an
attempt to coerce him to sign an incomplete or blank form,
the taxpayer should report the matter to the Treasury
Inspector General for Tax Administration, and
``(C) contain the address and telephone number of the
Treasury Inspector General for Tax Administration.
``(4) Cross Reference.--
``For provision providing for civil damages for violation of
paragraph (2), see section 7431(i).''.
(b) Civil Damages.--Section 7431 (relating to civil damages
for unauthorized inspection or disclosure of returns and
return information) is amended by adding at the end the
following new subsection:
``(i) Disclosure or Use of Returns and Return Information
Obtained Under Subsection 6103(c).--Disclosure or use of
returns or return information obtained under section 6103(c)
other than for--
``(1) the purpose of, and to the extent necessary in,
accomplishing the purpose for disclosure specified in
writing, electronically, or orally, or
``(2) subject to the safeguards set forth in section 6103,
for purposes permitted under section 6103,
shall be treated as a violation of section 6103(a).''.
(b) Report.--Not later than 18 months after the date of the
enactment of this Act, the Secretary of the Treasury shall
submit a report to the Congress on compliance with the
designation and certification requirements applicable to
requests for or consent to disclosure of returns and return
information under section 6103(c) of the Internal Revenue
Code of 1986, as amended by subsection (a). Such report
shall--
(1) evaluate (on the basis of random sampling) whether--
(A) the amendment made by subsection (a) is achieving the
purposes of this section;
(B) requesters and submitters for such disclosure are
continuing to evade the purposes of this section and, if so,
how; and
(C) the sanctions for violations of such requirements are
adequate; and
(2) include such recommendations that the Secretary of the
Treasury considers necessary or appropriate to better achieve
the purposes of this section.
(d) Sunset of Existing Consents.--Notwithstanding any other
provision of law, any request for or consent to disclose any
return or return information under section 6103(c) of the
Internal Revenue Code of 1986 made before the date of the
enactment of this Act shall remain in effect until the
earlier of the date such request or consent is otherwise
terminated or the date which is 3 taxable years after such
date of enactment.
(e) Effective Date.--The amendments made by this section
shall apply to requests and consents made after 3 months
after the date of the enactment of this Act.
SEC. 407. CIVIL DAMAGES FOR UNAUTHORIZED INSPECTION OR
DISCLOSURE.
(a) Notice to Taxpayer.--Subsection (e) of section 7431
(relating to notification of unlawful inspection and
disclosure) is amended by adding at the end the following:
``The Secretary shall also notify such taxpayer if the
Internal Revenue Service or, upon notice to the Secretary by
a Federal or State agency, if such Federal or State agency,
proposes an administrative determination as to disciplinary
or adverse action against an employee arising from the
employee's unauthorized inspection or disclosure of the
taxpayer's return or return information. The notice described
in this subsection shall include the date of the inspection
or disclosure and the rights of the taxpayer under such
administrative determination.''.
(b) Exhaustion of Administrative Remedies Required.--
Section 7431, as amended by this Act, is amended by adding at
the end the following new subsection:
``(j) Exhaustion of Administrative Remedies Required.--A
judgment for damages shall not be awarded under subsection
(c) unless the court determines that the plaintiff has
exhausted the administrative remedies available to such
plaintiff within the Internal Revenue Service.''.
(c) Payment Authority Clarified.--
(1) In general.--Section 7431, as amended by subsection
(b), is amended by adding at the end the following new
subsection:
``(k) Payment Authority.--Claims pursuant to this section
shall be payable out of funds appropriated under section 1304
of title 31, United States Code.''.
(2) Annual reports of payments.--The Secretary of the
Treasury shall annually report to the Committee of Finance of
the Senate and the Committee on Ways and Means of the House
of Representatives regarding payments made from the United
States Judgment Fund under section 7431(k) of the Internal
Revenue Code of 1986.
(d) Burden of Proof for Good Faith Exception Rests With
Secretary.--Section 7431(b) (relating to exceptions) is
amended by adding at the end the following new flush
sentence:
``In any proceeding involving the issue of the existence of
good faith, the burden of proof with respect to such issue
shall be on the Secretary.''.
(e) Reports.--Subsection (p) of section 6103 (relating to
procedure and recordkeeping), as amended by this Act, is
amended by adding at the end the following new paragraph:
``(10) Report on willful unauthorized disclosure and
inspection.--As part of the report required by paragraph
(3)(C) for each calendar year, the Secretary shall furnish
information regarding the willful unauthorized disclosure and
inspection of returns and return information, including the
number, status, and results of--
``(A) administrative investigations,
``(B) civil lawsuits brought under section 7431 (including
the amounts for which such lawsuits were settled and the
amounts of damages awarded), and
``(C) criminal prosecutions.''.
(c) Effective Dates.--
(1) Notice.--The amendment made by subsection (a) shall
apply to determinations made after the date of the enactment
of this Act.
(2) Exhaustion of remedies and burden of proof.--The
amendments made by subsections (b) and (d) shall apply to
inspections and disclosures occurring on and after the date
of the enactment of this Act.
(3) Payment authority.--The amendment made by subsection
(c)(1) shall take effect on the date of the enactment of this
Act.
(4) Reports.--The amendment made by subsection (e) shall
apply to calendar years ending after the date of the
enactment of this Act.
SEC. 408. EXPANDED DISCLOSURE IN EMERGENCY CIRCUMSTANCES.
(a) In General.--Section 6103(i)(3)(B)(i) (relating to
danger of death or physical injury) is amended by striking
``or State law enforcement agency'' and inserting ``, State,
or local law enforcement agency''.
(b) Conforming Amendments.--Section 6103(p)(4) is amended--
(1) by striking ``(i)(3)(B)(i) or (7)(A)(ii)'' and
inserting ``(i)(7)(A)(ii)'', and
(2) by striking ``, (i)(3)(B)(i),''.
(c) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 409. DISCLOSURE OF TAXPAYER IDENTITY FOR TAX REFUND
PURPOSES.
(a) In General.--Section 6103(m)(1) (relating to tax
refunds) is amended by striking ``taxpayer identity
information to the press and other media'' and by inserting
``a person's name and the city, State, and zip code of the
person's mailing address to the press, other media, and
through any other means of mass communication,''.
(b) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 410. DISCLOSURE TO STATE OFFICIALS OF PROPOSED ACTIONS
RELATED TO SECTION 501(C) ORGANIZATIONS.
(a) In General.--Subsection (c) of section 6104 is amended
by striking paragraph (2) and inserting the following new
paragraphs:
``(2) Disclosure of proposed actions related to charitable
organizations.--
``(A) Specific notifications.--In the case of an
organization to which paragraph (1) applies, the Secretary
may disclose to the appropriate State officer--
``(i) a notice of proposed refusal to recognize such
organization as an organization described in section
501(c)(3) or a notice of proposed revocation of such
organization's recognition as an organization exempt from
taxation,
``(ii) the issuance of a letter of proposed deficiency of
tax imposed under section 507 or chapter 41 or 42, and
``(iii) the names, addresses, and taxpayer identification
numbers of organizations which have applied for recognition
as organizations described in section 501(c)(3).
``(B) Additional disclosures.--Returns and return
information of organizations with respect to which
information is disclosed under subparagraph (A) may be made
available for inspection by or disclosed to an appropriate
State officer.
``(C) Procedures for disclosure.--Information may be
inspected or disclosed under subparagraph (A) or (B) only--
``(i) upon written request by an appropriate State officer,
and
``(ii) for the purpose of, and only to the extent necessary
in, the administration of State laws regulating such
organizations.
Such information may only be inspected by or disclosed to
representatives of the appropriate State officer designated
as the individuals who are to inspect or to receive the
returns or return information under this paragraph on behalf
of such officer. Such representatives shall not include any
contractor or agent.
``(D) Disclosures other than by request.--The Secretary may
make available for inspection or disclose returns and return
information of an organization to which paragraph (1) applies
to an appropriate State
[[Page S5225]]
officer of any State if the Secretary determines that such
inspection or disclosure may facilitate the resolution of
Federal or State issues relating to the tax-exempt status of
such organization.
``(3) Disclosure with respect to certain other exempt
organizations.--Upon written request by an appropriate State
officer, the Secretary may make available for inspection or
disclosure returns and return information of an organization
described in paragraph (2), (4), (6), (7), (8), (10), or (13)
of section 501(c) for the purpose of, and to the extent
necessary in, the administration of State laws regulating the
solicitation or administration of the charitable funds or
charitable assets of such organizations. Such information may
be inspected only by or disclosed only to representatives of
the appropriate State officer designated as the individuals
who are to inspect or to receive the returns or return
information under this paragraph on behalf of such officer.
Such representatives shall not include any contractor or
agent.
``(4) Use in civil judicial and administrative
proceedings.--Returns and return information disclosed
pursuant to this subsection may be disclosed in civil
administrative and civil judicial proceedings pertaining to
the enforcement of State laws regulating such organizations
in a manner prescribed by the Secretary similar to that for
tax administration proceedings under section 6103(h)(4).
``(5) No disclosure if impairment.--Returns and return
information shall not be disclosed under this subsection, or
in any proceeding described in paragraph (4), to the extent
that the Secretary determines that such disclosure would
seriously impair Federal tax administration.
``(6) Definitions.--For purposes of this subsection--
``(A) Return and return information.--The terms `return'
and `return information' have the respective meanings given
to such terms by section 6103(b).
``(B) Appropriate state officer.--The term `appropriate
State officer' means--
``(i) the State attorney general,
``(ii) in the case of an organization to which paragraph
(1) applies, any other State official charged with overseeing
organizations of the type described in section 501(c)(3), and
``(iii) in the case of an organization to which paragraph
(3) applies, the head of an agency designated by the State
attorney general as having primary responsibility for
overseeing the solicitation of funds for charitable
purposes.''.
(b) Conforming Amendments.--
(1) Subsection (a) of section 6103 is amended--
(A) by inserting ``or any appropriate State officer who has
or had access to returns or return information under section
6104(c)'' after ``this section'' in paragraph (2), and
(B) by striking ``or subsection (n)'' in paragraph (3) and
inserting ``subsection (n), or section 6104(c)''.
(2) Subparagraph (A) of section 6103(p)(3) is amended by
inserting ``and section 6104(c)'' after ``section'' in the
first sentence.
(3) Paragraph (4) of section 6103(p), as amended by section
202(b)(2)(B) of the Trade Act of 2002 (Public Law 107-210;
116 Stat. 961), is amended by striking ``or (17)'' after
``any other person described in subsection (l)(16)'' each
place it appears and inserting ``or (18) or any appropriate
State officer (as defined in section 6104(c))''.
(4) The heading for paragraph (1) of section 6104(c) is
amended by inserting ``for charitable organizations''.
(5) Paragraph (2) of section 7213(a) is amended by
inserting ``or under section 6104(c)'' after ``6103''.
(6) Paragraph (2) of section 7213A(a) is amended by
inserting ``or 6104(c)'' after ``6103''.
(7) Paragraph (2) of section 7431(a) is amended by
inserting ``(including any disclosure in violation of section
6104(c))'' after ``6103''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act
but shall not apply to requests made before such date.
SEC. 411. TREATMENT OF PUBLIC RECORDS.
(a) In General.--Section 6103(b) (relating to definitions)
is amended by adding at the end the following new paragraph:
``(12) Treatment of public records.--Returns and return
information shall not be subject to subsection (a) if
disclosed--
``(A) in the course of any judicial or administrative
proceeding or pursuant to tax administration activities, and
``(B) properly made part of the public record.''.
(b) Effective Date.--The amendment made by this section
shall take effect before, on, and after the date of the
enactment of this Act.
SEC. 412. INVESTIGATIVE DISCLOSURES.
(a) In General.--Section 6103 (confidentiality and
disclosure of returns and return information) is amended by
redesignating subsection (q) as subsection (r) and by
inserting after subsection (p) the following new subsection:
``(q) Investigative Disclosures.--Nothing in this section
may be construed to prohibit investigative agents of the
Internal Revenue Service from identifying themselves, their
organizational affiliation, and the criminal nature of an
investigation when contacting third parties in writing or in
person.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 413. TIN MATCHING.
(a) In General.--Section 6103(k) (relating to disclosure of
certain returns and return information for tax administration
purposes) is amended by adding at the end the following new
paragraph:
``(10) TIN matching.--The Secretary may disclose to any
person required to provide a taxpayer identifying number (as
described in section 6109) to the Secretary whether such
information matches records maintained by the Secretary.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 414. FORM 8300 DISCLOSURES.
(a) In General.--Section 6103(p)(4) (relating to
safeguards) is amended by striking ``(15),'' both places it
appears.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 415. TECHNICAL AMENDMENT.
(a) In General.--Section 6103(i)(7)(A) (relating to
disclosure to law enforcement agencies) is amended by adding
at the end the following new clause:
``(v) Taxpayer identity.--For purposes of this
subparagraph, a taxpayer's identity shall not be treated as
taxpayer return information.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
TITLE V--SIMPLIFICATION THROUGH ELIMINATION OF INOPERATIVE PROVISIONS
SEC. 501. SIMPLIFICATION THROUGH ELIMINATION OF INOPERATIVE
PROVISIONS.
(a) In General.--
(1) Adjustments in tax tables so that inflation will not
result in tax increases.--Paragraph (7) of section 1(f) is
amended to read as follows:
``(7) Special rule for certain brackets.--In prescribing
tables under paragraph (1) which apply to taxable years
beginning in a calendar year after 1994, the cost-of-living
adjustment used in making adjustments to the dollar amounts
at which the 36 percent rate bracket begins or at which the
39.6 percent rate bracket begins shall be determined under
paragraph (3) by substituting `1993' for `1992'.''.
(2) Reduced capital gain rates for qualified 5-year gain.--
Paragraph (2) of section 1(h) is amended by striking ``In the
case of any taxable year beginning after December 31, 2000,
the'' and inserting ``The''.
(3) Credit for producing fuel from nonconventional
source.--Section 29 is amended by striking subsection (e) and
by redesignating subsections (f) and (g) as subsections (e)
and (f), respectively.
(4) Earned income credit.--Paragraph (1) of section 32(b)
is amended--
(A) by striking subparagraphs (B) and (C), and
(B) in subparagraph (A) by striking ``(A) In general.--In
the case of taxable years beginning after 1995'' and moving
the table 2 ems to the left.
(5) General business credits.--Subsection (d) of section 38
is amended by striking paragraph (3).
(6) Carryback and carryforward of unused credits.--
Subsection (d) of section 39 is amended by striking
paragraphs (1) through (8) and by redesignating paragraphs
(9) and (10) as paragraphs (1) and (2), respectively.
(7) Adjustments based on adjusted current earnings.--Clause
(ii) of section 56(g)(4)(F) is amended by striking ``In the
case of any taxable year beginning after December 31, 1992,
clause'' and inserting ``Clause''.
(8) Items of tax preference; depletion.--Paragraph (1) of
section 57(a) is amended by striking ``Effective with respect
to taxable years beginning after December 31, 1992, this''
and inserting ``This''.
(9) Intangible drilling costs.--
(A) Clause (i) of section 57(a)(2)(E) is amended by
striking ``In the case of any taxable year beginning after
December 31, 1992, this'' and inserting ``This''.
(B) Clause (ii) of section 57(a)(2)(E) is amended by
striking ``(30 percent in the case of taxable years beginning
in 1993)''.
(10) Annuities; certain proceeds of endowment and life
insurance contracts.--Section 72 is amended--
(A) in subsection (c)(4) by striking ``; except that if
such date was before January 1, 1954, then the annuity
starting date is January 1, 1954'', and
(B) in subsection (g)(3) by striking ``January 1, 1954,
or'' and ``, whichever is later''.
(11) Accident and health plans.--Section 105(f) is amended
by striking ``or (d)''.
(12) Flexible spending arrangements.--Section 106(c)(1) is
amended by striking ``Effective on and after January 1, 1997,
gross'' and inserting ``Gross''.
(13) Certain combat zone compensation of members of the
armed forces.--Subsection (c) of section 112 is amended--
(A) by striking ``(after June 24, 1950)'' in paragraph (2),
and
(B) striking ``such zone;'' and all that follows in
paragraph (3) and inserting ``such zone.''.
(14) Principal residence.--Section 121(b)(3) is amended--
(A) by striking subparagraph (B); and
(B) in subparagraph (A) by striking ``(A) In general.--''
and moving the text 2 ems to the left.
[[Page S5226]]
(15) Certain reduced uniformed services retirement pay.--
Section 122(b)(1) is amended by striking ``after December 31,
1965,''.
(16) Great plains conservation program.--Section 126(a) is
amended by striking paragraph (6) and by redesignating
paragraphs (7), (8), (9), and (10) as paragraphs (6), (7),
(8), and (9), respectively.
(17) Mortgage revenue bonds for residences in federal
disaster areas.--Section 143(k) is amended by striking
paragraph (11).
(18) Interim authority for governor.--
(A) Section 146(e) is amended by striking paragraph (2) and
by redesignating paragraph (3) as paragraph (2).
(B) Section 42(h)(3)(F) is amended by striking ``(other
than paragraph (2)(B) thereof)''.
(19) Treble damage payments under the antitrust law.--
Section 162(g) is amended by striking the last sentence.
(20) State legislators' travel expenses away from home.--
Paragraph (4) of section 162(h) is amended by striking ``For
taxable years beginning after December 31, 1980, this'' and
inserting ``This''.
(21) Interest.--
(A) Section 163 is amended by striking paragraph (6) of
subsection (d) and paragraph (5) (relating to phase-in of
limitation) of subsection (h).
(B) Section 56(b)(1)(C) is amended by striking clause (ii)
and by redesignating clauses (iii), (iv), and (v) as clauses
(ii), (iii), and (iv), respectively.
(22) Charitable, etc., contributions and gifts.--Section
170 is amended by striking subsection (k).
(23) Amortizable bond premium.--Subparagraph (B) of section
171(b)(1) is amended to read as follows:
``(B)(i) in the case of a bond described in subsection
(a)(2), with reference to the amount payable on maturity or
earlier call date, and
``(ii) in the case of a bond described in subsection
(a)(1), with reference to the amount payable on maturity (or
if it results in a smaller amortizable bond premium
attributable to the period of earlier call date, with
reference to the amount payable on earlier call date), and''.
(24) Net operating loss carrybacks and carryovers.--
(A) Section 172 is amended--
(i) by striking subparagraph (D) of subsection (b)(1) and
by redesignating subparagraphs (E), (F), and (G) as
subparagraphs (D), (E), and (F), respectively,
(ii) by striking subsection (g), and
(iii) by striking subparagraph (F) of subsection (h)(2).
(B) Section 172(h)(4) is amended by striking ``subsection
(b)(1)(E)'' each place it appears and inserting ``subsection
(b)(1)(D)''.
(C) Section 172(i)(3) is amended by striking ``subsection
(b)(1)(G)'' each place it appears and inserting ``subsection
(b)(1)(F)''.
(D) Section 172(j) is amended by striking ``subsection
(b)(1)(H)'' each place it appears and inserting ``subsection
(b)(1)(G)''.
(E) Section 172, as amended by subparagraphs (A) through
(D) of this paragraph, is amended--
(i) by redesignating subsections (h), (i), and (j) as
subsections (g), (h), and (i), respectively,
(ii) by striking ``subsection (h)'' each place it appears
and inserting ``subsection (g)'', and
(iii) by striking ``subsection (i)'' each place it appears
and inserting ``subsection (h)''.
(25) Research and experimental expenditures.--Subparagraph
(A) of section 174(a)(2) is amended to read as follows:
``(A) Without consent.--A taxpayer may, without the consent
of the Secretary, adopt the method provided in this
subsection for his first taxable year for which expenditures
described in paragraph (1) are paid or incurred.''.
(26) Amortization of certain research and experimental
expenditures.--Paragraph (2) of section 174(b)(2) is amended
by striking ``beginning after December 31, 1953''.
(27) Soil and water conservation expenditures.--Paragraph
(1) of section 175(d) is amended to read as follows:
``(1) Without consent.--A taxpayer may, without the consent
of the Secretary, adopt the method provided in this section
for his first taxable year for which expenditures described
in subsection (a) are paid or incurred.''.
(28) Activities not engaged in for profit.--Section
183(e)(1) is amended by striking the last sentence.
(29) Dividends received on certain preferred stock; and
dividends paid on certain preferred stock of public
utilities.--
(A) Sections 244 and 247 are hereby repealed and the table
of sections for part VIII of subchapter B of chapter 1 is
amended by striking the items relating to sections 244 and
247.
(B) Paragraph (5) of section 172(d) is amended to read as
follows:
``(5) Computation of deduction for dividends received.--The
deductions allowed by section 243 (relating to dividends
received by corporations) and 245 (relating to dividends
received from certain foreign corporations) shall be computed
without regard to section 246(b) (relating to limitation on
aggregate amount of deductions).''.
(C) Paragraph (1) of section 243(c) is amended to read as
follows:
``(1) In general.--In the case of any dividend received
from a 20-percent owned corporation, subsection (a)(1) shall
be applied by substituting `80 percent' for `70 percent'.''.
(D) Section 243(d) is amended by striking paragraph (4).
(E) Section 246 is amended--
(i) by striking ``, 244,'' in subsection (a)(1),
(ii) in subsection (b)(1)--
(I) by striking ``sections 243(a)(1), and 244(a),'' the
first place it appears and inserting ``section 243(a)(1),'',
(II) by striking ``244(a),'' the second place it appears
therein, and
(III) by striking ``subsection (a) or (b) of section 245,
and 247,'' and inserting ``and subsection (a) or (b) of
section 245,'', and
(iii) by striking ``, 244,'' in subsection (c)(1).
(F) Section 246A is amended by striking ``, 244,'' both
places it appears in subsections (a) and (e).
(G) Sections 263(g)(2)(B)(iii), 277(a), 301(e)(2),
469(e)(4), 512(a)(3)(A), subparagraphs (A), (C), and (D) of
section 805(a)(4), 805(b)(5), 812(e)(2)(A),
815(c)(2)(A)(iii), 832(b)(5), 833(b)(3)(E), 1059(b)(2)(B),
and 1244(c)(2)(C) are each amended by striking ``, 244,''
each place it appears.
(H) Section 805(a)(4)(B) is amended by striking ``,
244(a),'' each place it appears.
(I) Section 810(c)(2)(B) is amended by striking ``244
(relating to dividends on certain preferred stock of public
utilities),''.
(30) Organization expenses.--Section 248(c) is amended by
striking ``beginning after December 31, 1953,'' and by
striking the last sentence.
(31) Bond repurchase premium.--Section 249(b)(1) is amended
by striking ``, in the case of bonds or other evidences of
indebtedness issued after February 28, 1913,''.
(32) Amount of gain where loss previously disallowed.--
Section 267(d) is amended by striking ``(or by reason of
section 24(b) of the Internal Revenue Code of 1939)'' in
paragraph (1), by striking ``after December 31, 1953,'' in
paragraph (2), by striking the second sentence, and by
striking ``or by reason of section 118 of the Internal
Revenue Code of 1939'' in the last sentence.
(33) Acquisitions made to evade or avoid income tax.--
Paragraphs (1) and (2) of section 269(a) are each amended by
striking ``or acquired on or after October 8, 1940,''.
(34) Interest on indebtedness incurred by corporations to
acquire stock or assets of another corporation.--Section 279
is amended--
(A) by striking ``after December 31, 1967,'' in subsection
(a)(2),
(B) by striking ``after October 9, 1969,'' in subsection
(b),
(C) by striking ``after October 9, 1969, and'' in
subsection (d)(5), and
(D) by striking subsection (i) and by redesignating
subsection (j) as subsection (i).
(35) Special rules relating to corporate preference
items.--Paragraph (4) of section 291(a) is amended by
striking ``In the case of taxable years beginning after
December 31, 1984, section'' and inserting ``Section''.
(36) Qualifications for tax credit employee stock ownership
plan.--Section 409 is amended by striking subsections (a),
(g), and (q).
(37) Funding standards.--Section 412(m)(4) is amended--
(A) by striking ``the applicable percentage'' in
subparagraph (A) and inserting ``25 percent'', and
(B) by striking subparagraph (C) and by redesignating
subparagraph (D) as subparagraph (C).
(38) Retiree health accounts.--Section 420 is amended--
(A) by striking paragraph (4) in subsection (b) and by
redesignating paragraph (5) as paragraph (4), and
(B) by amending paragraph (2) of subsection (c) to read as
follows:
``(2) Requirements relating to pension benefits accruing
before transfer.--The requirements of this paragraph are met
if the plan provides that the accrued pension benefits of any
participant or beneficiary under the plan become
nonforfeitable in the same manner which would be required if
the plan had terminated immediately before the qualified
transfer (or in the case of a participant who separated
during the 1-year period ending on the date of the transfer,
immediately before such separation).''.
(39) Employee stock purchase plans.--Section 423(a) is
amended by striking ``after December 31, 1963,''.
(40) Limitation on deductions for certain farming.--Section
464 is amended--
(A) by striking ``any farming syndicate (as defined in
subsection (c))'' both places it appears in subsections (a)
and (b) and inserting ``any taxpayer to whom subsection (f)
applies'', and
(B) by striking subsection (g).
(41) Deductions limited to amount at risk.--
(A) Paragraph (3) of section 465(c) is amended by striking
``In the case of taxable years beginning after December 31,
1978, this'' and inserting ``This''.
(B) Paragraph (2) of section 465(e)(2)(A) is amended by
striking ``beginning after December 31, 1978''.
(42) Nuclear decommissioning costs.--Section 468A(e)(2) is
amended--
(A) by striking ``at the rate set forth in subparagraph
(B)'' in subparagraph (A) and inserting ``at a rate of 20
percent'', and
(B) by striking subparagraph (B) and by redesignating
subparagraphs (C) and (D) as subparagraphs (B) and (C),
respectively.
(43) Passive activity losses and credits limited.--
(A) Section 469 is amended by striking subsection (m).
(B) Subsection (b) of section 58 is amended by adding
``and'' at the end of paragraph (1), by striking paragraph
(2), and by redesignating paragraph (3) as paragraph (2).
[[Page S5227]]
(44) Adjustments required by changes in method of
accounting.--Section 481(b)(3) is amended by striking
subparagraph (C).
(45) Exemption from tax on corporations, certain trusts,
etc.--Section 501 is amended by striking subsection (p).
(46) Requirements for exemption.--
(A) Section 503(a)(1) is amended to read as follows:
``(1) General rule.--An organization described in paragraph
(17) or (18) of section 501(a) or described in section 401(a)
and referred to in section 4975(g)(2) or (3) shall not be
exempt from taxation under section 501(a) if it has engaged
in a prohibited transaction.''.
(B) Paragraph (2) of section 503(a) is amended by striking
``described in section 501(c)(17) or (18) or paragraph
(a)(1)(B)'' and inserting ``described in paragraph (1)''.
(C) Subsection (c) of section 503 is amended by striking
``described in section 501(c)(17) or (18) or subsection
(a)(1)(B)'' and inserting ``described in subsection (a)(1)''.
(47) Amounts received by surviving annuitant under joint
and survivor annuity contract.--Subparagraph (A) of section
691(d)(1) is amended by striking ``after December 31, 1953,
and''.
(48) Income taxes of members of armed forces on death.--
Section 692(a)(1) is amended by striking ``after June 24,
1950''.
(49) Insurance company taxable income.--
(A) Section 832(e) is amended by striking ``of taxable
years beginning after December 31, 1966,''.
(B) Section 832(e)(6) is amended by striking ``In the case
of any taxable year beginning after December 31, 1970, the''
and by inserting ``The''.
(50) Tax on nonresident alien individuals.--Subparagraph
(B) of section 871(a)(1) is amended to read as follows:
``(B) gains described in subsection (b) or (c) of section
631,''.
(51) Property on which lessee has made improvements.--
Section 1019 is amended by striking the last sentence.
(52) Involuntary conversion.--Section 1033 is amended by
striking subsection (j) and by redesignating subsection (k)
as subsection (j).
(53) Property acquired during affiliation.--Section 1051 is
repealed and the table of sections for part IV of subchapter
O of chapter 1 is amended by striking the item relating to
section 1051.
(54) Holding period of property.--
(A) Paragraph (5) of section 1223 is amended by striking
``(or under so much of section 1052(c) as refers to section
113(a)(23) of the Internal Revenue Code of 1939)''.
(B) Paragraph (7) of section 1223 is amended by striking
the last sentence.
(C) Paragraph (9) of section 1223 is repealed.
(55) Property used in the trade or business and involuntary
conversions.--Subparagraph (A) of section 1231(c)(2) is
amended by striking ``beginning after December 31, 1981''.
(56) Sale or exchange of patents.--Section 1235 is
amended--
(A) by striking subsection (c) and by redesignating
subsections (d) and (e) as (c) and (d), respectively, and
(B) by striking ``(d)'' in subsection (b) and inserting
``(c)''.
(57) Dealers in securities.--Subsection (b) of section 1236
is amended by striking ``after November 19, 1951,''.
(58) Sale of patents.--Subsection (a) of section 1249 is
amended by striking ``after December 31, 1962,''.
(59) Gain from disposition of farm land.--Paragraph (1) of
section 1252(a) is amended by striking ``after December 31,
1969,'' both places it appears.
(60) Treatment of amounts received on retirement or sale or
exchange of debt instruments.--Subsection (c) of section 1271
is amended to read as follows:
``(c) Special Rule for Certain Obligations with Respect to
Which Original Issue Discount not Currently Includible.--
``(1) In general.--On the sale or exchange of debt
instruments issued by a government or political subdivision
thereof after December 31, 1954, and before July 2, 1982, or
by a corporation after December 31, 1954, and on or before
May 27, 1969, any gain realized which does not exceed--
``(A) an amount equal to the original issue discount, or
``(B) if at the time of original issue there was no
intention to call the debt instrument before maturity, an
amount which bears the same ratio to the original issue
discount as the number of complete months that the debt
instrument was held by the taxpayer bears to the number of
complete months from the date of original issue to the date
of maturity,
shall be considered as ordinary income.
``(2) Subsection (a)(2)(A) not to apply.--Subsection
(a)(2)(A) shall not apply to any debt instrument referred to
in subparagraph (A) of this paragraph.
``(3) Cross reference.--
``For current inclusion of original issue discount, see section
1272.''.
(61) Amount and method of adjustment.--Section 1314 is
amended by striking subsection (d) and by redesignating
subsection (e) as subsection (d).
(62) Election; revocation; termination.--Clause (iii) of
section 1362(d)(3) is amended by striking ``unless'' and all
that follows and inserting ``unless the corporation was an S
corporation for such taxable year.''.
(63) Old-age, survivors, and disability insurance.--
Subsection (a) of section 1401 is amended by striking ``the
following percent'' and all that follows and inserting ``12.4
percent of the amount of the self-employment income for such
taxable year.''.
(64) Hospital insurance.--Subsection (b) of section 1401 is
amended by striking ``the following percent'' and all that
follows and inserting ``2.9 percent of the amount of the
self-employment income for such taxable year.''.
(65) Ministers, members of religious orders, and christian
science practitioners.--Paragraph (3) of section 1402(e) is
amended by striking ``whichever of the following dates is
later: (A)'' and by striking ``; or (B)'' and all that
follows and by inserting a period.
(66) Withholding of tax on nonresident aliens.--The first
sentence of subsection (b) of section 1441 and the first
sentence of paragraph (5) of section 1441(c) are each amended
by striking ``gains subject to tax'' and all that follows
through ``October 4, 1966'' and inserting ``and gains subject
to tax under section 871(a)(1)(D)''.
(67) Affiliated group defined.--Subparagraph (A) of section
1504(a)(3) is amended by striking ``for a taxable year which
includes any period after December 31, 1984'' in clause (i)
and by striking ``in a taxable year beginning after December
31, 1984'' in clause (ii).
(68) Disallowance of the benefits of the graduated
corporate rates and accumulated earnings credit.--
(A) Subsection (a) of section 1551 is amended by striking
paragraph (1) and by redesignating paragraphs (2) and (3) as
paragraphs (1) and (2), respectively.
(B) Section 1551(b) is amended--
(i) by striking ``or (2)'' in paragraph (1), and
(ii) by striking ``(a)(3)'' in paragraph (2) and inserting
``(a)(2)''.
(69) Definition of wages.--Section 3121(b) is amended by
striking paragraph (17).
(70) Credits against tax.--
(A) Paragraph (4) of section 3302(f) is amended by striking
``subsection--'' and all that follows through ``(A) In
general.--'', by striking subparagraph (B), by redesignating
clauses (i) and (ii) as subparagraphs (A) and (B),
respectively, and by moving the text of such subparagraphs
(as so redesignated) 2 ems to the left.
(B) Paragraph (5) of section 3302(f) is amended by striking
subparagraphs (D) and by redesignating subparagraph (E) as
subparagraph (D).
(71) Domestic service employment taxes.--Section 3510(b) is
amended by striking paragraph (4).
(72) Tax on fuel used in commercial transportation on
inland waterways.--Section 4042(b)(2)(A) is amended to read
as follows:
``(A) The Inland Waterways Trust Fund financing rate is 20
cents per gallon.''.
(73) Transportation by air.--Section 4261(e) is amended--
(A) in paragraph (1) by striking subparagraph (C), and
(B) by striking paragraph (5).
(74) Taxes on failure to distribute income.--Section 4942
is amended--
(A) by striking subsection (f)(2)(D),
(B) in subsection (g)(2)(A) by striking ``For all taxable
years beginning on or after January 1, 1975, subject'' and
inserting ``Subject'',
(C) in subsection (g) by striking paragraph (4), and
(D) in subsection (i)(2) by striking ``beginning after
December 31, 1969, and''.
(75) Taxes on taxable expenditures.--Section 4945(f) is
amended by striking ``(excluding therefrom any preceding
taxable year which begins before January 1, 1970)''.
(76) Returns.--Subsection (a) of section 6039D is amended
by striking ``beginning after December 31, 1984,''.
(77) Information returns.--Subsection (c) of section 6060
is amended by striking ``year'' and all that follows and
inserting ``year.''.
(78) Abatements.--Section 6404(f) is amended by striking
paragraph (3).
(79) Failure by corporation to pay estimated income tax.--
Clause (i) of section 6655(g)(4)(A) is amended by striking
``(or the corresponding provisions of prior law)''.
(80) Retirement.--Section 7447(i)(3)(B)(ii) is amended by
striking ``at 4 percent per annum to December 31, 1947, and
at 3 percent per annum thereafter'', and inserting ``at 3
percent per annum''.
(81) Annuities to surviving spouses and dependent children
of judges.--
(A) Paragraph (2) of section 7448(a) is amended by striking
``or under section 1106 of the Internal Revenue Code of
1939'' and by striking ``or pursuant to section 1106(d) of
the Internal Revenue Code of 1939''.
(B) Subsection (g) of section 7448 is amended by striking
``or other than pursuant to section 1106 of the Internal
Revenue Code of 1939''.
(C) Subsection (j)(1) and (j)(2) of section 7448 are each
amended by striking ``at 4 percent per annum to December 31,
1947, and at 3 percent per annum thereafter'' and inserting
``at 3 percent per annum''.
(82) Merchant marine capital construction funds.--Paragraph
(4) of section 7518(g) is amended by striking ``any
nonqualified withdrawal'' and all that follows through
``shall be determined'' and inserting ``any nonqualified
withdrawal shall be determined''.
(83) Valuation tables.--Paragraph (3) of section 7520(c) is
amended--
(A) by striking ``Not later than December 31, 1989, the''
and inserting ``The'', and
[[Page S5228]]
(B) by striking ``thereafter'' in the last sentence
thereof.
(84) Administration and collection of taxes in
possessions.--Section 7651 is amended by striking paragraph
(4) and by redesignating paragraph (5) as paragraph (4).
(85) Definition of employee.--(A) Section 7701(a)(20) is
amended by striking ``chapter 21'' and all that follows and
inserting ``chapter 21.''.
(b) Effective Date.--
(1) General rule.--Except as otherwise provided in
paragraph (2), the amendments made by subsection (a) shall
take effect on the date of enactment of this Act.
(2) Savings provision.--If--
(A) any provision amended or repealed by subsection (a)
applied to--
(i) any transaction occurring before the date of the
enactment of this Act,
(ii) any property acquired before such date of enactment,
or
(iii) any item of income, loss, deduction, or credit taken
into account before such date of enactment, and
(B) the treatment of such transaction, property, or item
under such provision would (without regard to the amendments
made by subsection (a)) affect the liability for tax for
periods ending after such date of enactment,
nothing in the amendments made by subsection (a) shall be
construed to affect the treatment of such transaction,
property, or item for purposes of determining liability for
tax for periods ending after such date of enactment.
____
Tax Administration Good Government Act Introduced April 10, 2003
i. improve tax administration and establish taxpayer safeguards
Collection
Waiver of user fee for installment agreements using
automated withdrawals. The IRS imposes a $43 user fee on
taxpayers entering into an installment agreement. The
proposal would waive the user fee if the taxpayer agrees to
automated withdrawal of installment payments from a bank
account. This proposal will help facilitate collection
through automated withdrawals.
Authorize partial pay installment agreements. The proposal
restores authority that the IRS had prior to 1998 to allow
IRS to enter into installment agreements with taxpayers that
want to resolve their tax liability but cannot afford to make
payments large enough to fully pay the liability at the end
of the term of the installment agreement. The proposal would
permit the collection of taxes from cases that are otherwise
placed in the currently not collectible inventory.
Terminate installment agreements for failure to file
returns and failure to make tax deposits. The proposal would
stop the downward spiral where taxpayers owe more and the
Government collects less. Although a significant number of
taxpayers violate the terms of their installment agreements
by failing to timely file their tax returns or make required
Federal tax deposits, the IRS is not permitted to terminate
installment agreements for these reasons.
Remove $50,000 threshold requirement for office of chief
counsel review of offers in compromise--IRC section 7122(b).
The proposal would remove the dollar threshold and give IRS
discretion in determining when a Chief Counsel opinion is
necessary. IRS attorneys are presently required to review
offers where the tax assessed, including penalties and
interest, exceeds $50,000. As a practical matter, IRS lawyer
offer little in the way of review and often contribute to the
delay in processing OICs.
Seven-day threshold on tolling of statute of limitations
during National Taxpayer Advocate review. The proposal
provides additional time, without tolling the statute of
limitations, for review by the National Taxpayer Advocate for
taxpayer assistance orders.
Increase Penalty for Bad Checks. Proposal would increase
penalty for bad checks to $20 or 2 % of amount over $1,000.
Allow the Financial Management Service to Retain
Transaction Fees from Levied Amounts. Proposal would allow
FMS to retain directly a portion of the levied funds as
payment of FMS fees. A delinquent taxpayer, however, would
receive full credit for the amount levied upon (i.e., the
amount credited to a taxpayer's account would not be reduced
by FMS's fee). The IRS pays FMS fees out of its own
appropriations. The proposal would alter internal government
accounting and allow the use of appropriated funds to
administer the tax system.
Elimination or Restriction on Offsetting Refunds from
former residents. The proposal would allow States to offset
Federal tax refunds owed by former residents. In 1998,
Congress authorized the state refund offset program. However,
the provision did not authorize states to offset Federal tax
refunds for State tax debts owed by former residents who had
subsequently moved to another State. Former residents have
the same safeguards as residents in these situations and
there is strong precedence that clearly gives States
authority to impose and collect taxes on former residents.
Processing and Personnel
Explanation of Statute of Limitations and Consequences of
Failure to Timely File. The proposal would require the IRS to
provide taxpayers with an explanation of the consequences of
failing to timely file refund claims.
Disclosure of tax information to facilitate combined
employment tax reporting. The proposal would expand and make
permanent the disclosure authority of the IRS to permit
disclosures of name, address, taxpayer identification number,
and signature to any State entity for purposes of carrying
out a combined federal and state employment tax reporting
program. Under current law, no tax information may be
furnished by the Internal Revenue Service to another agency
except as permitted under section 6103 which requires the
other agency to establish procedural safeguards satisfactory
to the IRS. A pilot program was established in 1997 in the
State of Montana to assess the feasibility and desirability
of expanding combined reporting. Reports from Montana were
very positive about the program.
Expansion of declaratory judgment remedy to tax-exempt
organizations. The proposal would extend declaratory judgment
procedures similar to those currently available only to
charities under section 7428 to other section 501(c)
determinations. The proposal would limit jurisdiction over
controversies involving such determinations to the United
States Tax Court. In addition, the proposal would modify the
present-law declaratory judgment procedures to provide that
an organization is deemed to have exhausted its
administrative remedies under the declaratory judgment
procedures at the expiration of (1) 270 days after the date
on which the request for a determination was made, or (2) in
the case of a failure by any office of the IRS to make a
determination (other than the office responsible for initial
determinations with respect to the issue), 450 days after the
date on which the request for a determination was made.
The proposal would also require the organization to take,
in a timely manner, all reasonable steps to secure such
determination.
Amendment to Treasury auction reforms. The proposal would
permit earlier disclosure upon the release by the Secretary
of the minutes of the meeting. Under current law, members of
the Treasury Borrowing Advisory Committee are prohibited from
disclosing anything relating to the securities to be
auctioned in a midquarter refunding by the Secretary until
the Secretary makes a public announcement of the refunding.
Revisions relating to termination of employment of IRS
employee misconduct. Proposal would modify section 1203 by
removing the late filing of refund returns from the list of
violations and removing employee versus employee acts (i.e.
for violation of an employee's rather than a taxpayer's
Constitutional or civil rights) from the list of violations.
IRS Oversight Board approval of use of critical pay
authority. The proposal would require IRS Oversight Board
review and approve the use of critical pay authority.
Critical pay allows the IRS to hire employees critical to the
mission of the IRS as well as allow the IRS to hire up to 40
individuals for four year terms under streamlined procedures.
Low-income taxpayer clinics. The proposal would increase
the authorization for low-income taxpayer controversy clinics
to $10 million and authorize a similar grant program for low-
income taxpayer preparation clinics for $10 million. The
proposal would specify that grants may not be used for any
purpose other than those specified in the Code (this
restriction would be inapplicable to funds from other
sources). The proposal would also authorize the IRS to
promote the benefits and encourage the use of low-income
taxpayer clinics.
Enrolled agents. The proposal would add a new section to
the Code permitting the Secretary to prescribe regulations to
regulate the conduct of enrolled agents in regard to their
practice before the IRS and to permit enrolled agents meeting
the Secretary's qualifications to use the credentials or
designation ``enrolled agent'', ``EA'', or ``E.A.''.
Establishment of disaster response team. Proposal would
require the IRS to establish a permanent Disaster Response
Team which, in coordination with the Federal Emergency
Management Agency, is to assist taxpayers in clarifying and
resolving tax matters associated with a Presidentially
declared disaster or a terroristic or military action. The
Team is to be staffed by IRS employees with a relevant
knowledge and experience, including a representative from the
Office of the Taxpayer Advocate.
Accelerated tax refunds. Proposal would require the
Secretary of Treasury to study and report to the tax writing
committees on options to accelerate tax refunds for taxpayers
who maintain the same filing characteristics and elect the
direct option for any refund.
Study on clarifying record-keeping responsibilities. The
proposal would require the Secretary of the Treasury to study
the scope of records required to be maintained by taxpayers,
the utility of requiring taxpayers to maintain records
indefinitely, the taxpayer burden incurred by such
requirement given the necessity to upgrade technological
storage for outdated records, the number of negotiated
records retention agreements requested by taxpayers and the
number entered into by the IRS, and proposals regarding
taxpayer record-keeping. Under current law, every person
liable for any tax imposed by the Code, or for any collection
thereof, shall keep such records as the Secretary of the
Treasury may from time to time prescribe.
Streamline National Taxpayer Advocate Annual Reports. Each
year, the National Taxpayer Advocate is required to issue two
reports to Congress: (1) an annual report on
[[Page S5229]]
objectives of the Advocate for the year due June 30 and (2)
an annual report on the Advocate's activities including the
20 most serious problems confronting taxpayers. The
Advocate's office spends an enormous amount of time and
effort preparing these reports. The proposal would streamline
the reporting process by requiring the Advocate to issue only
one report each year.
Penalty on failure to report interests in foreign financial
accounts. The proposal would establish a $5,000 penalty for
non-willful failure to report interest in foreign bank
accounts. Under present law there is only a penalty of
$25,000 for willful failures.
Repeal of personal holding company tax. The proposal would
repeal the personal holding company (PHC) tax. Subsequent
changes in the tax code resulted in the provisions
ineffectiveness as originally intended.
II. Simplification of Interest and Penalty Regimes
Individual estimated tax. The proposal simplifies the
individual estmated tax penalty including, increase the
penalty threshold for individuals to $2,000 from $1,000;
apply one interest rate per estimated tax underpayment; and
adopt 365-day year.
Corporate estimated tax. The proposal simplifies the
corporate estimated tax penalty by increasing the exception
for small amount of tax shown on the return from less than
$500 to less than $1,000.
Increase in large corporation threshold for estimated tax
payments. The proposal simplifies the corporate estimated tax
by expanding the safe harbor exception used by small
corporations by increasing the threshold from $1 million to
$1.5 million of taxable income.
Expansion of interest abatement. The proposal would: (1)
expand the circumstances in which interest may be abated to
include periods attributable to any unreasonable IRS error or
delay and (2) allow the abatement of interest to the extent
interest is attributable to the taxpayer's reliance on
written statement by the IRS.
Deposits made to stop the running of interest. Proposal
would permit deposits to be made to an interest bearing
account within Treasury to cover tax underpayments related to
issues potentially subject to dispute with the IRS.
Freeze provision regarding suspension of interest where
Secretary fails to contact taxpayer. The proposal would
repeal current law which requires the suspension of interest
on taxes owed until 21 days after the IRS sends a notice of
deficiency. The suspension is triggered if the IRS fails to
contact the taxpayer within 1 year for taxable years after
January 1, 2004 or 18 months for taxable years before January
1, 2004. The proposal is unnecessary with expanded interest
abatement.
Expansion of interest netting. Applies interest netting
rules without regard to the 45-day period in which the
Secretary may refund an overpayment of tax without the
payment of interest.
Clarification of application of Federal tax deposit
penalty. The proposal would clarify that the 10 percent
penalty rate only applies in cases where the failure to
deposit extends for more than 15 days.
Frivolous tax submissions. The proposal would increase the
penalty for frivolous tax returns from $500 to $5,000. In
addition, the proposal would permit the IRS to dismiss
requests for Collection Due Process hearings, installment
agreements, offers-in-compromise, and taxpayer assistance
orders if they are based on frivolous arguments or are
intended to delay or impede tax administration. Individuals
submitting such requests are subject to a $5,000 penalty for
repeat behavior or failure to withdraw the request after
being given the opportunity to do so.
iii. u.s. tax court modernization
Jurisdiction of Tax Court over collection due process
cases. Currently, if a taxpayer's underlying tax liability
does not relate to income taxes or a type of tax over which
the Tax Court normally has deficiency jurisdiction, there is
no opportunity for Tax Court review and the taxpayer must
file in a District Court to obtain review. This provision
consolidates judicial review of collection due process
activity in the Tax Court.
Authority for special trial judges to hear and decide
certain employment status cases. This provision clarifies
that the Tax Court may authorize its special trial judges to
enter decisions in employment status cases that are subject
to small case proceedings under section 7436(c).
Confirmation of authority of Tax Court to apply doctrine of
equitable recoupment. The common-law principle of equitable
recoupment permits a party to asset an otherwise time-barred
claim to reduce or defeat an opponent's claim if both claims
arise from the same transaction. This provision confirms
statutorily that the Tax Court may apply equitable recoupment
principles to the same extent as District Court and the Court
of Federal Claims.
Tax Court filing fee in all cases commenced by filing
petition. This provision clarifies, in keeping with current
Tax Court procedure, that the Tax Court is authorized to
impose a $60 filing fee for all cases commenced by petition.
The proposal would eliminate the need to amend section 7451
each time the Tax Court is granted new jurisdiction.
Amendments to appoint employees. Currently, the Tax Court
has to go to the executive branch, the Office of Personnel
Management, to change a position. It is inappropriate to
require the Tax Court to seek permission from the executive
since that branch is a party (Commissioner of Internal
Revenue) before the Tax Court. This change would allow the
Tax Court to be independent in fact and perception from the
Executive Branch while ensuring that basic employee rights,
protections, and remedies are retained or required in an
appropriate way (e.g., whistleblower protection, civil
rights, merit system principles, etc.).
Expanded use of Tax Court practice fee for pro se
taxpayers. The Tax Court is authorized to charge
practitioners a fee of up to $30 per year and to use these
fees to pursue disciplinary matters. The provision expands
use of these fees to provide services to pro se taxpayers.
Fees could be used for education programs for pro se
taxpayers.
Annuities for survivors of Tax Court judges who are
assassinated. The reality is that many people do not like to
pay taxes. there is as much risk of a Tax Court judge being
assassinated as any other Federal judge. The proposal would
conform the treatment of Tax Court judges to District Court
judges.
Cost-of-living adjustments for Tax Court judicial survivor
annuities. All Federal employees have this provision except
the Tax Court. Survivors of Tax Court judges are subject to
an obsolete method of indexing.
Life insurance coverage for Tax Court judges. This simply
codifies current Office of Personnel Management
interpretation, as was previously done for District Court
judges.
Cost of life insurance coverage for Tax Court judges age 65
or over. Congress established the Tax Court in 1969 and
required that Tax Court judges receive the same compensation
as District Court judges. The District Court judges were
given this benefit to ensure that there was no diminution of
their compensation (as required by the Constitution). This
provision is in keeping with the original intent of Congress.
Modification of timing of lump-sum payment of judge's
accrued annual leave. District Court judges are allowed to
receive a lump-sum payment due to the life-time tenure of
Article III judges. Tax Court judges, while they have a 15
year term, effectively have a life-time term because they are
always subject to recall.
Participation of Tax Court judges in the Thrift Savings
Plan. The proposal would allow Tax Court judges to
participate in Thrift Savings Plan. Currently, only 19
federal government employees are left out of the Thrift
Savings Plan (i.e., Tax Court judges).
Exemption of teaching compensation of retired judges for
limitation on outside earned income. After retirement, Tax
Court judges should have the same ability to teach as
District Court judges.
General provisions relating to magistrate judges of the Tax
Court. ``Magistrate'' is more recognizable to the American
public because it is the term used by Article III courts. The
provision changes the term ``Special Trial Judge'' to
``Magistrate Judge of the United States Tax Court'' and
provides for alignment of term of office and removal
applicable to District Court magistrate judges.
Annuities to surviving spouses and dependent children of
magistrate judges of the Tax Court. This section gives
Magistrates/Special Trial Judges the same advantages as Tax
Court judges, thus ensuring a greater pool of participants in
the fund.
Retirement and annuity program for magistrate judges. A
retirement and annuity program more aligned with District
Court Magistrates and the Tax Court judges is key for
attracting and retaining qualified judges.
Incumbent magistrate judges of the Tax Court. The provision
provides transition rules similar to those given to the
District Court magistrate judges.
Provisions for recall. Article III judges are ``self-
recalling'' (i.e., they decide for themselves whether they
are recalled or not). In contrast, Tax Court judges are
subject to provisions that authorize mandatory recall by the
Chief Judge. These provisions authorize the recall of
Magistrates/Special Trial judges in a manner similar to those
now applicable to the regular judges of the Court.
iv. confidentiality and disclosure reforms
Clarification of definition of church tax inquiry. The
proposal would clarify that the present-law church tax
inquiry procedures do not apply to contacts made by the IRS
for the purpose of educating churches with respect to the law
governing tax-exempt organizations. For example, the proposal
clarifies that the IRS does not violate the church tax
inquiry procedures when written materials are provided to a
church or churches for the purpose of educating such church
or churches with respect to the types of activities that are
not permissible under section 501(c)(3).
Collection activities with respect to joint return
disclosable to either spouse based on oral request. The
proposal would eliminate the requirement for former spouses
to make a written request for disclosure of collection
activities with respect to a joint return. Under present law,
section 6103(e)(7) permits the IRS to disclose return
information to the same persons who may have access to a
return under the other provisions of section 6103(e), thus
either spouse may obtain return information regarding a joint
return upon oral request.
Taxpayer representatives not subject to examination on sole
basis of representation of taxpayers. The proposal would
clarify that
[[Page S5230]]
an IRS employee conducting an examination of a taxpayer is
not authorized to inspect a taxpayer representative's return
or return information solely on the basis of the
representative relationship to the taxpayer. Under the
proposal, the supervisor of the IRS employee would be
required to approve such inspection after making a
determination that other grounds justified such an
inspection. The proposal would not affect the ability of
employees of the IRS Director of Professional Responsibility,
or other employees whose assigned duties concern the
regulation of practice before the IRS, to access returns and
return information of a representative.
Prohibition of disclosure of taxpayer identifying number
with respect to disclosure of accepted offers-in-compromise.
The proposal would prohibit the disclosure of the taxpayer
identification number as part of the publicly available
summaries of accepted offers in compromise.
Compliance by contractors with confidentiality safeguards.
The proposal would require that a State or Federal agency
conduct on-site reviews of all of its contractors receiving
Federal returns and return information every three years.
This review is intended to cover secure storage, restricting
access, computer security, and other safeguards deemed
appropriate by the Secretary. Under the proposal, the State
or Federal agency would be required to submit a report of its
findings to the IRS and certify annually that all contractors
are in compliance with the requirements to safeguard the
confidentiality of Federal returns and return information.
Higher standards for requests for and consents to
disclosure. The proposal would render invalid a consent that
does not designate a recipient or is not dated at the time of
execution. The person submitting the consent to the IRS would
be required to verify under penalties of perjury that the
form was complete and dated at the time it was signed by the
taxpayer. Inspection or disclosure of a return or return
information pursuant to an invalid consent would be
unauthorized under section 6103. Thus, a person making such
unauthorized disclosure or inspection could be liable for
civil damages under section 7431, and criminal penalties
under section 7213 or 7213A for willful unauthorized
disclosure or inspection.
Civil damages for unauthorized inspection or disclosure.
The proposal would require the IRS to notify a taxpayer at
the point of proposed administrative action as to
disciplinary or adverse action against an employee arising
from the unauthorized inspection or disclosure of the
taxpayer's return or return information.
Expanded disclosure in emergency circumstances. The
proposal would permit disclosure to local law enforcement
authorities emergency situations including suicide threats.
Disclosure of taxpayer identity for tax refund purposes.--
On April 15, 2002, about 1.7 million people who did not file
their 1998 income tax return who lose more than $2.3 billion
in tax refunds. When the IRS is unable to find a taxpayer due
a refund, present law provides that it may use ``the press or
other media'' to notify the taxpayer of the refund. The IRS
believes the current statutory framework in Section 6103(m)
does not permit disclosure via the Internet. The proposal
would allow the IRS to use any means of ``mass
communicating,'' including the Internet to notify a taxpayer
of an undelivered refund.
Disclosure to State officials of proposed actions related
to section 501(c) organizations. The proposal provides that
upon written request by an appropriate State officer, the
Secretary may disclose: (1) a notice of proposed refusal to
recognize an organization as a section 501(c)(3)
organization; (2) a notice of proposed revocation of tax-
exemption of a section 501(c)(3) organization; (3) the
issuance of a proposed deficiency of tax imposed under
section 507, chapter 41, or chapter 42; (4) the names,
addresses, and taxpayer identification numbers of
organizations that have applied for recognition as section
501(c)(3) organizations; and (5) returns and return
information of organizations with respect to which
information has been disclosed under (1) through (4) above.
Disclosure or inspection is permitted for the purpose of, and
only to the extent necessary in, the administration of State
laws regulating section 501(c)(3) organizations, such as laws
regulating tax-exempt status, charitable trusts, charitable
solicitation, and fraud.
Treatment of public records. The proposal clarifies that
public record data (e.g., press releases re criminal cases)
does not retain 6103 protections in the files of the IRS.
Investigative disclosures. The proposal permits the IRS
Criminal Investigation agents to identify themselves,
organizational affiliation, and criminal nature of
investigation when contacting third parties in writing or in
person.
TIN matching. The proposal permits taxpayer identification
number (TIN) verification by persons required to provide the
information to the IRS (limited to whether information
matches) to permit early error resolution and enhance
compliance. Under present law, over 30 million information
returns are received by the IRS from payors that contain
missing or incorrect name and TIN information. However, the
IRS is only permitted to disclose the error to the payor at
the point at which the payment is subject to backup
withholding.
Form 8300 disclosures. The proposal ensures that the Form
8300 (for reporting transactions in excess of $10,000) can be
disclosed to law enforcement in the same manner as financial
reporting documents required under the Bank Secrecy Act
(under Title 31).
V. SIMPLIFICATION THROUGH ELIMINATION OF INOPERATIVE PROVISIONS
1. Adjustments in tax tables so that inflation will not
result in tax increases. Paragraph (7) of section 1(f) is
amended to read as follows: ``(7) Special rule for certain
brackets--In prescribing tables under paragraph (1) which
apply to taxable years beginning in a calendar year after
1994, the cost-of-living adjustment used in making
adjustments to the dollar amounts at which the 36 percent
bracket begins or at which the 39.6 rate bracket begins shall
be determined under paragraph (3) by substituting `1993' for
`1992'.''
2. Reduced capital gain rates for qualified 5-year gain.
Paragraph (2) of section 1(h) is amended by striking ``In the
case of taxable years beginning after December 31, 2000,
the'' and inserting ``The''.
3. Credit for producing fuel from nonconventional source.
Section 29 is amended by striking subsection (e).
4. Earned income credit. Paragraph (1) of section 32(b) is
amended by striking subparagraphs (B) and (C) and by striking
``(A) In General. In the case of taxable years beginning
after 1995:''.
5. General business credits. Subsection (d) of section 38
is amended by striking paragraph (3).
6. Carryback and carryforward of unused credits. Section 39
is amended by striking subsection (d).
7. Adjustments based on adjusted current earnings. Clause
(ii) of section 56(g)(4)(F) is amended by striking ``In the
case of any taxable year beginning after December 31, 1992,
clause'' and inserting ``Clause''.
8. Items of tax preference; Depletion. Paragraph (1) of
section 57(a) is amended by striking ``Effective with respect
to taxable years beginning after December 31, 1992, this''
and inserting ``This''.
9. Intangible drilling costs. Clause (i) of section
57(a)(E) is amended by striking ``In the case of any taxable
year beginning after December 31, 1992, this'' and inserting
``This''. Clause (ii) of section 57(a)(2)(E) is amended by
striking ``(30 percent in the case of taxable years beginning
in 1993''.
10. Annuities; certain proceeds of endowment and life
insurance contracts. Paragraph (4) of section 72(c) is
amended by striking ``under the contract'' and all that
follows and inserting'' under the contract.'' Paragraph (3)
of section 72(g) is amended by striking ``January 1, 1954,
or''.
11. Accident and health plans. Section 105(f) is amended by
striking ``or (d)''.
12. Flexible spending arrangements. Section 106(c)(1) is
amended by striking ``Effective on and after January 1, 1997,
gross'' and inserting ``Gross''.
13. Certain combat zone compensation of members of the
Armed Forces. Subsection (c) of section 112 is amended by
striking ``(after June 24, 1950)'' in paragraph (2), and
striking ``such zone,'' and all that follows in paragraph (3)
and inserting ``such zone.''
14. Principal residence. Section 121(b)(3) is amended by
striking subparagraph (B).
15. Certain reduced uniformed services retirement pay.
Section 112(b)(1) is amended by striking ``after December 31,
1965,''.
16. Great plains conservation program. Section 126(a) is
amended by striking paragraph (6).
17. Mortgage revenue bonds--Federal disaster area
modifications. Eliminate special qualified mortgage bond
rules or residences located in Federal disaster areas.
(utility expired January 1, 1999).
18. Interim authority for governors regarding allocation of
private activity bond volume limits. Eliminate temporary
gubernatorial authority to allocate the volume limit.
19. Treble damage payments under the antitrust law. Section
162(g) is amended by striking the last sentence.
20. State legislators' travel expenses away from home.
Paragraph (4) of section 162(h) is amended by striking ``For
taxable years beginning after December 31, 1980, this'' and
inserting ``This''.
21. Interest. Section 163 is amended by striking paragraph
(6) of subsection (d) and paragraph (5) of subsection (h).
Section 56(b)(1)(C) is amended by striking clause (ii) and by
redesignating clauses (iii) and (iv) as clauses (ii) and
(iii) respectively.
22. Charitable, etc., contributions and gifts. Section 170
is amended by striking subsection (k).
23. Amortizable bond premium. Subparagraph (B) of section
171(b)(1) is amended to read as follows:
``(B)(i) in the case of a bond described in subsection
(a)(2), with reference to the amount payable on maturity or
earlier call date, and
``(ii) in the case of a bond described in subsection
(a)(1), with reference to the amount payable on maturity (or
if it results in a smaller amortizable bond premium
attributable to the period to earlier call date, with
reference to the amount payable on earlier call date), and''
24. Net operating loss carrybacks and carryovers. Section
172 is amended by striking subparagraph (D) of subsection
(b)(1), subsection (g), and subparagraph (F) of the paragraph
(h)(2).
25. Research and experimental expenditures. Subparagraph
(A) of section 174(a)(2) is amended to read as follows: ``(A)
Without
[[Page S5231]]
consent.--A taxpayer may, without the consent of the
Secretary, adopt the method provided in this subsection for
his first taxable year for which expenditures described in
paragraph (l) are paid or incurred.''
26. Amortization of certain research and experimental
expenditures. Paragraph (2) of section 174(b)(2) is amended
by striking ``beginning after December 31, 1953''.
27. Soil and water conservation expenditures. Paragraph (1)
of section 175(d) is amended to read as follows: ``(1)
Without consent.--A taxpayer may, without the consent of the
Secretary, adopt the method provided in this section for his
first taxable year for which expenditures described in
subsection (a) are paid or incurred.''
28. Activities not engaged in for profit. Section 183(e)(1)
is amended by striking the last sentence.
29. Dividends received on certain preferred stock; and
Dividends paid on certain preferred stock of public
utilities. Sections 244 and 247 are repealed. Paragraph (5)
of section 172(d) is amended to read as follows:
``(5) Computation of deduction for dividends received. The
deductions allowed by section 243 and 245 shall be computed
without regard to section 246(b) (relating to limitation on
aggregate amount of deductions).''
Paragraph (1) of section 243(c) is amended to read as
follows:
``(1) In General.--In the case of any dividend received
from a 20-percent owned corporation, subsection (a)(1) shall
be applied by substituting `80 percent' for `70 percent'.''
Section 243(d) is amended by striking paragraph (4).
Section 246 is amended--
(i) by striking ``, 244,'' in subsection (a)(1),
(ii) by striking ``sections 243(a)(1), and 244(a),'' the
first place it appears in subsection (b)(1) and inserting
``section 243(a)(1),'' and by striking ``244(a),'' the second
place it appears therein, and
(iii) by striking in subsection (c)(1).
Section 246A is amended by striking ``244'' in subsections
(a) and (e).
Sections 277(a), 301(e), 469(e)(4), 512(a)(3)(A),
subparagraphs (A), (C), and (D) of section 805(a)(4),
805(b)(5), 812(e)(2)(A), 832(b)(5), 833(b)(3)(E),
1059(b)(2)(B), and 1244(c)(2)(C) are each amended by striking
``, 244,'' each place it appears.
Section 805(a)(4)(B) is amended by striking ``, 244(a),''
each place it appears.
Section 810(c)(2) is amended by striking ``244 (relating to
dividends on certain preferred stock of public utilities),''.
30. Organization expenses. Section 248(c) is amended by
striking ``beginning after December 31, 1953,'' and by
striking the last sentence.
31. Bond repurchase premium. Section 249(b)(1) is amended
by striking ``, in the case of bonds or other evidences of
indebtedness issued after February 28, 1913,''.
32. Amount of gain where loss previously disallowed.
Section 267(d) is amended by striking ``(or by reason of
section 24(b) of the Internal Revenue Code of 1939)'' in
paragraph (1), by striking ``after December 31, 1953,'' in
paragraph (2), by striking the second sentence, and by
striking ``or by reason of section 118 of the Internal
Revenue Code of 1939'' in the last sentence.
33. Acquisitions made to evade or avoid income tax.
Paragraphs (1) and (2) of section 269 are each amended by
striking ``or acquired on or after October 8, 1940,''.
34. Interest on indebtedness incurred by corporations to
acquire stock or assets of another corporation. Section 279
is amended--(A) by striking ``after December 31, 1967,'' in
subsection (a)(2), (B) by striking ``after October 9, 1969,''
in subsections (b), (C) by striking ``after October 9, 1969,
and'', and (D) by striking subsection (i) and redesignating
subsection (j) as subsection (i).
35. Special rules relating to corporate preference items.
Paragraph (4) of section 291(a) is amended by striking ``In
the case of taxable years beginning after December 31, 1984,
section'' and inserting ``Section''.
36. Qualifications for tax credit employee stock ownership
plan. Section 409 is amended by striking subsections (a),
(g), and (p).
37. Funding standards. Section 412(m)(4) is amended by
striking ``the applicable percentage'' in subparagraph (A)
and by inserting ``25 percent'', and by striking subparagraph
(C).
38. Retiree health accounts. Section 420 is amended by
striking subsections (b)(4) and (c)(2)(B).
39. Employee stock purchase plans. Section 423(a) is
amended by striking ``after December 31, 1963,''.
40. Limitation on deductions for certain farming. Section
464 is amended by striking ``any farming syndicate (as
defined in subsection (c))'' in subsections (a) and (b) and
inserting ``any taxpayer to whom subsection (f) applies'',
and by striking subsections (c) and (g).
41. Deductions limited to amount at risk. Paragraph (3) of
section 465(c)(3) is amended by striking ``In the case of
taxable years beginning after December 31, 1978, this'' and
inserting ``This''. Paragraph (2) of section 465(e)(2)(A) is
amended by striking ``beginning after December 31, 1978''.
42. Nuclear decommissioning costs. Section 468A(e)(2) is
amended by striking ``at the rate set forth in subparagraph
(B)'' in subparagraph (A) and inserting ``at a rate of 20
percent'', and by striking subparagraph (B).
43. Passive activity losses and credits limited. Section
469 is amended by striking subsection (m). Subsection (b) of
section 58 is amended by adding ``and'' at the end of
paragraph (1), by striking paragraph (2), and by
redesignating paragraph (3) as paragraph (2).
44. Adjustments required by changes in method of
accounting. Section 481(b)(3) is amended by striking
subparagraph (C).
45. Exemption from tax on corporations, certain trusts,
etc. Section 501 is amended by striking subsection (p).
46. Requirements for exemption. Section 503(a)(1) is
amended to read as follows: ``(1) General rule.--An
organization described in paragraph (17) or (18) of section
501(a) or described in section 401(a) and referred to in
section 4975(g)(2) or (3) shall not be exempt from taxation
under section 501(a) if it has engaged in a prohibited
transaction.'' Paragraph (2) of section 503(a) is amended by
striking ``described in section 501(c)(17) or (18) or
paragraph (a)(1)(B)'' and inserting ``described in paragraph
(1)''. Subsection (c) of section 503 is amended by striking
``described in section 501(c)(17) or (18) or subsection
(a)(1)(B)'' and inserting ``described in subsection (a)(1)''.
47. Amounts received by surviving annuitant under joint and
survivor annuity contract. Subparagraph (A) of section
691(d)(1) is amended by striking ``after December 31, 1953,
and''.
48. Income taxes of members of Armed Forces on death.
Section 692(a)(1) is amended by striking ``after June 24,
1950''.
49. Insurance company taxable income. Section 832(e)(1) is
amended by striking ``of taxable years beginning after
December 31, 1966,'' Section 832(e)(6) is amended by striking
``In the case of any taxable year beginning after December
31, 1970, the'' and by inserting ``The''.
50. Tax on nonresident alien individuals. Subparagraph (B)
of section 871(a)(1) is amended to read as follows: ``(B)
gains described in section 631(b) or (c),''.
51. Property on which lessee has made improvements. Section
1019 is amended by striking the last sentence.
52. Involuntary conversion. Section 1033 is amended by
striking subsection (j).
53. Property acquired during affiliation. Section 1051 is
repealed.
54. Holding period of property. Paragraphs (5) of section
1223 is amended by striking ``(or under so much of section
1052(c) as refers to section 113(a)(23) of the Internal
Revenue Code of 1939)''. Paragraph (7) of section 1223 is
amended by striking the last sentence. Paragraph (9) of
section 1223 is repealed.
55. Property used in the trade or business and involuntary
conversions. Paragraph (2) of section 1231(c) is amended by
striking ``beginning after December 31, 1981''.
56. Sale or exchange of patents. Section 1235 is amended by
striking subsection (c) and redesignating subsections (d) and
(e) as (c) and (d) respectively.
57. Dealers in securities. Subsection (b) of section 1236
is amended by striking ``after November 19, 1951,''.
58. Sale of patents. Subsection (a) of section 1249 is
amended by striking ``after December 31, 1962,''.
59. Gain from disposition of farm land. Subparagraph (a) of
section 1252 is amended by striking ``after December 31,
1969,''.
60. Treatment of amounts received on retirement or sale or
exchange of debt instruments. Subsection (c) of section 1271
is amended by striking paragraph (1).
61. Amount and method of adjustment. Section 1314 is
amended by striking subsection (d).
62. Election; revocation; termination. Clause (iii) of
section 1362(d)(3) is amended by striking ``unless`` and all
that follows and inserting ``unless the corporation was an S
corporation for such taxable year.''
63. Old-age, survivors, and disability insurance.
Subsection (a) of section 1401 is amended by striking ``the
following percent'' and all that follows and inserting ``12.4
percent of the amount of the self-employment income for such
taxable year.''
64. Hospital insurance. Subsection (b) of section 1401 is
amended by striking ``the following percent'' and all that
follows and inserting ``2.9 percent of the amount of the
self-employment income for such taxable year.''
65. Ministers, members of religious orders, and Christian
Science practitioners. Paragraph (3) of section 1402(e) is
amended by striking ``whichever of the following dates is
later: (A)'' and by striking ``; or (B)'' and all that
follows and by inserting a period.
66. Withholding of tax on nonresident aliens. The first
sentence of subsection (b) of section 1441 and the first
sentence of paragraph (5) of section 1441(c) are each amended
by striking the ``gains subject to tax'' and all that follows
through ``October 4, 1966'' and inserting ``and gains subject
to tax under section 871(a)(1)(D)''
67. Affiliated group defined. Subparagraph (A) of section
1504(a)(3) is amended by striking ``for a taxable year which
includes any period after December 31, 1984'' in clause (i)
and by striking ``in a taxable year beginning after December
31, 1984'' in clause (ii).
68. Disallowance of the benefits of the graduated corporate
rates and accumulated earnings credit. Subsection (a) of
section 1551 is amended--
(1) by striking paragraph (1) and designating paragraphs
(2) and (3) as (1) and (2) respectively, and
(2) by striking ``(2) or (3)'' and inserting ``(1) or
(2)''.
Subsection (b) of section 1551 is amended by striking ``or
(2)''.
69. Definition of wages. Section 3121(b) is amended by
striking paragraph (17).
70. Credits against tax. Section 3302(f) is amended by
striking paragraphs (4)(B) and (5)(D).
[[Page S5232]]
71. Domestic service employment taxes. Section 3510(b) is
amended by striking paragraph (4).
72. Tax on fuel used in commercial transportation on inland
waterways. Section 4042(b)(2)(A) is amended to read as
follows: ``(A) The Inland Waterways Trust Fund financing rate
is 20 cents per gallon.''
73. Transportation by air. Section 4261(e) is amended by
striking paragraphs (1)(C) and (5).
74. Taxes on failure to distribute income. Section 4942 is
amended--
(1) by striking subsection (f)(2)(D),
(2) by striking ``For all taxable years beginning on or
after January 1, 1975, subject'' and inserting ``Subject'' in
subsection (g)(2)(A),
(3) by striking subsection (g)(4), and
(4) by striking ``after December 31, 1969, and'' in
subsection (i)(2).
75. Taxes on taxable expenditures. Section 4945(f) is
amended by striking ``(excluding therefrom any preceding
taxable year which begins before January 1, 1970)''.
76. Returns. Subsection (a) of section 6039D is amended by
striking ``beginning after December 31, 1984,''
77. Information returns. Subsection (c) of section 6060 is
amended by striking ``year'' and all that follows and
inserting ``year.''.
78. Abatements. Section 6404(f) is amended by striking
paragraph (3).
79. Failure by corporation to pay estimated income tax.
Clause (i) of section 6655(g)(4)(A) is amended by striking
``(or the corresponding provisions of prior law)''.
80. Retirement. Section 7447(i)(3)(B)(ii) is amended by
striking ``at 4 percent per annum to December 31, 1947, and
at 3 percent per annum thereafter'', and inserting ``at 3
percent per annum''.
81. Annuities to surviving spouses and dependent children
of judges. Paragraph (2) of section 7448(a) is amended by
striking ``or under section 1106 of the Internal Revenue Code
of 1939''.
Subsectin (g) of section 7448 is amended by striking ``or
other than pursuant to section 106 of the Internal Revenue
Code of 1939''.
Subsection (j)(1)(B) and (j)(2) of section 7448 are each
amended by striking ``at 4 percent per annum to December 31,
1947, and at 3 percent per annum thereafter'' and inserting
``at 3 percent per annum''.
82. Merchant Marine capital construction funds. Paragraph
(4) of section 7518(g) is amended by striking ``any
nonqualified withdrawal'' and all that follows through
``shall be determined'' and inserting ``any nonqualified
withdrawal shall be determined''.
83. Valuation tables. Paragraph (3) of section 7520(c) is
amended by striking ``not later than December 31, 1989, the''
and inserting ``The''.
84. Administration and collection of taxes in possessions.
Section 7561 is amended by striking paragraph (4).
85. Definition of employee. Section 7701(a)(20) is amended
by striking ``chapter 21'' and all that follows and inserting
``chapter 21.''.
Effective Date.--
General Rule.--Except as otherwise provided in this part,
the amendments made by this part shall take effect of the
date of enactment of this Act.
Savings Provision.--If
(1) any provision amended or repealed by this part applied
to--
(a) any transaction occurring before the date of the
enactment of this Act,
(b) any property acquired before such date of enactment, or
(c) any item of income, loss, deduction, or credit taken
into account before such date of enactment, and
(2) the treatment of such transaction, property, or item
under such provision would (without regard to the amendments
made by this part) affect the liability for tax for periods
ending after such date of enactment, nothing in the
amendments made by this part shall be construed to affect the
treatment of such transaction, property, or item for purposes
of determining liability for tax for periods ending after
such date of enactment.
______
By Mr. BREAUX (for himself, Mr. Chafee, Mr. Bingaman, Ms.
Landrieu, Mr. Lieberman, Mrs. Clinton, Mr. Miller, and Mr.
Graham of Florida):
S. 883. A bill to amend title XIX of the Social Security Act to
revise and simplify the transitional medical assistance (TMA) program;
to the Committee on Finance.
Mr. BREAUX. Mr. President, I ask unamimous 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. 883
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 ``Transitional Medical
Assistance Improvement Act of 2003''.
SEC. 2. REVISION AND SIMPLIFICATION OF THE TRANSITIONAL
MEDICAL ASSISTANCE PROGRAM (TMA).
(a) Option of Continuous Eligibility for 12 Months; Option
of Continuing Coverage for Up To an Additional Year.--
(1) Option of continuous eligibility for 12 months by
making reporting requirements optional.--Section 1925(b) of
the Social Security Act (42 U.S.C. 1396r-6(b)) is amended--
(A) in paragraph (1), by inserting ``, at the option of a
State,'' after ``and which'';
(B) in paragraph (2)(A), by inserting ``Subject to
subparagraph (C):'' after ``(A) Notices.--'';
(C) in paragraph (2)(B), by inserting ``Subject to
subparagraph (C):'' after ``(B) Reporting requirements.--'';
(D) by adding at the end the following new subparagraph:
``(C) State option to waive notice and reporting
requirements.--A State may waive some or all of the reporting
requirements under clauses (i) and (ii) of subparagraph (B).
Insofar as it waives such a reporting requirement, the State
need not provide for a notice under subparagraph (A) relating
to such requirement.''; and
(E) in paragraph (3)(A)(iii), by inserting ``the State has
not waived under paragraph (2)(C) the reporting requirement
with respect to such month under paragraph (2)(B) and if''
after ``6-month period if''.
(2) State option to extend eligibility for low-income
individuals for up to 12 additional months.--Section 1925 of
such Act (42 U.S.C. 1396r-6) is further amended--
(A) by redesignating subsections (c) through (f) as
subsections (d) through (g), respectively; and
(B) by inserting after subsection (b) the following new
subsection:
``(c) State Option of Up To 12 Months of Additional
Eligibility.--
``(1) In general.--Notwithstanding any other provision of
this title, each State plan approved under this title may
provide, at the option of the State, that the State shall
offer to each family which received assistance during the
entire 6-month period under subsection (b) and which meets
the applicable requirement of paragraph (2), in the last
month of the period the option of extending coverage under
this subsection for the succeeding period not to exceed 12
months.
``(2) Income restriction.--The option under paragraph (1)
shall not be made available to a family for a succeeding
period unless the State determines that the family's average
gross monthly earnings (less such costs for such child care
as is necessary for the employment of the caretaker relative)
as of the end of the 6-month period under subsection (b) does
not exceed 185 percent of the official poverty line (as
defined by the Office of Management and Budget, and revised
annually in accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) applicable to a family of
the size involved.
``(3) Application of extension rules.--The provisions of
paragraphs (2), (3), (4), and (5) of subsection (b) shall
apply to the extension provided under this subsection in the
same manner as they apply to the extension provided under
subsection (b)(1), except that for purposes of this
subsection--
``(A) any reference to a 6-month period under subsection
(b)(1) is deemed a reference to the extension period provided
under paragraph (1) and any deadlines for any notices or
reporting and the premium payment periods shall be modified
to correspond to the appropriate calendar quarters of
coverage provided under this subsection; and
``(B) any reference to a provision of subsection (a) or (b)
is deemed a reference to the corresponding provision of
subsection (b) or of this subsection, respectively.''.
(b) State Option To Waive Receipt of Medicaid for 3 of
Previous 6 Months To Qualify for TMA.--Section 1925(a)(1) of
such Act (42 U.S.C. 1396r-6(a)(1)) is amended by adding at
the end the following: ``A State may, at its option, also
apply the previous sentence in the case of a family that was
receiving such aid for fewer than 3 months, or that had
applied for and was eligible for such aid for fewer than 3
months, during the 6 immediately preceding months described
in such sentence.''.
(c) Elimination of Sunset for TMA.--
(1) Subsection (g) of section 1925 of such Act (42 U.S.C.
1396r-6), as redesignated under subsection (a)(2), is
repealed.
(2) Section 1902(e)(1) of such Act (42 U.S.C. 1396a(e)(1))
is amended by striking ``(A) Notwithstanding'' and all that
follows through ``During such period, for'' in subparagraph
(B) and inserting ``For''.
(d) CMS Report on Enrollment and Participation Rates Under
TMA.--Section 1925 of such Act (42 U.S.C. 1396r-6), as
amended by subsections (a)(2)(A) and (c)(1), is amended by
inserting after subsection (f) the following:
``(g) Additional Provisions.--
``(1) Collection and reporting of participation
information.--Each State shall--
``(A) collect and submit to the Secretary, in a format
specified by the Secretary, information on average monthly
enrollment and average monthly participation rates for adults
and children under this section; and
``(B) make such information publicly available.
Such information shall be submitted under subparagraph (A) at
the same time and frequency in which other enrollment
information under this title is submitted to the Secretary.
Using such information, the Secretary shall submit to
Congress annual reports concerning such rates.''.
(e) Coordination of Work.--Section 1925(g) of such Act (42
U.S.C. 1396r-6(g)), as added by subsection (d), is amended by
adding at the end the following new paragraph:
[[Page S5233]]
``(2) Coordination with administration for children and
families.--The Administrator of the Centers for Medicare &
Medicaid Services, in carrying out this section, shall work
with the Assistant Secretary for the Administration for
Children and Families to develop guidance or other technical
assistance for States regarding best practices in
guaranteeing access to transitional medical assistance under
this section.''.
(f) Elimination of TMA Requirement for States That Extend
Coverage to Children and Parents Through 185 Percent of
Poverty.--
(1) In general.--Section 1925 of such Act (42 U.S.C. 1396r-
6) is further amended by adding at the end the following:
``(h) Provisions Optional for States That Extend Coverage
to Children and Parents Through 185 Percent of Poverty.--A
State may meet (but is not required to meet) the requirements
of subsections (a) and (b) if it provides for medical
assistance under section 1931 to families (including both
children and caretaker relatives) the average gross monthly
earning of which (less such costs for such child care as is
necessary for the employment of a caretaker relative) is at
or below a level that is at least 185 percent of the official
poverty line (as defined by the Office of Management and
Budget, and revised annually in accordance with section
673(2) of the Omnibus Budget Reconciliation Act of 1981)
applicable to a family of the size involved.''.
(2) Conforming amendments.--Section 1925 of such Act (42
U.S.C. 1396r-6) is further amended, in subsections (a)(1) and
(b)(1), by inserting ``, but subject to subsection (h),''
after ``Notwithstanding any other provision of this title,''
each place it appears.
(g) Requirement of Notice for All Families Losing TANF.--
Subsection (a)(2) of section 1925 of such Act (42 U.S.C.
1396r-6) is amended by adding at the end the following flush
sentences:
``Each State shall provide, to families whose aid under part
A or E of title IV has terminated but whose eligibility for
medical assistance under this title continues, written notice
of their ongoing eligibility for such medical assistance. If
a State makes a determination that any member of a family
whose aid under part A or E of title IV is being terminated
is also no longer eligible for medical assistance under this
title, the notice of such determination shall be supplemented
by a 1-page notification form describing the different ways
in which individuals and families may qualify for such
medical assistance and explaining that individuals and
families do not have to be receiving aid under part A or E of
title IV in order to qualify for such medical assistance.
Such notice shall further be supplemented by information on
how to apply for child health assistance under the State
children's health insurance program under title XXI and how
to apply for medical assistance under this title.''.
(h) Extending Use of Outstationed Workers To Accept
Applications for Transitional Medical Assistance.--Section
1902(a)(55) of such Act (42 U.S.C. 1396a(a)(55)) is amended
by inserting ``and under section 1931'' after
``(a)(10)(A)(ii)(IX)''.
(i) Effective Dates.--
(1) In general.--Except as provided in this subsection, the
amendments made by this section shall apply to calendar
quarters beginning on or after October 1, 2002.
(2) Notice.--The amendment made by subsection (g) shall
take effect 6 months after the date of enactment of this Act.
(3) Delay permitted for state plan amendment.--In the case
of a State plan for medical assistance under title XIX of the
Social Security Act which the Secretary of Health and Human
Services determines requires State legislation (other than
legislation appropriating funds) in order for the plan to
meet the additional requirements imposed by the amendments
made by this section, the State plan shall not be regarded as
failing to comply with the requirements of such title solely
on the basis of its failure to meet these additional
requirements before the first day of the first calendar
quarter beginning after the close of the first regular
session of the State legislature that begins after the date
of enactment of this Act. For purposes of the previous
sentence, in the case of a State that has a 2-year
legislative session, each year of such session shall be
deemed to be a separate regular session of the State
legislature.
______
By Ms. LANDRIEU (for herself, Mr. Nelson of Nebraska, Mr. Shelby,
Mrs. Lincoln, Mrs. Hutchison, Mr. Johnson, Mr. Bunning, and Mr.
Reid):
S. 884. A bill to amend the Consumer Credit Protection Act to assure
meaningful disclosures of the terms of rental-purchase agreements,
including disclosures of all costs to consumers under such agreements,
to provide certain substantive rights to consumers under such
agreements, and for other purposes; to the Committee on Banking,
Housing, and Urban Affairs.
Ms. LANDRIEU. Mr. President, 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. 884
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 ``Consumer Rental-Purchase
Agreement Act of 2003''.
SEC. 2. FINDINGS AND DECLARATION OF PURPOSES.
(a) Findings.--Congress finds that--
(1) the rental-purchase industry provides a service that
meets and satisfies the demands of many consumers;
(2) each year, approximately 2,300,000 United States
households enter into rental-purchase transactions, and over
a 5-year period, approximately 4,900,000 United States
households will do so;
(3) competition among the various firms engaged in the
extension of rental-purchase transactions would be
strengthened by informed use of rental-purchase transactions;
and
(4) the informed use of rental-purchase transactions
results from an awareness of the cost thereof by consumers.
(b) Purposes.--The purposes of this Act are to assure the
availability of rental-purchase transactions; and to assure
simple, meaningful, and consistent disclosure of rental-
purchase terms so that consumers will be able to more readily
compare the available rental-purchase terms and avoid
uninformed use of rental-purchase transactions, and to
protect consumers against unfair rental-purchase practices.
SEC. 3. CONSUMER CREDIT PROTECTION ACT.
The Consumer Credit Protection Act (15 U.S.C. 1601 et seq.)
is amended by adding at the end the following new title:
``TITLE X--RENTAL-PURCHASE TRANSACTIONS
``Sec. 1001. Short title; definitions.
``Sec. 1002. Exempted transactions.
``Sec. 1003. General disclosure requirements.
``Sec. 1004. Rental-purchase disclosures.
``Sec. 1005. Other agreement provisions.
``Sec. 1006. Right to acquire ownership.
``Sec. 1007. Prohibited provisions.
``Sec. 1008. Statement of accounts.
``Sec. 1009. Renegotiations and extensions.
``Sec. 1010. Point-of-rental disclosures.
``Sec. 1011. Rental-purchase advertising.
``Sec. 1012. Civil liability.
``Sec. 1013. Additional grounds for civil liability.
``Sec. 1014. Liability of assignees.
``Sec. 1015. Regulations.
``Sec. 1016. Enforcement.
``Sec. 1017. Criminal liability for willful and knowing violation.
``Sec. 1018. Relation to other laws.
``Sec. 1019. Effect on Government agencies.
``Sec. 1020. Compliance date.
``SEC. 1001. SHORT TITLE; DEFINITIONS.
``(a) Short Title.--This title may be cited as the `Rental-
Purchase Protections Act'.
``(b) Definitions.--For purposes of this title, the
following definitions shall apply:
``(1) Advertisement.--The term `advertisement' means a
commercial message in any medium that promotes, directly or
indirectly, a rental-purchase agreement, but does not include
price tags, window signs, or other in-store merchandising
aids.
``(2) Agricultural purpose.--The term `agricultural
purpose' includes--
``(A) the production, harvest, exhibition, marketing,
transformation, processing, or manufacture of agricultural
products by a natural person who cultivates plants or
propagates or nurtures agricultural products; and
``(B) the acquisition of farmlands, real property with a
farm residence, or personal property and services used
primarily in farming.
``(3) Board.--The term `Board' means the Board of Governors
of the Federal Reserve System.
``(4) Cash price.--The term `cash price' means the price at
which a merchant, in the ordinary course of business, offers
to sell for cash the property that is the subject of the
rental-purchase transaction.
``(5) Consumer.--The term `consumer' means a natural person
who is offered or enters into a rental-purchase agreement.
``(6) Date of consummation.--The term `date of
consummation' means the date on which a consumer becomes
contractually obligated under a rental-purchase agreement.
``(7) Initial payment.--The term `initial payment' means
the amount to be paid before or at the time of consummation
of the agreement, or the time of delivery of the property
covered by the agreement if delivery occurs after
consummation, including--
``(A) the rental payment;
``(B) service, processing, or administrative charges;
``(C) any delivery fee;
``(D) refundable security deposit;
``(E) taxes;
``(F) mandatory fees or charges; and
``(G) any optional fees or charges agreed to by the
consumer.
``(8) Merchant.--The term `merchant' means a person who
provides the use of property through a rental-purchase
agreement in the ordinary course of business and to whom the
initial payment by the consumer under the agreement is
payable.
``(9) Payment schedule.--The term `payment schedule' means
the amount and timing of the periodic payments and the total
number of all periodic payments that the consumer will make
if the consumer acquires ownership of the property by making
all periodic payments.
[[Page S5234]]
``(10) Periodic payment.--The term `periodic payment' means
the total payment that a consumer will make for a specific
rental period after the initial payment, including the rental
payment, taxes, mandatory fees or charges, and any optional
fees or charges agreed to by the consumer.
``(11) Property.--The term `property' means property that
is not real property under the laws of the State in which the
property is located when it is made available under a rental-
purchase agreement.
``(12) Rental payment.--The term `rental payment' means
rent required to be paid by a consumer for the possession and
use of property for a specific rental period, but does not
include taxes or any fees or charges.
``(13) Rental period.--The term `rental period' means a
week, month, or other specific period of time, during which
the consumer has a right to possess and use property that is
the subject of a rental-purchase agreement after paying the
rental payment and any applicable taxes for such period.
``(14) Rental-purchase agreement.--
``(A) In general.--The term `rental-purchase agreement'
means a contract in the form of a bailment or lease for the
use of property by a consumer for an initial period of 4
months or less, that is renewable with each payment by the
consumer, and that permits but does not obligate the consumer
to become the owner of the property.
``(B) Exclusions.--The term `rental-purchase agreement'
does not include--
``(i) a credit sale (as defined in section 103(g) of the
Truth in Lending Act);
``(ii) a consumer lease (as defined in section 181(1) of
the Truth in Lending Act); or
``(iii) a transaction giving rise to a debt incurred in
connection with the business of lending money or a thing of
value.
``(15) Rental-purchase cost.--
``(A) In general.--For purposes of sections 1010 and 1011,
the term `rental-purchase cost' means the sum of all rental
payments and mandatory fees or charges imposed by the
merchant as a condition of entering into a rental-purchase
agreement or acquiring ownership of property under a rental-
purchase agreement, including--
``(i) any service, processing, or administrative charge;
``(ii) any fee for an investigation or credit report; and
``(iii) any charge for delivery required by the merchant.
``(B) Excluded items.--The following fees or charges shall
not be taken into account in determining the rental-purchase
cost with respect to a rental-purchase transaction:
``(i) Fees and charges prescribed by law, which actually
are or will be paid to public officials or government
entities, such as sales tax.
``(ii) Fees and charges for optional products and services
offered in connection with a rental-purchase agreement.
``(16) State.--The term `State' means any State of the
United States, the District of Columbia, any territory of the
United States, Puerto Rico, Guam, American Samoa, the Trust
Territory of the Pacific Islands, the Virgin Islands, and the
Northern Mariana Islands.
``(17) Total cost.--The term `total cost' means the sum of
the initial payment and all periodic payments in the payment
schedule to be paid by the consumer to acquire ownership of
the property that is the subject of the rental-purchase
agreement.
``SEC. 1002. EXEMPTED TRANSACTIONS.
``This title does not apply to rental-purchase agreements
primarily for business, commercial, or agricultural purposes,
or those made with agencies or instrumentalities of the
Federal Government or a State or political subdivision
thereof.
``SEC. 1003. GENERAL DISCLOSURE REQUIREMENTS.
``(a) Recipient of Disclosure.--A merchant shall disclose
to any person who will be a signatory to a rental-purchase
agreement the information required by sections 1004 and 1005.
``(b) Timing of Disclosure.--The disclosures required under
sections 1004 and 1005 shall be made before the consummation
of the rental-purchase agreement, and clearly and
conspicuously in writing as part of the rental-purchase
agreement to be signed by the consumer.
``(c) Clearly and Conspicuously.--As used in this section,
the term `clearly and conspicuously' means that information
required to be disclosed to the consumer shall be worded
plainly and simply, and appear in a type size, prominence,
and location as to be readily noticeable, readable, and
comprehensible to an ordinary consumer.
``SEC. 1004. RENTAL-PURCHASE DISCLOSURES.
``(a) In General.--For each rental-purchase agreement, the
merchant shall disclose to the consumer, to the extent
applicable--
``(1) the date of the consummation of the rental-purchase
transaction and the identities of the merchant and the
consumer;
``(2) a brief description of the rental property, which
shall be sufficient to identify the property to the consumer,
including an identification or serial number, if applicable,
and a statement indicating whether the property is new or
used;
``(3) a description of any fee, charge, or penalty, in
addition to the periodic payment, that the consumer may be
required to pay under the agreement, which shall be
separately identified by type and amount;
``(4) a clear and conspicuous statement that the
transaction is a rental-purchase agreement and that the
consumer will not obtain ownership of the property until the
consumer has paid the total dollar amount necessary to
acquire ownership;
``(5) the amount of any initial payment, which includes the
first periodic payment, and the total amount of any fees,
taxes, or other charges, required to be paid by the consumer;
``(6) the amount of the cash price of the property that is
the subject of the rental-purchase agreement, and, if the
agreement involves the rental of 2 or more items as a set (as
may be defined by the Board in regulation) a statement of the
aggregate cash price of all items shall satisfy this
requirement;
``(7) the amount and timing of periodic payments, and the
total number of periodic payments necessary to acquire
ownership of the property under the rental-purchase
agreement;
``(8) the total cost, using that term, and a brief
description, such as `This is the amount that you will pay
the merchant if you make all periodic payments to acquire
ownership of the property.';
``(9) a statement of the right of the consumer to terminate
the agreement without paying any fee or charge not previously
due under the agreement by voluntarily surrendering or
returning the property in good repair upon expiration of any
lease term; and
``(10) substantially the following statement: `OTHER
IMPORTANT TERMS: See your rental-purchase agreement for
additional important information on early termination
procedures, purchase option rights, responsibilities for
loss, damage, or destruction of the property, warranties,
maintenance responsibilities, and other charges or penalties
you may incur.'.
``(b) Form of Disclosure.--The disclosures required by
paragraphs (4) through (10) of subsection (a) shall--
``(1) be segregated from other information at the beginning
of the rental-purchase agreement;
``(2) contain only directly related information; and
``(3) be identified in boldface, upper-case letters as
follows: `IMPORTANT RENTAL-PURCHASE DISCLOSURES'.
``(c) Disclosure Requirements Relating to Insurance
Premiums and Liability Waivers.--
``(1) In general.--A merchant shall clearly and
conspicuously disclose in writing to the consumer before the
consummation of a rental-purchase agreement that the purchase
of leased property insurance or liability waiver coverage is
not required as a condition for entering into the rental-
purchase agreement.
``(2) Affirmative written request after cost disclosure.--A
merchant may provide insurance or liability waiver coverage,
directly or indirectly, in connection with a rental-purchase
transaction only if--
``(A) the merchant clearly and conspicuously discloses to
the consumer the cost of each component of such coverage
before the consummation of the rental-purchase agreement; and
``(B) the consumer signs an affirmative written request for
such coverage after receiving the disclosures required under
paragraph (1) and subparagraph (A) of this paragraph.
``(d) Accuracy of Disclosure.--
``(1) In general.--The disclosures required to be made
under subsection (a) shall be accurate as of the date on
which the disclosures are made, based on the information
available to the merchant.
``(2) Information subsequently rendered inaccurate.--If
information required to be disclosed under subsection (a) is
subsequently rendered inaccurate as a result of any agreement
between the merchant and the consumer subsequent to the
delivery of the required disclosures, the resulting
inaccuracy shall not constitute a violation of this title.
``SEC. 1005. OTHER AGREEMENT PROVISIONS.
``(a) In General.--Each rental-purchase agreement shall--
``(1) provide a statement specifying whether the merchant
or the consumer is responsible for loss, theft, damage, or
destruction of the property;
``(2) provide a statement specifying whether the merchant
or the consumer is responsible for maintaining or servicing
the property, together with a brief description of the
responsibility;
``(3) provide that the consumer may terminate the agreement
without paying any charges not previously due under the
agreement by voluntarily surrendering or returning the
property that is the subject of the agreement upon expiration
of any rental period;
``(4) contain a provision for reinstatement of the
agreement, which at a minimum--
``(A) permits a consumer who fails to make a timely rental
payment to reinstate the agreement, without losing any rights
or options which exist under the agreement, by the payment of
all past due rental payments and any other charges then due
under the agreement and a payment for the next rental period
within 7 business days after failing to make a timely rental
payment if the consumer pays monthly, or within 3 business
days after failing to make a timely rental payment if the
consumer pays more frequently than monthly;
``(B) if the consumer returns or voluntarily surrenders the
property covered by the agreement, other than through
judicial process, during the applicable reinstatement period
set forth in subparagraph (A), permits
[[Page S5235]]
the consumer to reinstate the agreement during a period of at
least 60 days after the date of the return or surrender of
the property by the payment of all amounts previously due
under the agreement, any applicable fees, and a payment for
the next rental period;
``(C) if the consumer has paid 50 percent or more of the
total cost necessary to acquire ownership and returns or
voluntarily surrenders the property, other than through
judicial process, during the applicable reinstatement period
set forth in subparagraph (A), permits the consumer to
reinstate the agreement during a period of at least 120 days
after the date of the return of the property by the
payment of all amounts previously due under the agreement,
any applicable fees, and a payment for the next rental
period; and
``(D) permits the consumer, upon reinstatement of the
agreement, to receive the same property, if available, that
was the subject of the rental-purchase agreement, or if the
same property is not available, a substitute item of
comparable quality and condition, except that the Board may,
by regulation or order, exempt any independent small business
(as defined by regulation of the Board) from the requirement
of providing the same or comparable product during the
extended reinstatement period provided in subparagraph (C),
if the Board determines, taking into account such standards
as the Board determines appropriate, that the reinstatement
right provided in subparagraph (C) would provide excessive
hardship for the independent small business;
``(5) provide a statement specifying the terms under which
the consumer shall acquire ownership of the property that is
the subject of the rental-purchase agreement either by
payment of the total cost to acquire ownership, as provided
in section 1006, or by exercise of any early purchase option
provided in the rental-purchase agreement;
``(6) provide a statement disclosing that if any part of a
manufacturer's express warranty covers the property at the
time the consumer acquires ownership of the property, the
warranty will be transferred to the consumer if allowed by
the terms of the warranty; and
``(7) provide, to the extent applicable, a description of
any grace period for making any periodic payment, the amount
of any security deposit, if any, to be paid by the consumer
upon initiation of the rental-purchase agreement, and the
terms for refund of such security deposit to the consumer
upon return, surrender or purchase of the property.
``(b) Repossession During Reinstatement Period.--Subsection
(a)(4) shall not be construed so as to prevent a merchant
from attempting to repossess property during the
reinstatement period pursuant to subsection (a)(4)(A), but
such a repossession does not affect the right of the consumer
to reinstatement under subsection (a)(4).
``SEC. 1006. RIGHT TO ACQUIRE OWNERSHIP.
``(a) In General.--The consumer shall acquire ownership of
the property that is the subject of the rental-purchase
agreement, and the rental-purchase agreement shall terminate,
upon compliance by the consumer with the requirements of
subsection (b) or any early payment option provided in the
rental purchase agreement, and upon payment of any past due
payments and fees, as permitted by regulation of the Board.
``(b) Payment of Total Cost.--The consumer shall acquire
ownership of the rental property upon payment of the total
cost of the rental-purchase agreement, as defined in section
1001(17), and as disclosed to the consumer in the rental-
purchase agreement pursuant to section 1004(a).
``(c) Additional Fees Prohibited.--A merchant shall not
require the consumer to pay, as a condition for acquiring
ownership of the property that is the subject of the rental-
purchase agreement, any fee or charge in addition to, or in
excess of, the regular periodic payments required by
subsection (b), or any early purchase option amount provided
in the rental-purchase agreement, as applicable. A
requirement that the consumer pay an unpaid late charge or
other fee or charge which the merchant has previously billed
to the consumer shall not constitute an additional fee or
charge for purposes of this subsection.
``(d) Transfer of Ownership Rights.--Upon payment by the
consumer of all payments necessary to acquire ownership under
subsection (b) or any early purchase option amount provided
in the rental-purchase agreement, as applicable, the merchant
shall--
``(1) deliver, or mail to the last known address of the
consumer, such documents or other instruments which the Board
has determined, by regulation, are necessary to acknowledge
full ownership by the consumer of the property acquired
pursuant to the rental-purchase agreement; and
``(2) transfer to the consumer the unexpired portion of any
warranties provided by the manufacturer, distributor, or
seller of the property, which shall apply as if the consumer
were the original purchaser of the property, except where
such transfer is prohibited by the terms of the warranty.
``SEC. 1007. PROHIBITED PROVISIONS.
``A rental-purchase agreement may not contain--
``(1) a confession of judgment;
``(2) a negotiable instrument;
``(3) a security interest or any other claim of a property
interest in any goods, except those goods, the use of which
is provided by the merchant pursuant to the agreement;
``(4) a wage assignment;
``(5) a provision requiring the waiver of any legal claim
or remedy created by this title or other provision of Federal
or State law;
``(6) a provision requiring the consumer, in the event that
the property subject to the rental-purchase agreement is
lost, stolen, damaged, or destroyed, to pay an amount in
excess of the least of--
``(A) the fair market value of the property, as determined
by regulation of the Board;
``(B) any early purchase option amount provided in the
rental-purchase agreement; or
``(C) the actual cost of repair, as appropriate;
``(7) a provision authorizing the merchant, or a person
acting on behalf of the merchant, to enter the dwelling of
the consumer or other premises without obtaining the consent
of the consumer, or to commit any breach of the peace in
connection with the repossession of the rental property or
the collection of any obligation or alleged obligation of the
consumer arising out of the rental-purchase agreement;
``(8) a provision requiring the purchase of insurance or
liability damage waiver to cover the property that is the
subject of the rental-purchase agreement, except as permitted
by regulation of the Board; or
``(9) a provision requiring the consumer to pay more than 1
late fee or charge for an unpaid or delinquent periodic
payment, regardless of the period in which the payment
remains unpaid or delinquent, or to pay a late fee or charge
for any periodic payment because a previously assessed late
fee has not been paid in full.
``SEC. 1008. STATEMENT OF ACCOUNTS.
``Upon request of a consumer, a merchant shall provide a
statement of the account of the consumer. If a consumer
requests a statement for an individual account more than 4
times in any 12-month period, the merchant may charge a
reasonable fee for the additional statements requested in
excess of 4 times during that 12-month period.
``SEC. 1009. RENEGOTIATIONS AND EXTENSIONS.
``(a) Renegotiations.--For purposes of this section, a
`renegotiation' occurs when a rental-purchase agreement is
satisfied and replaced by a new agreement undertaken by the
same consumer. A renegotiation requires new disclosures under
this title, except as provided in subsection (c).
``(b) Extensions.--For purposes of this section, an
`extension' is an agreement by the consumer and the merchant
to continue an existing rental-purchase agreement beyond the
original end of the payment schedule, but does not include a
continuation that is the result of a renegotiation.
``(c) Exceptions.--New disclosures under this title are not
required for the following, even if they meet the definition
of a renegotiation or an extension under this section:
``(1) A reduction in payments.
``(2) A deferment of 1 or more payments.
``(3) The extension of a rental-purchase agreement.
``(4) The substitution of property with property that has a
substantially equivalent or greater economic value, provided
that the rental-purchase cost does not increase.
``(5) The deletion of property in a multiple-item
agreement.
``(6) A change in the rental period, provided that the
rental-purchase cost does not increase.
``(7) An agreement resulting from a court proceeding.
``(8) Any other event described in regulations prescribed
by the Board.
``SEC. 1010. POINT-OF-RENTAL DISCLOSURES.
``(a) In General.--For any item of property or set of items
displayed or offered for rental-purchase, the merchant shall
display on or next to the item or set of items a card, tag,
or label that clearly and conspicuously discloses--
``(1) a brief description of the property;
``(2) whether the property is new or used;
``(3) the cash price of the property;
``(4) the amount of each rental payment;
``(5) the total number of rental payments necessary to
acquire ownership of the property; and
``(6) the rental-purchase cost.
``(b) Form of Disclosure.--
``(1) In general.--A merchant may make the disclosures
required by subsection (a) in the form of a list or catalog
which is readily available to the consumer at the point of
rental if the merchandise is not displayed in the showroom of
the merchant, or if displaying a card, tag, or label would be
impractical due to the size of the merchandise.
``(2) Clearly and conspicuously.--As used in this section,
the term `clearly and conspicuously' means that information
required to be disclosed to the consumer shall appear in a
type size, prominence, and location as to be noticeable,
readable, and comprehensible to an ordinary consumer.
``SEC. 1011. RENTAL-PURCHASE ADVERTISING.
``(a) In General.--If an advertisement for a rental-
purchase transaction refers to or states the amount of any
payment for any specific item or set of items, the merchant
making the advertisement shall also clearly and conspicuously
state in the advertisement for the item or set of items
advertised--
``(1) that the transaction advertised is a rental-purchase
agreement;
``(2) the amount, timing, and total number of rental
payments necessary to acquire ownership under the rental-
purchase agreement;
[[Page S5236]]
``(3) the amount of the rental-purchase cost;
``(4) that to acquire ownership of the property, the
consumer must pay the rental-purchase cost plus applicable
taxes; and
``(5) whether the stated payment amount and advertised
rental-purchase cost is for new or used property.
``(b) Prohibition.--An advertisement for a rental-purchase
agreement shall not state or imply that a specific item or
set of items is available at specific amounts or terms,
unless the merchant usually and customarily offers, or will
offer, the item or set of items at the stated amounts or
terms.
``(c) Clearly and Conspicuously.--
``(1) In general.--For purposes of this section, the term
`clearly and conspicuously' means that required disclosures
shall be presented in a type, size, shade, contrast,
prominence, location, and manner, as applicable to
different media for advertising, so as to be readily
noticeable and comprehensible to the ordinary consumer.
``(2) Regulatory guidance.--The Board shall prescribe
regulations on principles and factors to meet the clear and
conspicuous standard, as appropriate to print, video, audio,
and computerized advertising, reflecting the principles and
factors typically applied in each medium by the Federal Trade
Commission.
``(3) Limitation.--Nothing contrary to, inconsistent with,
or in mitigation of, the disclosures required by this section
shall be used in any advertisement in any medium, and no
audio, video, or print technique shall be used that is likely
to obscure or detract significantly from the communication of
the required disclosures.
``SEC. 1012. CIVIL LIABILITY.
``(a) In General.--Except as otherwise provided in section
1013, any merchant who fails to comply with any requirement
of this title with respect to any consumer is liable to such
consumer as provided for leases in section 130. For purposes
of this section, the term `creditor' as used in section 130
shall include a `merchant', as defined in section 1001.
``(b) Jurisdiction of Courts; Limitation on Actions.--
``(1) In general.--Notwithstanding section 130(e), any
action under this section may be brought in any United States
district court, or in any other court of competent
jurisdiction, before the end of the 1-year period beginning
on the date on which the last payment was made by the
consumer under the rental-purchase agreement.
``(2) Recoupment or set-off.--This subsection shall not bar
a consumer from asserting a violation of this title in an
action to collect an obligation arising from a rental-
purchase agreement, which was brought after the end of the 1-
year period described in paragraph (1) as a matter of defense
by recoupment or set-off in such action, except as otherwise
provided by State law.
``SEC. 1013. ADDITIONAL GROUNDS FOR CIVIL LIABILITY.
``(a) Individual Cases With Actual Damages.--Any merchant
who fails to comply with any requirement imposed under
section 1010 or 1011 with respect to any consumer who suffers
actual damage from the violation shall be liable to such
consumer as provided in section 130.
``(b) Pattern or Practice of Violations.--If a merchant
engages in a pattern or practice of violating any requirement
imposed under section 1010 or 1011, the Federal Trade
Commission or an appropriate State attorney general, in
accordance with section 1016, may initiate an action to
enforce sanctions against the merchant, including--
``(1) an order to cease and desist from such practices; and
``(2) a civil money penalty of such amount as the court may
impose, based on such factors as the court may determine to
be appropriate.
``SEC. 1014. LIABILITY OF ASSIGNEES.
``(a) Assignees Included.--For purposes of section 1013 and
this section, the term `merchant' includes an assignee of a
merchant.
``(b) Liabilities of Assignees.--
``(1) Apparent violation.--An action under section 1012 or
1013 for a violation of this title may be brought against an
assignee only if the violation is apparent on the face of the
rental-purchase agreement to which it relates.
``(2) Apparent violation defined.--For purposes of this
subsection, a violation that is apparent on the face of a
rental-purchase agreement includes, but is not limited to, a
disclosure that can be determined to be incomplete or
inaccurate from the face of the agreement.
``(3) Involuntary assignment.--An assignee has no liability
under this section in a case in which the assignment is
involuntary.
``(4) Rule of construction.--No provision of this section
shall be construed as limiting or altering the liability
under section 1012 or 1013 of a merchant assigning a rental-
purchase agreement.
``(b) Proof of Disclosure.--In an action by or against an
assignee, the consumer's written acknowledgment of receipt of
a disclosure, made as part of the rental-purchase agreement,
shall be conclusive proof that the disclosure was made, if
the assignee had no knowledge that the disclosure had not
been made when the assignee acquired the rental-purchase
agreement to which it relates.
``SEC. 1015. REGULATIONS.
``(a) In General.--The Board shall prescribe regulations,
as necessary to carry out this title, to prevent its
circumvention, and to facilitate compliance with its
requirements.
``(b) Model Disclosure Forms.--
``(1) Board authority.--The Board may publish model
disclosure forms and clauses for common rental-purchase
agreements to facilitate compliance with the disclosure
requirements of this title and to aid the consumer in
understanding the transaction by utilizing readily
understandable language to simplify the technical nature of
the disclosures.
``(2) Content.--In devising forms described in paragraph
(1), the Board shall consider the use by merchants of data
processing or similar automated equipment.
``(3) Use not mandatory.--Nothing in this title may be
construed to require a merchant to use any model form or
clause published by the Board under this section.
``(4) Determination of compliance.--A merchant shall be
deemed to be in compliance with the requirement to provide
disclosure under section 1003(a) if the merchant--
``(A) uses any appropriate model form or clause published
by the Board under this section; or
``(B) uses any such model form or clause, and changes it by
deleting any information which is not required by this title
or rearranging the format, if in making such deletion or
rearranging the format, the merchant does not affect the
substance, clarity, or meaningful sequence of the disclosure.
``(c) Effective Date of Regulations.--
``(1) In general.--Any regulation prescribed by the Board,
or any amendment or interpretation thereof, shall not be
effective before the October 1 that follows the date of
publication of the regulation in final form by at least 6
months.
``(2) Authority to modify.--The Board may, at its
discretion--
``(A) lengthen the period of time described in paragraph
(1) to permit merchants to adjust to accommodate new
requirements; or
``(B) shorten that period of time, if the Board makes a
specific finding that such action is necessary to comply with
the findings of a court or to prevent unfair or deceptive
practices.
``(3) Voluntary compliance.--Notwithstanding paragraph (1)
or (2), a merchant may comply with any newly prescribed
disclosure requirement prior to its effective date.
``SEC. 1016. ENFORCEMENT.
``(a) Federal Enforcement.--Compliance with this title
shall be enforced under the Federal Trade Commission Act (15
U.S.C. 41 et seq.), and a violation of any requirement
imposed under this title shall be deemed a violation of a
requirement imposed under that Act. All of the functions and
powers of the Federal Trade Commission under the Federal
Trade Commission Act are available to the Commission to
enforce compliance by any person with the requirements of
this title, irrespective of whether that person is engaged in
commerce or meets any other jurisdictional test under the
Federal Trade Commission Act.
``(b) State Enforcement.--
``(1) In general.--An action to enforce the requirements
imposed by this title may also be brought by the appropriate
State attorney general in any appropriate United States
district court, or any other court of competent jurisdiction.
``(2) Prior written notice.--
``(A) In general.--The State attorney general shall provide
prior written notice of any civil action described in
paragraph (1) to the Federal Trade Commission, and shall
provide the Commission with a copy of the complaint.
``(B) Emergency action.--If prior notice required by this
paragraph is not feasible, the State attorney general shall
provide notice to the Commission immediately upon instituting
the action.
``(3) FTC intervention.--The Commission may--
``(A) intervene in an action described in paragraph (1);
``(B) upon intervening--
``(i) remove the action to the appropriate United States
district court, if it was not originally brought there; and
``(ii) be heard on all matters arising in the action; and
``(C) file a petition for appeal.
``SEC. 1017. CRIMINAL LIABILITY FOR WILLFUL AND KNOWING
VIOLATION.
``Whoever willfully and knowingly gives false or inaccurate
information, or fails to provide information which that
person is required to disclose under the provisions of this
title or any regulation issued under this title shall be
subject to the penalty provisions as provided in section 112.
``SEC. 1018. RELATION TO OTHER LAWS.
``(a) Relation to State Law.--
``(1) No effect on consistent state laws.--Except as
otherwise provided in subsection (b), this title does not
annul, alter, or affect in any manner the meaning, scope, or
applicability of the laws of any State relating to rental-
purchase agreements, except to the extent that those laws are
inconsistent with any provision of this title, and then only
to the extent of the inconsistency.
``(2) Determination of inconsistency.--Upon its own motion
or upon the request of an interested party, which is
submitted in accordance with procedures prescribed by
regulation of the Board, the Board shall determine whether
any such inconsistency exists. If the Board determines that a
term or provision of a State law is inconsistent with
[[Page S5237]]
a provision of this title, merchants located in that State
shall not be required to comply with that term or provision,
and shall incur no liability under the law of that State for
failure to follow such term or provision, notwithstanding
that such determination is subsequently amended,
rescinded, or determined by judicial or other authority to
be invalid for any reason.
``(3) Greater protection under state law.--Except as
provided in subsection (b), for purposes of this section, a
term or provision of a State law is not inconsistent with the
provisions of this title if the term or provision affords
greater protection and benefit to the consumer than the
protection and benefit provided under this title, as
determined by the Board, on its own motion or upon the
petition of any interested party.
``(b) State Laws Relating to Characterization of
Transaction.--Notwithstanding subsection (a), this title
shall supersede any State law, to the extent that such law--
``(1) regulates a rental-purchase agreement as a security
interest, credit sale, retail installment sale, conditional
sale, or any other form of consumer credit, or that imputes
to a rental-purchase agreement the creation of a debt or
extension of credit; or
``(2) requires the disclosure of a percentage rate
calculation, including a time-price differential, an annual
percentage rate, or an effective annual percentage rate.
``(c) Relation to Federal Trade Commission Act.--No
provision of this title shall be construed as limiting,
superseding, or otherwise affecting the applicability of the
Federal Trade Commission Act to any merchant or rental-
purchase transaction.
``SEC. 1019. EFFECT ON GOVERNMENT AGENCIES.
``No civil liability or criminal penalty under this title
may be imposed on the United States or any of its departments
or agencies, any State or political subdivision thereof, or
any agency of a State or political subdivision thereof.
``SEC. 1020. COMPLIANCE DATE.
``Compliance with this title shall not be required until 6
months after the date of enactment of this title. In any
case, a merchant may comply with this title at any time after
such date of enactment.''.
______
By Mr. KYL (for himself and Mr. Cornyn):
S. 887. A bill to amend the Internal Revenue Code of 1986 to apply an
excise tax to excessive attorneys fees for legal judgments,
settlements, or agreements that operate as a tax; to the Committee on
Finance.
Mr. KYL. Mr. President, I rise today to introduce the Intermediate
Sanctions Compensatory Revenue Adjustment Act of 2003, ISCRAA. This
legislation will restore to the States billions of dollars in revenue
due to them from a massive lawsuit recently conducted on their behalf
the tobacco-Related Medicaid expenses litigation. ISCRAA amends an
existing provision of the Federal tax code in order to enforce basic,
universally accepted fiduciary standards governing the award of
attorneys fees. By applying these standards to the attorneys who
represented the states in the tobacco settlement, ISCRAA reasonably can
be expected to restore to the states income with a present value of
approximately $9 billion. I have included at the end of my statement a
chart detailing how much each state can expect to recover.
ISCRAA's tax formula is borrowed from the 1996 Tax Act's Intermediate
Sanctions Tax, IST, which applies a two-step excise tax to any
excessive or unreasonable compensation that the managers of a trust pay
to themselves from the assets of the trust. The IST framework
encourages the trustee to restore the excessive portion of any fee to
the trust--when he does so, the IST's punitive taxes do not apply.
ISCRAA extends the IST to another type of trust relationship: that
between a lawyer and his client. ISCRAA applies the IST tax formula to
any unreasonable or excessive income that a lawyer collects from
litigation resulting in a judgment or settlement in excess of $100
million. To avoid IST taxes, an attorney must restore the excessive
portion of the fee to the client.
As my colleague Senator Cornyn will explain today, the ethical and
legal abuses that resulted from the 1998 State tobacco settlement make
the need for this legislation manifest. Senator CORNYN also will
discuss the law of attorneys' fiduciary obligations, which establishes
that a fee award is the property of the client--and that any unethical
fee must be restored to the client, regardless of how the fee award is
structured.
I will discuss today how ISCRAA will affect massive litigations
generally. In order to gauge the reasonableness of a lawyer's fee
award, ISCRAA adopts and codifies a liberal version of the lodestar-
multiplier system. As I will later explain in greater detail, ISCRAA
allows fee multipliers of up to 500 percent of reasonable hourly rates.
This limit is as generous as the most liberal limits adopted by state
courts, and considerably more generous than the limits that federal
courts have applied in $100 million cases. ISCRAA's fee formula
guarantees that attorneys' fiduciary obligations will be respected,
while providing plaintiff's lawyers with ample incentive to provide
high-quality legal representation in these types of cases.
Federal supervision of fee awards resulting from $100 million
litigations is appropriate for several reasons. First, because of their
sheer size, these types of lawsuits inevitably operate as a tax on the
consuming public. Few defendants actually can afford to pay such
judgments with cash on hand. Instead, the affected industries simply
will raise the prices that they charge to their customers.
This is exactly what has happened in the State Medicaid tobacco
settlement--according to the leading proponents of that litigation. The
first State attorney general to file suit against the tobacco companies
has admitted that ``what always happens in these cases is the industry
passes the costs to the consumer.'' Other commentators agree that this
has occurred in the tobacco litigation. As one law-review article
notes, ``the [tobacco] settlement * * * is a tax because it's a set of
payments made by tobacco companies that depend on how many packs they
sell; in short, it looks like a tax and quacks like a tax.''
Because of the way that these massive judgments typically are
satisfied, it is particularly important to ensure that attorneys are
paid in proportion to the services that they provided--rather than
solely on the basis of the size of the recovery. Again, the State
tobacco settlement highlights the nature of the problem. As two of the
leading academic commentators have noted, it is ``very troubl[ing]''
that under that agreement, ``a group of private citizens [are] getting
paid a percentage of a tax increase they helped pass.'' The sheer size
of the tobacco settlement--and the fact that attorneys fees were based
on this size, rather than on the attorneys' actual efforts--has given
the fee awards an uncanny resemblance to the medieval practice of tax
farming. In all but name, the government has licensed a group of
private individuals to collect a tax from the consuming public.
I would emphasize at this point that ISCRAA is not an attack on the
State tobacco lawsuits. The bill does not pass judgment on the merits
or the appropriateness of this type of litigation. ISCRAA simply is
designed to ensure that when such lawsuits are brought on the public's
behalf, the public receive its fair share of the proceeds. If a State
chooses to seek compensatory revenue from industry for past harms, then
the resulting tax on the public--minus the reasonable value of the
legal services actually provided--must go to the State treasury.
There are several reasons why $100 million is an appropriate
threshold for applying ISCRAA's fee formula. First, the courts
themselves have indicated that fee agreements based primarily on the
size of the recovery tend to become unreasonable when judgements reach
this size. As one court has stated, ``in much smaller cases, a fee
award of 33 percent does not present the danger of providing the
plaintiff's counsel with the windfall that would accompany a `megafund'
settlement of $100 million or upwards. But it is quite different when
the figures hit the really big time.'' Or as the Third Circuit notes,
``courts have generally decreased the percentage awarded [for attorneys
fees] as the amount recovered increases, and $100 million seems to be
the informal marker of a 'very large' settlement.''
The logic of avoiding judgment-based awards in these very large cases
is straightforward. As one court explains, ``it is not 150 times more
difficult to prepare, try, and settle a $150 million case than it is to
try a $1 million case, but the application of a percentage comparable
to that in a smaller case may yield an award 150 times greater.'' Thus,
according to another court, ``there is considerable merit'' to
disallowing standard percentage awards as the ``size of the [recovery]
fund increases. In many instances the increase [in the recovery] is
merely a factor of the size of the class and has no direct relationship
to the efforts of counsel.''
[[Page S5238]]
It also bears mention that because of its $100 million threshold,
ISCRAA applies to a fairly limited universe of cases. As courts have
remarked, ``there are few so-called `megafund' cases with settlements
over $100 million.'' In 2001, the U.S. Court of Appeals for the Third
Circuit attempted to catalogue all common-fund cases in federal court
that resulted in recoveries greater than $100 million. Though such
litigations have been more frequent in recent years, the Third Circuit
identified only 22 such cases since 1985. See in re Cendant Corp.
PRIDES Litig., 243 F.3d 722, 737 (3d Cir. 2001).
ISCRAA is somewhat broader than the criteria that Cendant Corp.
employed to collect cases. ISCRAA is not limited to common-fund cases--
it also applies to judgments won on behalf of tax-exempt entities or
even single individuals. ISCRAA also applies to cases brought in State
court, and it aggregates identical claims that are brought against
common defendants in separate actions, in order to prevent evasion of
its limits through the subdivision of actions. Nevertheless, ISCRAA's
scope remains fairly narrow. An academic specialist who is familiar
with developments in this field has reviewed the bill and concluded
that because of its ``relatively high threshold,'' ISCRAA probably
would apply only to about 15-20 litigations per year. I will include a
copy of this professor's letter to me in the Congressional Record.
Finally, a $100 million threshold also is appropriate because it
limits ISCRAA's reach to litigations that are a natural subject of
congress's authority to regulate interstate commerce. It is well-
established that ``Congress' commerce authority includes the power to
regulate . . . those [economic] activities that substantially affect
interstate commerce.'' United States v. Morrison, 529 U.S. 598, 609
(2000). See also United States v. Lopez, 514 U.S. 549 (1995). Both the
executive and the legislative branches previously have identified $100
million as guideline for determining whether a matter has a significant
impact on interState commerce. See, e.g. Executive Order 12866;
Congressional Review Act, 5 U.S.C. Sec. 804(2); Unfunded Mandates Act,
2 U.S.C. Sec. 1532(a). Because it is limited to litigations of this
size, ISCRAA is consistent with congress's power and obligation to
protect the flow of commerce between states.
Another point that I would like to emphasize today is that ISCRAA is
not an anti-plaintiffs' lawyer bill. It is not stingy toward trial
attorneys. ISCRAA is carefully designed to protect fiduciary interests
while providing plaintiffs' lawyers with ample incentives to provide
high-quality legal representation in large litigations. ISCRAA's fee
formula is as generous as the limits set by the most liberal State
courts that engage in meaningful review of attorneys fees, and is
considerably more generous than the Federal courts' practices in $100
million cases. Moreover, the multiplier criteria that ISCRAA employs
universally are recognized as legitimate prerequisites for a
contingency fee--even by trial lawyers' professional associations.
Federal courts primarily rely on two systems for calculating
attorneys fees in cases, such as class actions, in which they are
required to set ``reasonable fees:'' the percentage method and the
lodestar-multiplier method. The percentage method, as its name implies,
calculates fees as a percentage of the total recovery. The lodestar
system, by contrast, requires a court to first calculate a fee based on
the number of hours that the lawyer worked multiplied by prevailing
hourly rates, the ``lodestar''. The court then multiplies this lodestar
fee again in order to reward the attorney for the risk of nonpayment of
fees that he assumed and for any exceptional services that he provided.
Over the last thirty years, courts have moved back and forth between
these two systems. Only a few courts make lodestar-multipliers the
exclusive means of awarding attorneys fees. But as one academic
commentator has noted, ``lodestar, or hours-based methods, have been
adopted in every [federal judicial] circuit.''
And more importantly, in large-recovery cases, there has been very
little difference between lodestar and percentage systems. This is
because even when courts apply a percentage to calculate fees, and as
judgements become very large, courts typically also calculate a
reasonable lodestar in order to determine what constitutes a reasonable
percentage. Thus, again, as the Third Circuit notes, ``courts have
generally decreased the percentage awarded as the amount recovered
increases, and $100 million seems to be the informal marker of a `very
large' settlement.''
Courts have been wary of awarding fees based on percentages alone. As
one State supreme court explains: ``to begin the assessment by
arbitrarily picking a percentage amount without any reliance on a
cognizable structure invites decisions that are nonobjective and
inconsistent. What constitutes a reasonable percentage may differ from
one judge to another depending on each judge's predilections,
background, and geographical location in the state.''
Thus ``courts that employ the percentage approach appear to be
motivated in part by a lodestar dynamic. Because courts are reluctant
to give fee awards totally incommensurate with the efforts of the
attorneys, percentage awards generally decrease as the amount of the
recovery increases.''
One result of the cross-use of the lodestar and percentage systems is
that even when courts use the percentage system, those awards
overwhelmingly tend to reflect a reasonable lodestar multiplier.
Therefore, even percentage-based cases tend to provide evidence of the
range of multipliers that the courts consider to be reasonable.
In 2001, the Third Circuit ``set forth a chart of fee awards given in
Federal courts since 1985 in class actions in which the settlement fund
exceeded $100 million and in which the percentage of recovery method
was used.'' Cendant Corp. The court identified 17 such cases. In almost
every case, the Third Circuit could calculate the multiplier that was
used, and ``the lodestar multiplier in those cases never exceeded
2.99.'' And in the direct lodestar-multiplier cases that court
identified, the multiplier ranged from 1.2 to 3.25.
Other courts, surveying smaller cases than the $100 million
recoveries examined in Cendant Corp., have identified larger
multipliers. One Federal district court has ``observe[d] that in
virtually every case where the court notes a lodestar but awards fees
based upon a percentage, the lodestar multiplier converted from this
percentage is in the range of 1 to 4.'' Another Federal district court
has found that ``the range of lodestar multipliers in large and
complicated class actions runs from a low of 2.26 to a high of 4.5.''
By contrast, some courts have declared that they would allow only
lower multipliers. One Federal court has stated that ``only in the most
exceptional circumstances would this court award a multiplier of 3 or
greater. . . . this court believes that lodestars enhanced by
multipliers less than 3 should adequately compensate even the most
talented counsel.'' And the Seventh Circuit has suggested that ``it may
be that a doubling of the lodestar would provide a sensible ceiling.''
On the other hand, the Florida Supreme Court--which is generally
regarded as one of the more plaintiff-friendly courts in the United
States--has announced that: ``we set the maximum multiplier available
in this common-fund category of cases at 5. . . . [A] multiplier which
increases fees to five times the accepted hourly rate is sufficient to
alleviate the contingency risk factor involved and attract high level
counsel to common fund cases while producing a fee that remains within
the bounds of reasonableness. We emphasize that 5 is a maximum
multiplier.''
ISCRAA adopts this more liberal standard. It allows fees as high as
500 percent of reasonable hourly rates. ISCRAA awards multipliers based
on two criteria: it allows up to 300 percent to be added onto the
amount of reasonable hourly fees if a case that involved a substantial
risk of nonrecovery of fees, and allows an additional 100 percent add-
on if the attorney provided exceptional services that improved the
plaintiff's recovery.
The criteria that ISCRAA employs universally are recognized as
necessary prerequisites to the legitimacy of a contingency fee.
``Courts in general have insisted that a contingent fee be
[[Page S5239]]
truly contingent. The typically elevated fee reflecting the risk to the
lawyer of receiving no fee will be permitted only if the representation
indeed involves a significant degree of risk.'' Charles W. Wolfram,
Modern Legal Ethics Sec. 9.4, at 532 (1986). The risk requirement has
been recognized ever since contingency fees first were allowed in the
United States. The American Bar Association even noted at that time
that ``a contract for a contingent fee, where sanctioned by law, should
be reasonable under all the circumstances of the case, including the
risk and uncertainty of the compensation.'' ABA Canons of Professional
Ethics, Canon 13 (1908). Indeed, even the professional associations of
plaintiffs' attorneys have, at times, acknowledged that contingent fees
should be based on an actual contingency. In a guide to its members,
the Association of Trial Lawyers of America has ``recommend[ed]'' that
attorneys ``exercise sound judgment in using a percentage in the
contingent fee contract that is commensurate with the risk, cost and
effort required.'' ATLA, Keys to the Courthouse: Quick Facts on the
Contingency Fee System 13 (1994).
The criteria that ISCRAA employs are universally accepted--and the
limits that it sets should be universally acceptable. ISCRAA is not
intended to alter the considered standards of any jurisdiction. Rather,
it is intended to enforce those standards--and to correct the
occasional extreme outlier. Because ISCRAA incorporates a fee formula
that is substantially more liberal than the usual practices of the
federal courts in $100 million cases, we can be confident that high-
quality legal representation will remain available to plaintiffs in
these large litigations. See, e.g. in re Sumitomo Copper Litig., 74 F.
Supp. 2d 393, S.D.N.Y. 1999, RICO and Commodities Exchange Act case
resulting in $116 million recovery; attorneys reviewed millions of
pages of documents located throughout the world, many requiring
translation from Japanese; Federal district court awards multiplier of
250 percent for total fee of $32 million.
Another issue that I will address today is the argument--occasionally
raised in opposition to proposals to limit attorneys fees--that such
restrictions violate attorneys' rights to freedom of contract.
The first principle to keep in mind when questions of attorneys fees
are considered is that ``a fiduciary relationship exists as a matter of
law between attorney and client.'' (Illinois Supreme Court.) As one
academic commentator has noted: ``[I]t is uncontroverted today that a
lawyer is a fiduciary for, and therefore has a duty to deal fairly
with, the client. . . . Lawyers are fiduciaries because retention of an
attorney to exercise 'professional judgment' on the client's behalf
necessarily involves reposing trust and confidence in the attorney.
Exercising professional judgment requires that the lawyer advance the
client's interests as the client would define them if the client were
well-informed.''
The lawyer's status as fiduciary places limits on his dealings with
his client--including with regard to his fee. ``An attorney's freedom
to contract with a client is subject to the constraints of ethical
considerations.'' New Jersey Supreme Court. ``In setting fees, lawyers
are fiduciaries who owe their clients greater duties than are owed
under the general law of contracts.'' Massachusetts Appeals Court. ``As
a result of lawyers' special role in the legal system, contracts
between lawyer and client receive special scrutiny. . . . While freedom
of contract is the guiding principle underlying contract law,
contractual freedom is muted in the lawyer-client and lawyer-lawyer
contexts.'' Joseph M. Perillo, law professor.
The unique status of attorney fee contracts has led courts to reject
analogies between such agreements and other business or service
contracts. Perhaps the fullest exposition is provided by the Arizona
Supreme Court: ``We realize that business contracts may be enforced
between those in equal bargaining capacities, even though they turn out
to be unfair, inequitable or harsh. However, a fee agreement between
lawyer and client is not an ordinary business contract. The profession
has both an obligation of public service and duties to clients which
transcend ordinary business relationships and prohibit the lawyer from
taking advantage of the client. Thus, in fixing and collecting fees the
profession must remember that it is a branch of the administration of
justice and not a mere money getting trade.' ABA Canons of Professional
Ethics, Canon 12.''
The same principle has been identified by the Florida Supreme Court:
There is but little analogy between the elements that control the
determination of a lawyer's fee and those which determine the
compensation of skilled craftsmen in other fields. Lawyers are officers
of the court. The court is an instrument of society for the
administration of justice. Justice should be administered economically,
efficiently, and expeditiously. The attorney's fee is, therefore, a
very important factor in the administration of justice, and if it is
not determined with proper relation to that fact it results in a
species of social malpractice that undermines the confidence of the
public in the bench and bar. It does more than that. It brings the
court into disrepute and destroys its power to perform adequately the
function of its creation.''
In order to protect the lawyer's public role and to enforce his
fiduciary obligations, the courts read a reasonableness requirement
into every attorney fee contract. ``[T]he requirement that a fee be
reasonable in amount overrides the terms of the contract, so that an
`unreasonable' fee cannot be recovered, even if agreed to by the
client.'' G. Hazard, Jr. & W. Hodes, The Law of Lawyering 1. 5:205 Fee
Litigation and Arbitration 120 (1998 Supp.).
As one court has stated, ``[A]n attorney is only entitled to fees
which are fair and just and which adequately compensate him for his
services. This is true no matter what fee is specified in the contract,
because an attorney, as a fiduciary, cannot bind his client to pay a
greater compensation for his services than the attorney would have the
right to demand if no contract had been made. Therefore, as a matter of
public policy, reasonableness is an implied term in every contract for
attorney's fees.''
Finally, when assessing whether a fee is reasonable, courts ask
whether the fee is proportional to the services that were actually
provided. ``Fees must be reasonably proportional to the services
rendered and the situation presented.'' (Arizona Supreme Court.) ``If
an attorney's fee is grossly disproportionate to the services rendered
and is charged to a client who lacks full information about all of the
relevant circumstances, the fee is `clearly excessive' . . . even
though the client consented to such fee.'' West Virginia Supreme Court.
Because attorneys are fiduciaries, they simply do not have complete
freedom of contract in negotiating their fees. An attorney's dealings
with his client always must reflect that the client comes to him in a
position of trust--and therefore, the attorney's fee always must be
reasonable. ISCRAA will help ensure that this important obligation is
respected.
Another subject that I would like to address today is ISCRAA's
effective date. ISCRAA applies to attorney fee payments received after
June 1, 2002. This effective date is appropriate under the
circumstances of the State tobacco settlement for several reasons:
first, Congress routinely enacts major tax legislation with effective
dates that look back much further than does ISCRAA. The Supreme Court
has ``repeatedly upheld [such moderately] retroactive tax legislation
against a due process challenge.'' United States v. Carlton, 512 U.S.
26, 30-31, 1994; see id. at 33, upholding tax whose ``actual
retroactive effect . . . extended for a period only slightly greater
than one year''.
Second, ISCRAA is not even truly retroactive. ISCRAA does not change
the substantive law governing attorneys fee awards. Rather, it simply
enforces established, pre-existing fiduciary standards that already
bind every attorney in every state. The Model Rules of Professional
Conduct, at Rule 1.5(a), contain a clear, direct command that ``a
lawyer's fee shall be reasonable.'' Similarly, the Model Code of
Professional Responsibility, at DR 2-106, directs that an attorney
``shall not enter into an agreement for, charge, or collect an illegal
or clearly excessive fee.'' The Model Code further explains that an
attorneys fee is ``clearly excessive when, after a review of the facts,
a
[[Page S5240]]
lawyer of ordinary prudence would be left with a definite and firm
conviction that the fee is in excess of a reasonable fee.'' Finally, as
academic commentators point out, in addition to the model rules, ``all
State rules of professional conduct prohibit attorneys from charging
excessive fees.''
As I described earlier, to enforce fiduciary standards, ISCRAA
codifies and applies a very generous version of the fee multiplier
system, allowing attorneys fees as high as 500 percent of reasonable
hourly rates. This is considerably more generous than what Federal
courts typically allow in large-judgment cases. No attorney can be
heard to complain that he is subjected to a law that is more generous
than his existing fiduciary obligations.
Further, none of the tobacco-settlement attorneys can reasonably
maintain that they have a vested right to see their fiduciary duties to
the states go unenforced. Nevertheless, in order to be fair to all
parties, ISCRAA's excise taxes are applied only to fees that were paid
after June 1, 2002. By this date, all of the tobacco lawyers twice had
received notice from George W. Bush that he intended to enact
legislation to enforce their fiduciary obligations. In February 2000,
then-candidate Bush promised that he would ``extend[] the `excess
benefits' provision of the tax code to private lawyers who contract
with states and municipalities,'' with ``the reasonableness of the fees
* * * [to] be determined by the standard judicial `lodestar' method.''
And as early as February 2001, the current Administration announced
that it anticipated providing ``additional public health resources for
the States from the President's proposal to extend fiduciary
responsibilities to the representatives of States in tobacco
lawsuits.'' See A Blueprint for New Beginnings: A Responsible Budget
for America's Priorities 80, Office of Management and Budget, February
28, 2001.
Under ISCRAA, all of the attorneys who participated in the State
tobacco settlement still will be very liberally compensated. Because
ISCRAA does not apply to the first three-and-a-half years of fee
payments under the settlement, it exempts the first two-and-a-half
billion dollars that these lawyers received. Every one of the tobacco
lawyers will have more than enough money left to pay for the yachts,
luxury cars, and vacation homes that were purchased with the tobacco
proceeds. ISCRAA might simply be described as the one-yacht-per-lawyer
rule.
But most importantly, because ISCRAA applies to the last year's worth
of tobacco fee payments, and to all future payments, it will return a
substantial amount of funds to the States--money that already should
belong to the States under any reasonable interpretation of fiduciary
standards. It is critical that these funds be restored in this time of
widespread fiscal crisis. Today a large number of the States face
massive budget deficits that threaten their ability to provide health
care to the indigent, to fully fund public education, and to guarantee
adequate and effective law enforcement. When such needs risk going
unmet, fee abuses that cost the States billions of dollars simply can
no longer be ignored. The States must receive their fair share of the
tobacco settlement proceeds--funds that are badly needed to support
basic public services.
Under the terms of the November 1998 Master Settlement Agreement,
MSA, between the States and tobacco companies, $500 million in
cigarette taxes is set aside every year to pay the attorneys who chose
to have their fees awarded in arbitration. Because extraordinarily high
fees were awarded by the arbitrators--estimated to total $15 billion--
the $500-million-a-year income stream, which is not adjusted for
inflation, may have to be paid in perpetuity. In addition to this
annuity, the MSA also sets aside an additional $1.25 billion in
cigarette taxes to compensate those lawyers who choose to forego
arbitration and negotiate their fees directly with the tobacco
companies.
The present value of the $500-million-a-year fee stream--discounting
all future payments for the time value of money--has been
conservatively estimated at just over $8 billion. Current and future
payments from the $1.25 billion fee fund are less certain, since the
grants made from that fund and their disbursement schedule have been
kept obscure from the public. Because ISCRAA's effective date is June
1, 2002, ISCRAA will probably recoup for the States an additional $1
billion above the present value of future $500 million-a-year payments.
ISCRAA does not affect the first three-and-a-half years of fees paid
under the MSA. Because these payments almost certainly are adequate to
pay all reasonable fees incurred in the litigation, ISCRAA would
restore to the States virtually all fees paid after its effective date.
Thus the net present value of the sums that ISCRAA would provide to the
States can conservatively be estimated at $9 billion.
By restoring these excess fee payments to the states' MSA escrow
account and returning them to the States on a per capita basis, ISCRAA
guarantees every State a very substantial recovery. Based on the
estimates that I have described, even our Nation's smallest State,
Wyoming, would recoup at least $15 million in tobacco fee payments, and
other small States, such as North Dakota, would receive approximately
$20 million. On the other hand, our nation's largest State, California,
can expect to recoup at least $1 billion. Other large States would also
see generous returns: Florida, $511 million; Illinois, $397 million;
Michigan, $318 million; New York, $607 million; Ohio, $363 million; and
Texas, $667 million.
Here is how much each State can expect to recover:
Alabama....................................................$142,220,272
Alaska.......................................................20,046,569
Arizona.....................................................164,079,935
Arkansas.....................................................85,496,543
California................................................1,083,230,642
Colorado....................................................137,556,275
Connecticut.................................................108,911,511
Delaware.....................................................25,059,883
District of Columbia.........................................18,294,706
Florida.....................................................511,123,686
Georgia.....................................................261,806,474
Hawaii.......................................................38,745,502
Idaho........................................................41,381,203
Illinois....................................................397,174,614
Indiana.....................................................194,456,664
Iowa.........................................................93,585,167
Kansas.......................................................85,976,825
Kentucky....................................................129,257,603
Louisiana...................................................142,919,876
Maine........................................................40,772,615
Maryland....................................................169,384,021
Massachusetts...............................................203,046,997
Michigan....................................................317,835,940
Minnesota...................................................157,327,166
Mississippi..................................................90,973,451
Missouri....................................................178,937,382
Montana......................................................28,852,605
Nebraska.....................................................54,726,966
Nevada.......................................................63,905,164
New Hampshire................................................39,520,996
New Jersey..................................................269,094,724
New Mexico...................................................58,173,915
New York....................................................606,875,689
North Carolina..............................................257,420,675
North Dakota.................................................20,537,847
Ohio........................................................363,078,559
Oklahoma....................................................110,353,478
Oregon......................................................109,417,889
Pennsylvania................................................392,753,669
Rhode Island.................................................33,525,716
South Carolina..............................................128,305,961
South Dakota.................................................24,140,253
Tennessee...................................................181,945,847
Texas.......................................................666,850,647
Utah.........................................................71,417,756
Vermont......................................................19,470,563
Virginia....................................................226,374,115
Washington..................................................188,496,659
West Virginia................................................57,831,660
Wisconsin...................................................171,532,756
Wyoming......................................................15,791,372
I ask unanimous consent that the text of the bill and the following
four articles be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 887
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 ``Intermediate Sanctions
Compensatory Revenue Adjustment Act of 2003'' (ISCRAA).
SEC. 2. EXCISE TAXES ON EXCESS FEE TRANSACTIONS OF CERTAIN
ATTORNEYS.
(a) In General.--Subchapter D of chapter 42 of the Internal
Revenue Code of 1986 (relating to failure by certain
charitable organizations to meet certain qualification
requirements) is amended by adding at the end the following
new section:
``SEC. 4959. TAXES ON EXCESS FEE TRANSACTIONS.
``(a) Initial Taxes.--There is hereby imposed on the
collecting attorney in each excess fee transaction a tax
equal to 5 percent of the excess fee. The tax imposed by this
paragraph shall be paid by any collecting attorney referred
to in subsection (f)(1) with respect to such transaction.
``(b) Additional Tax on the Collecting Attorney.--In any
case in which a tax is imposed by subsection (a) on an excess
fee transaction and the excess fee involved in such
transaction is not corrected within the
[[Page S5241]]
taxable period, there is hereby imposed a tax equal to 200
percent of the excess fee involved. The tax imposed by this
paragraph shall be paid by any collecting attorney referred
to in subsection (f)(1) with respect to such transaction.
``(c) Excess Fee Transaction; Excess Fee.--For purposes of
this section--
``(1) Excess fee transaction.--
``(A) In general.--The term `excess fee transaction' means
any transaction in which a fee is provided by an applicable
plaintiff (including payments resulting from litigation on
behalf of an applicable plaintiff determined on an hourly or
percentage basis, whether such fee is paid from the
applicable plaintiff's recovery, pursuant to a separately
negotiated agreement, or in any other manner), directly or
indirectly, to or for the use of any collecting attorney with
respect to such applicable plaintiff if the amount of the fee
provided exceeds the value of the services received in
exchange therefor or subsection (g)(1) applies.
``(B) Determination of value.--For purposes of subparagraph
(A), in determining whether the amount of the fee provided
exceeds the value of the services received in exchange
therefor, the value of the services shall be the sum of--
``(i) the reasonable expenses incurred by the collecting
attorney in the course of the representation of the
applicable plaintiff, and
``(ii) a reasonable fee based on--
``(I) the number of hours of non-duplicative, professional
quality legal work provided by the collecting attorney of
material value to the outcome of the representation of the
applicable plaintiff, taking into account the factors
described in subparagraphs (B) and (D) of subsection (h)(2),
``(II) reasonable hourly rates for the individuals
performing such work based on hourly rates charged by other
attorneys for the rendition of comparable services, including
rates charged by adversary defense counsel in the
representation, taking into account the factors described in
subparagraphs (A), (C), (E), and (G) of subsection (h)(2),
and
``(III) to the extent such items are not taken into account
in establishing the reasonable hourly rates under subclause
(II), an appropriate adjustment rate determined in accordance
with subparagraph (C) to compensate the collecting attorney
for periods of substantial risk of non-payment of fees and
for skillful or innovative services which increase the amount
of the applicable plaintiff's recovery.
``(C) Adjustment rate.--
``(i) In general.--For purposes of this paragraph, an
appropriate adjustment rate is a percentage of the reasonable
hourly rate under subparagraph (B)(ii)(II) which is added to
the amount of such rate and which is not more than the sum of
one risk percentage and one skill percentage described in
clauses (ii) and (iii), respectively.
``(ii) Risk percentage.--For purposes of this subparagraph,
the term `risk percentage' means a percentage rate that is
proportional to the collecting attorney's risk of nonrecovery
of fees and which is--
``(I) in the case of a collecting attorney who assumed a
substantial risk of nonpayment of fees, not more than 100
percent,
``(II) in the case of a collecting attorney who assumed a
substantial risk of nonpayment of fees and devoted more than
8,000 hours of legal work (as described in subparagraph
(B)(ii)(I)) and more than 2 years to the case before
resolution of all claims, not more than 200 percent, or
``(III) in the case of a collecting attorney who assumed a
substantial risk of nonpayment of fees and devoted more than
15,000 hours of legal work (as described in subparagraph
(B)(ii)(I)) and more than 4 years to the case before
resolution of all claims, not more than 300 percent.
``(iii) Skill percentage.--For purposes of this
subparagraph, the term `skill percentage' means, in the case
of a collecting attorney who has demonstrated exceptionally
skillful or innovative legal service which generated a
recovery for the applicable plaintiff substantially greater
than the typical recovery in similar cases, a percentage rate
that is proportional to the increase in the applicable
plaintiff's recovery and that is not more than 100 percent.
``(iv) Limitation.--An appropriate adjustment rate shall
not increase the collecting attorney's fee above an amount
that is proportional to the applicable plaintiff's recovery.
``(D) Court approval of fees.--Fee payments approved by any
court shall be presumed to not be in excess of the value of
the services received in exchange therefor if the court
approving the fee--
``(i) did not approve an adjustment rate greater than that
determined to be appropriate under subparagraph (C) in a case
where such fee included an adjustment rate, and
``(ii) obtained and relied upon a report of a legal
auditing firm with respect to such fee in accordance with the
procedures in subsection (h).
``(2) Excess fee.--The term `excess fee' means the excess
referred to in paragraph (1)(A).
``(d) Joint and Several Liability.--For purposes of this
section, if more than 1 person is liable for any tax imposed
by subsection (a), all such persons shall be jointly and
severally liable for such tax.
``(e) Applicable Plaintiff.--For purposes of this section,
the term `applicable plaintiff' means any person represented
by a collecting attorney with respect to a claim described in
subsection (f)(1).
``(f) Other Definitions and Rules.--For purposes of this
section--
``(1) Collecting attorney.--The term `collecting attorney'
means any person engaged in the practice of law who
represents--
``(A) any governmental entity, including any State,
municipality, or political subdivision of a State, or any
person acting on such entity's behalf, including pursuant to
Federal or State Qui Tam statutes, in a claim for recoupment
of payments made or to be made by such entity to or on behalf
of any natural person by reason, directly or indirectly, of a
breach of duty that causes damage to such natural person,
``(B) any organization described in paragraph (3) or (4) of
section 501(c) and exempt from tax under section 501(a), in a
claim for damages based on a breach of duty, whether civil or
criminal, causing damage to such organization,
``(C) any natural person seeking to recover damages in a
claim based on breaches of duty, whether civil or criminal,
causing damage to such natural person, or
``(D) any assignee or other holder of claims described in
subparagraph (A), (B), or (C),
when 1 or more of such claims, whether or not joined in 1
action, involve the same or a coordinated group of
plaintiff's attorneys or similarly situated defendants, arise
out of the same transaction or set of facts or involve
substantially similar liability issues, and result in
settlements or judgments aggregating at least $100,000,000.
``(2) Taxable period.--The term `taxable period' means,
with respect to any excess fee transaction, the period
beginning with the date on which the transaction occurs and
ending 90 days after the earliest of--
``(A) the date of the mailing of a notice of deficiency
under section 6212 with respect to the tax imposed by
subsection (a), or
``(B) the date on which the tax imposed by subsection (a)
is assessed.
``(3) Correction.--
``(A) General rule.--Any excess fee transaction is
corrected by undoing the excess fee to the extent possible
and taking any additional measures necessary to place the
applicable plaintiff in a financial position not worse than
that in which such plaintiff would be if the collecting
attorney were dealing under the highest fiduciary standards.
``(B) Payment of excess fees.--
``(i) In general.--Except as provided in clause (ii), a
collecting attorney corrects an excess fee transaction by
paying any excess fees plus interest to the applicable
plaintiff.
``(ii) Certain settlements.--In the case of excess fees
arising from or related to that certain Master Settlement
Agreement of November 23, 1998, and other, concluded
Settlement Agreements based on State health care expenditures
pursuant to title XIX of the Social Security Act (42 U.S.C.
1396 et seq.), including lawsuits involving the States of
Florida, Minnesota, Mississippi, and Texas, the collecting
attorney corrects an excess fee transaction by paying any
excess fees plus interest to the 50 States in proportion to
each State's share of the United States population.
``(C) No waiver of fee.--No collecting attorney may avoid
imposition of any tax imposed by this section by transferring
any portion of the excess fee or refusing to accept any
portion of the excess fee.
``(g) Disclosure Requirements.--
``(1) Treatment as excess fee.--Any fee provided after the
date of the enactment of this subsection by an applicable
plaintiff (including payments resulting from litigation on
behalf of an applicable plaintiff determined on an hourly or
percentage basis, whether such fee is paid from the
applicable plaintiff's recovery, pursuant to a separately
negotiated agreement, or in any other manner), directly or
indirectly, to or for the use of any collecting attorney with
respect to such applicable plaintiff shall be deemed to be an
excess fee provided in an excess fee transaction unless the
disclosure requirements described in paragraph (2) are met.
``(2) Contents of statement.--The disclosure requirements
of this paragraph are met for any taxable year in which a
collecting attorney receives any fees with respect to a claim
described in subsection (f)(1), if such collecting attorney--
``(A) includes in the return of tax for such taxable year a
statement including the information described in subsection
(c)(1) with respect to such claim, and
``(B) provides a statement including the information
described in subsection (c)(1) to the applicable plaintiff
prior to the deadline (including extensions) for filing such
return.
``(h) Legal Auditing Firm.--
``(1) In general.--In any case before a Federal district
court or a State court in which the court approves fees paid
to a collecting attorney, the court shall seek bids from
legal auditing firms with a specialty in reviewing attorney
billings and select 1 such legal auditing firm to review the
billing records submitted by the collecting attorney, under
the same standards the firm would use if it were hired by a
private party to review legal bills submitted to the party,
for the reasonableness of such attorney's billing patterns
and practices. The court shall require the collecting
attorney to submit billing records, cost records, and any
other information sought by such firm in its review.
[[Page S5242]]
``(2) Review by legal auditing firm.--In reviewing the
billing records and work performed by the collecting
attorney, the legal auditing firm shall address all relevant
matters, including--
``(A) the hourly rates of the collecting attorney compared
with the prevailing market rates for the services rendered by
the collecting attorney,
``(B) the number of hours worked by the collecting attorney
on the case compared with other cases that the collecting
attorney worked on during the same period,
``(C) whether the collecting attorney performed tasks that
could have been performed by attorneys with lower billing
rates,
``(D) whether the collecting attorney used appropriate
billing methodology, including keeping contemporaneous time
records and using appropriate billing time increments,
``(E) whether particular tasks were staffed appropriately,
``(F) whether the costs and expenses submitted by the
collecting attorney were reasonable,
``(G) whether the collecting attorney exercised billing
judgment, and
``(H) any other matters normally addressed by the legal
auditing firm when reviewing attorney billings for private
clients.
``(3) Filing of report; response; burden of proof.--The
court shall set a date for the filing of the report of the
legal auditing firm, and allow the collecting attorney or any
applicable plaintiff to respond to the report within a
reasonable time period. The report shall be presumed correct
unless rebutted by the collecting attorney or any applicable
plaintiff by clear and convincing evidence.
``(4) Fee for legal auditing firm.--The fee for the report
of the legal auditing firm shall be paid from the collecting
attorney's fee award, the applicable plaintiff's recovery, or
both in a manner determined by the court.
``(i) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
this section, including regulations to prevent avoidance of
the purposes of this section and regulations requiring
recordkeeping and information reporting.''.
(b) Conforming and Clerical Amendments.--
(1) Subsections (a), (b), and (c) of section 4963 of the
Internal Revenue Code of 1986 are each amended by inserting
``4959,'' after ``4958,''.
(2) Subsection (e) of section 6213 of such Code is amended
by inserting ``4959 (relating to excess fee transactions),''
before ``4971''.
(3) Paragraphs (2) and (3) of section 7422(g) of such Code
are each amended by inserting ``4959,'' after ``4958,''.
(4) The heading for subchapter D of chapter 42 of such Code
is amended to read as follows:
``Subchapter D--Failure by Certain Charitable Organizations and Persons
to Meet Certain Qualification Requirements and Fiduciary Standards.''.
(5) The table of subchapters for chapter 42 of such Code is
amended by striking the item relating to subchapter D and
inserting the following:
``Subchapter D. Failure by certain charitable organizations and persons
to meet certain qualification requirements and fiduciary
standards.''.
(6) The table of sections for subchapter D of chapter 42 of
such Code is amended by adding at the end the following new
item:
``Sec. 4959. Taxes on excess fee transactions.''.
(c) Effective Date.--The amendments made by this section
shall apply to excess fees paid on or after June 1, 2002.
SEC. 3. DECLARATORY JUDGMENTS RELATING TO EXCISE TAXES ON
EXCESS FEE TRANSACTIONS OF CERTAIN ATTORNEYS.
(a) In General.--Subchapter B of chapter 76 of the Internal
Revenue Code of 1986 (relating to judicial proceedings) is
amended by redesignating section 7437 as section 7438 and by
inserting after section 7436 the following new section:
``SEC. 7437. DECLARATORY JUDGMENTS RELATING TO TAX ON EXCESS
FEE TRANSACTIONS.
``(a) In General.--In a case of actual controversy
involving--
``(1) a determination by the Secretary or the collecting
attorney with respect to the imposition of the excise tax on
excess fee transactions on such collecting attorney under
section 4959, or
``(2) a failure by the Secretary or the collecting attorney
to make such a determination,
upon the filing of an appropriate pleading by an applicable
plaintiff, the Tax Court may make a declaration with respect
to such determination or failure. Any such declaration shall
have the force and effect of a decision of the Tax Court and
shall be reviewable as such.
``(b) Deferential Review.--If a collecting attorney's fee
has been approved by a court in accordance with section
4959(c)(1)(D) or by the Secretary pursuant to section 4959,
the Tax Court shall review the fee only for an abuse of
discretion.
``(c) Legal Auditing Firm.--In any petition for a
declaration referred to in subsection (a):
``(1) No previous report.--If a report by a legal auditing
firm that meets the requirements of section 4959(h) has not
been previously produced and relied on by another court, the
Tax Court shall hire such a legal auditing firm and rely on
its report pursuant to the procedures in section 4959(h).
``(2) Second report.--
``(A) In general.--If a report by a legal auditing firm has
been approved by a court in accordance with section 4959, the
Tax Court shall hire a second legal auditing firm upon the
request of the petitioner.
``(B) Fee for report.--The Tax Court may direct the
petitioner to pay the fee for any report of a legal auditing
firm provided pursuant to subparagraph (A).
``(d) Time for Bringing Action.--No proceeding may be
initiated under this section by any person until 90 days
after such person first notifies the Secretary of the excess
fee transaction with respect to which the proceeding relates.
``(e) Definitions.--For purposes of this section, any term
used in this section and also in section 4959 shall have the
meaning given such term by section 4959.''.
(b) Clerical Amendment.--The table of sections for
subchapter B of chapter 76 of the Internal Revenue Code of
1986 is amended by striking the item relating to section 7437
and by inserting the following new items:
``Sec. 7437. Declaratory judgments relating to tax on excess fee
transactions.
``Sec. 7438. Cross references.''.
(c) Effective Date.--The amendments made by this section
shall apply to actions after the date of the enactment of
this Act.
____
[From the Connecticut Law Review, Summer, 2001]
A Most Dangerous Indiscretion: the Legal, Economic, and Political
Legacy of the Governments' Tobacco Litigation
(By Margaret A. Little)
In 1997 and 1998, the tobacco companies settled with four
states who were approaching trial under agreements valued at
around $40 billion. This was followed in late 1998 by a
Master Settlement Agreement (``MSA'') wherein forty-six
states entered into a massive $206 billion settlement
agreement with the tobacco companies. In addition, the
tobacco companies agreed to contribute $1.5 billion to an
anti-smoking ``education and advertising campaign'' and $250
million ``for a foundation dedicated to reducing teen
smoking.'' These agreements which total $246 billion are
reported to represent the largest privately negotiated
redistribution of wealth in world history. MSA further
obligates the tobacco companies to pay the private practice
attorneys hired by the settling states what has been
variously estimated at $8 to $10 billion in net present
value. Each state's legislature must pass a ``Qualifying
Statute'' to be eligible for the ``damage'' payments. The
agreement could not be fully implemented until courts in
eighty percent of the states ``in number and aggregate
damages'' has approved the settlement. The most significant
difference between the settlement with the states and the
1997 federal settlement is that the MSA confers no
protections on the tobacco companies from suits by smokers.
____
[From the Economist, February 13, 1999]
Knights in Golden Armour
For Americans, lawyers seem to embody extremes of both
heroism and greed, sometimes at the same time. A film
currently playing to packed cinemas across the country, ``A
Civil Action'', tells the true story of one crusading lawyer
(played by John Travolta) who bankrupted himself trying to
sue two big companies which had polluted a small town's
drinking water. But when they win, even lawyer-heroes expect
to be well paid. The small group of contingency-fee lawyers
who helped state governments bring the tobacco industry to
heel are about to collect fees so colossal that they dwarf
even the excesses of Wall Street investment bankers in the
mad, bad 1980s.
Tobacco remains a bonanza for lawyers in all kinds of ways.
On February 10th, a Californian jury awarded $51.5m in
damages against Philip Morris to a woman with inoperable lung
cancer. The award, by far the largest in a smoking-related
lawsuit, was a brusque reminder that, despite last year's
settlement with the states, tobacco companies remain
vulnerable to suits brought by individuals; and that as long
as smokers want compensation, lawyers will reap fortunes.
The legal profession is still trying to digest the
implications of the staggering $8.1 billion a three-man
arbitration panel awarded in December to lawyers for the work
they did in helping Florida, Mississippi and Texas win a
settlement from the tobacco industry for health-care costs.
Over the next six months, the panel is expected to use the
same criteria to set fees for the lawyers who represented
dozens of other states in the negotiations which led to a
national settlement last November. If they do, 250-450 lucky
lawyers could collect between $20 billion and $25 billion in
fees.
``These amounts are grotesque and absurd,'' says Lester
Brickman, a law professor at New York's Cardozo School of
Law. ``Most
[[Page S5243]]
of this money should have gone to the states.'' Mr Brickman,
an expert on legal fees, predicts that the flood of cash
going to a small group of trial lawyers will finance a wave
of mass litigation against other industries, including
alcohol and fast food, on similar public-health grounds. This
approach is already being pursued by big-city mayors against
gun manufacturers and distributors with the help of some of
the same law firms which represented the states in their
suits against the tobacco companies.
The lawyers involved in the tobacco suits insist that the
awards are fair, reflecting the risk they ran by taking on
the tobacco firms when no one, including the state attorneys-
general, thought they had much chance of winning. The lawyers
worked without pay, and as part of the settlement have now
agreed to submit to arbitration rather than insist on a share
of the money the states will receive, which is what the
contracts they signed with many state governments would have
given them. ``The fees are huge,'' admits Philip Anderson,
the president of the American Bar Association. ``But these
lawyers were able to do something that governments have never
been able to achieve on their own--assemble enough evidence
to bring the tobacco industry to account. And the fees were
agreed by sophisticated parties on both sides.''
Too much sophistication, in fact, may be the problem.
Unusually, neither plaintiffs nor defendants in these cases
seem to have had much interest in limiting the lawyers' fees.
Officially, these fees are being paid by the tobacco firms,
which spares the state attorneys-general the politically
embarrassing task of having to pay the lawyers huge amounts
of money out of their state's share of the settlement. The
lawyers agreed to arbitration because they knew that state
politicians could never have honoured their contingency
contracts, which would themselves have become the subject of
prolonged litigation. Most judges would have reduced the
amounts the lawyers would get.
In any case, the arbitration is a mere fig-leaf. The money
going tot he lawyers was clearly part of the overall amount
that the tobacco companies were willing to pay to settle the
case. Whatever the lawyers get, the states do not.
The reaction of the tobacco companies has also been
suspiciously muted. Brown & Williamson, one of the firms,
called the fee award ``obscene'', but the other companies
said little. One reason may be that they do not really care
about the size of the total fee award. Their deal with the
states caps the amount they must pay all the states' lawyers
of $500m a year. This will be divided by the lawyers
according to their proportions of the overall fee award.
Tobacco companies will also shell out another $1.25 billion
over the next five years to pay off those lawyers who do not
want to wait years to receive all their money. So the
companies' exposure is limited, no matter what the lawyers
get.
In effect, the lawyers are becoming joint business partners
with the states and the tobacco companies in leaving a tax on
smokers. The overall settlement has been widely misreported
as giving the states $206 billion. But this is only the
amount that they will receive in the first 25 years. The
settlement actually runs in perpetuity, turning the tobacco
firms into permanent tax-collection agencies for the states.
The firms have already raised prices by about 50 cents a pack
to pay for the settlement. The $500m they will be handing
over to the lawyers annually will also be paid for by
smokers.
If the total fee award to lawyers reaches $25 billion,
these annual payments will continue for the next 50 years. If
the outstanding fees are inflation-adjusted, as the
arbitrators decided they should be in Florida, Mississippi
and Texas, the payments to the lawyers and their heirs could
go on for ever, because the $500m annual cap will not be
inflation-adjusted. The tobacco firms are threatening to
challenge the inflation-adjustment provision in the courts
because they say it is not part of the national settlement
agreement.
But inflation-adjusted or not, today's smokers--70% of whom
earn less than $40,000 a year--will be paying the lawyers as
well as the states, via the tobacco companies, for the rest
of their (abbreviated) lives. Tobacco companies' bottom-lines
will barely be affected. This is why tobacco shares rose
after the settlement with the states was announced in
November and barely reacted when the first gigantic fee
awards to lawyers were made in December.
How the arbitrator came up with such a huge figure is
something of a mystery. The awards range from 20-35% of what
the three states will receive. But this is far more than the
8% fee agreed last May by the lawyers in Minnesota, the only
state actually to take its tobacco case all the way to trial.
____
Morales, Friend Indicted in Texas Tobacco Case--Former AG Has Denied
Wrongdoing; Federal Charges Include Tax Evasion
[From the Dallas Morning News, March 7, 2003]
(By George Kuempel)
Austin.--Former Texas Attorney General Dan Morales and a
lawyer friend were indicted on federal charges Thursday,
accused of trying to defraud the state of hundreds of
millions in legal fees from its suit against the tobacco
industry.
Mr. Morales, a Democrat who lost a bid for governor last
year, also was charged with illegally converting campaign
funds to personal use, filing bogus income tax information
and falsifying a bank loan application.
He and Marc Murr of Houston, who also was indicted, are
expected to surrender to the FBI on Friday. They previously
have denied wrongdoing.
U.S. Attorney Johnny Sutton called it ``a case of an
elected official charged with abusing the public trust.''
``This indictment alleges he violated that trust by
backdating contracts, forging government records and
converting campaign contributions to personal use,'' Mr.
Sutton said at the federal courthouse.
The 12-count indictment issued by a federal grand jury
stemmed from a long-running investigation into payment of
legal fees from the state's $17.3 billion settlement with
tobacco companies when Mr. Morales was attorney general in
1998.
It's a case that has been at the center of a political
wrangling for several years between Mr. Morales and
Republicans. And it comes just weeks after his brother, San
Antonio musician Michael Morales, pleaded guilty to
attempting to extort $280,000 from Democrat Tony Sanchez
during the campaign against Gov. Rick Perry.
Dan Morales, now a private lawyer in Austin, is accused of
fraudulently trying to secure millions of dollars in fees for
Mr. Murr for work on the tobacco case that he did not do by
backdating contracts and forging government documents.
The indictments of Dan Morales and Marc Murr are another
chapter in Texas' landmark $17.3 billion settlement with
tobacco companies that has included twists, turns and
reversals.
Initial debate: Gov. George W. Bush and state Attorney
General John Cornyn, both Republicans, complained about $3.3
billion paid to five attorneys for their work on the 1998
settlement. Added intrigue: Mr. Morales said his friend Marc
Murr of Houston was also among the state's tobacco lawyers
and was due about $500 million. Mr. Morales had publicly
hired the five private attorneys and disclosed their
contracts; the deal with Mr. Murr was initially secret.
The Murr deal: Mr. Morales said Mr. Murr was hired to be a
watchdog over the other lawyers and to advise him during the
litigation. The other lawyers initially said that they had
never heard of Mr. Murr, and later said he did little or no
work on the case.
The initial inquiries: Mr. Cornyn, who succeeded Mr.
Morales as attorney general in 1999, began investigating the
Murr contract. Federal investigators started their inquiry
into the deals and the documents.
The Murr money: In December 1998, Mr. Murr went before a
national arbitration panel and was awarded $1 million over 30
years from tobacco companies. Unbeknownst to the other
tobacco lawyers, Mr. Morales and Mr. Murr also formed a state
arbitration panel in September 1998 that gave Mr. Murr $260
million--an award he contended was binding. He cited a Jan.
31, 1997, contract with the state as evidence.
Cornyn objects: In May 1999, Mr. Cornyn said that the Jan.
31, 1997, contract between Mr. Morales and Mr. Murr was a
fake and did not exist when it supposedly was signed.
Sudden reversal: In U.S. District Court, Mr. Murr's
attorney dropped the $260 million claim on May 6, 1999. Mr.
Murr's attorney also told the court that at least one of the
contracts signed by his client and Mr. Morales was backdated
by as much as a year. Mr. Morales had denied any manipulation
of the contract. He said the investigations are spawned by
partisan political attacks.
Mr. Morales is reported to have hired Mr. Murr without the
knowledge of the team of five high-profile trial lawyers he
contracted to represent the state in its lawsuit against the
big tobacco companies.
At one time, Mr. Murr stood to receive $520 million as his
share of the $3.3 billion in fees awarded to the lawyers in
the case.
His share was later reduced to $1 million, but he gave up
his claim to the money when allegations arose that he had
done no work on the case.
According to the indictment, Mr. Morales and Mr. Murr
``fabricated an outside counsel agreement, backdated to
January 31, 1997, which purportedly required the State to pay
a reasonable fee to Defendant Murr's corporation.''
As part of the ``scheme,'' the two men fabricated another
outside counsel agreement, backdated to Oct. 17, 1996, which
assigned 3 percent of the state's recovery to Mr. Murr's
corporation.
``Defendant Morales directed a state employee to type and
then backdate the bogus agreement. Three percent of the
state's recovery was estimated to be $520 million,''
according to the indictment.
In May 1999, two forensic experts hired by The Dallas
Morning News said that the Morales-Murr contract shows
evidence of ``severe document manipulation.''
The private lawyers who handled the tobacco case were John
Quinn and John Eddie Williams of Houston, Walter Umphrey and
Wayne Reaud of Beaumont, and Harold Nix of Daingerfield. They
have defended their actions in the case.
Mr. Morales surprised some when he announced plans in 1995
to sue several big tobacco companies to help recover the
state's cost of treating patients suffering from tobacco-
related illnesses.
But questions were raised about the fees by Republicans,
including John Cornyn, who became attorney general in 1999
after Mr. Morales decided not to run again.
[[Page S5244]]
Mr. Cornyn began a state investigation, and Andy Taylor, a
former assistant attorney general who headed that said of Mr.
Morales: ``He's toast.
``We looked at the computer hard drives and could tell to
the second when the backdating on the contracts occurred.''
Mr. Taylor, a Houston lawyer, said prosecutors have
informed him that he will be called as a witness in the case.
He said delays in the indictment probably were because of the
lack of a permanent U.S. attorney for months before Mr.
Sutton's appointment and confirmation.
Mr. Morales had slammed the inquiry as politically
motivated. ``There's not one shred of evidence or a single
document to support these lurid accusations.'' he said in
1999.
Micheal Ramsey, an attorney for Mr. Murr, said Thursday of
the charges, ``My initial take is that it's unfair.''
Both men are accused of conspiracy and mail fraud, which
can carry a penalty of up to five years in prison and a
$250,000 fine.
The indictment also charges that Mr. Morales used $400,000
in campaign donations to buy a $775,000 house in Travis
County and he is accused of understating by $400,000 his
liabilities in applying for a $600,000 loan in 1999.
Making a false application on a loan application is a
charge punishable by up to 30 years in prison and a $1
million fine.
According to the indictments, Mr. Morales defrauded the
state, the Texas Ethics Commission, his contributors and
others from 1997 and 1999 by converting political donations
to personal use.
He is charged in another court with making false statements
on his 1998 federal income tax return.
The indictment alleges that in his joint return filed with
his wife, Mr. Morales listed their taxable income as $39,734
when he knew full well that ``their joint taxable income was
substantially in excess'' of that amount.
THE CHARGES
Charges against former Attorney General Dan Morales include
accusations that he:
Fraudulently tried to funnel $260 million in legal fees
from the state tobacco case to a friend, who also was
indicted.
Illegally converted nearly $400,000 in campaign
contributions to his personal use.
Made false statements to get a $600,000 mortgage for his
Travis County house.
Filed a false tax return that understated his taxable
income for 1998.
____
[From the Wall Street Journal, March 10, 2003]
Faust in Texas II
The indictment of former Texas Attorney General Dan Morales
lifts the lid ever so slightly over one of the mysteriously
ignored scandals of the 1990s. We mean the national tobacco
settlement that turned into a $500 million-a-year tax for the
benefit of private tort lawyers.
That's the amount the tobacco companies agreed to pay in
``fees'' to private attorneys appointed by the state
politicos on contingency. Four years later, an itinerant
panel of three ``arbitrators'' is still moving from state to
state to decide how this revenue stream, roughly a present
value of $8 billion, will be divvied up.
Texas was crucial to starting the landslide toward a
national settlement, and Mr. Morales selected the five
lawyers who handled the state's case and would eventually
receive an astounding $3.3 billion in fees. How these five
were picked, though no part of last week's indictment, is an
untold story in itself. Houston lawyer Joe Jamail, who waved
off a chance to participate, told a grand jury Mr. Morales
had demanded a $1 million gratuity to be named to the case.
Never mind. A million bucks would soon appear a hilariously
trivial sum compared to the monumental fees the tobacco
lawyers would receive. Seeing the sums that were up for grabs
after the settlement was reached, Mr. Morales produced out of
the blue a friend, lawyer Marc Murr, whom he claimed was
entitled to $520 million. Mr. Morales even turned up a
document, never seen before, testifying to a fee agreement.
The five private lawyers were apoplectic, insisting Mr.
Murr had done little work and implying the contract was a
forgery. Mr. Morales quickly retreated. He did not seek a
third term as attorney general.
The Murr episode had not been forgotten, however, and last
week the U.S. Attorney's office in Austin brought charges
against Mr. Morales for making false statements and
concealing documents in an effort to enrich his friend. Mr.
Murr was also indicted.
Hallelujah. We can only hope this proves a sideshow to the
main event. Mr. Jamail's allegations about how Mr. Morales
picked the other five attorneys reportedly have been seconded
by two other witnesses before a grand jury. Virtually
overlooked has been the role of lawyer Walter Umphrey, one of
the biggest beneficiaries of the tobacco settlement, in
naming the supposedly ``independent'' chairman of the
national arbitration panel that is still awarding millions of
dollars in fees.
A shameful episode, the tobacco settlement essentially
enacted a national sales tax outside any legislature and
awarded a big chunk of the proceeds to private campaign
contributors of the attorneys general who brought the suit.
So vast have been the rewards, in publicity and money, that
the AGs have now turned themselves into full-time buccaneers-
in-arms of the private tort bar, preying on one industry
after another in search of more such triumphs.
Belated accountability is better than none. We just hope
prosecutors and grand juries won't stop with the Murr case.
____
Mr. CORNYN. Mr. President, I am pleased to join my colleague, Senator
Kyl, to introduce today this landmark legislation to clean up our civil
justice system. This legislation would enact a badly needed reform to
the way in which attorneys are paid in some of the Nation's largest
cases. It is designed to address some of the worst abuses of our civil
justice system that I have witnessed in my nearly thirty years in the
legal profession as a lawyer in private practice, as a state trial and
appellate judge, and as state attorney general.
This legislation, the Intermediate Sanctions Compensatory Revenue
Adjustment Act of 2003, ISCRAA, will combat the gross abuse of attorney
contingent fee agreements, abuses which we have been witnessing at an
increasing rate in recent years. The legislation will enforce
attorneys' fiduciary duties to their clients in a small but important
category of cases--those resulting in judgments greater than $100
million.
Contingent fee agreements can have an important role to play in our
civil justice system. Sometimes, when people are injured but cannot
afford to hire lawyers out of their own pockets, attorneys will accept
the case with the expectation that, if their clients prevail, the
attorney will be paid for his or her services out of the judgment or
settlement that the attorney is able to secure for the client. Such
agreements between attorneys and their clients are called contingent
fee agreements, because the attorney's fee is contingent on the client
obtaining a money judgment or settlement. Contingent fee agreements,
properly understood and utilized, reward attorneys for their work in
obtaining monetary recovery for their clients, and the risk that they
take that, despite their hard work and best efforts, they are unable to
obtain any recovery for the client at all.
Contingent fees can thus help ensure that plaintiffs with legitimate
claims have the opportunity to obtain justice from our courts through
the assistance of counsel. But contingent fees also present serious
ethical problems for our legal system--particularly in cases in which
the dollar amounts at stake are extraordinary, and result in a
contingent fee award that overwhelmingly exceeds the relatively light
or even negligible effort and risk actually undertaken by the
attorneys.
Under the time-tested traditions of our legal system, clients hire
attorneys with the understanding and expectation that the attorney is
ethically, legally, and morally obliged to represent their best
interests, and that the attorney will use his or her legal skills in
order to produce the best possible result--not for the attorney, but
for the client.
Thus, as my colleague has noted, contingent fee agreements are no
ordinary agreements between consumers and businesses. It is a bedrock
principle and well-established tenet of our Anglo-American system of
justice that attorneys are not ordinary businessmen who can engage in
hard bargaining with their customers, as courts have made clear on
countless occasions. Rather, attorneys are officers of the court who
bear a fiduciary duty to their clients. As fiduciaries, attorneys
occupy a position of trust in their dealings with their clients, a
trust which attorneys may not lawfully abuse.
One obligation that flows from this status as a fiduciary is the
attorney's obligation not to charge an unreasonable or excessive fee.
This obligation is a fundamental part of an attorney's ethical duties,
universally recognized in the ethics rules of all 50 States. Courts
have made clear, time and time again, that every attorney fee contract
automatically and necessarily includes the requirement that the fee be
a reasonable one, a fundamental and basic duty of all attorneys, and
one that no provision of such agreements may abrogate.
ISCRAA affirms and reinforces the longstanding substantive law of
attorneys' fiduciary duties, by providing a special mechanism to
enforce those duties in a particularly high risk category of cases--a
category that the courts themselves have singled out as posing special
risks of unethical, windfall fees. Courts have noted that allowing
standard contingency fee agreements in cases involving judgments of
[[Page S5245]]
$100 million or more have a distinct tendency of grossly
overcompensating attorneys for their actual services rendered.
ISCRAA prevents attorneys from evading their obligation to charge a
reasonable fee in extraordinarily large recovery cases, by effectively
limiting awards to a generous multiple of reasonable hourly fees. State
courts, Federal courts, and even trial lawyers' themselves have all
recognized that a reasonable fee must be proportional to the attorney's
actual efforts. ISCRAA codifies and enforces this principle, while
continuing to guarantee lawyers ample and generous compensation for
their efforts--using fee multipliers that are as generous as the most
liberal limits adopted by state courts, and which are considerably more
generous than the limits set by federal courts in $100 million cases.
This legislation thus promises to clean up our civil justice system
and to repudiate the grossest abuses of our legal system. Make no
mistake: Although all attorneys are supposed to uphold a strict ethical
code, under which they are strictly forbidden from charging their
clients unreasonable or excessive attorney fees, the temptation to
abuse contingent fee agreements is a strong one, and even more so when
the dollar amounts are truly extraordinary--such as in the $100 million
cases that would be covered by this legislation. And make no mistake:
the victim of such attorney fee abuse, and the beneficiary of this
legislation, is not the defendant who pays the judgment--after all, the
defendant pays the same total amount whether the money goes to the
attorney or to the client. Rather, the real victim of this abuse, and
the real beneficiary of this legislation, is the injured client, whose
money is being taken away from the lawyer through an abusive contingent
fee arrangement.
As my colleague has also noted, ISCRAA is unquestionably an
appropriate exercise of Congress's power to regulate and protect
interstate commerce, considering the large size of the litigations to
which it applies. $100 million is a standard threshold used by the
federal government to determine whether an economic transaction
significantly affects interstate commerce.
But the most important reason for federal intervention in this area I
have not yet mentioned, and I would like to take a moment to discuss it
here: the gross abuses that we have already witnessed in large
litigation fee awards. Recent experience amply demonstrates that, if
the Federal Government does not act to prevent unethical and grossly
abusive fee awards in massive, nationwide lawsuits, no one will.
Moreover, recent experience further demonstrates that unreasonable fee
payments in such suits threaten not just the attorneys' fiduciary
obligations; they also place at risk the integrity of our governmental
institutions. The unwholesome incentives created by windfall, unethical
fee awards in large-scale litigations have induced some public
officials to abandon their civic obligations.
The textbook example of the types of abuses that make ISCRAA
necessary is the attorney fee arrangement awarded in the State lawsuits
to recover tobacco-related Medicaid expenses. Individual law firms that
represented the States in that litigation have been given hundreds of
millions and sometimes even billions of dollars in fees. To date,
approximately $15 billion in fees has been awarded to the tobacco
settlement lawyers, to be paid out in $500-million-a-year increments.
Attorneys representing just three of the States--Mississippi, Texas,
and Florida--were awarded $8.2 billion in fees. In many cases, such
fees were paid to attorneys who filed duplicate, copycat lawsuits at a
time when settlement negotiations had already begun and the risk that
the states would not recover any money was negligible. Yet these
lawyers nevertheless received massive contingency fees, for suits that
involved no real contingency. And for most of the tobacco settlement
lawyers, the size of the fee awards bears no reasonable relation to the
actual effort expended or risk involved.
There is widespread agreement that the fees awarded in the tobacco
settlement are excessive and unreasonable. Perhaps the most damning
indictments come from those who took the plaintiffs' side in this
litigation--including from plaintiff lawyers themselves. For example,
Michael Ciresi, a pioneer in the tobacco litigation who represented the
state of Minnesota in its lawsuit, and who is no doubt familiar with
what these lawsuits actually require, has said that the Texas, Florida,
and Mississippi lawyers' fee awards ``are far in excess of these
lawyers' contribution to any of the state results.'' Similarly, former
Food and Drug Administration Commissioner David Kessler, another leader
in the fight against tobacco, has said that the states' private lawyers
``did a real service, but I think the fee is outrageous. All the legal
fees are out control.'' Washington, D.C. lawyer and tobacco-industry
opponent John Coale has denounced the fee awards as ``beyond human
comprehension'' and stated that ``the work does not justify them.''
Even the Association of American Trial Lawyers, the nation's premier
representative of the plaintiffs bar, has condemned attorney fees
requested in the state tobacco settlement. The President of ATLA has
noted: ``Common sense suggests that a one billion dollar fee is
excessive and unreasonable and certainly should invite the scrutiny, of
the courts. ATLA generally refrains from expressing an institutional
opinion regarding a particular fee in a particular case, but we have a
strong negative reaction to reports that at least one attorney on
behalf of the plaintiffs in the Florida case is seeking a fee in excess
of one billion dollars.''
This letter, written in 1997, only concerned one of the Florida
lawyers' request for attorney fees. Ultimately, Florida's private
counsel was awarded a total of $3.4 billion in fees. These statements
demonstrate beyond all doubt that there is real abuse going on here,
and that the victim of this abuse is the client, the plaintiff--and not
the defendant.
Perhaps the best gloss on the tobacco fee awards is that provided by
Professor Lester Brickman, a professor of law at Cardozo Law School and
noted authority on legal ethics and attorney fees. Professor Brickman
has stated:
``Under the rules of legal ethics, promulgated partly as a
justification for the legal profession's self-governance, fees cannot
be `clearly excessive.' Indeed, that standard has now been superseded
in most States by an even more rigorous standard: fees have to be
`reasonable.' Are these fees, which in many cases amount to effective
hourly rates of return of tens of thousands--and even hundreds of
thousands--of dollars an hour, reasonable? I think to ask the question
is to answer it.''
The attorney fees awarded in the state tobacco settlement are simply
indefensible. And the process by which the fees were awarded partly
explains how they came to be so. Outside counsel fees were determined
by a private arbitration panel established by the Master Settlement
Agreement, MSA, that resolved 46 of the states' litigation. Four other
states had settled their suits earlier. Their lawyers, however, also
were paid out of the accounts created by the MSA. Amazingly, the
settlement agreement explicitly immunized all fee awards from judicial
review. Even more amazingly, one of the three arbitrators who made the
awards had a clear conflict of interests: he was the father of a South
Carolina lawyer whose law firm has received the largest fee awards of
all, believed to amount to over $2 billion. Another one of the
arbitrators had no background in fee arbitrations or any related
matter, and simply ignored the law in order to make outrageous awards,
using the salaries of sports stars and entertainers as a basis of
measure. Revealingly, the third arbitrator, a retired Federal judge
appointed by President Carter, dissented from the key fee decisions.
As incredible as the MSA fee awards and the arbitration procedures
may seem, even more dubious is the process by which many of the law
firms that participated in this lucrative litigation were selected in
the first place to represent the states.
In my home State of Texas, trial lawyers have accused the then-state
attorney general of demanding $1 million in campaign contributions in
exchange for their being hired to represent the state in the tobacco
litigation. One prominent lawyer--a former president of the Texas Trial
Lawyers Association--has since said that the attorney general's
solicitation was so blatant that ``I knew th[at] instant . . . that I
[[Page S5246]]
could not be involved in the matter.'' He even later wondered if the
meeting had been a ``sting operation.'' Another lawyer simply
characterized his encounter with the attorney general as a bribery
solicitation.
This former Texas attorney general was recently indicted on Federal
charges of attempting to fraudulently divert $260 million in tobacco-
settlement legal fees to one of his personal friends. He had given a
sworn affidavit that this lawyer had served as Texas' ``primary
adviser'' in its tobacco lawsuit--despite the apparent fact that the
lawyer had attended no court hearings, depositions, or strategy
meetings, wrote no memos or legal briefs about the case, and apparently
never even spoke to any of the other attorneys. The attorney general
even went so far as to forge and fraudulently backdate documents in
order to win his friend a share of the tobacco settlement fee.
As for the five law firms that actually did represent Texas in the
tobacco litigation, they filed relatively late lawsuits that were based
on other lawyers' work--and yet, despite the minimal energy expended on
those suits, were awarded $3.3 billion in attorney fees. This award
amounts to compensation that, even assuming that the attorneys worked
all day every day during the entire period of the litigation, remains
well in excess of $100,000 an hour. As one newspaper editorial has
noted, for the amount of money that these lawyers were awarded, Texas
could hire 10,000 additional teachers or policemen for ten years.
Instead, four of these firms gave the attorney general $150,000 in
campaign contributions in recent years.
Texas' experience is not an isolated example. In other states as
well, lawyers' participation in the tobacco litigation appears to have
been the product of political favoritism--and to have resulted in
unfathomable fees that bear no reasonable relation to the services
provided. For example: New Jersey: The private in-state lawyers who
represented this state in the tobacco litigation have admitted that
they had no mass-tort litigation experience and played no role in the
state settlement talks. They have also admitted that all the key work
in the state's lawsuit was done by out-of-state firms--the in-state
firms' principal work was drafting pro hac vice motions to have these
outside lawyers admitted in New Jersey courts. Any work that the New
Jersey lawyers did was submitted to the outside lawyers, who made all
of the substantive arguments. Result: these in-state lawyers were
awarded $350 million in the MSA fee arbitration. Connections: the New
Jersey lawyers were an inside group of past presidents of the New
Jersey trial lawyers' association. The State refused to even consider
hiring a nonprofit firm to conduct the New Jersey lawsuit.
Pennsylvania: Settlement talks had already begun, the states' tobacco
litigation was being resolved, and all of the legal theories already
had been developed long before the Pennsylvania state suit was filed.
Result: Pennsylvania's private lawyers were awarded $50 million in the
MSA arbitration--equivalent to 1000 percent of a reasonable hourly
rate. As one expert has noted, ``there's not $50 million of work in
there.'' Connections: the two law firms that the state Attorney General
selected to conduct the litigation were among his top campaign
contributors. The firms were awarded no-bid contracts. As one
Pennsylvania commentator has noted, ``obviously, it was a political
kind of thing.''
Maryland: Billionaire tort lawyer Peter Angelos demanded a one
billion dollar fee for his work on that State's case, even though,
according to the State Senate President, the State legislature had
retroactively ``changed centuries of precedent to ensure [Angelos] a
win in the case.'' Angelos ultimately received an accelerated $150
million payment for this no-risk lawsuit.
Louisiana: The private law firms that represented the State in the
tobacco litigation were awarded $575 million. The MSA arbitration panel
actually increased this award on the ground that the State government--
the lawyers' supposed client--was opposed to suing tobacco companies.
The Louisiana fee award amounts to almost $7,000 an hour, based on the
lawyers' estimate that they worked a total 85,000 hours. Moreover, this
estimate is unverifiable, because the state's private lawyers kept no
billing records--as the attorney general explained, ``I wasn't that big
on hourly or written reports.'' The dissenting member of the
arbitration panel simply noted that the Louisiana fee award ``shocks
the conscience'' The single biggest beneficiary of this largesse--
receiving $115 million in attorney fees--was a law firm based in Lake
Charles, the hometown of the state's attorney general. This firm and
the next largest fee recipient had donated over $42,000 to the attorney
general's political campaigns. Together, all of the firms that
represented Louisiana gave more than $100,000 to the attorney general
in the years before they were selected to participate in the state's
tobacco team.
Ohio: The lawyers representing this State received fees estimated to
exceed $50,000 per hour, despite the fact that, according to
independent observers, ``all of the legal issues were resolved long
before these Ohio lawyers stepped up to the plate.'' The state's
outside counsel had donated $26,000 in campaign contributions to the
State attorney general prior to their appointment to the state's
tobacco team. After the attorney general chose one private lawyer to
serve as the state's ``lead special counsel,'' that lawyer hired one of
the attorney general's top aides for an undisclosed sum in order to--in
the lawyer's own words--``help me get acquainted with a technique
called PowerPoint.'' When told that ``there were many people in Ohio
capable of doing a PowerPoint presentation,'' the state's outside
counsel responded that this particular attorney general's aide ``was
the only one I knew of.''
Massachusetts: According to other tobacco plaintiffs' lawyers,
Massachusetts's suit piggybacked on the work of other lawyers and was
not pivotal to the outcome of the tobacco litigation. Result: $775
million was awarded to the Massachusetts lawyers in the MSA
arbitration.
New York: When this State's then-attorney general hired private
counsel to represent the State in its tobacco lawsuit, tobacco
companies already had paid $15 billion to Florida and Mississippi for
identical claims and a national settlement agreement already was under
discussion. As one local anti-tobacco leader has noted, ``these were
copycat lawsuits, there wasn't all that much work to do.'' The firms'
primary job was to collect New York-specific data in order to calculate
damages. Ultimately, the New York firms represented the State for just
13 months. And they received a fee award of $625 million. This amounts
to at least $14,000 an hour, for a lawsuit that by all accounts
involved no risk. The dissenting member of the arbitration panel has
denounced the award as ``an astronomical sum unrelated to, the
attorneys', efforts or achievements.'' The New York firms had
contributed more than $250,000 to New York politicians and their
campaign organizations in the years preceding their selection - and
another $200,000 after the State settlement.
Wisconsin: The Wisconsin lawyers' tobacco litigation work has been
described as chiefly consisting of media and public relations efforts
on their own behalf. Their billing records included time spent
selecting office space and buying furniture. One lawyer effectively
billed $3,000 to the State for reading an article in a Madison
newspaper. The lawyers also billed the State for limousine rides around
the state, trips on private jets, and stays at luxury hotels. Result:
$75 million was awarded to the Wisconsin lawyers. Based on the law
firms' records of the total number of hours they devoted to the case--
including work by paralegals--this fee amounts to $3,000 per hour.
Missouri: A State supreme court justice in Missouri resigned his post
in order to join one of the private law firms expected to receive a
portion of the MSA arbitrators' fee award. Ultimately, the firms
representing the State spent just 5 months on the state's lawsuit. They
received a fee award of $111 million. One State leader has described
the award as ``the biggest rip-off in the 180-year history of the
state.'' The law firms receiving these fees had donated more than
$500,000 to State politicians and parties in the years leading up to
their selection as the State's outside counsel.
[[Page S5247]]
These examples are too numerous to dismiss. In State after State, the
temptations created by the massive, windfall fees awarded in the
Medicaid tobacco settlement corrupted not only lawyers involved, but
the government as well. The fee awards poisoned everything that they
touched. No one who examines these events closely--who surveys the
obscene fee awards, and the political cronyism that determined who
benefited--can disagree that this must never be allowed to happen
again.
As a final point, I would like to address a question that has been
raised with regard to remedy. Some have argued that nothing can be done
to correct the excesses of the tobacco settlement fee awards--even with
regard to fees that are still being or have yet to be paid. On several
occasions, State judges who were called upon to approve their State's
tobacco settlement have also, on their own initiative, inquired into
the apparent unreasonableness of the fees awarded. In each case, both
the plaintiffs' lawyers--and in some cases, even State officials--have
challenged the State courts' authority to act. They have argued that
these courts lack jurisdiction to review a national settlement, and
that excessive fees cannot be restored to the State. One state's
attorney general implicated in these events has argued that it is a
``misconception'' that the tobacco settlement ``attorneys' fees are
coming out of the public's pocket. That is not the case. They [sic]
defendants have agreed to pay these fees.''
Because of the way that the MSA fee payments are structured, no
lawyer's award comes out of any one particular, identifiable State's
recovery. Instead, all of the lawyers are being paid from one of two
separate accounts, each of which is funded by the tobacco companies.
It is a mistake, however, to contend that, because the MSA fee
payments are made directly from defendants to plaintiffs' lawyers--
without ever formally or actually passing through the plaintiffs'
hands--they are immunized against ethical scrutiny or correction. It is
well and long established in our law that fee awards originate as the
property of the client regardless of how the fee agreements are
structured. The courts have been very clear on this point. As they have
stated: ``The allowance of attorney fees in a judgment gives the
attorneys no interest and ownership in the judgment to the extent of
the amount of the fee allowed, but the judgment in its entirety is the
property of the client. The award for fees is for the client, not the
attorney.''
``[A]ttorneys' fee provisions exist for the benefit of parties and
not the attorneys. . . . Several jurisdictions have noted that the real
party in interest with regard to fees is the client and not the
attorney.''
``A judgment for costs is a judgment in favor of the party, and not
of his attorney, and the money represented by the costs is the property
of the party.''
``[T]he award of attorney fees [is] made not to the attorneys but to
the litigant who was personally liable to the attorneys. This is also
the view in other states when the courts award attorney fees.''
``An award of attorney's fees belongs to the client and not the
attorney.''
Indeed, an award of attorney fees is generally taxable as income to
the client. In a recent case, the U.S. Court of Appeals for the Ninth
Circuit noted that a plaintiff's obligation to compensate the law firm
that represented him ``was satisfied by [the defendant]. The payment
was therefore to [the client]. The discharge by a third person of an
obligation to him is equivalent to receipt by the person taxed.'' The
Ninth Circuit emphasized that the fact ``[t]hat [the client] never laid
hands on the money paid to the lawyers does not obliterate their
constructive receipt.'' In other words, the fee award belongs to the
client, regardless of how the award is made.
The rule that fee awards belong to the client is strongly supported
by important policy considerations. It is necessary because any other
rule would be an invitation to collusion and self-dealing between
plaintiffs' lawyers and defendants. Again, the courts have been very
clear on this point. As the Third Circuit has noted: ``[A] defendant is
interested only in disposing of the total claims asserted against it,
and the allocation between the [plaintiff's] payment and the attorneys'
fees is of little or no interest to the defense. Moreover, the
divergence in class members' and class counsel's financial incentives
creates the danger that the lawyers might urge a class settlement at a
low figure or on a less-than-optimal basis in exchange for red-carpet
treatment for fees.''
The Second Circuit has made the same point, noting: ``Defendants,
once the settlement amount has been agreed to, have little interest in
how it is distributed and thus no incentive to oppose the [attorneys]
fee. Indeed, the same dynamic creates incentives for collusion--the
temptation for lawyers to agree to a less than optimal settlement in
exchange for [generous fees].''
The Ninth Circuit has also addressed the question of ``whether a
class member has standing to appeal class counsel's attorney fee and
cost award when that award is payable by the defendant independently,
and not out of the class settlement.'' The court concluded that
``[e]ven if class counsel's attorney fees are not to be paid from the
class settlement . . . , the aggregate amount of the attorney fees and
the class settlement payments may be viewed as ``a constructive common
fund.'' The court reasoned that ``[i]f . . . class counsel agreed to
accept excessive fees and costs to the detriment of class plaintiffs,
then class counsel breached their fiduciary duty to the class. If that
were the case, any excessive award could be considered property of the
class plaintiffs, and any injury they suffered could be at least
partially redressed by allocating to them a portion of that award.''
As several commentators have noted, the policy considerations
underpinning the rule that fee awards belong to the client apply with
full force to the State tobacco settlement. Indeed, that settlement
could serve as a textbook example for why this rule exists. As
Professor Brickman has noted: ``To the tobacco companies, dollars are
dollars, whether paid to States or paid to lawyers. So the real amount
on the bargaining table was not the $246 billion that the states
settled for, but a larger sum, including the amount to be paid to the
attorneys. . . . Stated simply, because dollars are fungible, the fees
are coming out of the settlements.''
Even foreign commentators have noted that the State tobacco
settlement's ``arbitration is a mere figleaf. The money going to the
lawyers was clearly part of the overall amount that the tobacco
companies were willing to pay to settle the case. Whatever the lawyers
get, the states do not.''
And this point has not been lost upon members of Congress.
Representative Chris Cox, R-CA, has testified on the matter: ``It is
specious to argue that, billions of dollars, in fees are not being
diverted out of funds available for public health and taxpayers. The
tobacco industry is willing to pay a certain sum to get rid of these
cases. That sum is the total cost of the payment to the plaintiffs and
their lawyers. It is a matter of indifference to the industry how that
sum is divided--75 percent for the plaintiffs and 25 percent for their
lawyers, or vice versa. That means that every penny paid to the
plaintiffs' lawyers--whether it is technically ``in'' the settlement or
not--is money that the industry could have paid to the state or the
private plaintiffs. Excessive attorneys' fees in this case will not be
a victimless crime.''
These authorities and their reasoning should be more than sufficient
to permanently dispel the notion that an attorney fee agreement can be
structured so as to evade the ethical obligation to charge only a
reasonable fee. The defenders of the MSA fee payments are simply
misleading the public and this distinguished body when they assert that
a particular lawyer's award under the settlement does not come out of a
particular state's recovery. That fee comes out of all of the State's
recoveries. All excessive or unreasonable fees should be restored to
all 50 of the States.
Senator Kyl has already presented estimates of the monetary recovery
each State can expect if ISCRAA is enacted. I would simply point out
here that, according to those estimates, Texas has been charged
excessive and unreasonable attorney fees in the amount of $667 million,
and therefore would recover those funds if this legislation is adopted.
ISCRAA's return of unethical tobacco-settlement fee awards to the
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states is manifestly proper in light of the fact that all fee awards
are the property of the client, and the attorney is entitled only to a
reasonable fee. No attorney is above these ethical rules and
obligations. They cannot be waived or ignored. And in light of our
experience with the State tobacco settlement fee awards, and their
effect on our public officials, these ethical duties must be carried
out and enforced strictly and fully.
Our Federal and State courts generally do a good job of protecting
consumers and enforcing the rights of all Americans. But there are
problems in our courts that require attention and significant reform.
Class action abuse not only threatens the integrity and the perception
of rationality in our nation's courts, it also strongly hinders
economic and job growth. Tort reform is badly needed to rescue many
industries, especially our health care industry, from abuses of our
legal system. The judicial confirmation process at the federal level
has become bitter, severe and destructive, and that broken process
poses a serious threat to judicial independence and the quality and
efficiency of our courts. And abusive attorney fee arrangements make a
mockery of our civil justice system, all while enriching a small band
of unscrupulous litigators at the expense of the real victims, their
clients.
To enforce the longstanding fiduciary duty of all attorneys to charge
only a reasonable fee, in a class of cases that poses heightened risks
of abuse and special significance to the national economy, I urge that
this Senate consider expediently, and approve quickly, this important
measure, the Intermediate Sanctions Compensatory Revenue Adjustment Act
of 2003.
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