[Congressional Record Volume 149, Number 174 (Tuesday, November 25, 2003)]
[Senate]
[Pages S15977-S16031]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. GRASSLEY:
  S. 1952. A bill to direct the United States Trade Representative to 
enforce Special Agent rights, under certain trade agreements with 
respect to Mexico, pursuant to title III of the Trade Act of 1974; to 
the Committee on Finance.
  Mr. GRASSLEY. Mr. President, I rise today to introduce the Mexican 
Agricultural Trade Compliance Act. This bill directs the U.S. Trade 
Representative to retaliate against Mexico over that country's de facto 
prohibition on the importation of U.S.-produced high fructose corn 
syrup.
  I introduce this bill reluctantly. For months I have made it clear, 
through letters, floor statements, a hearing, and a trade roundtable, 
that if the Mexican Congress did not lift its illegal 20 percent tax on 
soft drinks containing high fructose corn syrup, I would be forced to 
consider introducing retaliatory legislation, such as this ``tequila 
tariff'' which also covers other agricultural products.
  We're at the end of our legislative session and there has been no 
action by the Mexican Congress. So, I'm faced with no alternative but 
to introduce this bill.
  Let me explain how we got to where we are today. Mexico was formerly 
the largest export market for U.S.-produced high fructose corn syrup. 
But since 1997, Mexico has engaged in a concerted effort to restrict 
U.S. imports of this product. Throughout this time, Mexico has 
consistently violated its NAFTA and WTO commitments.
  Let me give you a short history of Mexico's unjustified actions. In 
February 1997, Mexico initiated an antidumping investigation of U.S. 
high fructose corn syrup, followed by the imposition of an antidumping 
order the following year. The United States challenged Mexico's 
antidumping order under the NAFTA. On two different occasions, NAFTA 
panels determined that Mexico's actions violated its NAFTA obligations.
  The United States also challenged Mexico's antidumping order at the 
Wortd Trade Organization. On two separate occasions, the Dispute 
Settlement Body of the WTO held that Mexico's actions violated its 
international trade commitments.
  But Mexico continued to ignore its NAFTA and WTO obligations. In 
fact, Mexico went one step further and in effect threw gasoline onto 
the fire. On January 1, 2002, in a transparent attempt to evade the 
NAFTA and WTO determinations against it, Mexico imposed a 20 percent 
tax on soft drinks containing high fructose corn syrup. The intent and 
effect of this tax was to continue Mexico's antidumping order on U.S. 
produced high fructose corn syrup by other means.
  In April 2002, with its tax now in place, and in a continuous event 
with the imposition of this tax, Mexico lifted its antidumping order on 
high fructose corn syrup. These actions enabled Mexico to make the 
disingenuous claim that it had come into compliance with the findings 
adopted by the NAFTA and the WTO regarding its antidumping order.
  The effects of the import restrictions of Mexico's antidumping order 
continue, with even more egregious results. Because of Mexico's tax, 
U.S. exports of high fructose corn syrup to Mexico are now at almost 
zero levels.
  This is an extraordinary situation. Mexico lost under the NAFTA, and 
it lost at the WTO commitments, Mexico responded by imposing a de facto 
ban on imports of U.S. high fructose corn syrup. Mexico is not only 
violating its international trade commitments, but also causing 
significant harm for Iowa's corn farmers. Iowa's producers of high 
fructose corn syrup are suffering as well. I know of no other U.S. 
agricultural product that has been shut out of its largest export 
market for so long.
  The United States has worked diligently, and patiently with Mexico on 
this issue. U.S. Trade Representative Robert Zoellick and Ambassador 
Allen Johnson, our Chief Agricultural Negotiator, have put in countless 
hours trying to convince Mexico to come into compliance with its trade 
obligations regarding high fructose corn syrup. But still, the tax 
remains in place. My colleagues on both sides of the aisle, and

[[Page S15978]]

in both the Senate and the House, have repeatedly contacted Mexican 
officials reminding them of Mexico's trade commitments with regard to 
this issue. But still, the tax remains in place.
  I too have worked hard, since the beginning, to try to convince 
Mexico to lift its de facto ban on the sale of U.S.-produced high 
fructose corn syrup. As I have mentioned, I've written letters to 
Mexican officials, delivered floor speeches, conducted a Finance 
Committee hearing, and held an agricultural roundtable, all in an 
effort to convince Mexico to lift its de facto ban on imports of U.S. 
high fructose corn syrup. During a hearing of the Finance Committee on 
September 23, I stated clearly that if the Mexican tax on soft drinks 
containing high fructose corn syrup was not lifted--and soon--I would 
be forced to consider introducing retaliatory legislation. But still, 
the tax remains in place.
  So now, at the end of our legislative session, I see no alternative 
but to introduce the Mexican Agricultural Trade Compliance Act.
  The Mexican Agricultural Trade Compliance Act establishes that the 
Government of Mexico has engaged in a pattern of activity that has 
continuously denied the rights of U.S. exporters of high fructose corn 
syrup under existing trade agreements. Further, the denial of these 
rights is unjustifiable and burdens or restricts U.S. commerce. 
Therefore, Mexico's actions meet the statutory criteria under section 
301 of the Trade Act of 1974 for retaliatory action.
  The Mexican Agricultural Trade Compliance Act requires the U.S. Trade 
Representative to retaliate, pursuant to section 301, against imports 
from Mexico within 60 days of enactment of the Act. However, the U.S. 
Trade Representative shall not take such action if he certifies, within 
30 days after enactment of the Act, that Mexico has eliminated its tax 
on soft drinks containing high fructose corn syrup and is according the 
U.S. high fructose corn syrup industry the benefits of all applicable 
trade agreements.
  I fully hope that prior to the return of the U.S. Senate in January, 
the Mexican Congress will act rationally and bring Mexico into 
compliance with its international trade obligations regarding high 
fructose corn syrup. If it does not, I'll work hard to advance the 
Mexican Agricultural Trade Compliance Act through the Senate. Given the 
large number of unjustified barriers imposed by Mexico over the past 
months against imports of U.S. agricultural products, Mexico has not 
been earning goodwill with Members of the Senate. I expect that my 
legislation will receive broad support.
  I also intend to work with the U.S. Trade Representative to designate 
Mexican products upon which retaliatory duties will be imposed. The 
products on this list will consist first and foremost of Mexican 
agricultural products that are prospering on account of their access to 
the U.S. market. These Mexican products will likely include bottled 
tequila, tomatoes, bell peppers, avocados, limes, asparagus, mangos, 
papayas, watermelons, honey, pecans, and shrimp and prawns. The total 
amount of duties imposed on these Mexican products will equal the lost 
sales being experienced by U.S. producers of high fructose corn syrup 
on account of Mexico's de facto ban of this product, an amount which--
according to U.S. industry--could be as high as $465 million annually.
  Let me conclude by stating that I know that some in Mexico are 
working constructively to try to resolve this issue. Earlier this month 
President Fox of Mexico sent to the Mexican Congress a formal request 
to repeal the tax on high fructose corn syrup. I hope that his request 
becomes law. I appreciated the offer of Mexico's Secretary of 
Agriculture, Javier Usabiaga, to speak with me regarding the tax, and I 
regret that our schedules have not permitted us to meet personally. I 
also note that U.S. and Mexican private sector representatives have 
been negotiating over access for U.S. high fructose corn syrup to the 
Mexican market.
  Regardless of these efforts, Mexico's de facto ban on imports of U.S. 
high fructose corn syrup remains in place. Meanwhile, Iowa's corn 
growers and Iowa's high fructose corn syrup producers continue to 
suffer on account of Mexico's NAFTA and WTO illegal actions. Again, I 
strongly hope that Mexican legislators will remove Mexico's tax on soft 
drinks containing high fructose corn syrup prior to the return of the 
U.S. Senate next January. But if this tax is not repealed by January, I 
have every intention of working to advance this legislation through the 
Senate.
  I'm a strong believer in free trade. I fought hard for passage of the 
NAFTA. I did so because I know free trade benefits farmers in Iowa and 
other states. U.S. agriculture certainly benefits from the NAFTA, as 
does Mexican agriculture. But Mexico has engaged in a blatantly illegal 
act against U.S. agriculture for too long. Mexico's action is having a 
particularly negative impact on my State of Iowa. If we are to maintain 
support for free trade in this country, we must ensure that our trading 
partners live up to their obligations. If they do not, we must take 
action. I hope the introduction of this bill sends a strong message to 
my Mexican counterparts that we are ready and willing to stand up for 
U.S. agriculture. I sincerely hope that they will do the right thing 
and repeal their illegal tax on high fructose corn syrup.
  I hope they repeal their illegal tax to demonstrate their commitment 
to living up to the letter and spirit of Mexico's promises under NAFTA 
and the WTO. I hope they repeal their illegal tax to improve relations 
between the United States and Mexico and to bring the benefits of free 
trade to consumers and producers in both countries. And, Mr. President, 
I hope they repeal their illegal tax so the Mexican Agricultural Trade 
Compliance act is no longer needed. But, if that's what it takes, then 
that's what we should do.
                                 ______
                                 
      By Mr. CAMPBELL:
  S. 1955. A bill to make technical corrections to laws relating to 
Native Americans, and for other purposes; to the Committee on Indian 
Affairs.
  Mr. CAMPBELL. Mr. President, today I am introducing the Native 
American Technical Corrections Act of 2004 to provide amendments to 
certain Federal statutes affecting Indian tribes and Indian people.
  Though a modest bill, when it is enacted it will provide real relief 
to the affected tribes that seek Congress' help in removing the many 
obstacles that block the paths to greater levels of advancement.
  I ask unanimous consent that the text of the legislation be printed 
in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1955

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Native 
     American Technical Corrections Act of 2004''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definition of Secretary.

 TITLE I--TECHNICAL AMENDMENTS AND OTHER PROVISIONS RELATING TO NATIVE 
                               AMERICANS

Sec. 101. National Fund for Excellence in American Indian Education.
Sec. 102. Indian Financing Act Amendment.
Sec. 103. Exchanged Indian land.
Sec. 104. Indian tribal justice technical and legal assistance.
Sec. 105. Tribal justice systems.
Sec. 106. Authorization of 99-year leases for the Prairie Band of 
              Potawatomi.
Sec. 107. Navajo healthcare contracting.
Sec. 108. Crow Tribal Trust Fund.
Sec. 109. Fallon Paiute-Shoshone Tribe Settlement Fund.
Sec. 110. ANCSA amendment.

   TITLE II--COWLITZ INDIAN TRIBE DISTRIBUTION OF JUDGMENT FUNDS ACT

Sec. 201. Cowlitz Indian Tribe Distribution of Judgment Funds Act.

[[Page S15979]]

Sec. 202. Definitions.
Sec. 203. Judgment distribution plan.
Sec. 204. Distribution and use of funds.

 TITLE III--ASSINIBOINE AND SIOUX TRIBES OF THE FORT PECK RESERVATION.

Sec. 301. Short title.
Sec. 302. Findings and purpose.
Sec. 303. Definitions.
Sec. 304. Distribution of judgment funds.
Sec. 305. Applicable law.

          TITLE IV--UTU UTU GWAITU PAIUTE INDIAN LAND TRANSFER

Sec. 401. Transfer.

     SEC. 2. DEFINITION OF SECRETARY.

       In this Act, the term ``Secretary'' means the Secretary of 
     the Interior.

 TITLE I--TECHNICAL AMENDMENTS AND OTHER PROVISIONS RELATING TO NATIVE 
                               AMERICANS

     SEC. 101. NATIONAL FUND FOR EXCELLENCE IN AMERICAN INDIAN 
                   EDUCATION.

       Title V of the Indian Self-Determination and Education 
     Assistance Act (25 U.S.C. 458bbb) is amended--
       (1) by striking the title heading and inserting the 
     following:

``TITLE V--NATIONAL FUND FOR EXCELLENCE IN AMERICAN INDIAN EDUCATION'';

       (2) in section 501 (25 U.S.C. 458bbb)--
       (A) by striking the section heading and inserting the 
     following:

     ``SEC. 501. NATIONAL FUND FOR EXCELLENCE IN AMERICAN INDIAN 
                   EDUCATION.'';

     and
       (B) in subsection (a), by striking ``the American Indian 
     Education Foundation'' and inserting ``a foundation to be 
     known as the `National Fund for Excellence in American Indian 
     Education' ''; and
       (3) in section 503(2) (25 U.S.C. 458bbb-2(2)), by striking 
     ``Foundation'' the second place it appears and inserting 
     ``National Fund for Excellence in American Indian 
     Education''.

     SEC. 102. INDIAN FINANCING ACT AMENDMENT.

       (a) Loan Guaranties and Insurance.--Section 201 of the 
     Indian Financing Act of 1974 (25 U.S.C. 1481) is amended--
       (1) by striking ``the Secretary is authorized (a) to 
     guarantee'' and inserting ``the Secretary may--
       ``(1) guarantee'';
       (2) by striking ``members; and (b) in lieu of such 
     guaranty, to insure'' and inserting ``members; or
       ``(2) to insure'';
       (3) by striking ``Sec. 201. In order'' and inserting the 
     following:

     ``SEC. 201. LOAN GUARANTIES AND INSURANCE.

       ``(a) In General.--In order''; and
       (4) by adding at the end the following:
       ``(b) Eligible Borrowers.--The Secretary may guarantee or 
     insure loans under subsection (a) to both for-profit and 
     nonprofit borrowers.''.
       (b) Loan Approval.--Section 204 of the Indian Financing Act 
     of 1974 (25 U.S.C. 1484) is amended by striking ``Sec. 204.'' 
     and inserting the following:

     ``SEC. 204. LOAN APPROVAL.''.

     SEC. 103. EXCHANGED INDIAN LAND.

       Notwithstanding any other provision of law, if--
       (1) any portion of the Indian country (as defined in 
     section 1151 of title 18, United States Code) under the 
     jurisdiction of an Indian tribe was subject to a government 
     taking for a project that received any funding under Public 
     Law 85-500;
       (2) the Indian tribe applies for land to be taken into 
     trust by the Federal Government; and
       (3) the Secretary of the Interior accepts the land into 
     trust on behalf of the Indian tribe;

     the land shall be deemed for all purposes to have been 
     acquired in trust as of the date of the taking.

     SEC. 104. INDIAN TRIBAL JUSTICE TECHNICAL AND LEGAL 
                   ASSISTANCE.

       Sections 106 and 201(d) of the Indian Tribal Justice 
     Technical and Legal Assistance Act (25 U.S.C. 3666, 3681(d)) 
     are amended by striking ``for fiscal years 2000 through 
     2004'' and inserting ``for fiscal years 2004 through 2010''.

     SEC. 105. TRIBAL JUSTICE SYSTEMS.

       Subsections (a), (b), (c), and (d) of section 201 of the 
     Indian Tribal Justice Act (25 U.S.C. 3621) are amended by 
     striking ``2007'' and inserting ``2010''.

     SEC. 106. AUTHORIZATION OF 99-YEAR LEASES FOR THE PRAIRIE 
                   BAND OF POTAWATOMI.

       (a) In General.--Subsection (a) of the first section of the 
     Act of August 9, 1955 (25 U.S.C. 415(a)) is amended in the 
     second sentence--
       (1) by inserting ``the reservation of the Prairie Band 
     Potawatomi Nation Reservation,'' after ``Spanish Grant'),''; 
     and
       (2) by inserting ``lands held in trust for the Prairie Band 
     Potawatomi Nation,'' before ``lands held in trust for the 
     Cherokee Nation of Oklahoma''.
       (b) Effective Date.--The amendments made by subsection (a) 
     apply to any lease entered into or renewed on or after the 
     date of enactment of this Act.

     SEC. 107. NAVAJO HEALTHCARE CONTRACTING.

       Congress authorizes the Navajo Area Office of the Indian 
     Health Service to reprogram contract healthcare service 
     dollars for the Navajo Health Foundation/Sage Memorial 
     Hospital 638 contract.

     SEC. 108. CROW TRIBAL TRUST FUND.

       Section 6(d) of the Crow Boundary Settlement Act of 1994 
     (25 U.S.C. 1776d(d)), is amended--
       (1) in the subsection heading, by inserting ``and Capital 
     Gains'' after ``Interest'';
       (2) in paragraph (1), by striking ``Only'' and inserting 
     ``Except as provided in paragraph (4), only''; and
       (3) by adding at the end the following:
       ``(4) Distribution of capital gains.--Notwithstanding 
     subsection (f) or any other provision of law, capital gains 
     and any other noninterest income received on funds in the 
     Crow Tribal Trust Fund shall be available for distribution by 
     the Secretary to the Crow Tribe to the extent that the 
     balance in the Crow Tribal Trust Fund (including capital 
     gains) exceeds $85,000,000, for the same uses and subject to 
     the same restrictions in paragraphs (1) and (3) as are 
     applicable to distributions of interest.''.

     SEC. 109. FALLON PAIUTE-SHOSHONE TRIBE SETTLEMENT FUND.

       Section 102 of the Fallon Paiute Shoshone Indian Tribes 
     Water Rights Settlement Act of 1990 (104 Stat. 3289) is 
     amended--
       (1) In subsection (C)--
       (A) in paragraph (1), by striking ``The income of the Fund 
     may be obligated and expended only for the following 
     purposes:'' and inserting the following: ``Notwithstanding 
     any conflicting provision in the original Fund plan developed 
     in consultation with the Secretary under subsection (f), 
     during fiscal year 2004 and each subsequent fiscal year, 6 
     percent of the average quarterly market value of the Fund 
     during the immediately preceding 3 fiscal years (referred to 
     in this title as the `Annual 6 percent Amount') may be 
     expended or obligated only for the purposes specified in 
     subparagraphs (a) through (f) of this section. In addition, 
     during each fiscal year subsequent to Fund fiscal year 2004, 
     any unexpended and unobligated portion of the Annual 6 
     percent Amount from any of the 3 immediately preceding Fund 
     fiscal years subsequent to fiscal year 2003, not including 
     any income that may accrue on that portion may also be 
     expended or obligated only for the following purposes:''; and
       (B) by striking paragraphs (2) through (4) and inserting 
     the following:
       ``(2) No monies from the Fund other than the amounts 
     authorized in subsection (C)(1) may be expended or obligated 
     for any purpose.
       ``(3) Notwithstanding any conflicting provision in the 
     original Fund plan, during fiscal year 2004 and each 
     subsequent fiscal year, not more than 20 percent of the 
     Annual 6 percent Amount for the fiscal year (referred to in 
     this title as the `Annual 1.2 percent Amount') may be 
     expended or obligated under subsection (c)(1)(C) for per 
     capita distributions to tribal members, provided that during 
     each Fund fiscal year subsequent to fiscal year 2004, any 
     unexpended and unobligated portion of the Annual 1.2 percent 
     Amount from any of the 3 immediately preceding Fund fiscal 
     years subsequent to fiscal year 2003, not including any 
     income that may accrue on that portion, may also be expended 
     or obligated for such per capita payments.''; and
       (2) in subsection (D), by adding at the end the following: 
     ``Notwithstanding any conflicting provision in the original 
     Fund plan, the Fallon Business Council, in consultation with 
     the Secretary, shall promptly amend the original plan for 
     purposes of conforming the plan to this title and making 
     nonsubstantive updates, improvements, or corrections to the 
     original plan.''.

     SEC. 110. ANCSA AMENDMENT.

       All land and interests in land in the State of Alaska 
     conveyed by the Federal Government under the Alaska Native 
     Claims Settlement Act (43 U.S.C. 1601 et seq.) to a Native 
     Corporation and reconveyed by that Native Corporation, or a 
     successor in interest, in exchange for any other land or 
     interest in land in the State of Alaska and located within 
     the same region (as defined in section 9(a) of the Alaska 
     Native Claims Settlement Act (43 U.S.C. 1608(a)), to a Native 
     Corporation under an exchange or other conveyance, shall be 
     deemed, notwithstanding the conveyance or exchange, to have 
     been conveyed pursuant to that Act.

   TITLE II--COWLITZ INDIAN TRIBE DISTRIBUTION OF JUDGMENT FUNDS ACT

     SEC. 201. COWLITZ INDIAN TRIBE DISTRIBUTION OF JUDGMENT FUNDS 
                   ACT.

       This title shall be known as the ``Cowlitz Indian Tribe 
     Distribution of Judgment Funds Act''.

      SEC. 202. DEFINITIONS.

       In this title:
       (1) Current judgment fund.--The term ``current judgment 
     fund'' means the funds awarded by the Indian Claims 
     Commission Docket No. 218 and all interest accrued on the 
     funds as of the date of enactment of this Act.
       (2) Initial interest.--The term ``initial interest'' means 
     the interest on the funds awarded by the Indian Claims 
     Commission Docket No. 218 during the time period from 1 year 
     before the date of enactment of this Act through the date of 
     enactment of this Act.
       (3) Principal.--The term ``principal'' means the funds 
     awarded by the Indian Claims Commission Docket No. 218 and 
     all interest accrued on the funds as of 1 year before the 
     date of enactment of this Act.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.
       (5) Tribe.--The term ``Tribe'' means the Cowlitzq Indian 
     Tribe of Washington, to which the Secretary extended Federal 
     recognition on December 31, 2001, under part 83 of title 25, 
     Code of Federal Regulations.

[[Page S15980]]

       (6) Tribal member.--The term ``tribal member'' means an 
     individual who is an enrolled member of the Cowlitz Indian 
     Tribe in accordance with tribal enrollment procedures and 
     requirements.
       (7) Tribal elder.--The term ``tribal elder'' means a tribal 
     member who was 62 years of age or older as of February 14, 
     2000.

      SEC. 203. JUDGMENT DISTRIBUTION PLAN.

       Notwithstanding the Indian Tribal Judgment Funds Use or 
     Distribution Act (25 U.S.C. 1401 et seq.), or any plan 
     prepared or promulgated by the Secretary under that Act, the 
     judgment funds awarded in Indian Claims Commission Docket No. 
     218 and interest accrued on those funds as of the date of 
     enactment of this Act shall be distributed and used in 
     accordance with this title.

      SEC. 204. DISTRIBUTION AND USE OF FUNDS.

       (a) Preservation of Principal After Elderly Assistance and 
     Tribal Administration Payments.--
       (1) In general.--Except as provided in subsection (b), the 
     principal shall not be distributed under this title.
       (2) Disbursements.--The Secretary shall--
       (A) maintain undistributed current judgment funds in an 
     interest-bearing account in trust for the Tribe; and
       (B) disburse principal or interest in accordance with this 
     title not later than 30 days after receipt by the Northwest 
     Regional Director of the Bureau of Indian Affairs of a 
     request by the Cowlitz Tribal Council for a disbursement of 
     funds.
       (b) Elderly Assistance Program.--
       (1) Setaside.--From the current judgment fund, the 
     Secretary shall set aside 20 percent for an elderly 
     assistance payment.
       (2) Payments.--The Secretary shall provide 1 elderly 
     assistance payment to each enrolled tribal elder not later 
     than 30 days after all of the following have occurred:
       (A) List of enrolled members.--The Cowlitz Tribal Council 
     has compiled and reviewed for accuracy a list of all enrolled 
     tribal members that are both a minimum of \1/16\ Cowlitz 
     blood and 62 years of age or older as of February 14, 2000.
       (B) Verification.--The Secretary has verified the blood 
     quantum and age of the tribal members identified on the list 
     under subparagraph (A).
       (C) Request for disbursement.--The Cowlitz Tribal Council 
     has made a request for disbursement of judgment funds for the 
     elderly assistance payment.
       (3) Death of tribal elder.--If a tribal elder eligible for 
     an elderly assistance payment dies before receiving payment 
     under this subsection, the funds that would have been paid to 
     the tribal elder shall be added to and distributed in 
     accordance with the emergency assistance program under 
     subsection (c).
       (4) Costs.--The Secretary shall pay all costs of 
     distribution under this subsection out of the amount set 
     aside under paragraph (1).
       (c) Emergency Assistance Program.--
       (1) Setaside.--From the principal, the Secretary shall set 
     aside 10 percent for an emergency assistance program.
       (2) Distribution of interest.--Beginning the second year 
     after the date of enactment of this Act, interest earned on 
     the amount setaside--
       (A) shall be distributed annually in a lump sum to the 
     Cowlitz Tribal Council; and
       (B) shall be used to provide emergency assistance for 
     tribal members.
       (3) Availability of interest.--Of the initial interest, 10 
     percent shall be available on the date of enactment of this 
     Act shall be used to fund the program for the first year 
     after the date of enactment of this Act.
       (d) Education, Vocational, and Cultural Training Program.--
       (1) Setaside.--From the principal, the Secretary shall set 
     aside 10 percent for an education, vocational, and cultural 
     training program.
       (2) Distribution of interest.--Beginning the second year 
     after the date of enactment of this Act, interest earned on 
     the amount setaside--
       (A) shall be distributed annually in a lump sum to the 
     Cowlitz Tribal Council; and
       (B) shall be used to provide scholarships to tribal members 
     pursuing educational advancement, including cultural and 
     vocational training.
       (3) Availability of interest.--Of the initial interest, 10 
     percent shall be available upon the date of enactment of this 
     Act to fund the program for the first year after the date of 
     enactment of this Act.
       (e) Housing Assistance Program.--
       (1) Setaside.--From the principal, the Secretary shall set 
     aside 5 percent for a housing assistance program.
       (2) Distribution of interest.--Beginning the second year 
     after the date of enactment of this Act, interest earned on 
     the amount set aside--
       (A) shall be disbursed annually in a lump sum to the 
     Cowlitz Tribal Council; and
       (B) shall be--
       (i) used as a supplement to any existing tribal housing 
     improvements program; or
       (ii) used in a separate housing assistance Program 
     established by the Cowlitz Tribal Council.
       (3) Availability of interest.--Of the initial interest, 5 
     percent shall be available on the date of enactment of this 
     Act to fund the program for the first year after the date of 
     enactment of this Act.
       (f) Economic Development, Tribal, and Cultural Centers.--
       (1) Setaside.--From the principal, the Secretary shall set 
     aside 21.5 percent--
       (A) for economic development; and
       (B) if other funding is not available or not adequate (as 
     determined by the Tribe), for the construction and 
     maintenance of tribal and cultural centers.
       (2) Distribution of interest.--Beginning the second year 
     after the date of enactment of this Act, interest earned on 
     the amount set aside--
       (A) shall be disbursed annually in a lump sum to the 
     Cowlitz Tribal Council; and
       (B) shall be used for--
       (i) property acquisition for business or other activities 
     that are likely to benefit the Tribe economically or provide 
     employment for tribal members;
       (ii) business development for the Tribe, including 
     collateralization of loans for the purchase or operation of 
     businesses, matching funds for economic development grants, 
     joint venture partnerships, and other similar ventures that 
     are likely to produce profits for the Tribe; and
       (iii) design, construction, maintenance, and operation of 
     tribal centers and cultural centers.
       (3) Loan repayment.--The principal and interest of any 
     business loan made under paragraph (2) shall be repaid to the 
     economic development program for reinvestments, and business 
     profits shall be credited to the general fund of the Tribe 
     for uses to be determined by the Cowlitz Tribal Council.
       (4) Availability of interest.-- 21.5 percent of the initial 
     interest available upon the date of enactment of this Act to 
     fund the program for the first year after the date of 
     enactment of this Act.
       (g) Natural Resources.--
       (1) Setaside.--From the principal, the Secretary shall set 
     aside 7.5 percent for natural resources.
       (2) Distribution of interest.--Beginning the second year 
     after the date of enactment of this Act, interest earned on 
     the amount set aside--
       (A) shall be disbursed annually in a lump sum to the 
     Cowlitz Tribal Council; and
       (B) may be added to any existing tribal natural resource 
     program to enhance the use and enjoyment by the Tribe of 
     existing and renewable natural resources on tribal land.
       (3) Availability of interest.--7.5 percent of the initial 
     interest shall be available upon the date of enactment of 
     this Act to fund the program for the first year after the 
     date of enactment of this Act.
       (h) Cultural Resources.--
       (1) Setaside.--From the principal, the Secretary shall set 
     aside 4 percent for cultural resources.
       (2) Distribution of interest.--Beginning the second year 
     after the date of enactment of this Act, interest earned on 
     the amount set aside--
       (A) shall be distributed annually in a lump sum to the 
     Cowlitz Tribal Council; and
       (B) shall be used to--
       (i) maintain artifacts;
       (ii) collect documents; and
       (iii) archive and identify cultural sites of tribal 
     significance.
       (3) Availability or interest.--Of the initial interest, 4 
     percent shall be available on the date of enactment of this 
     Act to fund the program for the first year after the date of 
     enactment of this Act.
       (i) Health.--
       (1) Setaside.--From the principal, the Secretary shall set 
     aside 21 percent for health.
       (2) Distribution of interest.--Beginning the second year 
     after the date of enactment of this Act, interest earned on 
     the amount set aside--
       (A) shall be disbursed annually in a lump sum to the 
     Cowlitz Tribal Council; and
       (B) shall be used for the health needs of the Tribe.
       (3) Availability of interest.--21 percent of the initial 
     interest shall be available on the date of enactment of this 
     Act to fund the program for the first year after the date of 
     enactment of this Act.
       (j) Tribal Administration Program.--
       (1) Setaside.--From the principal, the Secretary shall set 
     aside 21 percent for tribal administration.
       (2) Distribution of interest.--
       (A) Initial distribution.--Of the initial interest, 21 
     percent, and of the principal, the difference between 21 
     percent of the initial interest and $150,000, shall be set 
     aside and immediately disbursed to the Tribe for the purposes 
     of funding tribal administration for the first year after the 
     date of enactment of this Act.
       (B) Subsequent distribution.--Beginning the second year 
     after the date of enactment of this Act, interest earned on 
     the remaining principal set aside under this subsection shall 
     be disbursed annually in a lump sum to pay the operating 
     costs of the Cowlitz Tribal Council, including travel, 
     telephone, cultural, and other expenses incurred in the 
     conduct of the affairs of the Tribe and legal fees as 
     approved by the Cowlitz Tribal Council.
       (k) General Conditions.--
       (1) In general.--The conditions stated in this subsection 
     apply to the management and use of all funds available under 
     this title by the Cowlitz Tribal Council.
       (2) Administrative costs.--Not more than 10 percent of the 
     interest earned on the principal designated for the program 
     under any subsection, except the programs under subsections 
     (i) and (j), may be used for the administrative costs of the 
     program.
       (3) No service area.--
       (A) In general.--No service area is implied or imposed 
     under any program under this title.

[[Page S15981]]

       (B) Members outside service area.--If the costs of 
     administering any program under this Act for the benefit of 
     tribal members living outside the Tribe's Indian Health 
     Service area are greater than 10 percent of the interest 
     earned on the principal designated for that program, the 
     Cowlitz Tribal Council may authorize the expenditure of such 
     funds for that program.
       (3) Approval.--Before any expenditures, the Cowlitz Tribal 
     Council shall approve all programs and shall publish in a 
     publication of general circulation regulations that provide 
     standards and priorities for programs under this title.
       (4) Applicability of other law.--Section 7 of the Indian 
     Tribal Judgment Funds Use or Distribution Act (25 U.S.C. 
     1407) shall apply to funds available under this title.
       (5) Appeal.--
       (A) In general.--Any tribal member who believes that he or 
     she has been unfairly denied the right to take part in any 
     program under this title may appeal to the tribal secretary.
       (B) Resolution.--The tribal secretary shall bring the 
     appeal to the Cowlitz Tribal Council for resolution.
       (C) Timely response.--The resolution shall be made in a 
     timely manner, and the tribal secretary shall respond to the 
     tribal member.

  TITLE III--ASSINIBOINE AND SIOUX TRIBES OF THE FORT PECK RESERVATION

     SEC. 301. SHORT TITLE.

       This title may be cited as the ``Assiniboine and Sioux 
     Tribes of the Fort Peck Reservation Judgment Fund 
     Distribution Act of 2003''.

      SEC. 302. FINDINGS.

       Congress finds that--
       (1) on December 18, 1987, the Assiniboine and Sioux Tribes 
     of the Fort Peck Reservation and 5 individual Fort Peck 
     tribal members filed a complaint in the United States Claims 
     Court (currently the Court of Federal Claims) in the case of 
     Assiniboine and Sioux Tribes of the Fort Peck Reservation v. 
     United States of America, Docket No. 773-87-L, to recover 
     interest earned on trust funds while those funds were held in 
     special deposit accounts and Indian Moneys-Proceeds of Labor 
     accounts;
       (2) the Court held that the United States was liable for 
     any income derived from investment of the trust funds of the 
     Tribe and individual members of the Tribe for the period 
     during which those funds were held in special deposit 
     accounts and Indian Moneys-Proceeds of Labor accounts;
       (3) on December 31, 1998, the plaintiffs entered into a 
     settlement with the United States for claims made in the case 
     for payment by the United States of--
       (A) $1,339,415.33, representing interest earned on funds 
     while held in special deposit accounts at the Fort Peck 
     Agency during the period August 13, 1946, through September 
     30, 1981;
       (B) $2,749,354.41, representing--
       (i) interest on the principal indebtedness for the period 
     from August 13, 1946, through July 31, 1998; plus
       (ii) $364.27 in per diem interest on the principal 
     indebtedness for each day during the period commencing August 
     1, 1998, and ending on the date on which the judgment is 
     paid; and
       (C) $350,000, representing the litigation costs and 
     attorney's fees that the Tribe incurred to prosecute the 
     claims;
       (4) the terms of the settlement were approved by the Court 
     on January 8, 1999, and judgment was entered on January 12, 
     1999;
       (5) on March 18, 1999, $4,522,551.84 was transferred to the 
     Department of the Interior;
       (6) that judgment amount was deposited in an escrow account 
     established to provide--
       (A) $350,000 for the payment of attorney's fees and 
     expenses; and
       (B) $4,172,551.84 for pending Court-ordered distribution to 
     the Tribe and individual Indian trust beneficiaries;
       (7) on January 31, 2001, the Court approved a joint 
     stipulation that established procedures for--
       (A) identification of the class of individual Indians 
     having an interest in the judgment;
       (B) notice to and certification of that class; and
       (C) the distribution of the judgment amount to the Tribe 
     and affected class of individual Indians;
       (8)(A) on or about February 14, 2001, in accordance with 
     the Court-approved stipulation, $643,186.73 was transferred 
     to an account established by the Secretary for the benefit of 
     the Tribe; and
       (B) that transferred amount represents--
       (i) 54.2 percent of the Tribe's estimated 26-percent share 
     of the amount referred to in paragraph (6)(B); plus
       (ii) 50 percent of the Tribe's estimated 26-percent share 
     of interest and capital gains earned on the judgment amount 
     from the period beginning March 18, 1999, and ending on 
     December 31, 2000;
       (9) under the Court-approved stipulation--
       (A) that transferred amount is to remain available for use 
     by the Tribe in accordance with a plan adopted under the 
     Indian Tribal Judgment Funds Use or Distribution Act (25 
     U.S.C. 1401 et seq.);
       (B) the Tribe will most likely receive additional payments 
     from the distribution amount once the identification of all 
     individuals eligible to share in the distribution amount is 
     completed and the pro rata shares are calculated; and
       (C) those additional payments would include--
       (i) the balance of the share of the Tribe of the 
     distribution amount and investment income earned on the 
     distribution amount;
       (ii) the portion of the distribution amount that represents 
     income derived on funds in special deposit accounts that are 
     not attributable to the Tribe or any individual Indian; and
       (iii) the portion of the distribution amount that 
     represents shares attributable to individual Indians that--

       (I) cannot be located for purposes of accepting payment; 
     and
       (II) will not be bound by the judgment in the case referred 
     to in paragraph (1); and

       (10) under the Indian Tribal Judgment Funds Use or 
     Distribution Act (25 U.S.C. 1401 et seq.), the Secretary is 
     required to submit to Congress for approval an Indian 
     judgment fund use or distribution plan.

      SEC. 303. DEFINITIONS.

       In this title:
       (1) Court.--The term ``Court'' means the Court of Federal 
     Claims.
       (2) Distribution amount.--The term ``distribution amount'' 
     means the amount referred to in section 302(6)(B).
       (3) Judgment amount.--The term ``judgment amount'' means 
     the amount referred to in section 302(5).
       (4) Principal indebtedness.--The term ``principal 
     indebtedness'' means the amount referred to in section 
     302(3)(A).
       (5) Tribe.--The term ``Tribe'' means the Assiniboine and 
     Sioux Tribes of the Fort Peck Reservation.

      SEC. 304. DISTRIBUTION OF JUDGMENT FUNDS.

       (a) In General.--Notwithstanding any provision of the 
     Indian Tribal Judgment Funds Use or Distribution Act (25 
     U.S.C. 1401 et seq.), the share of the Tribe of the 
     distribution amount, and such additional amounts as may be 
     awarded to the Tribe by the Court with respect to the case 
     referred to in section 302(1) (including any interest accrued 
     on those amounts)--
       (1) shall be made available for tribal health, education, 
     housing, and social services programs of the Tribe, 
     including--
       (A) educational and youth programs;
       (B) programs for improvement of facilities and housing;
       (C) programs to provide equipment for public utilities;
       (D) programs to provide medical assistance or dental, 
     optical, or convalescent equipment; and
       (E) programs to provide senior citizen and community 
     services; and
       (2) shall not be available for per capita distribution to 
     any member of the Tribe.
       (b) Budget Specification.--The specific programs for which 
     funds are made available under subsection (a)(1), and the 
     amount of funds allocated to each of those programs, shall be 
     specified in an annual budget developed by the Tribe and 
     approved by the Secretary.

      SEC. 305. APPLICABLE LAW.

       Except as provided in section 304(a), all funds distributed 
     under this title are subject to sections 7 and 8 of the 
     Indian Tribal Judgment Funds Use or Distribution Act (25 
     U.S.C. 1407, 1408).

          TITLE IV--UTU UTU GWAITU PAIUTE INDIAN LAND TRANSFER

     SEC. 401. TRANSFER.

       Section 902(b) of the California Indian Land Transfer Act 
     (114 Stat. 2921) is amended--
       (1) by striking ``3,525.8'' and inserting ``3,765.8''; and
       (2) by adding at the end the following:
       ``(9) Utu utu gwaitu paiute tribe.--Lands to be held in 
     trust for the Utu Utu Gwaitu Paiute Tribe, Benton Paiute 
     Reservation are comprised of approximately 240 acres 
     described as follows:
       ``Mount Diablo Base and Meridian

                   ``Township 2 South, Range 31 East

       ``Section 11:
       ``SE\1/2\ and E\1/2\ of SW\1/4\.''.
                                 ______
                                 
      By Mrs. BOXER:
  S. 1956. A bill to provide assistance to States and nongovernmental 
entities to initiate public awareness and outreach campaigns to reduce 
teenage pregnancies; to the Committee on Health, Education, Labor, and 
Pensions.
  Mrs. BOXER. Mr. President, today, I am proud to introduce the HOPE 
Youth Pregnancy Prevention Act.
  While teen pregnancy rates in the United States have dropped 
significantly in the last decade, we still have one of the highest 
rates among industrialized nations. American teens are twice as likely 
to become pregnant as teenagers in Great Britain and four times more 
likely than teens in Sweden and France. At the same time, the teen 
pregnancy rates for Hispanic and other minority teens in the United 
States are significantly higher than the national average.
  The HOPE Youth Pregnancy Prevention Act would provide resources to 
help prevent teen pregnancy among at-risk and minority youth.
  Specifically, my bill would provide grants to States, localities, and 
non-

[[Page S15982]]

governmental organizations for teenage pregnancy prevention activities 
targeted to areas with large ethnic minorities and other at-risk youth. 
These grants could be used for a number of activities, including youth 
development, work-related interventions and other educational 
activities, parental involvement, teenage outreach and clinical 
services. The bill would authorize $30 million a year for five years 
for these grants.
  The bill would also provide grants to States and non-governmental 
organizations to establish multimedia public awareness campaigns to 
combat teenage pregnancy. These campaigns would aim to prevent teen 
pregnancy through TV, radio and print ads, billboards, posters, and the 
Internet. Priority would be given to those activities that target 
ethnic minorities and other at-risk youth. The bill would authorize $20 
million a year for 5 years.
  Over the past 10 years, we have made progress reducing teen 
pregnancy. But out work is not done. We need to strengthen our efforts, 
especially among Hispanic and other minority youth. I encourage my 
colleagues to support this effort.
                                 ______
                                 
      By Mr. BINGAMAN:
  S. 1957. A bill to authorize the Secretary of the Interior to 
cooperate with the States on the border with Mexico and other 
appropriate entities in conducting a hydrogeologic characterization, 
mapping, and modeling program for priority transboundary aquifers, and 
for other purposes; to the Committee on Energy and Natural Resources.
  Mr. BINGAMAN. Mr. President, today I am pleased to introduce the 
United States-Mexico Transboundary Aquifer Assessment Act.
  This bill is the result of a field hearing I conducted in Las Cruces, 
NM two years ago during my tenure as the Chairman of the Energy and 
Natural Resources Committee. The focus of the hearing was water 
resource issues that were developing along the U.S.-Mexico border--
particularly the area encompassing Las Cruces, El Paso, Texas, and 
Juarez, Mexico.
  There had long existed an ongoing effort to address water quality 
issues and waste-water infrastructure needs in the border region, but I 
was concerned that issues regarding the availability of future water 
supplies were growing. The testimony at that hearing made clear that 
there exists little consensus on how growing communities in the border 
region will address their future water needs. In particular, I was 
struck by the lack of agreement on the long-term viability of future 
groundwater sources, many of which involve aquifers underlying 
communities in both the United States and Mexico. Given the rapid 
population growth along the U.S.-Mexico border and the increasing 
demand for water, there is a strong need to gain a common understanding 
of the limits of our shared groundwater resources. A thorough 
understanding of the resource is the first step to avoiding conflicts 
similar to those that have arisen between the United States and Mexico 
over shared surface waters--e.g. the Rio Grande.
  The United States-Mexico Transboundary Assessment Act is intended to 
address the lack of binational consensus regarding the source and 
availability of future water supplies along the border. It will do this 
by establishing a scientific program, involving entities on both sides 
of the border, to comprehensively assess priority transboundary 
aquifers. The information and scientific tools developed by this 
program will be extremely valuable to State and local water resource 
managers in the border region. This effort is to be led by the United 
States Geological Survey (USGS) working closely with the border states 
and local entities. Over the last several years the USGS has been 
working with key stakeholders in the border region to design this 
technical program.
  I understand that establishing this scientific program and accurately 
assessing our shared water resources is just a step towards developing 
the long-term plans and solutions that will help avoid future 
international disputes concerning scarce water supplies. This small 
step, however, is an important one, and is recognized by a number of 
organizations familiar with the need for cooperative efforts between 
the United States and Mexico on shared water resources. In its 6th 
Report on the U.S.-Mexico Border Environment, the Good Neighbor 
Environmental Board, an independent federal advisory committee managed 
by the U.S. Environmental Protection Agency, recommended the initiation 
of a ``border-wide groundwater assessment program to systematically 
analyze priority trans-boundary aquifers.'' Also, the Center for 
Strategic and International Studies, in a January 2003 report of its 
U.S.-Mexico Binational Council, included as one of its recommendations 
that Mexico and the United States ``improve data collection, 
information gathering, and transparency as the first step to developing 
a long-term strategy for water management.''
  Ultimately, the necessary long-term strategy will have to be 
developed by the communities and other water users who reside along the 
border. Working with each other and their state water resource 
agencies, I believe successful strategies can be developed so long as 
the information that is the basis for the plans is the most accurate 
possible. In that respect, the USGS has a strong and important role to 
play. This bill will ensure that the USGS will be able to fulfill this 
role which, in turn, will enhance the prospects for our border 
communities to plan for their future and manage their growth in a 
manner that ensures their long-term viability and prosperity.
  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. 1957

       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 ``United States-Mexico 
     Transboundary Aquifer Assessment Act''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds that--
       (1) rapid population growth in the United States-Mexico 
     border region over the last decade has placed major strains 
     on limited water supplies in the region;
       (2) water quantity and quality issues are likely to be the 
     determining and limiting factors affecting future economic 
     development, population growth, and human health in the 
     border region;
       (3) increasing use of groundwater resources in the border 
     region by municipal and other water users has raised serious 
     questions concerning the long-term availability of the water 
     supply;
       (4) cooperation between the United States and Mexico in 
     assessing and understanding transboundary aquifers is 
     necessary for the successful management of shared groundwater 
     resources by State and local authorities in the United States 
     and appropriate authorities in Mexico, including management 
     that avoids conflict between the United States and Mexico;
       (5) while there have been some studies of binational 
     groundwater resources along the United States-Mexico border, 
     additional data and analyses are needed to develop an 
     accurate understanding of the long-term availability of 
     useable water supplies from transboundary aquifers; and
       (6) the Border States--
       (A) are primarily responsible for the management and 
     allocation of groundwater resources within the respective 
     boundaries of the Border States; and
       (B) should have a cooperative role in the analysis and 
     characterization of transboundary aquifers.
       (b) Purpose.--The purpose of this Act is to direct the 
     Secretary of the Interior to establish a United States-Mexico 
     transboundary aquifer assessment program to--
       (1) systematically assess priority transboundary aquifers; 
     and
       (2) provide the scientific foundation necessary for State 
     and local officials to address pressing water resource 
     challenges in the United States-Mexico border region.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Aquifer.--The term ``aquifer'' means a subsurface 
     water-bearing geologic formation from which significant 
     quantities of water may be extracted.
       (2) Border state.--The term ``Border State'' means each of 
     the States of Arizona, California, New Mexico, and Texas.
       (3) Indian tribe.--The term ``Indian tribe'' means an 
     Indian tribe, band, nation, or other organized group or 
     community--
       (A) that is recognized as eligible for the special programs 
     and services provided by the United States to Indians because 
     of their status as Indians; and
       (B) the reservation of which includes a transboundary 
     aquifer within the exterior boundaries of the reservation.
       (4) Priority transboundary aquifer.--The term ``priority 
     transboundary aquifer'' means a transboundary aquifer that 
     has been

[[Page S15983]]

     designated for study and analysis under the program.
       (5) Program.--The term ``program'' means the United States-
     Mexico transboundary aquifer assessment program established 
     under section 4(a).
       (6) Reservation.--The term ``reservation'' means land that 
     has been set aside or that has been acknowledged as having 
     been set aside by the United States for the use of an Indian 
     tribe, the exterior boundaries of which are more particularly 
     defined in a final tribal treaty, agreement, executive order, 
     Federal statute, secretarial order, or judicial 
     determination.
       (7) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior, acting through the Director of the United 
     States Geological Survey.
       (8) Transboundary aquifer.--The term ``transboundary 
     aquifer'' means an aquifer that underlies the boundary 
     between the United States and Mexico.
       (9) Tri-regional planning group.--The term ``Tri-Regional 
     Planning Group'' means the binational planning group 
     comprised of--
       (A) the Junta Municipal de Aqua y Saneamiento de Ciudad 
     Juarez;
       (B) the El Paso Water Utilities Public Service Board; and
       (C) the Lower Rio Grande Water Users Organization.
       (10) Water resources research institutes.--The term ``water 
     resources research institutes'' means the institutes within 
     the Border States established under section 104 of the Water 
     Resources Research Act of 1984 (42 U.S.C. 10303).

     SEC. 4. ESTABLISHMENT OF PROGRAM.

       (a) In General.--The Secretary, in consultation and 
     cooperation with the Border States, the Water Resources 
     Research Institutes, Sandia National Laboratories, and other 
     appropriate entities in the United States and Mexico, shall 
     carry out the United States-Mexico transboundary aquifer 
     assessment program to characterize, map, and model 
     transboundary groundwater resources along the United States-
     Mexico border at a level of detail determined to be 
     appropriate for the particular aquifer.
       (b) Objectives.--The objectives of the program are to--
       (1) develop and implement an integrated scientific approach 
     to assess transboundary groundwater resources, including--
       (A)(i) identifying fresh and saline transboundary aquifers; 
     and
       (ii) prioritizing the transboundary aquifers for further 
     analysis by assessing--
       (I) the proximity of the transboundary aquifer to areas of 
     high population density;
       (II) the extent to which the transboundary aquifer is used; 
     and
       (III) the susceptibility of the transboundary aquifer to 
     contamination;
       (B) evaluating all available data and publications as part 
     of the development of study plans for each priority 
     transboundary aquifer;
       (C) creating a geographic information system database to 
     characterize the spatial and temporal aspects of each 
     priority transboundary aquifer; and
       (D) using field studies, including support for and 
     expansion of ongoing monitoring and metering efforts, to 
     develop any additional data that are needed to define aquifer 
     characteristics to the extent necessary to enable the 
     development of groundwater flow models to assess sustainable 
     water yields for each priority transboundary aquifer;
       (2) expand existing agreements, as appropriate, between the 
     United States Geological Survey, the Border States, the Water 
     Resources Research Institutes, and appropriate authorities in 
     the United States and Mexico, to--
       (A) conduct joint scientific investigations;
       (B) archive and share relevant data; and
       (C) carry out any other activities consistent with the 
     program; and
       (3) produce scientific products for each priority 
     transboundary aquifer to provide the scientific information 
     needed by water managers and natural resource agencies on 
     both sides of the United States-Mexico border to effectively 
     accomplish the missions of the managers and agencies.
       (c) Designation of Certain Aquifers.--For purposes of the 
     program, the Secretary shall designate the Hueco Bolson and 
     Mesilla aquifers underlying parts of Texas, New Mexico, and 
     Mexico as priority transboundary aquifers.
       (d) Cooperation With Mexico.--To ensure a comprehensive 
     assessment of transboundary aquifers, the Secretary shall, to 
     the maximum extent practicable, work with appropriate Federal 
     agencies and other organizations to develop partnerships 
     with, and receive input from, relevant organizations in 
     Mexico to carry out the program.
       (e) Grants and Cooperative Agreements.--The Secretary may 
     provide grants or enter into cooperative agreements and other 
     agreements with the Water Resource Research Institutes and 
     other Border State entities to carry out the program.

     SEC. 5. STATE AND TRIBAL ROLE.

       (a) Coordination.--The Secretary shall coordinate the 
     activities carried out under the program with--
       (1) the appropriate water resource agencies in the Border 
     States; and
       (2) any affected Indian tribes.
       (b) New Activity.--After the date of enactment of this Act, 
     the Secretary shall not initiate any field studies to develop 
     data or develop any groundwater flow models for a priority 
     transboundary aquifer under the program before consulting 
     with, and coordinating the activity with, the Border State 
     water resource agency that has jurisdiction over the aquifer.

     SEC. 6. AUTHORIZATION OF APPROPRIATIONS.

       (a) In General.--There are authorized to be appropriated to 
     carry out this Act $50,000,000 for the period of fiscal years 
     2005 through 2014.
       (b) Distribution of Funds.--Of the amounts made available 
     under subsection (a), 50 percent shall be made available to 
     the Water Resource Research Institutes to provide funding to 
     appropriate entities in the Border States (including Sandia 
     National Laboratories, State agencies, universities, the Tri-
     Regional Planning Group, and other relevant organizations) 
     and Mexico to conduct activities under the program, including 
     the binational collection and exchange of scientific data.

     SEC. 7. REPORTS.

       Not later than 5 years after the date of enactment of this 
     Act, and on completion of the program in fiscal year 2014, 
     the Secretary shall submit to the appropriate water resource 
     agency in the Border States, an interim and final report, 
     respectively, that describes--
       (1) any activities carried out under the program;
       (2) any conclusions of the Secretary relating to the status 
     of transboundary aquifers; and
       (3) the level of participation in the program of entities 
     in Mexico.
                                 ______
                                 
      By Mr. DASCHLE (for Mr. Kerry (for himself and Mr. Kennedy)):
  S. 1958. A bill to prevent the practice of late trading by mutual 
funds, and for other purposes; to the Committee on Banking, Housing, 
and Urban Affairs.
  (At the request of Mr. Daschle, the following statement was ordered 
to be printed in the Record.)
 Mr. KERRY. Mr. President, as the world's largest economy, I 
believe the United States must have the fairest, most transparent and 
efficient financial markets in the world. Our financial services 
companies must live up to the highest standards of accountability. This 
is critical to ensure that the United States remains strong, 
competitive and safe in the global economy. Unfortunately, recent 
reports of late trading and market timing have brought into question 
whether mutual fund companies have lived up to the highest standards of 
accountability. They have also shown that the Bush Administration 
failed to provide effective oversight and examination of mutual fund 
companies, while poorly enforcing our securities laws. The inaction of 
the Bush Administration has dangerously eroded the trust and confidence 
of the American people in mutual funds and may have allowed mutual fund 
companies and big investors to engage in fraudulent behavior against 
individuals and pension funds.
  New York and Massachusetts regulators have uncovered a scheme in 
which some of America's top mutual fund companies let big investors 
profit illegally at the expense of small investors with so-called 
``late trades'' and ``market timing.'' The scam appears to be 
widespread. Today, roughly half of all American households own mutual 
funds either directly or through a retirement account or pension fund. 
It's been reported that as much as one quarter of mutual fund companies 
may be involved in late trading and market timing and that such schemes 
may cost investors as much as $5 billion annually.
  In a late trade, big investors purchase mutual fund shares after the 
close of the market but at the closing price, allowing them to take 
advantage of late-breaking financial news. A mutual fund manager might 
allow a big investor to buy shares in a technology fund at the 4 p.m. 
close price after learning at 5 p.m. that a major technology company 
has reported unexpectedly strong earnings. The investor is almost 
guaranteed a profit when the market opens the following day and share 
prices climb. In return for this illegal access, the big investor might 
pledge to continue to invest in the fund.
  Market timing exploits the unique way that mutual funds set their 
prices. While it is not illegal, most mutual fund companies assure 
investors that they discourage such practices and that they are working 
to prevent fund timing. Under a market timing trade, big investors 
trade in and out of certain mutual funds in order to exploit the 
inefficient way mutual funds price their shares and ensure a profit.
  In 2002, individuals who invested in mutual funds paid approximately 
$70 billion in advisory and management

[[Page S15984]]

fees, an average of more than $700 per investor. There is a significant 
disparity between the rate of advisory fees charged to mutual fund 
investors and the rate paid by institutional investors, even though 
they provide the similar services. Currently, mutual fund managers are 
under no obligation to negotiate advisory and management fees that are 
in the best interest of their shareholders. In some instances, mutual 
fund managers has a financial relationship with the contractor which 
receives a no-bid contract from the same mutual fund.
  In a September 2003 complaint, New York Attorney General Spitzer 
alleged that Canary Capital Partners, a New Jersey hedge fund, engaged 
in illegal and unethical trading in mutual funds, such as late trading 
and market timing. After the New York State complaint, the SEC ordered 
a preliminary investigation, which found that half of the 88 mutual 
fund companies and brokerage firms had arrangements to make market-
timing trades. These arrangements occurred even though about half of 
the fund companies have policies specifically barring market timing. 
Other investigations of mutual fund companies have begun, and it 
appears as though many mutual fund companies have been involved 
directly or indirectly in late trading and market-timing schemes.
  I am very concerned that the actions of the SEC in response to the 
State investigations of late trading and market timing have been 
inadequate and show a bias in favor of mutual fund companies at the 
expense of small investors.

  For example, earlier this year the SEC conducted a four-month 
investigation of Putnam Investments' record keeping, internal controls, 
and ability to comply with Federal securities laws. During that review, 
a Putnam employee informed the SEC that the company had failed to stop 
improper market-timing trades. Despite the tip, SEC examiners did not 
identify any problems with market timing in its report on Putnam. The 
Putnam employee, after being rejected by the SEC, brought the same 
information to the Massachusetts Secretary of State's office, which 
began an investigation. Only after the Commonwealth of Massachusetts 
began an investigation did the SEC begin its own investigation of 
market timing at Putnam. In October, both the Commonwealth of 
Massachusetts and the SEC charged Putnam with securities fraud, only 
months after the SEC gave Putnam a clean bill of health. Only a few 
weeks later, Putnam reached a partial settlement of the securities 
fraud charges with the SEC which did not include the Commonwealth of 
Massachusetts. Under the settlement, Putnam agrees to make restitution 
only for losses to investors attributable to excessive short-term and 
market-timing trading by its employees and to make structural reforms. 
Under the agreement, Putnam neither admitted nor denied wrongdoing and 
the SEC still has not investigated whether outside investors were 
engaged in market-timing activities. New York Attorney General Eliot 
Spitzer said that Putnam's agreement with the SEC does not address 
crucial issues involving restitution to fund holders, fees and 
penalties. William Galvin, the Massachusetts Secretary of State said 
that the agreement clearly demonstrates that the SEC is more interested 
in protecting the mutual fund industry than the average investor.
  These actions by the SEC highlight a fundamental problem in the Bush 
Administration's hands-off approach to regulating financial markets and 
the danger it poses to small investors and the national economy.
  Compounding this danger and lack of responsible leadership, President 
Bush has repeatedly nominated individuals to important economic 
positions notable for their corporate sympathies. The President 
selected a lobbyist for financial deregulation as the chief regulator 
of the federal mortgage lender Freddie Mac. His first SEC chairman was 
an accounting industry who was forced to resign in a storm of public 
outrage over his lenient treatment of his former business.
  Even after the accounting scandals that felled Enron and WorldCom, it 
was last year's Democratic Senate that pushed to enact an historic 
corporate reform law and the President who joined the effort only once 
its passage was all but ensured. It was state attorneys general who 
exposed dubious conflicts of interest at brokerage houses. And when 
energy companies gauged ratepayers in the West through questionable 
trades, the Administration sat on its hands for months.
  The message from the White House to the regulatory agencies, in 
actions if not words, is don't ask and don't tell when it comes to 
protecting investors and consumers.
  Justice demands that we fully prosecute Wall Street insiders that 
steal from Americans saving for retirement, education or simply a 
brighter future. And we can only hope to revive our economy if we 
restore investor confidence in the markets so that capital flows to 
business growth and job creation.
  To stop the erosion of trust in our financial markets and to help 
restore the American investor's faith in the mutual fund industry, I am 
introducing the Mutual Fund Investor Protection Act to update federal 
securities laws to curb late-trading and market-timing abuses and 
institute new limits on mutual fund fees paid by investors.
  The actions by the SEC show that it is incapable of protecting 
investors from securities fraud by mutual fund companies and will not 
prosecute this type of fraud to the full extent of the law. Therefore, 
we must take the day-to-day oversight of mutual funds away from the SEC 
and develop a new Mutual Fund Oversight Board to provide oversight, 
examination and enforcement of mutual funds. This new board will be 
similar to the Public Company Accounting Oversight Board developed in 
the Sarbanes-Oxley Act. It will be charged with identifying potential 
problems in the mutual fund industry and ensuring that fund boards are 
actively addressing these problems--before they spread. It would 
promulgate guidance regarding current regulatory issues and best 
practices regarding how to deal with them, and it would examine mutual 
funds to ensure that they are taking necessary steps to protect 
shareholders. The Board itself would determine how to provide an 
adequate and reliable source of funding for its investigations.

  I believe that every investor has the right to know how much their 
mutual fund takes away from their investment to pay for advisory, 
management, and investment service fees. Under this legislation, each 
investor will receive in their statement a regular accounting as to 
what types of fees they are paying to invest in their mutual fund. This 
will help investors shop around and find the mutual funds that have the 
lowest fees. Mutual funds will have to respond to the changing 
marketplace and only charge fees that are absolutely necessary to the 
management of the fund. Also, this legislation requires mutual fund 
managers to negotiate fee contracts that are reasonable and in their 
investors' best interest and to report on any significant or material 
business or professional relationship with companies that the mutual 
fund provides contracts. Finally, the bill requires each mutual fund to 
hire a compliance officer to ensure that the mutual fund complies with 
all relevant laws and makes sure that they provide any information on 
scams to the independent mutual fund directors to stop abuse. Taken 
together, these provisions will help investors by making it much more 
difficult for mutual funds to charge unreasonable and unnecessary fees.
  Today, mutual funds are valued once a day, called the Net Asset Value 
or NAV, usually at 4 p.m. EST, when the New York market closes. The 
bill will require that all mutual fund companies receive an order prior 
to the time the fund sets a share price or NAV for an investor to 
receive that day's price. This will make it much more difficult for big 
investors to use brokers to send in trades after the 4 p.m. deadline.
  We should include late-trading laws as an offense under the Racketeer 
Influenced and Corrupt Organization (RICO) provisions of the criminal 
code. First used to prosecute the Mob, RICO should now be used to stop 
and punish organized crime on Wall Street. This will help limit mutual 
fund employees and big investors from attempting to defraud small 
investors. It will also help investors who lose money due to late-
trading schemes to recover treble damages, costs and attorneys' fees.
  The SEC recently found that many mutual fund companies and brokerage

[[Page S15985]]

firms had arrangements with big investors allowing them to make market-
timing trades even though these fund companies have policies 
specifically barring market timing. My legislation bars mutual fund 
employees from engaging in market timing trades. It requires each 
mutual fund prospectus to explicitly disclose market-timing policies 
and procedures to stop abuse. Then, it increases penalties for mutual 
funds which do not follow their own policies and procedures to limit 
abuse.
  In order to help stop mutual fund abuse, this legislation increases 
the penalties and jail time for current securities laws including: 
defrauding the offer or sale of securities, failing to keep current and 
appropriate records of brokerage transactions, and not selling or 
redeeming fund shares at a price based on current Net Asset Value 
(NAV). These changes will make criminals think twice before committing 
violations of securities laws. The proceeds of the additional fines 
collected by this legislation will be put into a fund to assist the 
victims of their crimes.
  Today, individual mutual funds are effectively dominated by their 
advisers. My legislation strengthens the influence of independent 
directors on fund boards by requiring that independent directors 
comprise at least three-quarters of the board. It will also require 
mutual funds to have an independent chairman with the authority and 
ability to demand and receive all information from the fund advisory 
and management companies. This will increase the voice investors have 
in fund management and limit mutual fund abuses.
  By developing a new structure to provide appropriate oversight and 
enforcement mechanisms to fight abuse in the mutual fund industry, this 
legislation restores the confidence of investors in mutual funds. 
Ultimately, investor confidence will increase investment and enhance 
economic growth. I ask all my colleagues to support this 
legislation.
                                 ______
                                 
      By Mr. SARBANES (for himself, Ms. Landrieu, Ms. Mikulski, and Mr. 
        Allen):
  S. 1959. A bill to amend the Federal Water Pollution Control Act and 
the Water Resources Development Act of 1992 to provide for the 
restoration, protection, and enhancement of the environmental integrity 
and social and economic benefits of the Anacostia Watershed in the 
State of Maryland and the District of Columbia; to the Committee on 
Environment and Public Works.
  Mr. SARBANES. Mr. President, today I am introducing legislation to 
bolster efforts to restore the Anacostia River. Joining me in 
sponsoring this measure are my colleagues Senators Landrieu, Mikulski 
and Allen. A companion bill has also been introduced in the House, 
sponsored by Representative Eleanor Holmes Norton and other members of 
the Washington metropolitan area Congressional Delegation.
  Mr. President, the Anacostia River is a resource rich in history and 
with tremendous natural resources and recreational potential. It is 
homes to 43 species of fish, some 200 species of birds, as well as more 
than 800,000 people whose neighborhoods border the watershed. Flowing 
through Montgomery and Prince George's Counties in Maryland and 
emptying into the Potomac at the District of Columbia, the watershed 
consists of a 176-square-mile drainage area. One of the most urbanized 
watersheds in the United States, the Anacostia suffers a series of 
problems including trash, toxic pollution from urban runoff, sewage 
pollution from leaking sewer lines and combined sewer overflows, 
sediment pollution from erosion, and loss of fish and wildlife and 
recreational resources. It is a resource that has long been abused and 
neglected, but one that, in my view, can and must be protected and 
restored.
  Efforts to begin rejuvenating the Anacostia watershed began formally 
in 1987 when the State of Maryland, Montgomery and Prince George's 
Counties, and the District of Columbia signed an Anacostia Watershed 
Restoration Agreement. The agreement authorized the Washington Area 
Council of Governments, COG, to manage the restoration program and the 
Interstate Commission on the Potomac River Basin, ICPRB, to protect the 
resources and facilitate public participation. COG created an Anacostia 
Watershed Restoration Committee, AWRC, to coordinate and implement 
restoration projects throughout the watershed. Since that time, local, 
State, and Federal Government agencies, as well as the Anacostia 
Watershed Society, the Anacostia Citizens Advisory Committee and other 
environmental organizations and dedicated private citizens have 
contributed significant resources toward re-establishing the Anacostia 
watershed ecosystem.
  Thanks to this cooperative and coordinated Federal, State, local and 
private effort, we are beginning to make some progress in restoring the 
watershed. A Six Point Action Plan was signed in 1991 setting ambitious 
and broad-reaching goals for the river's restoration. In 1993 we 
celebrated the successful restoration of 32 acres of emergent tidal 
wetlands by the Army Corps of Engineers at Kenilworth marsh. The 
project has shown significant results in improving tidal water flow 
through the marsh, and reducing the concentration of nitrogen and 
phosphorus in the area and demonstrates what can be achieved in urban 
river restoration. There have been other success stories as well in 
urban stream restoration in Montgomery and Prince George's counties, 
removing barriers to fish passage and reforestation efforts throughout 
the watershed, to name only a few. In 1999, a new Anacostia Watershed 
Agreement was signed to strengthen the regional governmental commitment 
to Anacostia restoration. There are today more than 60 local, State and 
Federal agencies involved in Anacostia watershed restoration. And more 
than $100 million has been spent cleaning up the river. There is 
clearly much for which we can all be proud. But the job of restoring 
the Anacostia watershed is far from complete. The Anacostia is still 
one of North America's most endangered and threatened rivers. It is 
designated one of three ``regions of concern'' for toxics in the 
Chesapeake Bay watershed.
  The legislation which we are introducing authorizes more than $200 
million in Federal assistance over the next 10 years to restore the 
Anacostia. Of these funds, $170 million is authorized to address the 
biggest pollution problems in the watershed--stormwater runoff and 
failing wastewater infrastructure. As the builder of much of the 
original infrastructure and a major user, the Federal Government has an 
important responsibility to help stem the flow of this pollution and 
comply with the Clean Water Act. The remaining funds will allow the 
administrator of EPA, working together with an ``Anacostia Watershed 
Council'' of State and local officials, to develop a comprehensive 
environmental protection and resource management plan for the 
watershed, for several Federal agencies to join in the implementation 
of the plan.
  Mr. President, the Anacostia River suffers from centuries of impacts 
and changes. Once a healthy, thriving river, it is today severely 
degraded. This legislation is urgently needed if we are to achieve the 
goal of making the Anacostia and its tributaries swimmable and fishable 
again. I urge my colleagues to join me in supporting this measure and 
ask unanimous consent that a section-by-section analysis of the 
legislation be printed in the Record.
  There being no objection, the analysis was ordered to be printed in 
the Record, as follows:

Section-by-Section Analysis of the ``Anacostia Watershed Initiative Act 
                               of 2003''

       Section 1--Title--``The Anacostia Watershed Restoration Act 
     of 2003''
       Section 2--Findings--Describes the attributes and 
     challenges of the watershed, addresses the economic and 
     natural potential of the watershed to Maryland, DC and the 
     United States; relates the history of efforts to restore the 
     Anacostia River and watershed; and suggests that the 
     importance of the Anacostia River combined with the need for 
     concerted sustained actions among the affected jurisdictions, 
     requires the development of comprehensive environmental 
     protection and resource management action plan.
       Section 3--Anacostia Watershed Initiative--Amends Federal 
     Water Pollution Control Act (Clean Water Act) by adding a new 
     section 123 that:
       a. Provides definitions.
       b. Establishes the ``Anacostia Watershed Restoration 
     Initiative'' in the U.S. Environmental Protection Agency to 
     restore the environmental integrity of the Anacostia 
     watershed and plan and fund restoration improvements.

[[Page S15986]]

       c. Establishes the Anacostia Watershed Council (comprised 
     of the Administrator of the EPA, the Interior Secretary, the 
     Secretary of the Army, the Governor of Maryland, the Governor 
     of Virginia, the Mayor of the District of Columbia, and the 
     County Executives from Prince Georges and Montgomery 
     Counties) and provides minimum meeting requirements.
       d. Establishes objectives and guidelines for the 
     development, review and approval, within one year after 
     enactment, of a 10-year multi-jurisdictional Comprehensive 
     Action Plan for restoration of the Anacostia watershed. 
     Directs that the comprehensive action plan shall incorporate 
     the goals of the 1991 Anacostia Watershed Restoration 
     Agreement; provide for public input; identify annual 
     restoration targets, describe the duties of federal, state 
     and local agencies, and suggest methods, schedules, and 
     amounts of funding required for programs, activities, and 
     projects. Directs that the plan shall promote implementation 
     of a federally approved combined sewer long term control 
     plan. Allows the plan to be amended as appropriated.
       e. Requires the Anacostia Watershed Council to report 
     annually to the Congressional authorizing and appropriating 
     committees.
       f. Permits the Administrator, in consultation with the 
     Anacostia Watershed Council, to provide financial and 
     technical support to local public and non-profit entities to 
     develop and implement the Comprehensive Action Plan.
       g. Directs Under or Assistant Secretaries of the EPA, 
     Interior, Agriculture, Commerce, Army, HUD, and 
     Transportation acting through designed agencies to support 
     the Initiative and Comprehensive Action Plan.
       h. Provides that the Initiative shall not affect existing 
     obligations.
       i. Authorizes appropriations for fiscal years 2004-2013; 
     $3,000,000 to the Administrator for development and 
     implementation of the Initiative and $6,000,000 of which 
     shall be used by EPA, Interior, Agriculture, Commerce, 
     Transportation, HUD, and the Army; provided that not more 
     than 10 percent of these funds may be used for administrative 
     costs.
       Section 4--Water Infrastructure--Amends Section 219(f) of 
     the Water Resource Development Act to provide $150 million to 
     support upgrading the DC combined sewer and $20 million for a 
     program of assistance to non-federal entities to address 
     other water quality issues.
                                 ______
                                 
      By Mrs. BOXER:
  S. 1960. A bill to exempt airports in economically depressed 
communities from matching grant obligations under the Airport 
Improvement Program; to the Committee on Commerce, Science, and 
Transportation.
  Mrs. BOXER. Mr. President, last summer I visited Del Norte County--in 
the most northern part of my State. Del Norte County has been hit 
particularly hard during these tough economic times. Unemployment in 
the county tops 7.6 percent. Local officials are working hard to 
revitalize the economy, and one of their top priorities is to renovate 
Del Norte County's airport. And they would like federal assistance.
  However, under the federal Airport Improvement Program, federal 
grants must be matched with local funds. In general, I support that 
policy. But, for communities facing severe economic problems, this 
match is prohibitive. It's a bit of a Catch-22. The Federal funds that 
would help the local economy rebound are not available because the 
local economy is in such bad shape that the community can't match the 
federal grants.
  The bill that I am introducing today would address this by 
eliminating the match required under the Airport Improvement Program 
for economically depressed communities.
  To be considered an economically depressed community, a community 
would have a variety of ways to quality. First, for the last two years, 
the unemployment rate could be one percent higher than the nation's 
unemployment rate. Second, the per capita income of the community could 
be 80 percent or less of the nation's per capita income. Or third, the 
Secretary of Transportation could decide that a particular community 
had a special needs. These criteria are consistent with other 
provisions of federal law.
  I believe that by waiving the matching grant in communities that have 
a high unemployment rate or low per capita income, we will help to 
rejuvenate their business climate and reinvigorate their local 
economies.
  With a little bit of help, I am very optimistic about the future of 
Del Norte County and other areas in California and across the Nation 
that are facing tough economic times. This bill will provide that 
little bit of help.
                                 ______
                                 
      By Mr. HOLLINGS (for himself, Ms. Collins, Mr. Carper, Mr. 
        Specter, Mr. Jeffords, Mr. Lautenberg, and Mr. Biden):
  S. 1961. A bill to provide for the revitalization and enhancement of 
the American passenger and freight rail transportation system; to the 
Committee on Commerce, Science, and Transportation.
  Mr. HOLLINGS. Mr. President, I rise today to introduce the American 
Railroad Revitalization, Investment, and Enhancement Act of the 21st 
Century, better known as ``ARRIVE-21.'' This legislation is of vital 
importance to rail transportation because it provides steady, 
dependable funding for our beleaguered national passenger rail system. 
It also provides funding for infrastructure investment in the railroad 
industry as a whole, including freight railroads. And it establishes a 
financing mechanism to ensure that our rail system benefits from a 
steady stream of funding, just like our airline industry, our transit 
systems, and our national highway system.
  For the past 30 years, Amtrak has provided us with a valuable public 
service, even though it was forced year after year to come beg for 
money from the Congress. And year after year, the Congress gave it just 
enough money to barely survive another 12 months. Sometimes Congress 
didn't appropriate even enough money to last 12 months, and Amtrak had 
to come back and beg for a supplemental appropriation just to remain in 
business until the end of the fiscal year. Never mind having enough 
money to grow the railroad; never mind having enough money to run a 
first-class passenger railroad. And never mind having enough money to 
keep the infrastructure in a state of good repair. All Amtrak has been 
able to do for 30 years is stay alive. It's time to give Amtrak the 
tools and funding it needs to do the job we keep asking it to do.
  Last year I introduced the National Defense Rail Act of 2002 which 
was approved by the Senate Commerce Committee by a vote of 20-3. We 
have shown that bipartisan support exists for authorizing a strong rail 
program, however the main obstacle we have faced has been securing 
funding to live up to the authorized amounts. This legislation attempts 
to address the lack of a guaranteed revenue stream for passenger rail 
programs and establishes a framework to address freight needs where 
there is a clear public benefit.
  It's a foregone conclusion that transportation development requires 
money. We somehow figured this out a long time ago with regard to every 
other mode of transportation. We federally funded the development of 
the interstate highway system; we subsidized airport construction; we 
dredged harbors and channels; and we built locks and dams. And the 
result of all that investment is that our citizens and our goods can 
move across the country, from big cities and from small towns, 
efficiently and relatively cheaply. We have today a national 
transportation system with many impressive components.
  You might even say we have been a little too successful with these 
modes of transportation because many of them are now strained to 
capacity in many areas of the country. This situation presents not only 
an economic dilemma, but also a genuine security risk. The atrocious 
events of September 11th, and the aftermath that followed, exposed the 
vulnerability of our society and our economy when transportation 
choices become limited and our mobility is diminished. Effective 
transportation security means that, as a Nation, we nurture all 
transportation options and we do not allow ourselves to be overly 
dependent on only one or two particular modes. In effect, that's what 
we have done by favoring highways and aviation, where we have directed 
the flow of billions of dollars. Ironically, rail passenger service is 
more environmentally-friendly, more fuel-efficient, and more capable of 
mitigating the impacts of population congestion to help foster regional 
economic growth than any of the other modes. But in the process of 
shoring up those other transportation modes for all those years, we 
lost our focus on passenger rail and we sadly neglected investing in 
its development.
  For passenger rail to be successful, its infrastructure must be 
developed through the kind of bold Federal leadership we exercised for 
our other modes of transportation. That's why my colleagues and I are 
pleased to introduce this landmark piece of legislation designed to 
change the way we think

[[Page S15987]]

about financing passenger rail service and designed to grow our 
passenger rail system into the world-class system it should be. The 
bill creates Federal/State and public/private partnerships to promote 
infrastructure development for both freight and passenger rail. It 
provides $20-$25 billion in grants over six years to States and State 
compacts for rail capital projects to provide for a safe, secure, and 
efficient rail transportation system. It enhances Federal and State 
rail transportation policy, and it promotes intermodal transportation 
investment.
  ARRIVE-21 creates a non-profit Rail Infrastructure Finance 
Corporation (RIFCO) to issue $30 billion in tax-credit bonds over six 
years for the purpose of providing grants to States for capital 
investment in freight and passenger rail infrastructure and facilities. 
RIFCO will establish a trust account made up of bond proceeds and 
contributions from States that receive RIFCO grants. Bond proceeds and 
State contributions in excess of the amount required to maintain the 
trust account will then be available for grants to the States through a 
competitive process.
  Although my first choice would be to fully fund the needs authorized 
in this legislation by straight federal spending, it has become clear 
that over the last thirty years that there is no pot of gold at the end 
of the rainbow when it comes to Amtrak. There is not enough money in 
the scant pot available for discretionary spending on transportation 
programs. We have established dedicated trust funds for the airlines 
with their ticket taxes, and we have the trust fund for the highways 
and transit programs which are funded through the gas tax, but when it 
comes to passenger railroads, there is no such revenue stream. The 
establishment of RIFCO was not my first choice to finance the publicly 
needed improvements of the railroad system, but it is an option for the 
Congress to debate and consider as we attempt to address what we need 
the rail system to do for this country.
  RIFCO is set up to assist the States fund both passenger and freight 
projects that benefit the public on a State, regional or national 
basis. State or State compacts may apply for RIFCO funds for 
discretionary and formula funds for capital projects in four 
categories: State Intercity Passenger Rail Corridor Development, 
including equipment, stations, and facilities. State Freight Rail 
Infrastructure Development Projects, including capital projects that 
primarily benefit freight rail transportation. States may use a 
percentage of these formula funds to manage State rail programs. 
National System Improvement Projects, including projects that 
significantly benefit the national passenger rail system, Amtrak-
sponsored projects and Northeast Corridor projects. High Priority 
Projects, including projects with major public policy benefits to the 
national rail system or significantly expand rail intermodal capacity 
in connection with maritime, aviation, and highway facilities.
  Eligible capital projects would include new rail line development, 
planning and environmental reviews, track upgrades and restoration, 
highway-rail grade crossing improvements and eliminations, relocation 
of track, infrastructure and facilities, construction of intermodal 
facilities and passenger rail stations, tunnel and bridge repairs, 
communication and signaling improvements, environmental impact 
mitigation, acquisition of passenger rail equipment, and security 
improvements. Projects to receive discretionary funding would be 
selected by RIFCO according to selection criteria contained in the 
bill. The projects would require a 20 percent non-Federal contribution 
paid to RIFCO for bond repayment.
  ARRIVE-21 also directs the Federal Railroad Administration to develop 
a National Rail Plan and to work with States in developing State rail 
plans, so that we have a comprehensive and coordinated long-range plan 
for rail development for the whole country. The bill also directs the 
Office of Intermodalism in the Department of Transportation to create a 
``50-Year Blueprint'' for the development of a national intermodal 
transportation system and provide a vision of emerging trends and 
opportunities for the future of passenger and freight rail 
transportation.
  Before I close, I would be remiss if I did not recognize the work of 
Nancy Lummens Lewis, a detailee from the Federal Railroad 
Administration, who has worked on the Commerce Committee since January. 
We have appreciated her professionalism, competency, and her 
willingness to work and share her time with us. I thank Nancy for her 
time spent on this bill, as well as her efforts on the reauthorization 
of the Transportation Equity Act of the 21st Century, The Federal 
Railroad Safety Improvement Act, and The Surface Transportation Board 
Act of 2003. We wish her well in her future endeavors.
  ARRIVE-21 presents a smart and efficient solution to a very important 
transportation dilemma. I am joined by several of my colleagues, 
including Senators Collins, Specter, Carper and Jeffords, in 
introducing this bipartisan legislation. As we have passed legislation 
this week providing approximately $15 billion annually for aviation for 
the next 4 years, and plan to take up a highway bill next year which 
will spend $40 to $60 billion annually on highways and transit over six 
years, we must not leave rail out. It is critical that the Senate take 
this bill up, and pass it, to ensure that our railroad transportation 
system, especially our passenger rail system, can grow and develop to 
meet our current and future transportation needs.
  Attached is an amendment that the sponsors of ARRIVE-21 intend to 
offer during floor consideration of the bill. I ask unanimous consent 
that the amendment and the text of the bill be printed in the Record.
  There being no objection, the amendment and the bill was ordered to 
be printed in the Record, as follows:


                               amendment

            TITLE VIII--RAIL INFRASTRUCTURE TAX CREDIT BONDS

     SEC. 801. CREDIT TO HOLDERS OF QUALIFIED RAIL INFRASTRUCTURE 
                   BONDS.

       (a) In General.--Part IV of subchapter A of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to credits 
     against tax) is amended by adding at the end the following 
     new subpart:

    ``Subpart H--Nonrefundable Credit for Holders of Qualified Rail 
                          Infrastructure Bonds

``Sec. 54. Credit to holders of qualified rail infrastructure bonds.

     ``SEC. 54. CREDIT TO HOLDERS OF QUALIFIED RAIL INFRASTRUCTURE 
                   BONDS.

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds a qualified rail infrastructure bond on a credit 
     allowance date of such bond which occurs during the taxable 
     year, there shall be allowed as a credit against the tax 
     imposed by this chapter for such taxable year an amount equal 
     to the sum of the credits determined under subsection (b) 
     with respect to credit allowance dates during such year on 
     which the taxpayer holds such bond.
       ``(b) Amount of Credit.--
       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any credit allowance 
     date for a qualified rail infrastructure bond is 25 percent 
     of the annual credit determined with respect to such bond.
       ``(2) Annual credit.--The annual credit determined with 
     respect to any qualified rail infrastructure bond is the 
     product of--
       ``(A) the applicable credit rate, multiplied by
       ``(B) the outstanding face amount of the bond.
       ``(3) Applicable credit rate.--For purposes of paragraph 
     (2), the applicable credit rate with respect to an issue is 
     the rate, equal to an average market yield (as of the day 
     before the date of sale of the issue) on outstanding long-
     term corporate debt obligations (determined under regulations 
     prescribed by the Secretary).
       ``(4) Credit allowance date.--For purposes of this section, 
     the term `credit allowance date' means--
       ``(A) March 15,
       ``(B) June 15,
       ``(C) September 15, and
       ``(D) December 15.

     Such term includes the last day on which the bond is 
     outstanding.
       ``(5) Special rule for issuance and redemption.--In the 
     case of a bond which is issued during the 3-month period 
     ending on a credit allowance date, the amount of the credit 
     determined under this subsection with respect to such credit 
     allowance date shall be a ratable portion of the credit 
     otherwise determined based on the portion of the 3-month 
     period during which the bond is outstanding. A similar rule 
     shall apply when the bond is redeemed.
       ``(c) Limitation Based on Amount of Tax.--The credit 
     allowed under subsection (a) for any taxable year shall not 
     exceed the excess of--
       ``(1) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(2) the sum of the credits allowable under this part 
     (other than this subpart and subpart C).

[[Page S15988]]

       ``(d) Credit Included in Gross Income.--Gross income 
     includes the amount of the credit allowed to the taxpayer 
     under this section (determined without regard to subsection 
     (e)) and the amount so included shall be treated as interest 
     income.
       ``(c) Qualified Rail, Infrastructure Bond.--For purposes of 
     this part, the term `qualified rail infrastructure bond' 
     means any bond issued as part of an issue if--
       ``(1) the bond is issued by the Rail Infrastructure Finance 
     Corporation and is in registered form,
       ``(2) the term of each bond which is part of such issue 
     does not exceed 20 years,
       ``(3) the payment of principal with respect to such bond is 
     the obligation of the Rail Infrastructure Finance Corporation 
     and not an obligation of the United States,
       ``(4) all proceeds from the sale of the issue are used for 
     the purposes set forth in section 507(c)(5) of the Arrive 21 
     Act, and
       ``(5) 95 percent or more of the net spendable proceeds from 
     the sale of such issue are to be used for expenditures 
     incurred after the date of enactment of this section for any 
     qualified project described in section 601, 602, or 603 of 
     the Arrive 21 Act subject to the limitations established by 
     that Act.
       ``(f) Special Rules Relating to Net Spendable Proceeds.--
       ``(1) In general.--Subject to paragraph (2), an issue shall 
     be treated as meeting the requirements of this subsection if, 
     as of 6 years after the date of issuance, the issuer 
     reasonably expects--
       ``(A) to award grants under sections 501, 502, and 503 of 
     the Arrive 21 Act in a total amount that is at least 95 
     percent of the net spendable proceeds of the issue for 1 or 
     more qualified projects within the 6-year period beginning on 
     such date,
       ``(B) to incur a binding commitment with a third party--
       ``(i) to spend at least 10 percent of the net spendable 
     proceeds of the issue, or to commence construction, with 
     respect to such projects within the 12-month period beginning 
     on such date, and
       ``(ii) to proceed with due diligence to complete such 
     projects, and
       ``(C) to expend the total amount of the net spendable 
     proceeds of the issue.
       ``(2) Rules regarding continuing compliance after 6-year 
     determination.--If at least 95 percent of the net spendable 
     proceeds of the issue is not awarded as grants to be expended 
     for 1 or more qualified projects within the 6-year period 
     beginning 6 years after the date of issuance, but the 
     requirements of paragraph (1) are otherwise met, an issue 
     shall be treated as continuing to meet the requirements of 
     paragraph (1) if either the requirement under subparagraph 
     (A) or the requirements under subparagraph (B) are met, as 
     follows:
       ``(A) The issuer uses all unspent proceeds from the sale of 
     the issue to redeem bonds of the issue within 90 days after 
     the end of such 6-year period and disburses any remaining net 
     spendable proceeds to the Secretary of Treasury within 30 
     days after the end of such 6-year period.
       ``(B) The issuer--
       ``(i) awards in grants under sections 501, 502, and 503 of 
     the Arrive 21 Act at least 75 percent of the net spendable 
     proceeds of the issue for 1 or more qualified projects within 
     the 6-year period beginning 6 years after the date of 
     issuance, and
       ``(ii) awards in grants under sections 501, 502, and 503 of 
     the Arrive 21 Act at least 95 percent of the net spendable 
     proceeds of the issue for 1 or more qualified projects within 
     the 7-year period beginning 6 years after the date of 
     issuance.
       ``(g) Recapture of Portion of Credit Where Cessation of 
     Compliance.--
       ``(1) In general.--If any bond which when issued purported 
     to be a qualified rail infrastructure bond ceases to be such 
     a qualified bond, the issuer shall pay to the United States 
     (at the time required by the Secretary) an amount equal to 
     the sum of--
       ``(A) the aggregate of the credits allowable under this 
     section with respect to such bond (determined without regard 
     to subsection (c)) for taxable years ending during the 
     calendar year in which such cessation occurs and the 2 
     preceding calendar years, and
       ``(B) interest at the underpayment rate under section 6621 
     on the amount determined under subparagraph (A) for each 
     calendar year for the period beginning on the first day of 
     such calendar year.
       ``(2) Nonculpable disqualifications.--If a qualified rail 
     infrastructure bond ceases to qualify as such a bond due to 
     action taken by the recipient of a grant made under section 
     601, 602, or 603 of the Arrive 21 Act, the issuer may seek 
     compensation under paragraph (1) of this subsection.
       ``(h) Rail Infrastructure Finance Trust.--
       ``(i) In general.--The following amounts shall be held in a 
     trust account by the Rail Infrastructure Finance Corporation:
       ``(A) An amount of the proceeds from the sale of all bonds 
     designated for purposes of this section that, when combined 
     with amounts described in subparagraphs (B), (C), and (D), is 
     sufficient--
       ``(i) to ensure the Corporation's ability to redeem all 
     bonds upon maturity; and
       ``(ii) to pay the administrative expenses of the 
     Corporation and the Rail Infrastructure Finance Trust.
       ``(B) The amount of any on-Federal contributions required 
     under section 604(b) of the Arrive 21 Act.
       ``(C) The temporary period investment earnings on proceeds 
     from the sale of such bonds.
       ``(D) Any earnings on any amounts described in subparagraph 
     (A), (B), or (C).
       ``(2) Use of funds.--Amounts in the trust account may be 
     used only for investment purposes to generate sufficient 
     funds to redeem qualified rail infrastructure bonds at 
     maturity and pay the administrative expenses of the 
     Corporation and the Trust.
       ``(3) Use of remaining funds on trust account.--If the 
     Corporation determines that the amount in the trusts account 
     exceeds the amount required to comply with paragraph (2), the 
     Corporation may transfer the excess to the Rail 
     Infrastructure Investment account to be available for 
     awarding grants as provided for in section 507(c)(5)(B) of 
     the Arrive 21 Act.
       ``(4) Reversion of remaining proceeds.--Upon retirement of 
     all bonds issued by the Corporation, any remaining proceeds 
     from the sale of such bonds shall be covered into the general 
     fund of the Treasury of the United States as miscellaneous 
     receipts.
       ``(i) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Bond.--The term `bond' includes any obligation.
       ``(2) Net spendable proceeds.--The terms `net spendable 
     proceeds' has the meaning give such term in section 507(c)(6) 
     of the Arrive 21 Act.
       ``(3) Qualified project.--The term `qualified project' 
     means any project that is eligible for grant funding under 
     section 601, 602, or 603 of the Arrive 21 Act.
       ``(4) Partnership; s corporation; and other pass-thru 
     entities.--Under regulations prescribed by the Secretary, in 
     the case of a partnership, trust, S corporation, or other 
     pass-thru entity, rules similar to the rules of section 41(g) 
     shall apply with respect to the credit allowable under 
     subsection (a).
       (5) Bonds held by regulated investment companies.--If any 
     qualified rail infrastructure bond is held by a regulated 
     investment company, the credit determined under subsection 
     (a) shall be allowed to shareholders of such company under 
     procedures prescribed by the Secretary.
       ``(6) Reporting.--Issuers of qualified rail infrastructure 
     bonds shall submit reports similar to the reports required 
     under section 149(e).''.
       (b) Amendments to Other Code Sections.--
       (1) Reporting.--Subsection (d) of section 6049 of the 
     Internal Revenue Code of 1986 (relating to returns regarding 
     payments of interest) is amended by adding at the end the 
     following new paragraph:
       ``(8) Reporting of credit on qualified rail infrastructure 
     bonds.--
       ``(A) In general.--For purposes of subsection (a), the term 
     `interest' includes amounts includible in gross income under 
     section 54(d) and such amounts shall be treated as paid on 
     the credit allowance date (as defined in section 54(b)(4)).
       ``(B) Reporting to corporations, etc.--Except as otherwise 
     provided in regulations, in the case of any interest 
     described in subparagraph (A), subsection (b)(4) shall be 
     applied without regard to subparagraphs (A), (H), (I), (J), 
     (K), and (L)(i) of such subsection.
       ``(C) Regulatory authority.--The Secretary may prescribe 
     such regulations as are necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations which 
     require more frequent or more detailed reporting.''.
       (2) Treatment for estimated tax purposes.--
       (A) Individual.--Section 6654 of such Code (relating to 
     failure by individual to pay estimated income tax) is amended 
     by redesignating subsection (m) as subsection (n) and by 
     inserting after subsection (l) the following new subsection:
       ``(m) Special Rule for Holders of Qualified Rail 
     Infrastructure Bonds.--For purposes of this section, the 
     credit allowed by section 54 to a taxpayer by reason of 
     holding a qualified rail infrastructure bond on a credit 
     allowance date shall be treated as if it were a payment of 
     estimated tax made by the taxpayer on such date.''.
       (B) Corporate.--Section 6655 of such Code (relating to 
     failure by corporation to pay estimated income tax) is 
     amended by adding at the end of subsection (g) the following 
     new paragraph:
       ``(5) Special rule for holders of qualified rail 
     infrastructure bonds.--For purposes of this section, the 
     credit allowed by section 54 to a taxpayer by reason of 
     holding a qualified rail infrastructure bond on a credit 
     allowance date shall be treated as if it were a payment of 
     estimated tax made by the taxpayer on such date.''.
       (c) Clerical Amendments.--
       (1) The table of subparts for part IV of subchapter A of 
     chapter 1 is amended by adding at the end the following new 
     item:

``Subpart H. Nonrefundable Credit for Holders of Qualified Rail 
              Infrastructure Bonds.''.

       (2) Section 6401(b)(1) is amended by striking ``and G'' and 
     inserting ``G, and H''.

     SEC. 802. ISSUANCE OF REGULATIONS.

       The Secretary of the Treasury shall issue regulations 
     required under section 54 of the Internal Revenue Code of 
     1986 not later than 90 days after the date of the enactment 
     of this Act.

     SEC. 803. EFFECTIVE DATE.

       The amendments made by section 701 shall apply to 
     obligations issued after the date of enactment of this Act.
       On page 3, at the end of the matter appearing before line 
     1, insert the following:

[[Page S15989]]

            Title VIII--Rail Infrastructure Tax Credit Bonds

Sec. 801. Credit to holders of qualified rail infrastructure bonds.
Sec. 802. Issuance of regulations.
Sec. 803. Effective date.

                                S. 1961

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``American 
     Railroad Revitalization, Investment, and Enhancement Act of 
     the 21st Century'' or the ``Arrive 21 Act''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Amendment of title 49, United States Code.
Sec. 3. Purposes.

                 TITLE I--RAIL TRANSPORTATION SECURITY

Sec. 101. Rail transportation security risk assessment.
Sec. 102. Certain personnel limitations not to apply.

                     TITLE II--FEDERAL RAIL POLICY

Sec. 201. Federal rail policy enhancement.
Sec. 202. Rail cooperative research program.
Sec. 203. State rail plans.
Sec. 204. Interstate railroad passenger high-speed transportation 
              policy.
Sec. 205. High-speed rail corridor planning.
Sec. 206. Designated high-speed rail corridors.
Sec. 207. Rehabilitation, improvement, and security financing.
Sec. 208. Repayment of loan to National Railroad Passenger Corporation.

                      TITLE III--INTERMODAL POLICY

Sec. 301. 50-year intermodal blueprint.
Sec. 302. Intermodal transportation policy.

                    TITLE IV--AMTRAK AUTHORIZATIONS

Sec. 401. National Railroad Passenger Transportation system defined.
Sec. 402. Restructuring of long-term debt and capital leases.
Sec. 403. General Amtrak authorizations.
Sec. 404. Excess railroad retirement.
Sec. 405. Authorizations for environmental compliance and station 
              improvements.
Sec. 406. Tunnel life safety.
Sec. 407. Authorization for capital and operating expenses.
Sec. 408. Establishment of grant process.
Sec. 409. State-supported routes.
Sec. 410. Re-establishment of Northeast Corridor Safety Committee.
Sec. 411. Amtrak board of directors.
Sec. 412. Establishment of financial accounting system for Amtrak 
              operations by independent auditor.
Sec. 413. Development of 5-year financial plan.
Sec. 414. Independent auditor to establish methodologies for Amtrak 
              route and service planning decisions.
Sec. 415. Metrics and standards.
Sec. 416. On-time performance.

            TITLE V--RAIL INFRASTRUCTURE FINANCE CORPORATION

Sec. 501. Establishment of corporation.
Sec. 502. Board of directors.
Sec. 503. Officers and employees.
Sec. 504. Nonprofit and nonpolitical nature of the corporation.
Sec. 505. Purpose and activities of corporation.
Sec. 506. Report to Congress.
Sec. 507. Administrative matters.
Sec. 508. Rail Infrastructure Finance Trust.

               TITLE VI--RAIL DEVELOPMENT GRANT PROGRAMS

Sec. 601. Intercity passenger rail development grant program.
Sec. 602. Freight rail infrastructure development grant program.
Sec. 603. High priority projects grant program.
Sec. 604. Grant program requirements and limitations.
Sec. 605. Standards and conditions.
Sec. 606. Grant program funding.

               TITLE VII--AUTHORIZATION OF APPROPRIATIONS

Sec. 701. Authorization of Appropriations.

     SEC. 2. AMENDMENT OF TITLE 49, UNITED STATES CODE.

       Except as otherwise expressly provided, whenever in this 
     Act an amendment or repeal is expressed in terms of an 
     amendment to, or a repeal of, a section or other provision, 
     the reference shall be considered to be made to a section or 
     other provision of title 49, United States Code.

     SEC. 3. PURPOSES.

       The purposes of this Act are--
       (1) to ensure more adequate financing of infrastructure 
     projects for the national rail transportation system 
     through--
       (A) the establishment of the nonprofit Rail Infrastructure 
     Finance Corporation to provide financial support for rail 
     infrastructure improvement projects by issuing qualified rail 
     transportation bonds; and
       (B) the provision of appropriate tax treatment of qualified 
     rail transportation bonds so issued;
       (2) to create a partnership between public and private 
     entities to promote freight and passenger rail infrastructure 
     development that benefits the public;
       (3) to provide resources to States and groups of States for 
     rail capital projects that result in a safe, secure, and 
     efficient rail transportation system;
       (4) to enhance Federal and State rail transportation policy 
     and planning;
       (5) to promote intermodal transportation investment, 
     planning, and coordination; and
       (6) to reauthorize the National Railroad Passenger 
     Corporation and reaffirm the Federal commitment to a national 
     system of intercity passenger 19l transportation.

                 TITLE I--RAIL TRANSPORTATION SECURITY

     SEC. 101. RAIL TRANSPORTATION SECURITY RISK ASSESSMENT.

       (a) In General.--
       (1) Assessment.--The Secretary of Homeland Security, in 
     consultation with the Secretary of Transportation, shall 
     assess the security risks associated with freight and 
     intercity passenger rail transportation and develop 
     prioritized recommendations for--
       (A) improving the security of rail infrastructure and 
     facilities, terminals, tunnels, rail bridges, rail switching 
     areas, and other areas identified by the Secretary as posing 
     significant rail-related risks to public safety and the 
     movement of interstate commerce, taking into account the 
     impact that any proposed security measure might have on the 
     provision of rail service;
       (B) deploying chemical and biological weapon detection 
     equipment;
       (C) training employees in terrorism response activities; 
     and
       (D) identifying the immediate and long-term economic impact 
     of measures that may be required to address those risks.
       (2) Existing private and public sector efforts.--The 
     assessment shall include a review of any actions already 
     taken or prospective actions necessary to address identified 
     security issues by both public and private entities.
       (b) Consultation; Use of Existing Resources.--In carrying 
     out the assessment required by subsection (a), the Secretary 
     shall consult with rail management, rail labor, facility 
     owners and operators, and public safety officials (including 
     officials responsible for responding to emergencies).
       (C) Report.--
       (1) Contents.--Within 180 days after the date of enactment 
     of this Act, the Secretary shall transmit to the Senate 
     Committee on Commerce, Science, and Transportation and the 
     House of Representatives Committee on Transportation and 
     Infrastructure a report, without compromising national 
     security, containing the assessment and prioritized 
     recommendations required by subsection (a).
       (2) Format.--The Secretary may submit the report in both 
     classified and redacted formats if the Secretary determines 
     that such action is appropriate or necessary.
       (d) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary $515,000,000 for fiscal 
     year 2004 to carry out this section, implement the measures 
     contained in the Secretary's prioritized recommendations, and 
     award grants for purposes identified in the assessment in 
     subsection (a), such sums to remain available until expended.

     SEC. 102. CERTAIN PERSONNEL LIMITATIONS NOT TO APPLY.

       Any statutory limitation on the number of employees in the 
     Transportation Security Administration of the Department of 
     Transportation, before or after its transfer to the 
     Department of Homeland Security, does not apply to the extent 
     that any such employees are responsible for implementing the 
     provisions of this Act.

                     TITLE II--FEDERAL RAIL POLICY

     SEC. 201. FEDERAL RAIL POLICY ENHANCEMENT

       Section 103 is amended to read as follows:

     ``Sec. 103. Federal Railroad Administration

       ``(a) In General.--The Federal Railroad Administration is 
     an administration in the Department of Transportation.
       ``(b) Administrator.--The head of the Administration is the 
     Administrator who is appointed by the President, by and with 
     the advice and consent of the Senate. The Administrator 
     reports directly to the Secretary of Transportation.
       ``(c) Safety.--To carry out all railroad safety laws of the 
     United States, the Administration is divided on a 
     geographical basis into at least 8 safety offices. The 
     Secretary of Transportation is responsible for all acts taken 
     under those laws and for ensuring that the laws are uniformly 
     administered and enforced among the safety offices.
       ``(d) Powers and Duties.--
       ``(1) In general.--The Administrator shall carry out--
       ``(A) the duties and powers related to rail road safety 
     vested in the Secretary by section 20134(c) and chapters 203 
     through 211 of this title, and chapter 213 of this title in 
     carrying out chapters 203 through 211;
       ``(B) the duties and powers related to railroad policy and 
     development under subsection (e); and
       ``(C) any additional duties and powers prescribed by the 
     Secretary.
       ``(2) Transfers.--A duty or power specified by paragraph 
     (1)(A) of this subsection may be transferred to another part 
     of the Department only when specifically provided by law or a 
     reorganization plan submitted under chapter 9 of title 5. A 
     decision of the Administrator in carrying out those duties 
     or powers and involving notice and hearing required by law 
     is administratively final.
       ``(3) Contracts, grants, leases, cooperative agreements, 
     and similar transactions.--Subject to the provisions of 
     subtitle I of title 40 and title III of the Federal

[[Page S15990]]

     Property and Administrative Services Act of 1949 (41 U.S.C. 
     251 et seq.), the Secretary of Transportation may make, enter 
     into, and perform such contracts, grants, leases, cooperative 
     agreements, and other similar transactions with Federal or 
     other public agencies (including State and local governments) 
     and private organizations and persons, and make such 
     payments, by way of advance or reimbursement, as the 
     Secretary may determine to be necessary or appropriate to 
     carry out functions of the Federal Railroad Administration. 
     The authority of the Secretary granted by this paragraph 
     shall be carried out by the Administrator.
       ``(e) Additional Duties of the Administrator.--The 
     Administrator shall--
       ``(1) provide assistance to States in developing State rail 
     plans prepared under section 22501 and review all State rail 
     plans submitted under such section 22501;
       ``(2) develop a long range national rail plan that is 
     consistent with approved State rail plans, the 50-year 
     Intermodal Blueprint developed under section 5503(e), and the 
     rail needs of the Nation, as determined by the Secretary in 
     order to promote an integrated, cohesive, efficient, and 
     optimized national rail system for the movement of goods and 
     people;
       ``(3) develop a preliminary national rail plan within a 
     year after the date of enactment of the Arrive 21 Act;
       ``(4) develop and enhance partnerships with the freight and 
     passenger railroad industry, States, and the public 
     concerning rail development;-
       ``(5) support rail intermodal development and high-speed 
     rail development, including high speed rail planning under 
     section 205;
       ``(6) ensure that programs and initiatives developed under 
     this section benefit the public and work toward achieving 
     regional and national transportation goals; and
       ``(7) facilitate and coordinate efforts to assist freight 
     and passenger rail carriers, transit agencies and 
     authorities, municipalities, and States in passenger-freight 
     service integration on shared rights of way by providing 
     neutral assistance at the joint request of affected rail 
     service providers and infrastructure owners relating to 
     operations and capacity analysis, capital requirements, 
     operating costs, and other research and planning related to 
     corridors shared by passenger or commuter rail service and 
     freight rail operations.
       ``(f) Performance Goals and Reports.--
       ``(1) Performance goals.--In conjunction with the 
     objectives established and activities undertaken under 
     section 103(e) of this title, the Administrator shall develop 
     a schedule for achieving specific, measurable performance 
     goals.
       ``(2) Resource needs.--The strategy and annual plans shall 
     include estimates of the funds and staff resources needed to 
     accomplish each goal and the additional duties required under 
     section 103(e).
       ``(3) Submission with president's budget.--Beginning with 
     fiscal year 2005 and each fiscal year thereafter, the 
     Secretary shall submit to Congress, at the same time as the 
     President's budget submission, the Administration's 
     performance goals and schedule developed under paragraph (1), 
     including an assessment of the progress of the Administration 
     toward achieving its performance goals.''.

     SEC. 202. RAIL COOPERATIVE RESEARCH PROGRAM.

       (a) Requirement for Program.--
       (1) Establishment and content.--Chapter 249 is amended by 
     adding at the end the following:

     ``Sec. 24910. Rail cooperative research program

       ``(a) In General.--The Secretary shall establish and carry 
     out a rail cooperative research program. The program shall--
       ``(1) address, among other matters, intercity rail 
     passenger and freight rail services, including existing rail 
     passenger and freight technologies and speeds, incrementally 
     enhanced rail systems and infrastructure, and new high-speed 
     wheel-on-rail systems and rail security;
       ''(2) address ways to expand the transportation of 
     international trade traffic by rail, enhance the efficiency 
     of intermodal interchange at ports and other intermodal 
     terminals, and increase capacity and availability of rail 
     service for seasonal freight needs;
       ``(3) consider research on the interconnectedness of 
     commuter rail, passenger rail, freight rail, and other rail 
     networks; and
       ``(4) give consideration to regional concerns regarding 
     rail passenger and freight transportation, including meeting 
     research needs common to designated high-speed corridors, 
     long-distance rail services, and regional intercity rail 
     corridors, projects, and entities.
       ``(b) Content.--The program to be carried out under this 
     section shall include research designed--
       ``(1) to identify the unique aspects and attributes of rail 
     passenger and freight service;
       ``(2) to develop more accurate models for evaluating the 
     impact of rail passenger and freight service, including the 
     effects on highway and airport and airway congestion, 
     environmental quality, and energy consumption;
       ``(3) to develop a better understanding of modal choice as 
     it affects rail passenger and freight transportation, 
     including development of better models to predict 
     utilization;
       ``(4) to recommend priorities for technology demonstration 
     and development;
       ``(5) to meet additional priorities as determined by the 
     advisory board established under subsection (c), including 
     any recommendations made by the National Research Council;
       ``(6) to explore improvements in management, financing, and 
     institutional structures;
       ``(7) to address rail capacity constraints that affect 
     passenger and freight rail service through a wide variety of 
     options, ranging from operating improvements to dedicated new 
     infrastructure, taking into account the impact of such 
     options on operations;
       ``(8) to improve maintenance, operations, customer service, 
     or other aspects of intercity rail passenger and freight 
     service;
       ``(9) to recommend objective methodologies for determining 
     intercity passenger rail routes and services, including the 
     establishment of new routes, the elimination of existing 
     routes, and the contraction or expansion of services or 
     frequencies over such routes;
       ``(10) to review the impact of equipment and operational 
     safety standards on the further development of high speed 
     passenger rail operations connected to or integrated with 
     non-high speed freight or passenger rail operations; and
       ``(11) to recommend any legislative or regulatory changes 
     necessary to foster further development and implementation of 
     high speed passenger rail operations while ensuring the 
     safety of such operations that are connected to or integrated 
     with non-high speed freight or passenger rail operations.
       ``(c) Advisory Board.--
       ``(1) Establishment.--In consultation with the heads of 
     appropriate Federal departments and agencies, the Secretary 
     shall establish an advisory board to recommend research, 
     technology, and technology transfer activities related to 
     rail passenger and freight transportation.
       ``(2) Membership.--The advisory board shall include--
       ``(A) representatives of State transportation agencies;
       ``(B) transportation and environmental economists, 
     scientists, and engineers; and
       ``(C) representatives of Amtrak, the Alaska Railroad, 
     freight railroads, transit operating agencies, intercity rail 
     passenger agencies, railway labor organizations, and 
     environmental organizations.
       ``(d) National Academy of Sciences.--The Secretary may make 
     grants to, and enter into cooperative agreements with, the 
     National Academy of Sciences to carry out such activities 
     relating to the research, technology, and technology transfer 
     activities described in subsection (b) as the Secretary deems 
     appropriate.''.
       (2) Clerical Amendment.--The chapter analysis for chapter 
     249 is amended by adding at the end the following:

``24910. Rail cooperative research program''.

       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Transportation 
     $5,000,000 for each of fiscal years 2004 through 2009 to 
     carry out the rail cooperative research program under section 
     24910 of title 49, United States Code.

     SEC. 203. STATE RAIL PLANS.

       (a) In General.--Part B of subtitle V is amended by adding 
     at the end the following:

       ``CHAPTER 225--STATE RAIL PLANS AND HIGH PRIORITY PROJECTS

``Sec.
``22501. Authority
``22502. Purposes
``22503. Transparency; coordination; review
``22504. Content
``22505. Approval
``22506. High priority projects
``22507. Definitions

     ``Sec. 22501. Authority

       ``(a) In General.--Each State may prepare and maintain a 
     State rail plan in accordance with the provisions of this 
     chapter.
       ``(b) Requirements.--For the preparation and periodic 
     revision of a State rail plan, a State shall--
       ``(1) establish or designate a State rail transportation 
     authority to prepare, maintain, coordinate, and administer 
     the plan;
       ``(2) establish or designate a State rail plan approval 
     authority to approve the plan;
       ``(3) submit the State's approved plan to the Secretary of 
     Transportation for approval; and
       ``(4) revise and resubmit a State-approved plan no less 
     frequently than once every 5 years for reapproval by the 
     Secretary.

     ``Sec. 22502. Purposes

       ``(a) Purposes.--The purposes of a State rail plan are as 
     follows:
       ``(1) To set forth State policy involving freight and 
     passenger rail transportation, including commuter rail 
     operations, in the State.
       ``(2) To establish the period covered by the State rail 
     plan.
       ``(3) To present priorities and strategies to preserve, 
     enhance, or expand rail service in the State that benefits 
     the public.
       ``(4) To serve as the basis for Federal and State rail 
     investments within the State.
       ``(b) Coordination.--A State rail plan shall be coordinated 
     with other State transportation planning goals and programs 
     and set forth rail transportation's role within the State 
     transportation system.

     ``Sec. 22503. Transparency; coordination; review

       ``(a) Preparation.--A State shall provide adequate and 
     reasonable notice and opportunity for comment and other input 
     to the public, rail carriers, commuter and transit 
     authorities operating in, or affected by rail operations 
     within the State, units of local government, and other 
     interested parties in the preparation and review of its State 
     rail plan.
       ``(b) Intergovernmental Coordination.--A State shall review 
     the freight and passenger rail service activities and 
     initiatives

[[Page S15991]]

     by regional planning agencies, regional transportation 
     authorities, and municipalities within the State, or in the 
     region in which the State is located, while preparing the 
     plan, and shall include any recommendations made by such 
     agencies, authorities, and municipalities as deemed 
     appropriate by the State.
       ``(c) Annual Reviews.--Each State shall transmit an annual 
     report on its plan to the Secretary of Transportation. The 
     report shall include, for the year preceding the year in 
     which submitted, the following matters:
       ``(1) A review of progress made, and actions taken, under 
     the plan during the year, including an update on the budget, 
     schedule, and financing for each project on the freight or 
     passenger rail capital project list compiled under section 
     22504(a) of this title.
       ``(2) Any modifications made in the plan after approval of 
     the plan by the Secretary or after the submission of the most 
     recent annual report on the plan to the Secretary, including 
     any modifications made to the priority freight or passenger 
     rail capital list required by section 22504(b).
       ``(d) Approval of Modified Plans.--Modifications of a State 
     rail plan that are determined substantive by the Secretary, 
     including any modification to a priority freight or passenger 
     rail capital project list required by section 22504(b), is 
     subject to approval (for the purposes of this chapter) by the 
     Secretary.

     ``Sec. 22504. Content

       ``(a) In General.--Each State rail plan shall contain the 
     following:
       ``(1) An evaluation of the existing overall rail 
     transportation system and rail services and facilities within 
     the State, a prioritization of such services and facilities 
     in terms of their contributions to the State's rail and 
     transportation system.
       ``(2) A comprehensive review of all rail lines within the 
     State, including proposed high speed rail corridors and 
     significant rail line segments not currently in service, 
     containing an overview of the transportation services 
     provided by those lines, their ownership, operating 
     characteristics, and the general state of their 
     infrastructure.
       ``(3) A statement of the State's freight and passenger rail 
     service objectives, including minimum service levels, for 
     rail transportation routes in the State.
       ``(4) A general analysis of rail's transportation, 
     economic, and environmental impacts in the State, including 
     congestion mitigation, trade and economic development, air 
     quality, land-use, energy-use, and community impacts.
       ``(5) A long-range rail service and investment program for 
     current and future freight and passenger services in the 
     State that meets the requirements of subsection (b).
       ``(6) A statement of public financing issues for rail 
     projects and service in the State, including a list of 
     current and prospective capital and operating funding 
     resources, public subsidies, State taxation, and other 
     financial policies relating to rail service and rail 
     infrastructure development.
       ``(7) A statement of rail service issues within the State, 
     such as congestion and capacity, and current system 
     deficiencies on a regional, intrastate, and interstate basis, 
     that reflects consultation with neighboring States and 
     describes any coordination of regional rail service.
       ``(8) A review of major passenger and freight intermodal 
     rail connections and facilities within the State, including 
     seaports, and prioritized options to maximize service 
     integration and efficiency between rail and other modes of 
     transportation within the State.
       ``(9) A description of new technology that relates to rail 
     transportation within the State, including logistics and 
     process improvements.
       ``(10) A review of publicly funded projects within the 
     State to improve rail transportation safety and security, 
     including all major projects funded under section 130 of 
     title 23.
       ``(11) A performance evaluation of passenger rail services 
     operating in the State, including possible improvements in 
     those services, and a description of strategies to achieve 
     those improvements.
       ``(12) A compilation of studies and reports on high-speed 
     rail corridor development within the State not included in a 
     previous plan under this chapter, and a plan for funding any 
     recommended development of such corridors in the State.
       ``(13) A statement that the State is in compliance with the 
     requirements of section 22102.
       ``(b) Long-Range Service and Investment Program.--
       ``(1) Program content.--A long-range rail service and 
     investment program included in a State rail plan under 
     subsection (a)(5) shall include the following matters:
       ``(A) Two ranked lists for rail capital projects, 1 for 
     freight rail capital projects and 1 for intercity passenger 
     rail capital projects.
       ``(B) A detailed funding plan for the projects.
       ``(2) Project list content.--The ranked list of freight and 
     intercity passenger rail capital projects shall contain--
       ``(A) a description of the anticipated public and private 
     benefits of each such project; and
       ``(B) a statement of the correlation between--
       ``(i) public funding contributions for the projects; and
       ``(ii) the public benefits.
       ``(3) Considerations for project list.--In preparing the 
     ranked list of freight and intercity passenger rail capital 
     projects, a State rail transportation authority shall take 
     into consideration the following matters:
       ``(A) Contributions made by non-Federal and non-State 
     sources through user fees, matching funds, or other private 
     capital involvement.
       ``(B) Rail capacity and congestion effects.
       ``(C) Effects to highway, aviation, and maritime capacity, 
     congestion, or safety.
       ``(D) Regional balance.
       ``(E) Environmental impact.
       ``(F) Competitive and service impacts for rail carriers and 
     shippers.
       ``(G) Preservation of rail service.
       ``(H) Economic and employment impacts.
       ``(I) Projected ridership and other service measures for 
     passenger rail projects.
       ``(c) Waiver.--The Secretary may waive any requirement of 
     subsection (a) upon application under circumstances that the 
     Secretary determines appropriate.

     Sec. 22505. Approval

       ``(a) Criteria.--The Secretary may approve a State rail 
     plan for the purposes of this chapter if--
       ``(1) the plan meets all of the requirements applicable to 
     State plans under this chapter;
       ``(2) for each ready-to-commence project listed on the 
     ranked list of freight and intercity passenger rail capital 
     projects under the plan--
       ``(A) the project meets all safety and environmental 
     requirements including those prescribed under the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4331 et seq.) 
     that are applicable to the project under law; and
       ``(B) the State has entered into an agreement with any 
     owner of rail infrastructure or right of way directly 
     affected by the project that provides for the State to 
     proceed with the project; and
       ``(3) the content of the plan is coordinated with--
       ``(A) State transportation plans developed pursuant to the 
     requirements of section 135 of title 23; and
       ``(B) the national rail plan, the 50-year intermodal 
     blueprint developed under section 5503(e) of this title, (if 
     either is available) and any other transportation plan of the 
     Federal Government that is required by law deemed relevant by 
     the Secretary.
       ``(b) Procedures for State Rail Plan Submission and 
     Approval.--The Secretary shall prescribe procedures for 
     States to submit State rail plans for review under this 
     title, including standardized format and data requirements 
     and procedures for resubmittal if a State rail plan is 
     disapproved. The procedures shall provide for the Secretary 
     to review a State rail plan and issue a record of decision of 
     approval or disapproval, with comment, on such plan within 
     180 days after the plan is submitted.

     ``Sec. 22506. High priority projects

       ``(a) Designation of Projects.--In reviewing State rail 
     plans, the Secretary of Transportation may designate as a 
     high priority project any project submitted by a State or 
     group of States that meets both of the following criteria:
       ``(1) The project focuses on key rail congestion points 
     that are--
       ``(A) selected by the Secretary on the basis of national 
     benefits to the rail transportation system; and
       ``(B) coordinated with the national rail plan, if that plan 
     is available.
       ``(2) The project is on a ranked list of priority freight 
     and passenger rail capital projects that is included in a 
     State rail plan under section 22504(a)(5) of title 49, United 
     States Code, unless this criterion is waived by the 
     Secretary.
       ``(b) Preferred Projects.--The Secretary, in designating 
     high priority projects, shall give preference to--
       ``(1) projects that have national significance for--
       ``(A) improving the national rail network and the Nation's 
     transportation system;
       ``(B) ensuring particularly high levels of safety;
       ``(C) increasing intermodal connectivity by providing or 
     improving direct connections between rail facilities and 
     other modes of transportation;
       ``(D) significantly improving highway, aviation, or 
     maritime capacity, congestion, or safety;
       ``(E) improving intercity passenger rail service by 
     increasing ridership, reducing trip time, or other 
     significant enhancements;
       ``(F) improving both intercity passenger rail and freight 
     rail services simultaneously;
       ``(G) enhancing freight rail service for shippers;
       ``(H) causing positive economic and employment results;
       ``(I) producing significant environmental or community 
     benefits;
       ``(J) having received financial commitments and other 
     support from non-Federal entities such as States, local 
     governments, or private entities;
       ``(K) enhancing international trade;
       ``(L) enhancing national security; or
       ``(M) employing positive train control technologies; and
       ``(2) projects that are at the stage of preparation that 
     all pre-commencement compliance with environmental protection 
     requirements has been completed and the projects are ready to 
     commence.
       ``(c) Regional Balance and Compatibility.--The Secretary, 
     in designating high priority projects, shall ensure that--
       ``(1) the geographic distribution of the designated high 
     priority projects is balanced

[[Page S15992]]

     among the geographic regions of the United States and a 
     disproportionated number of such projects is not concentrated 
     in a single State; and
       ``(2) all projects are--
       ``(A) compatible with State transportation plans developed 
     pursuant to the requirements of section 135 of title 23; and
       ``(B) carried out in conformance with the national rail 
     plan.
       ``(d) AdditionaL Projects.--The Secretary may designate 
     projects submitted to the Office by the National Railroad 
     Passenger Corporation, either independently or in conjunction 
     with a State or group of States, as a high priority project. 
     Any such projects shall be subject to the same designation 
     and selection criteria as apply under this section, except 
     the criteria set forth in subsections (a)(2) and (c)(2) of 
     this section.

     ``Sec. 22507. Definitions

       ``In this chapter:
       ``(1) Private benefit.--The term `private benefit' means a 
     benefit accrued to a person or private entity, other than the 
     National Railroad Passenger Corporation, that directly 
     improves the economic and competitive condition of that 
     person or entity through improved assets, cost reductions, 
     service improvements, or any other means as defined by the 
     Secretary. The Secretary may seek the advice of the states 
     and rail carriers in further defining this term.xxx
       ``(2) Public benefit.--The term `public benefit' means a 
     benefit accrued to the public in the form of enhanced 
     mobility of people or goods, environmental protection or 
     enhancement, congestion mitigation, enhanced trade and 
     economic development, improved air quality or land use, more 
     efficient energy use, enhanced public safety or security, 
     reduction of public expenditures due to improved 
     transportation efficiency or infrastructure preservation, and 
     any other positive community effects as defined by the 
     Secretary. The Secretary make seek the advice of the States 
     and rail carriers in further defining this term.
       ``(3) State.--The term `State' means any of the 50 States 
     and the District of Columbia.
       ``(4) State rail transportation authority.--The term `State 
     rail transportation authority' means the State agency or 
     official responsible under the direction of the Governor of 
     the State or a State law for preparation, maintenance, 
     coordination, and administration of the State rail plan.''.
       (b) Clerical Amendment.--The table of chapters for subtitle 
     V is amended by inserting after the item relating to chapter 
     223 the following:

``225. STATE RAIL PLANS AND HIGH PRIORITY PROJECTS........22501.''.....

     2SEC. 204. INTERSTATE RAILROAD PASSENGER HIGH-SPEED 
                   TRANSPORTATION POLICY.

       (a) In General.--Chapter 261 is amended by inserting before 
     section 26101 the following:

     ``Sec. 26100. Policy.

       ``The Congress declares that it is the policy of the United 
     States that designated high-speed railroad passenger 
     transportation corridors are the building blocks of an 
     interconnected National railroad passenger system.''.
       (b) Conforming Amendment.--The chapter analysis for chapter 
     261 is amended by inserting before the item relating to 
     section 26101 the following:

``26100. Policy''.

     SEC. 205. HIGH-SPEED RAIL CORRIDOR PLANNING.

       (a) In General.--Section 26101(a) is amended to read as 
     follows:
       ``(a) Planning.--
       ``(1) In General.--The Secretary of Transportation shall 
     provide planning assistance to States or group of States and 
     other public agencies promoting the development of high-speed 
     rail corridors designated by the Secretary under section 
     104(d) of title 23. The Secretary shall establish an 
     application and qualification process for applicants eligible 
     for assistance under this section.
       ``(2) Secretary may provide direct or financial 
     assistance.--The Secretary may provide planning assistance 
     under paragraph (1) directly or by providing financial 
     assistance to a public agency or group of public agencies to 
     undertake planning activities approved by the Secretary. 
     Twenty percent of the publicly financed planning costs 
     associated with projects assisted under this chapter shall 
     come from non-Federal sources. State matching contributions 
     may not be derived, directly or indirectly, from Federal 
     funds.
       ``(d) Record of Decision.--Upon completion of planning 
     activities funded under this section, the Secretary shall 
     make a recommendation on the record of whether to proceed 
     with the implementation of the corridor.''.
       (b) Conforming and Other Amendments to Section 26101.--
     Section 26101 is further amended--
       (1) by striking subsection (c)(2) and inserting the 
     following:
       ``(2) the extent to which the proposed planning focuses on 
     high-speed rail systems, giving a priority to systems which 
     will achieve sustained speeds of 125 miles per hour or 
     greater and projects involving dedicated rail passenger 
     rights-of-way;'';
       (2) by inserting ``and'' after the semicolon in subsection 
     (c)(12);
       (3) by striking ``completed; and'' in subsection (c)(13) 
     and inserting ``completed.''; and
       (4) by striking subsection (c)(14).
       (c) Conforming Amendment.--Section 26105(2)(A) is amended 
     by striking ``more than 125 miles per hour;'' and inserting 
     ``90 miles per hour or more;''.
       (d) Financial Assistance To Include Loans and Loan 
     Guarantees--.Section 26105(1) is amended by inserting 
     ``loans, loan guarantees,'' after ``contracts,''.
       (e) Special Transportation Circumstances.--Section 26101 is 
     amended by adding at the end the following:
       ``(d) Special Transportation Circumstances.--In carrying 
     out this section, the Secretary shall allocate an appropriate 
     portion of the amounts available for planning assistance to 
     providing appropriate transportation-related assistance in 
     any State in which the rail transportation system--
       ``(1) is not physically connected to rail systems in the 
     continental United States; and
       ``(2) may not otherwise qualify for high speed rail 
     implementation assistance due to the constraints imposed on 
     the railway infrastructure in that State due to the unique 
     characteristics of the geography of that State or other 
     relevant considerations, as determined by the Secretary.''.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Transportation 
     $50,000,000 for each of fiscal years 2004 through 2009 to 
     provide planning assistance under section 26101(a) of title 
     49, United States Code.

     SEC. 206. DESIGNATED HIGH-SPEED RAIL CORRIDORS.

       (a) In General.--The Secretary of Transportation shall give 
     priority in allocating funds authorized by section 26104 of 
     title 49, United States Code, to designated high-speed rail 
     corridors.
       (b) Designated High-Speed Rail Corridors.--For purposes of 
     subsection (a), the following shall be considered to be 
     designated high-speed rail corridors:
       (1) California Corridor connecting the San Francisco Bay 
     area and Sacramento to Los Angeles and San Diego.
       (2) Chicago Hub Corridor Network with the following spokes:
       (A) Chicago to Detroit.
       (B) Chicago to Minneapolis/St. Paul, Minnesota, via 
     Milwaukee, Wisconsin.
       (C) Chicago to Kansas City, Missouri, via Springfield, 
     Illinois, and St. Louis, Missouri.
       (D) Chicago to Louisville, Kentucky, via Indianapolis, 
     Indiana, and Cincinnati, Ohio.
       (E) Chicago to Cleveland, Ohio, via Toledo, Ohio.
       (F) Cleveland, Ohio, to Cincinnati, Ohio, via Columbus, 
     Ohio.
       (3) Empire State Corridor from New York City, New York, 
     through Albany, New York, to Buffalo, New York.
       (4) Florida High-Speed Rail Corridor from Tampa through 
     Orlando to Miami.
       (5) Gulf Coast Corridor from Houston Texas, through New 
     Orleans, Louisiana, to Mobile, Alabama, with a branch from 
     New Orleans, through Meridian, Mississippi, and Birmingham, 
     Alabama, to Atlanta, Georgia.
       (6) Keystone Corridor from Philadelphia, Pennsylvania, 
     through Harrisburg, Pennsylvania, to Pittsburgh, 
     Pennsylvania.
       (7) Northeast Corridor from Washington, District of 
     Columbia, through New York City, New York, New Haven, 
     Connecticut, and Providence, Rhode Island, to Boston, 
     Massachusetts, with a branch from New Haven, Connecticut, to 
     Springfield, Massachusetts.
       (8) New England Corridor from Boston, Massachusetts, to 
     Portland and Auburn, Maine, and from Boston, Massachusetts, 
     through Concord, New Hampshire, and Montpelier, Vermont, to 
     Montreal, Quebec.
       (9) Pacific Northwest Corridor from Eugene, Oregon; through 
     Portland, Oregon, and Seattle, Washington, to Vancouver, 
     British Columbia.
       (10) South Central Corridor from San Antonio, Texas, 
     through Dallas/Fort Worth to Little Rock, Arkansas, with a 
     branch from Dallas/Fort Worth through Oklahoma City, 
     Oklahoma, to Tulsa, Oklahoma.
       (11) Southeast Corridor from Washington, District of 
     Columbia, through Richmond, Virginia, Raleigh, North 
     Carolina, Columbia, South Carolina, Savannah, Georgia, and 
     Jessup, Georgia, to Jacksonville, Florida, with--
       (A) a branch from Raleigh, North Carolina, through 
     Charlotte, North Carolina, and Greenville, South Carolina, to 
     Atlanta, Georgia; a branch from Richmond, to Hampton Roads/
     Norfolk, Virginia;
       (B) a branch from Charlotte, North Carolina, to Columbia, 
     South Carolina, to Charleston, South Carolina;
       (C) a connecting route from Atlanta, Georgia, to Jessup, 
     Georgia;
       (D) a connecting route from Atlanta, Georgia, to 
     Charleston, South Carolina; and
       (E) a branch from Raleigh, North Carolina, through 
     Florence, South Carolina, to Charleston, South Carolina, and 
     Savannah, Georgia, with a connecting route from Florence, 
     South Carolina, to Myrtle Beach, South Carolina.
       (12) Southwest Corridor from Los Angeles, California, to 
     Las Vegas, Nevada.
       (c) Other High-Speed Rail Corridors.--For purposes of this 
     section, subsection (b)--
       (1) does not limit the term ``designated highspeed rail 
     corridor'' to those corridors described in subsection (b); 
     and
       (2) does not limit the Secretary of Transportation's 
     authority--
       (A) to designate additional high-speed rail corridors; or
       (B) to terminate the designation of any high-speed rail 
     corridor.

[[Page S15993]]

     SEC. 207. REHABILITATION, IMPROVEMENT, AND SECURITY 
                   FINANCING.

       (a) Definitions.--Section 102(7) of the Railroad 
     Revitalization and Regulatory Reform Act of 1976 (45 U.S.C. 
     802(7)) is amended to read as follows:
       ``(7) `railroad' has the meaning given that term in section 
     20102 of title 49, United States Code; and''.
       (b) General Authority.--Section 502 of the Railroad 
     Revitalization and Regulatory Reform Act of 1976 (45 U.S.C. 
     822) is amended--
       (1) by striking ``Secretary may provide direct loans and 
     loan guarantees to State and local governments,'' in 
     subsection (a) and inserting ``Secretary shall provide direct 
     loans and loan guarantees to State and local governments, 
     interstate compacts entered into under section 410 of the 
     Amtrak Reform and Accountability Act of 1997 (49 U.S.C 24101 
     note),'';
       (2) by striking ``or'' in subsection (b)(1)(B);
       (3) by redesignating subparagraph (C) of subsection (b)(1) 
     as subparagraph (D); and
       (4) by inserting after subparagraph (B) of subsection 
     (b)(1) the following:
       ``(C) to acquire, improve, or rehabilitate rail safety and 
     security equipment and facilities; or''.
       (c) Extent of Authority.--Section 502(d) of the Railroad 
     Revitalization and Regulatory Reform Act of 1976 (45 U.S.C. 
     822(d)) is amended by adding at the end ``The Secretary shall 
     not establish any limit on the proportion of the unused 
     amount authorized under this subsection that may be used for 
     a single loan or loan guarantee.''.
       (d) Cohorts of Loans.--Section 502(f) of the Railroad 
     Revitalization and Regulatory Reform Act of 1976 (45 U.S.C. 
     822(f)) is amended--
       (1) in paragraph (2)--
       (A) by striking ``and'' at the end of subparagraph (D);
       (B) by redesignating subparagraph (E) as subparagraph (F); 
     and
       (C) by adding after subparagraph (D) the following new 
     subparagraph:
       ``(E) the size and characteristics of the cohort of which 
     the loan or loan guarantee is a member; and''; and
       (2) by adding at the end of paragraph (4) the following: 
     ``A cohort may include loans and loan guarantees. The 
     Secretary shall not establish any limit on the proportion of 
     a cohort that may be used for a single loan or loan 
     guarantee.''.
       (e) Conditions of Assistance.--Section 502 of the Railroad 
     Revitalization and Regulatory Reform Act of 1976 (45 U.S.C. 
     822) is amended--
       (1) by striking ``offered;'' in subsection (f) (2) (A) and 
     inserting ``offered, if any;'';
       (2) by inserting ``(1)'' before ``The Secretary'' in 
     subsection (h) and redesignating paragraphs (1), (2), and (3) 
     of that subsection as subparagraphs (A), (B), and (C); and
       (3) by adding at the end of subsection (h) the following: .
       ``(2) The Secretary may not require an applicant for a 
     direct loan or loan guarantee under this section to provide 
     collateral.
       ``(3) The Secretary may not require that an applicant for a 
     direct loan or loan guarantee under this section have 
     previously sought the financial assistance requested from 
     another source.
       ``(4) The Secretary shall require recipients of direct 
     loans or loan guarantees under this section to apply the 
     standards of subsections (b) and (e) of section 22301 of 
     title 49, United States Code, to their projects.
       ``(5) The Secretary shall require recipients of direct 
     loans or loan guarantees under this section to comply with--
       ``(A) the standards of section 24312, as in effect on 
     September 1, 2003, with respect to the project in the same 
     manner that the National Railroad Passenger Corporation is 
     required to comply with such standards for construction work 
     financed under an agreement made under section 24308(a); and
       ``(B) the protective arrangements established under section 
     504 of the Railroad Revitalization and Regulatory Reform Act 
     of 1976 (45 U.S.C. 836) with respect to employees affected by 
     actions taken in connection with the project to be financed 
     by direct loans or loan guarantees.''.
       (f) Time Limit for Approval or Disapproval.--Section 502 of 
     the Railroad Revitalization and Regulatory Reform Act of 1976 
     (45 U.S.C. 822) is amended by adding at the end the 
     following:
       ``(i) Time Limit for Approval or Disapproval.--Not later 
     than 180 days after receiving a complete application for a 
     direct loan or loan guarantee under this section, the 
     Secretary shall approve or disapprove the application.''.
       (g) Fees and Charges.--Section 503 of the Railroad 
     Revitalization and Regulatory Reform Act of 1976 (45 U.S.C. 
     823) is amended--
       (1) by adding at the end of subsection (k) the following: 
     ``Funds received by the Secretary under the preceding 
     sentence shall be credited to the appropriation from which 
     the expenses of making such appraisals, determinations, and 
     findings were incurred.''; and
       (2) by adding at the end the following new subsection:
       ``(m) Fees and Charges.--Except as provided in this title, 
     the Secretary may not assess any fees, including user fees, 
     or charges in connection with a direct loan or loan guarantee 
     provided under section 502.''.
       (h) Substantive Criteria and Standards.--Not later than 30 
     days after the date of the enactment of this Act, the 
     Secretary of Transportation shall publish in the Federal 
     Register and post on the Department of Transportation Web 
     site the substantive criteria and standards used by the 
     Secretary to determine whether to approve or disapprove 
     applications submitted under section 502 of the Railroad 
     Revitalization and Regulatory Reform Act of 1976 (45 U.S.C. 
     822).
       (i) Operators Deemed Rail Carriers; Loans and Loan 
     Guarantees for Non-Railroad Entities.--Section 502 of the 
     Railroad Revitalization and Regulatory Reform Act of 1976 (45 
     U.S.C. 822), as amended by subsection (f), is amended by 
     adding at the end the following:
       ``(j) Operators Deemed Rail Carriers.--Any entity providing 
     railroad transportation (within the meaning of section 20102) 
     that begins operations after the date of enactment of the 
     Arrive 21 Act and that uses property acquired pursuant to 
     this section shall be considered an employer for purposes of 
     the Railroad Retirement Act of 1974 (45 U.S.C. 231 et seq.) 
     and considered a carrier for purposes of the Railway Labor 
     Act (45 U.S.C. 151 et seq. ).
       ``(k) Loan and Loan Guarantees for Non-Railroad Entities.--
     Notwithstanding any other provision of law, entities other 
     than rail companies shall be eligible for loans and loan 
     guarantees under this section.''.

     SEC. 208. REPAYMENT OF LOAN TO NATIONAL RAILROAD PASSENGER 
                   CORPORATION.

       The Secretary of Transportation may not collect any 
     payments of principal or interest for the direct loan made to 
     the National Railroad Passenger Corporation under section 502 
     of the Railroad Revitalization and Regulatory Reform Act of 
     1976 (45 U.S.C. 822). There are authorized to be appropriated 
     to the Secretary for fiscal year 2004 $100,000,000 for the 
     purpose of repaying that loan to the Secretary of the 
     Treasury.

                      TITLE III--INTERMODAL POLICY

     SEC. 301. 50-YEAR INTERMODAL BLUEPRINT.

       (a) In General.--Section 5503 is amended--
       (1) by redesignating subsections (e) and (f) as subsections 
     (g) and (h), respectively; and
       (2) by inserting after subsection (d) the following:
       ``(e) 50-Year Intermodal Blueprint.--
       ``(1) In general.--The Secretary, in consultation with the 
     advisory board established under section 24910(c) of this 
     title, and other Federal, State, local, and private concerns, 
     shall create a document to be known as the `50-year 
     Intermodal Blueprint', which shall--
       ``(A) set forth a plan to develop a national intermodal 
     transportation system, including all major modes of 
     transportation;
       ``(B) describe emerging trends and opportunities to fulfill 
     the future passenger and freight transportation needs of the 
     United States;
       ``(C) illustrate and estimate the potential results of 
     current policies, possible policy improvements, and 
     directives for achieving the goals set forth in the document;
       ``(D) forecast the impact of current and future 
     transportation policies on mobility, safety, energy 
     consumption, the environment, technology, international 
     trade, economic activity, and the quality of life in the 
     United States; and
       ``(E) identify sources of funding to implement the plan 
     described in subparagraph (A).
       ``(2) Biennial progress reports.--The Director, working 
     with the Department of Transportation Inspector General, 
     shall issue a 50-year Intermodal Blueprint progress report 
     every 2 years and transmit a copy to the Senate Committee on 
     Commerce, Science, and Transportation and the House of 
     Representatives Committee on Transportation and 
     Infrastructure. In the report, the Director shall--
       ``(A) disclose the results of an audit of the progress made 
     toward achieving the goals set forth in the 50-year 
     Intermodal Blueprint;
       ``(B) describe successes, challenges, and obstacles with 
     respect to the 50-year Intermodal Blueprint;
       ``(C) suggest any changes to the 50-year Intermodal 
     Blueprint that the Director deems necessary or appropriate to 
     reflect changed circumstances or new developments;
       ``(D) make recommendations on ways to increase intermodal 
     planning and cooperation throughout the national 
     transportation system and within the Department of 
     Transportation; and
       ``(E) identify successful funding mechanisms and make 
     recommendations for new approaches to funding intermodal 
     transportation facilities and services.
       ``(3) Sexennial revisions.--The Secretary, in consultation 
     with Federal, State, local, and private concerns, shall 
     revise and republish the 50-year Intermodal Blueprint every 6 
     years.
       ``(f) Impact Measurement Methodology; Impact Review.--The 
     Secretary, working with the Bureau of Transportation 
     Statistics, and taking into account the work of the rail 
     cooperative research program established under section 
     24910(a) of this title, shall--
       ``(1) formulate a methodology for measuring the impact of 
     intermodal transportation on--
       ``(A) the environment;
       ``(B) public health and welfare;
       ``(C) energy consumption;
       ``(D) the operation and efficiency of the transportation 
     system;
       ``(E) congestion; and
       ``(F) the economy and employment; and
       ``(2) undertake a comprehensive review of the impact of 
     international trade on intermodal transportation and existing 
     intermodal transportation infrastructure.''.
       (b) Retained Funds.--Section 5568 is amended--

[[Page S15994]]

       (1) by redesignating subsection (b) as subsection (c); and
       (2) by inserting after subsection (a) the following:
       ``(b) 50-Year Intermodal Blueprint.--There are authorized 
     to be appropriated to the Secretary $1,000,000 for each of 
     fiscal years 2004 through 2009 to carry out section 
     5503(e).''.

     SEC. 302. INTERMODAL TRANSPORTATION POLICY.

       (a) Policy Standards.--Section 302(e) is amended by 
     striking ``system'' and inserting ``system, including freight 
     and passenger rail service and maritime transportation, 
     including such transportation via inland waterways,''.
       (b) State Transportation Improvement Programs.--Section 
     135(f)(4) of title 23, United States Code, is amended by 
     inserting ``a State rail plan developed under chapter 225 of 
     title 49,'' after ``134,''.

                    TITLE IV--AMTRAK AUTHORIZATIONS

     SEC. 401. NATIONAL RAILROAD PASSENGER TRANSPORTATION SYSTEM 
                   DEFINED.

       (a) In General.--Section 24102 is amended--
       (1) by striking paragraph (2);
       (2) by redesignating paragraphs (3), (4), and (5) as 
     paragraphs (2), (3), and (4), respectively; and
       (3) by inserting after paragraph (4) as so redesignated the 
     following:
       ``(5) `national rail passenger transportation system' 
     means--
       ``(A) the segment of the Northeast Corridor between Boston, 
     Massachusetts and Washington, D.C.;
       ``(B) rail corridors that have been designated by the 
     Secretary of Transportation as high-speed corridors, but only 
     after they have been improved to permit operation of 
     highspeed service;
       ``(C) long-distance routes of more than 750 miles between 
     endpoints operated by Amtrak as of the date of enactment of 
     the Arrive 21 Act; and
       ``(D) short-distance corridors or routes operated by 
     Amtrak.''.
       (b) Amtrak Routes with State Funding.--
       (1) In general.--Chapter 247 is amended by inserting after 
     section 24701 the following:

     ``Sec. 24702. Transportation requested by States, 
       authorities, and other persons

       ``(a) Contracts for Transportation.--Amtrak and a State, a 
     regional or local authority, or another person may enter into 
     a contract for Amtrak to operate an intercity rail service 
     or route not included in the national rail passenger 
     transportation system upon such terms as the parties 
     thereto may agree.
       ``(b) Discontinuance.--Upon termination of a contract 
     entered into under this section, or the cessation of 
     financial support under such a contract by either party, 
     Amtrak may discontinue such service or route, notwithstanding 
     any other provision of law.''.
       (2) Conforming amendment.--The chapter analysis for chapter 
     247 is amended by inserting after the item relating to 
     section 24701 the following:

``24702. Transportation requested by States, authorities, and other 
              persons''.

       (c) Amtrak To Continue To Provide Non-High-Speed 
     Services.--Nothing in this Act is intended to preclude Amtrak 
     from restoring, improving, or developing non-high-speed 
     intercity passenger rail service.

     SEC. 402. RESTRUCTURING OF LONG-TERM DEBT AND CAPITAL LEASES.

       (a) In General.--The Secretary of the Treasury shall work 
     with the Secretary of Transportation and Amtrak to 
     restructure Amtrak's indebtedness as of the date of enactment 
     of this Act.
       (b) New Debt Prohibition.--Except as approved by the 
     Secretary of Transportation, Amtrak may not enter into any 
     obligation secured by assets of the Corporation after the 
     date of enactment of this Act. This section does not prohibit 
     unsecured lines of credit used by Amtrak or any subsidiary 
     for working capital purposes.
       (c) Debt Redemption.--The Secretary of Transportation, in 
     consultation with the Secretary of the Treasury, shall enter 
     into negotiations with the holders of Amtrak debt, including 
     leases, that is outstanding on the date of enactment of this 
     Act for the purpose of redeeming or restructuring that debt. 
     The Secretary, in consultation with the Secretary of the 
     Treasury, shall secure agreements for repayment on such terms 
     as the Secretary deems favorable to the interests of the 
     Government. Payments for such redemption may be made after 
     October 1, 2004, in either a single payment or a series of 
     payments, but in no case shall the repayment period extend 
     beyond September 30, 2008.
       (d) Criteria.--In redeeming or restructuring Amtrak's 
     indebtedness, the Secretaries and Amtrak--
       (1) shall ensure that the restructuring imposes the least 
     practicable burden on taxpayers; and
       (2) take into consideration repayment costs, the term of 
     any loan or loans, and market conditions.
       (e) Authorization.--There are authorized to be appropriated 
     to the Secretary such sums as may be necessary for fiscal 
     years 2005 through 2008 to restructure or redeem Amtrak's 
     secured debt.
       (f) Amtrak Principal and Interest Payments.--
       (1) Principal on debt service.--Unless the Secretary of 
     Transportation and the Secretary of the Treasury restructure 
     or redeem the debt, there are authorized to be appropriated 
     to the Secretary of Transportation for the use of Amtrak for 
     retirement of principal on loans for capital equipment, or 
     capital leases, not more than the following amounts:
       (A) For fiscal year 2004, $116,900,000.
       (B) For fiscal year 2005, $109,500,000.
       (C) For fiscal year 2006, $114,700,000.
       (D) For fiscal year 2007, $202,900,000.
       (E) For fiscal year 2008, $164,300,000.
       (F) For fiscal year 2009, $155,800,000.
       (2) Interest on debt.--Unless the Secretary of 
     Transportation and the Secretary of the Treasury restructure 
     or redeem the debt, there are authorized to be appropriated 
     to the Secretary of Transportation for the use of Amtrak for 
     the payment of interest on loans for capital equipment, or 
     capital leases, the following amounts:
       (A) For fiscal year 2004, $162,600,000.
       (B) For fiscal year 2005, $151,300,000.
       (C) For fiscal year 2006, $146,300,000.
       (D) For fiscal year 2007, $137,500,000.
       (E) For fiscal year 2008, $125,300,000.
       (F) For fiscal year 2009, $117,100,000.
       (3) Reductions in authorization levels.--Whenever action 
     taken by the Secretary of the Treasury under subsection (c) 
     results in reductions in amounts of principle and interest 
     that Amtrak must service on existing debt, Amtrak shall 
     submit revised recommendations to the Senate Committee on 
     Commerce, Science and Transportation, the House of 
     Representatives Committee on Transportation and 
     Infrastructure, the Senate Committee on Appropriations, and 
     House of Representatives Committee on Appropriations revised 
     requests for amounts authorized by paragraphs (1) and (2) 
     that reflect the such reductions.

     SEC. 403. GENERAL AMTRAK AUTHORIZATIONS.

       (a) Repeal of Self-Sufficiency Requirements.--
       (1) Title 49 amendments.--Chapter 241 is amended
       (A) by striking the last sentence of section 24101(d); and
       (B) by striking the last sentence of section 24104(a).
       (2) Amtrak reform and accountability act amendments.--Title 
     II of the Amtrak Reform and Accountability Act of 1997 (49 
     U.S.C. 24101 nt) is amended by striking sections 204 and 205.
       (3) Common stock redemption date.--Section 415 of the 
     Amtrak Reform and Accountability Act of 1997 (49 U.S.C. 24304 
     nt) is amended by striking subsection (b).
       (b) Lease arrangements.--Amtrak may obtain services from 
     the Administrator of General Services, and the Administrator 
     may provide services to Amtrak, under section 201(b) and 
     211(b) of the Federal Property and Administrative Service Act 
     of 1949 (40 U.S.C. 481(b) and 491(b)) for each of fiscal 
     years 2004 through 2008.
       (c) Financial Powers.--Section 415(d) of the Amtrak Reform 
     and Accountability Act of 1997 by adding at the end, the 
     following:
       ``(3) This section does not affect the applicability of 
     section 3729 of title 31, United States Code, to claims made 
     against Amtrak.''.

     SEC. 404. EXCESS RAILROAD RETIREMENT.

       Beginning in fiscal year 2004, the Secretary of the 
     Treasury each year shall pay to the Railroad Retirement 
     Account an amount equal to the amount Amtrak must pay under 
     section 3221 of the Internal Revenue Code of 1986 in fiscal 
     years that is more than the amount needed for benefits for 
     individuals who retire from Amtrak and for their 
     beneficiaries. There are authorized to be appropriated such 
     sums as may be necessary in each fiscal year beginning after 
     fiscal year 2004 for these payments.

     SEC. 405. AUTHORIZATIONS FOR ENVIRONMENTAL COMPLIANCE AND 
                   STATION EVIPROVEMENTS.

       (a) Environmental Compliance.--There are authorized to be 
     appropriated to the Secretary of Transportation for the use 
     of Amtrak in order to comply with environmental regulations 
     the following amounts:
       (A) For fiscal year 2004, $18,800,000.
       (B) For fiscal year 2005, $21,700,000.
       (C) For fiscal year 2006, $22,300,000.
       (D) For fiscal year 2007, $15,100,000.
       (E) For fiscal year 2008, $15,900,000.
       (F) For fiscal year 2009, $16,000,000.
       (b) Capital Improvements to Stations.--
       (1) In general.--There are authorized to be appropriated to 
     the Secretary of Transportation for the use of Amtrak for 
     capital improvements to stations, including an initial 
     assessment of the full set of accessibility needs across the 
     national rail passenger transportation system and improved 
     accessibility for the elderly and people with disabilities 
     and in Amtrak facilities and stations, the following 
     amounts:
       (A) For fiscal year 2004, $17,100,000.
       (B) For fiscal year 2005, $19,800,000.
       (C) For fiscal year 2006, $19,800,000.
       (D) For fiscal year 2007, $19,000,000.
       (E) For fiscal year 2008, $19,000,000.
       (F) For fiscal year 2009, $19,000,000.
       (2) Study of compliance requirements at existing intercity 
     rail stations.--Amtrak shall evaluate the improvements 
     necessary to make. all existing stations it serves readily 
     accessible to and usable by individuals with disabilities, as 
     required by section 242(e)(2) of the Americans with 
     Disabilities Act of 1990 (42 U.S.C. 12162(e)(2)). The 
     evaluation shall include the estimated cost of the 
     improvements necessary, the identification of the responsible 
     person (as defined in section 241(5) of that Act (42 U.S.C. 
     12161(5)), and the earliest practicable date when such 
     improvements can be made. Amtrak shall submit the survey to 
     the Senate Committee on

[[Page S15995]]

     Commerce, Science, and Transportation, the House of 
     Representatives Committee on Transportation and 
     Infrastructure, and the National Council on Disability by 
     September 30, 2005, along with recommendations for funding 
     the necessary improvements.

     SEC. 406. TUNNEL LIFE SAFETY.

       (a) Life Safety Needs.--There are authorized to be 
     appropriated to the Secretary of Transportation for the use 
     of Amtrak for fiscal year 2004:
       (1) $677,000,000 for the 6 New York tunnels built in 1910 
     to provide ventilation, electrical, and fire safety 
     technology upgrades, emergency communication and lighting 
     systems, and emergency access and egress for passengers.
       (2) $57,000,000 for the Baltimore & Potomac tunnel built in 
     1872 to provide adequate drainage, ventilation, 
     communication, lighting, and passenger egress upgrades.
       (3) $40,000,000 for the Washington, DC, Union Station 
     tunnels built in 1904 under the Supreme Court and House and 
     Senate Office Buildings to improve ventilation, 
     communication, lighting, and passenger egress upgrades.
       (b) Infrastructure Upgrades.--There are authorized to be 
     appropriated to the Secretary of Transportation for the use 
     of Amtrak $3,000,000 for fiscal year 2004 for the preliminary 
     design of options for a new tunnel on a different alignment 
     to augment the capacity of the existing Baltimore tunnels.
       (c) Financial Contribution From Other Tunnel Users.--The 
     Secretary shall, taking into account the need for the timely 
     completion of all life safety portions of the tunnel projects 
     described in subsection (a)--
       (1) consider the extent to which rail carriers other than 
     Amtrak use the tunnels;
       (2) consider the feasibility of seeking a financial 
     contribution from those other rail carriers toward the costs 
     of the projects; and
       (3) obtain financial contributions or commitments from such 
     other rail carriers if feasible.
       (d) Availability of Funds. Amounts appropriated pursuant to 
     this section shall remain available until expended.

     SEC. 407. AUTHORIZATION FOR CAPITAL AND OPERATING EXPENSES.

       (a) OPerating Expenses.--There are authorized to be 
     appropriated to the Secretary of Transportation for the use 
     of Amtrak for operating costs the following amounts:
       (1) For fiscal year 2004, $581,000,000.
       (2) For fiscal year 2005, $567,000,000.
       (3) For fiscal year 2006, $558,000,000.
       (4) For fiscal year 2007, $529,000,000.
       (5) For fiscal year 2008, $522,000,000.
       (6) For fiscal year 2009, $522,000,000.
       (b) Capital Backlog and Upgrades.--There are authorized to 
     be appropriated to the Secretary of Transportation for the 
     use of Amtrak for capital expenses, the following amounts:
       (1) For fiscal year 2004, $674,000,000.
       (2) For fiscal year 2005, $765,000,000.
       (3) For fiscal year 2006, $733,000,000.
       (4) For fiscal year 2007, $604,000,000.
       (5) For fiscal year 2008, $560,000,000.
       (6) For fiscal year 2009, $565,000,000.
       (c) Reductions.--Amounts authorized under subsection (b) 
     shall be reduced by amounts equal to grants provided by the 
     Rail Infrastructure Finance Corporation under title VI of 
     this Act upon receipt to Amtrak for capital requirements and 
     expenditures listed in the annual budget and 5 Year Financial 
     Plan required under section 413.

     SEC. 409. ESTABLISHMENT OF GRANT PROCESS.

       (a) Grant Requests.--Amtrak shall submit grant requests to 
     the Secretary of Transportation for funds authorized to be 
     appropriated to the Secretary for the use of Amtrak under 
     sections 405, 406, and 407.
       (b) Procedures for Grant Requests.--The Secretary shall 
     establish substantive and procedural requirements, including 
     schedules, for grant requests under this section not later 
     than 30 days after the date of enactment of this Act and 
     shall transmit copies to the Senate Committee on Commerce, 
     Science, and Transportation and the House of Representatives 
     Committee on Transportation and Infrastructure.
       (c) Review and Approval.--
       (1) 30-day process.--The Secretary shall complete the 
     review of a grant request and approve or disapprove the 
     request within 30 days after the date on which Amtrak submits 
     the grant request.
       (2) Incomplete or Deficient Requests.--If the Secretary 
     disapproves the request or determines that the request is 
     incomplete or deficient, the Secretary shall immediately 
     notify Amtrak of the reason for disapproval or the incomplete 
     items or deficiencies. Within 15 days after receiving 
     notification from the Secretary under the preceding sentence, 
     Amtrak shall submit a modified request for the Secretary's 
     review.
       (3) Revised Requests.--Within 15 days after receiving a 
     modified request from Amtrak, the Secretary shall either 
     approve the modified request, or, if the Secretary finds that 
     the request is still incomplete or deficient, the Secretary 
     shall identify in writing to the Senate Committee on 
     Commerce, Science, and Transportation and the House of 
     Representatives Committee on Transportation and 
     Infrastructure the remaining deficiencies and recommend a 
     process for resolving the outstanding portions of the 
     request.

     SEC. 409. STATE-SUPPORTED ROUTES.

       The Board of Directors of Amtrak, in consultation with the 
     Secretary of Transportation and the chief executive officer 
     of each State and the District of Columbia, shall develop a 
     formula for funding the operating costs of trains operating 
     on routes not in excess of 750 miles in length that--
       (1) is equitable and fair; and
       (2) ensures, within 5 years after the date of enactment of 
     this Act, equal treatment of all States (and the District of 
     Columbia) and groups of States (including the District of 
     Columbia).

     SEC. 410. RE-ESTABLISHMENT OF NORTHEAST CORRIDOR SAFETY 
                   COMMITTEE.

       (a) Re-establishment of Northeast Corridor Safety 
     Committee.--The Secretary of Transportation shall re-
     establish the Northeast Corridor Safety Committee authorized 
     by section 24905(b) of title 49, United States Code.
       (b) Termination Date.--Section 24905(b)(4) is amended by 
     striking ``January 1, 1999,'' and inserting ``January 1, 
     2009,''.

     SEC. 411. AMTRAK BOARD OF DIRECTORS.

       (a) In General.--Section 24302 is amended to read as 
     follows:

     ``Sec. 24302. Board of directors

       ``(a) Composition and Terms.--
       ``(1) The board of directors of Amtrak is composed of the 
     following 9 directors, each of whom must be a citizen of the 
     United States:
       ``(A) The President of Amtrak.
       ``(B) The Secretary of Transportation.
       ``(C) 7 individuals appointed by the President of the 
     United States, by and with the advice and consent of the 
     Senate, with experience and qualifications in or directly 
     related to rail transportation, including representatives of 
     freight and passenger rail transportation, travel, 
     hospitality, cruise line, and passenger air transportation 
     businesses, consumers of passenger rail transportation, and 
     State government.
       ``(2) In selecting individuals described in paragraph (1) 
     for nominations for appointments to the Board, the President 
     shall consult with the Speaker of the House of 
     Representatives, the Minority Leader of the House of 
     Representatives, the Majority Leader of the Senate, and the 
     Minority Leader of the Senate and should ensure adequate and 
     balanced representation of the major geographic regions of 
     the United States.
       ``(3) An individual appointed under paragraph (1)(C) of 
     this subsection serves for 5 years or until the individual's 
     successor is appointed and qualified. Not more than 4 
     individuals appointed under paragraph (1)(C) may be members 
     of the same political party.
       ``(4) The board shall elect a chairman and a vice chairman 
     from among its membership. The vice chairman shall serve as 
     chairman in the absence of the chairman.
       ``(5) The Secretary may be represented at board meetings by 
     the Secretary's designee.
       ``(b) Pay and Expenses.--Each director not employed by the 
     United States Government is entitled to $300 a day when 
     performing board duties and powers. Each director is entitled 
     to reimbursement for necessary travel, reasonable secretarial 
     and professional staff support, and subsistence expenses 
     incurred in attending board meetings.
       ``(c) Vacancies.-- A vacancy on the board is filled in the 
     same way as the original selection, except that an individual 
     appointed by the President of the United States under 
     subsection (a)(1)(C) of this section to fill a vacancy 
     occurring before the end of the term for which the 
     predecessor of that individual was appointed is appointed for 
     the remainder of that term. A vacancy required to be filled 
     by appointment under subsection (a)(1)(C) must be filled not 
     later than 120 days after the vacancy occurs.
       ``(d) Bylaws.--The board may adopt and amend bylaws 
     governing the operation of Amtrak. The bylaws shall be 
     consistent with this part and the articles of 
     incorporation.''.
       (b) Effective Date for Directors' Provision.--The amendment 
     made by subsection (a) shall take effect on October 1, 2003. 
     The members of the Amtrak Reform Board may continue to serve 
     until 3 directors appointed by the President under section 
     24302(a) of title 49, United States Code, as amended by 
     subsection (a), have qualified for office.

     SEC. 412. ESTABLISHMENT OF FINANCIAL ACCOUNTING SYSTEM FOR 
                   AMTRAK OPERATIONS BY INDEPENDENT AUDITOR.

       (a) In General.--The Inspector General of the Department of 
     Transportation shall employ an independent financial 
     consultant with experience in railroad accounting--
       (1) to assess Amtrak's financial accounting and reporting 
     system and practices;
       (2) to design and assist Amtrak in implementing a modern 
     financial accounting and reporting system, on the basis of 
     the assessment, that will produce accurate and timely 
     financial information in sufficient detail--
       (A) to enable Amtrak to assign revenues and expenses 
     appropriately to each of its lines of business and to each 
     major activity within each line of business activity, 
     including train operations, equipment maintenance, ticketing, 
     and reservations;
       (B) to aggregate expenses and revenues related to 
     infrastructure and distinguish them from expenses and 
     revenues related to rail operations; and
       (C) to provide ticketing and reservation information on a 
     real-time basis.
       (b) Verification of System; Report.--The Inspector General 
     of the Department of Transportation shall review the 
     accounting system designed and implemented under subsection 
     (a) to ensure that it accomplishes the purposes for which it 
     is intended. The Inspector General shall report his findings 
     and conclusions, together with any recommendations, to the 
     Senate Committee on Commerce, Science, and Transportation and 
     the

[[Page S15996]]

     House of Representatives Committee on Transportation and 
     Infrastructure.
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated to the Secretary of Transportation 
     $2,500,000 for fiscal year 2004 to carry out subsection (a), 
     such sums to remain available until expended.

     SEC. 413. DEVELOPMENT OF 5-YEAR FINANCIAL PLAN.

       (a) Development of 5-Year Financial Plan.--The Amtrak board 
     of directors shall submit an annual budget for Amtrak, and a 
     5-year financial plan for the fiscal year to which that 
     budget relates and the subsequent 4 years, prepared in 
     accordance with this section, to the Secretary of 
     Transportation and the Inspector General of the Department of 
     Transportation no later than--
       (1) the first day of each fiscal year beginning after the 
     date of enactment of this Act; or
       (2) the date that is 60 days after the date of enactment of 
     an appropriation Act for the fiscal year, if later.
       (b) Contents of 5-Year Financial Plan.--The 5-year 
     financial plan for Amtrak shall include, at a minimum--
       (1) all projected revenues and expenditures for Amtrak, 
     including governmental funding sources;
       (2) projected ridership levels for all Amtrak passenger 
     operations;
       (3) revenue and expenditure forecasts for nonpassenger 
     operations;
       (4) capital funding requirements and expenditures necessary 
     to maintain passenger service which will accommodate 
     predicted ridership levels and predicted sources of capital 
     funding;
       (5) operational funding needs, if any, to maintain current 
     and projected levels of passenger service, including state-
     supported routes and predicted funding sources;
       (6) projected capital and operating requirements, 
     ridership, and revenue for any new passenger service 
     operations or service expansions;
       (7) an assessment of the continuing financial stability of 
     Amtrak, as indicated by factors such as: the ability of the 
     federal government to adequately meet capital and operating 
     requirements, Amtrak's access to long-term and short-term 
     capital markets, Amtrak's ability to efficiently manage its 
     workforce, and Amtrak's ability to effectively provide 
     passenger train service.
       (8) lump sum expenditures of $10,000,000 or more and 
     sources of funding.
       (9) estimates of long-term and short-term debt and 
     associated principle and interest payments (both current and 
     anticipated);
       (10) annual cash flow forecasts; and
       (11) a statement describing methods of estimation and 
     significant assumptions.
       (c) Standards to Promote Financial Stability.--In meeting 
     the requirements of subsection (b) with respect to a 5-year 
     financial plan, Amtrak shall--
       (1) apply sound budgetary practices, including reducing 
     costs and other expenditures, improving productivity, 
     increasing revenues, or combinations of such practices; and
       (2) use the categories specified in the financial 
     accounting and reporting system developed under section 412 
     when preparing its 5-year financial plan.
       (d) Assessment by DOT Inspector General.--
       (1) In general.--The Inspector General of the Department of 
     Transportation shall assess the 5-year financial plans 
     prepared by Amtrak under this section to determine whether 
     they meet the requirements of subsection (b), and may suggest 
     revisions to any components thereof that do not meet those 
     requirements.
       (2) Assessment to be furnished to the congress.--The 
     Inspector General shall furnish to the House of 
     Representatives Committee on Appropriations, the Senate 
     Committee on Appropriations, the House of Representatives 
     Committee on Transportation and Infrastructure, and the 
     Senate Committee on Commerce, Science, and Transportation--
       (A) an assessment of the annual budget within 90 days after 
     receiving it from Amtrak; and
       (B) an assessment of the remaining 4 years of the 5-year 
     financial plan within 180 days after receiving it from 
     Amtrak.

     SEC. 414. INDEPENDENT AUDITOR TO ESTABLISH METHODOLOGIES FOR 
                   AMTRAK ROUTE AND SERVICE PLANNING DECISIONS.

       (a) Review.--The Secretary of Transportation shall, in 
     consultation with the Federal Railroad Administration, 
     execute a contract to obtain the services of an independent 
     auditor or consultant to research and define Amtrak's past 
     and current methodologies for determining intercity passenger 
     rail routes and services.
       (b) Recommendations.--The independent auditor or consultant 
     shall recommend objective methodologies for determining such 
     routes and services, including the establishment of new 
     routes, the elimination of existing routes, and the 
     contraction or expansion of services or frequencies over such 
     routes.
       (c) Submittal to Congress.--The Secretary shall submit 
     recommendations received under subsection (b) to Amtrak, the 
     House of Representatives Committee on Transportation and 
     Infrastructure, and the Senate Committee on Commerce, 
     Science, and Transportation.
       (d) Authorization of Appropriations.--There are authorized 
     to be made available to the Secretary of Transportation, out 
     of any amounts authorized by this Act to be appropriated for 
     the benefit of Amtrak and not otherwise obligated or 
     expended, such sums as may be necessary to carry out this 
     section.

     SEC. 415. METRICS AND STANDARDS.

       The Administrator of the Federal Railroad Administration 
     shall, in consultation with Amtrak and host railroads, 
     develop new or improve existing metrics and minimum standards 
     for measuring the service quality of intercity train 
     operations, including on-time performance, on-board services, 
     stations, facilities, equipment, and other services.

     SEC. 416. ON-TIME PERFORMANCE.

       Section 24308 is amended by adding at the end the 
     following:
       ``(f) On-time Performance and Other Standards.--If the on-
     time performance of any intercity passenger train averages 
     less than 80 percent for any consecutive 6-month period, or 
     the service quality of intercity train operations for which 
     minimum standards are established under section 415 of the 
     Arrive 21 Act fails to meet those standards, Amtrak may 
     petition the Surface Transportation Board to investigate 
     whether, and to what extent, delays or failure to achieve 
     minimum standards are due to causes that could reasonably be 
     addressed by a rail carrier over the tracks of which the 
     intercity passenger train operates, or by a regional 
     authority providing commuter service, if any. In carrying out 
     such an investigation, the Surface Transportation Board shall 
     obtain information from all parties involved and make 
     recommendations regarding reasonable measures to improve the 
     service, quality, and on-time performance of the train.''.

            TITLE V--RAIL INFRASTRUCTURE FINANCE CORPORATION

     SEC. 501. ESTABLISHMENT OF CORPORATION.

       There is established a nonprofit corporation, to be known 
     as the ``Rail Infrastructure Finance Corporation''. The Rail 
     Infrastructure Finance Corporation is not an agency or 
     establishment of the United States Government. The 
     Corporation shall be subject to the provisions of this title 
     and title VI, and, to the extent consistent with this 
     section, to the laws of the State of Delaware applicable to 
     corporations not for profit.

     SEC. 502. BOARD OF DIRECTORS.

       (a) Appointment.--The Rail Infrastructure Finance 
     Corporation shall have a Board of Directors consisting of 9 
     members appointed by the President, by and with the advice 
     and consent of the Senate. The President shall submit all 
     nominations for the initial Board not less than 180 days 
     after the date of enactment of this Act. Not more than 5 
     members of the Board may be members of the same political 
     party.
       (b) Membership Qualifications.--
       (1) In general.--The 9 members of the Board shall be 
     appointed from among citizens of the United States (not 
     regular full-time employees of the United States) who are 
     eminent in the fields of rail transportation, rail financing, 
     and intermodal transportation planning, and the financing and 
     management of large-scale, long-term public-private 
     cooperative projects.
       (2) Representation of specific interests.--Of the 9 members 
     of the Board, 8 of the members shall be selected as follows:
       (A) 1 member from among individuals who represent the 
     interests of freight rail transportation.
       (B) 1 member from among individuals who represent the 
     interests of intermodal transportation.
       (C) 1 member from among individuals who represent the 
     interests of passenger rail transportation.
       (D) 1 member from among individuals who represent the 
     interests of the States.
       (E) 1 member from among individuals who represent the 
     interests of intercity passenger rail users.
       (F) 1 member from among individuals who represent the 
     interests of organized rail labor.
       (G) 2 members from among persons who are involved in 
     finance.
       (c) Incorporation.--The members initially appointed to the 
     Board of Directors shall serve as incorporators and, upon the 
     establishment of a quorum, shall take whatever actions are 
     necessary to establish the Corporation under the laws of 
     Delaware.
       (d) Terms of Office.--Members of the Board shall be 
     appointed for terms of 6 years. No member of the Board shall 
     be eligible to serve in excess of 2 consecutive full terms.
       (e) Vacancies.--A member of the Board appointed to fill a 
     vacancy occurring prior to the expiration of the term for 
     which the member's predecessor was appointed shall be 
     appointed for the remainder of such term. Upon the expiration 
     of a member's term, the member shall continue to serve until 
     a successor is appointed.
       (f) Attendance Required.--Members of the Board shall attend 
     not less than 50 percent of all duly convened meetings of the 
     Board in any calendar year. A member who fails to meet the 
     requirement of the preceding sentence shall forfeit 
     membership and the President shall appoint a new member to 
     fill the resulting vacancy not later than 90 days after such 
     vacancy is determined by the Chairman of the Board.
       (g) Election of Chairman and Vice Chairman.--Members of the 
     Board shall annually elect 1 of their members to be Chairman 
     and elect 1 or more of their members as a Vice Chairman or 
     Vice Chairmen.
       (h) Compensation.--The members of the Board shall not, by 
     reason of such membership, be considered to be officers or 
     employees of the United States. They shall, while

[[Page S15997]]

     attending meetings of the Board or while engaged in duties 
     related to such meetings or other activities of the Board 
     pursuant to this Act, be entitled to receive compensation at 
     the rate of $300 per day, including traveltime. No Board 
     member shall receive compensation of more than $10,000 in any 
     fiscal year. While away from their homes or regular places of 
     business, Board members shall be allowed travel and actual, 
     reasonable, and necessary expenses.
       (i) Meetings Open to Public.--All meetings of the Board of 
     Directors of the Corporation, including any committee of the 
     Board, shall be open to the public under such terms, 
     conditions, and exceptions as the Board may establish.
       (j) Quorum and Proceedings.--Five members of the Board 
     shall constitute a quorum for the Board to conduct business. 
     All decisions of the Board shall be entered upon the records 
     of the Board.

     SEC. 503. OFFICERS AND EMPLOYEES.

       (a) In General.--The Rail Infrastructure Finance 
     Corporation shall have a President, and such other officers 
     as may be named and appointed by the Board for terms and at 
     rates of compensation fixed by the Board. No individual other 
     than a citizen of the United States may be an officer of the 
     Corporation. No officer of the Corporation may receive any 
     salary or other compensation (except for compensation for 
     services on boards of directors of other organizations that 
     do not receive funds from the Corporation, on committees of 
     such boards, and in similar activities for such 
     organizations) from any sources other than the Corporation 
     for services rendered during the period of his or her 
     employment by the Corporation. Service by any officer on 
     boards of directors of other organizations, on committees of 
     such boards, and in similar activities for such organizations 
     shall be subject to annual advance approval by the Board and 
     subject to the provisions of the Corporation's Statement of 
     Ethical Conduct. All officers shall serve at the pleasure of 
     the Board. An officer of the corporation shall not be 
     considered to be an officer or employee of the United States 
     by virtue of such office.
       (b) Nonpartisan Nature of Appointments.--No political test 
     or qualification shall be used in selecting, appointing, 
     promoting, or taking other personnel actions with respect to 
     officers, agents, or employees of the Corporation.

     SEC. 504. NONPROFIT AND NONPOLITICAL NATURE OF THE 
                   CORPORATION.

       (a) Stock.--The Rail Infrastructure Finance Corporation 
     shall have no power to issue any shares of stock, or to 
     declare or pay any dividends.
       (b) No Private Benefit.--No part of the income or assets of 
     the Corporation shall inure to the benefit of any director, 
     officer, employee, or any other individual except as salary 
     or reasonable compensation for services.
       (c) Political Activity Prohibited.--The Corporation may not 
     contribute to or otherwise support any political party or 
     candidate for elective public office.
       (d) Conflicts of Interest.--No director, officer, or 
     employee of the Corporation shall in any manner, directly or 
     indirectly, participate in the deliberation upon or the 
     determination of any question affecting his or her personal 
     interests or the interests of any corporation, partnership, 
     or organization in which he or she has a direct or indirect 
     financial interest. Board members shall recuse themselves 
     from Board decisions that directly affect either them or 
     entities they represent regarding grants and other financial 
     assistance provided to States by the Board.

     SEC. 505. PURPOSE AND ACTIVITIES OF CORPORATION.

       (a) Purpose.--The Rail Infrastructure Finance Corporation 
     shall, through the issuance of qualified rail infrastructure 
     bonds in accordance with section 54 of the Internal Revenue 
     Code of 1986 and this title, provide financial support for 
     rail transportation capital projects under title VI of this 
     Act.
       (b) Bond Issuance Authority.--
       (1) In general.--In order to carry out its purposes, the 
     Corporation is authorized to issue qualified rail 
     infrastructure bonds (as defined in section 54(e) of the 
     Internal Revenue Code of 1986) during the 6-year period 
     beginning on the day after the date of enactment of this Act.
       (2) Limitation.--The total face amount of the bonds 
     outstanding under paragraph (1) at any time may not exceed 
     $30,000,000,000.
       (3) No federal guarantee.--
       (A) Obligations insured by the corporation.--No obligation 
     that is insured, guaranteed, or otherwise backed by the 
     Corporation shall be deemed to be an obligation that is 
     guaranteed by the full faith and credit of the United States.
       (B) Special rule.--This paragraph shall not affect the 
     determination of whether such obligation is guaranteed for 
     purposes of Federal income taxes.
       (C) Securities offered by the corporation.--No debt or 
     equity securities of the Corporation shall be deemed to be 
     guaranteed by the full faith and credit of the United States.
       (4) Authority.--To carry out the foregoing purposes and 
     engage in the foregoing activities, the Corporation shall 
     have the usual powers conferred upon a nonprofit corporation 
     under the laws of the State of Delaware.
       (c) Federal Assistance.--The Corporation shall be eligible 
     to receive discretionary grants, contracts, gifts, 
     contributions, or technical assistance from any department or 
     agency of the Federal Government, but only to the extent 
     permitted by law and to the extent necessary to carry out the 
     purpose set forth in subsection (a) and the activities 
     described in subsection (b).
       (d) Status Under Federal Securities Laws.--
       (1) In general.--For purposes of the Securities Act of 
     1933, the Securities Exchange Act of 1934 or the Trust 
     Indenture Act of 1939, the Rail Infrastructure Finance 
     Corporation shall not be considered an agency or 
     instrumentality of the United States or any State or 
     Territory thereof nor an entity described in section 
     3(a)(4) of the Securities Act of 1933 and shall not be 
     entitled to rely on any exemption from those laws. Any 
     security offered or sold or guaranteed by the Rail 
     Infrastructure Finance Corporation may not be offered or 
     sold in reliance on any exemption from registration under 
     the Securities Act of 1933, unless exempted by rule or 
     regulation of the Securities and Exchange Commission. For 
     so long as the Rail Infrastructure Finance Corporation has 
     any securities outstanding, it may not rely on the rules 
     promulgated under the Securities Exchange Act of 1934 to 
     voluntarily terminate or suspend the Rail Infrastructure 
     Finance Corporation's obligations to comply with the 
     reporting requirements of the Securities Exchange Act of 
     1934 with regard to any of its outstanding securities and 
     the provisions of section 15(d)(6) of the Securities 
     Exchange Act of 1934 shall not apply to the Rail 
     Infrastructure Finance Corporation, unless exempted by 
     rule, regulation, or order of the Securities and Exchange 
     Commission.
       (2) Relationship to federal securities laws.--Except as 
     provided in paragraph (1), no provision of this section or 
     any regulation issued by any other Federal agency shall 
     supercede or otherwise affect the application of the Federal 
     securities laws (as such term is defined in section 2(a)(47) 
     of the Securities Exchange Act of 1934) or the rules, 
     regulations, or orders of the Securities and Exchange 
     Commission promulgated under those laws.

     SEC. 506. REPORT TO CONGRESS.

       (a) In General.--On or before May 15 of each year, the Rail 
     Infrastructure Finance Corporation shall submit an annual 
     report for the fiscal year ending on September 30 of the 
     preceding year to the Senate Committee on Commerce, Science, 
     and Transportation and the House of Representatives Committee 
     on Transportation and Infrastructure. The report shall 
     include a comprehensive and detailed report of the 
     Corporation's operations, activities, financial condition, 
     and accomplishments under this title and such recommendations 
     as the Corporation deems appropriate.
       (b) Availability for Testimony.--The officers and directors 
     of the Corporation shall be available to testify before those 
     committees with respect to such report or any other matter 
     which such committees may determine.

     SEC. 507. ADMINISTRATIVE MATTERS.

       (a) Budget.--The Rail Infrastructure Finance Corporation 
     shall establish an annual budget for the Corporation, 
     including the Rail Infrastructure Investment Account under 
     subsection (c).
       (b) Implementation Plan.--
       (1) Requirement for plan.--The Corporation shall conduct a 
     study and prepare a plan on how the Corporation can best 
     achieve the purposes and fulfill the requirements of this 
     title.
       (2) Consultation.--In preparing the plan, the Corporation 
     may consult with representatives of State and local 
     governments, railroads, and other similar entities.
       (3) Other requirements.--The plan, which shall be based on 
     the conclusions resulting from the study conducted under 
     paragraph (1), shall be submitted by the Corporation to the 
     Senate Committee on Commerce, Science, and Transportation and 
     the House of Representatives Committee on Transportation and 
     Infrastructure not later than 180 days after the date on 
     which the Corporation is incorporated. Unless directed 
     otherwise by law, the Corporation shall implement the plan 
     during the first fiscal year beginning after the fiscal year 
     in which the plan is submitted to Congress.
       (c) Rail Infrastructure Investment Account.--
       (1) Establishment.--The Board of Directors for the 
     Corporation shall establish an account to be known as the 
     Rail Infrastructure Investment Account.
       (2) Deposit of bond proceeds.--The Corporation shall 
     deposit the proceeds of sales of any bonds issued under 
     section 54 of the Internal Revenue Code of 1986 into the 
     Account.
       (3) Deposit of non-federal contributions.--The Board shall 
     deposit all non-Federal contributions received into the 
     Account.
       (4) Disbursements.--The Board may make available and may 
     disburse, during the first fiscal year beginning after the 
     date of enactment of this Act and during each succeeding 
     fiscal year thereafter, such funds as may be available for 
     obligation and expenditure from the Account.
       (5) Use of account funds.--Funds in the Account--
       (A) shall be used by the Corporation for investment 
     purposes through the trust established under section 508 to 
     generate an amount sufficient--
       (i) to repay the principal of the bonds at their maturity; 
     and

[[Page S15998]]

       (ii) to pay the administrative costs of the Corporation and 
     the Rail Infrastructure Finance Trust under section 508; and
       (B) shall, to the extent of the net spendable proceeds in 
     the account, be held in the Rail Infrastructure Finance Trust 
     established under section 508 and be available for 
     distribution as grants of financial assistance under title VI 
     of this Act.
       (6) Net spendable proceeds defined.--In this subsection, 
     the term ``net spendable proceeds'', with respect to the Rail 
     Infrastructure Investment Account, means the amount, 
     determined by the Board of Trustees of the Rail 
     Infrastructure Finance Trust, equal to the excess of--
       (A) the total amount in such Account, over
       (B) the amount in such Account that is needed for uses 
     under paragraph (5)(A).
       (d) Records and Audit.--
       (1) In general.--The account of the Corporation shall be 
     audited annually in accordance with generally accepted 
     auditing standards by independent certified public 
     accountants or independent licensed public accountants 
     certified or licensed by a regulatory authority of a State or 
     other political subdivision of the United States. The audits 
     shall be conducted at the place or places where the accounts 
     of the Corporation are normally kept. All books, accounts, 
     financial records, reports, files, and all other papers, 
     things, or property belonging to or in use by the Corporation 
     and necessary to facilitate the audits shall be made 
     available to the person or persons conducting the audits; and 
     full facilities for verifying transactions with the balances 
     or securities held by depositories, fiscal agents and 
     custodians shall be afforded to such person or persons.
       (2) Audit report.--The report of each such independent 
     audit shall be included in the annual report required by 
     section 506. The audit report shall set forth the scope of 
     the audit and include such statements as are necessary to 
     present fairly the Corporation's assets and liabilities, 
     surplus or deficit, with an analysis of the changes therein 
     during the year, supplemented in reasonable detail by a 
     statement of the Corporation's income and expenses during the 
     year, and a statement of the sources and application of 
     funds, together with the independent auditor's opinion of 
     those statements.
       (3) Accounting principles.--Not later than 1 year after the 
     date of the enactment of this Act, the Corporation shall 
     develop accounting principles which shall be used uniformly 
     by all entities receiving funds under this Act, taking into 
     account organizational differences among various categories 
     of such entities. Such principles shall be designed to 
     account fully for all funds received and expended for 
     purposes of this Act by such entities.
       (4) Requirements for recipients.--Each entity receiving 
     funds under this Act shall--
       (A) keep its books, records, and accounts in such form as 
     may be required by the Corporation;
       (B) either--
       (i) undergo an annual audit by independent certified public 
     accountants or independent licensed public accountants 
     certified or licensed by a regulatory authority of a State, 
     which audit shall be in accordance with auditing standards 
     developed by the Corporation; or
       (ii) submit a financial statement in lieu of the audit 
     required by subparagraph (A) if the Corporation determines 
     that the cost burden of such audit on such entity is 
     excessive in light of the financial condition of such entity; 
     and
       (C) furnish biennially to the Corporation a copy of the 
     audit report required pursuant to the subparagraph (B), as 
     well as such other information regarding finances (including 
     an annual financial report) as the Corporation may require.
       (5) Additional recordkeeping.--Any recipient of assistance 
     by grant or contract under this section, other than a fixed 
     price contract awarded pursuant to competitive bidding 
     procedures, shall keep such records as may be reasonably 
     necessary to disclose fully the amount and the disposition by 
     such recipient of such assistance, that total cost of the 
     project or undertaking in connection with which such 
     assistance is given or used, and the amount and nature of 
     that portion of the cost of the projects or undertaking 
     supplied by other sources, and such other records as will 
     facilitate an effective audit.
       (6) Access to records.--The Corporation or any of its duly 
     authorized representatives shall have access to any books, 
     documents, papers, and records of any recipient of assistance 
     for the purpose of auditing and, examining all funds received 
     from the Corporation.
       (7) Public inspection.--The Corporation shall maintain the 
     information described in paragraphs (4), (5), and (6) at its 
     offices for public inspection and copying for at least 3 
     years, according to such reasonable guidelines as the 
     Corporation may issue. This public file shall be updated 
     regularly.

     SEC. 508. RAIL. INFRASTRUCTURE FINANCE TRUST.

       (a) Establishment.--The Board of Directors of the Rail 
     Infrastructure Finance Corporation shall establish the Rail 
     Infrastructure Finance Trust (hereafter in this section 
     referred to as the ``Trust'') as a trust domiciled in the 
     State of Delaware before the issuance of bonds under section 
     505(b). The Trust shall, to the extent not inconsistent with 
     this Act, be subject to the laws of the State of Delaware 
     that are applicable to trusts. The Trust shall manage and 
     invest the assets of the Rail Infrastructure Account 
     described in section 507(c) that are transferred to it by the 
     Board in the manner set forth in this section.
       (b) Not a Federal Agency or Instrumentality.--The Trust is 
     not a department, agency, or other instrumentality of the 
     Government of the United States and shall not be subject to 
     title 31, United States Code.
       (c) Board of Trustees.--
       (1) Establishment.--The Trust shall have a Board of 
     Trustees.
       (2) Composition.--
       (A) Appointment.--The Board of Trustees shall consist of 5 
     members (hereafter in this title referred to as ``Trustees'') 
     3 of whom shall be appointed by a unanimous vote of the Board 
     of Directors of the Rail Infrastructure Finance Corporation.
       (B) Representation of particular interests.--The 3 members 
     of the Board of Trustees shall be selected as follows:
       (i) 1 from among persons who represent the interests of the 
     States.
       (ii) 1 from among persons who represent the interests of 
     freight and passenger railroads.
       (iii) 1 from among persons who represent the interests of 
     holders of qualified rail infrastructure bonds issued by the 
     Rail Infrastructure Corporation.
       (C) The 2 Trustees not appointed under subparagraph (A) 
     shall be elected directly by holders of qualified rail 
     infrastructure bonds issued by the Rail Infrastructure 
     Corporation through procedures established by the Board of 
     Trustees to represent the interests of such bond holders. The 
     election shall be held, and both members elected under this 
     subparagraph shall take office as Trustees, within 1 year 
     after the initial issuance of bonds under section 505(b).
       (3) Members not united states officials.--The members of 
     the Board of Trustees may not be considered officers or 
     employees of the Government of the United States.
       (4) Qualifications.--The Trustees shall be appointed only 
     from among persons who have experience and expertise in the 
     management of financial investments. No member of the Board 
     of Directors of the Rail Infrastructure Finance Corporation 
     is eligible to be a Trustee.
       (5) Terms.--Each member of the Board of Trustees shall be 
     appointed for a 3-year term. Any member whose term has 
     expired may serve until such member's successor has taken 
     office, or until the end of the calendar year in which such 
     member's term has expired, whichever is earlier. A vacancy in 
     the Board of Trustees shall not affect the powers of the 
     Board of Trustees and shall be filled in the same manner as 
     the member whose departure caused the vacancy. Any member 
     appointed to fill a vacancy occurring prior to the expiration 
     of the term for which the member's predecessor was appointed 
     shall be appointed for the remainder of such term.
       (d) Powers.--The Board of Trustees shall--
       (1) establish investment policies, including guidelines, 
     and retain independent advisers to assist in the formulation 
     and adoption of the investment guidelines;
       (2) retain independent investment managers to invest the 
     assets of the Trust in a manner consistent with such 
     investment guidelines;
       (3) invest assets in the Trust, pursuant to the policies 
     adopted in paragraph (1);
       (4) pay administrative expenses of the Trust from the 
     assets in the Trust;
       (5) transfer money to the Rail Infrastructure Investment 
     Account, upon request of the Board of Directors of the Rail 
     Infrastructure Finance Corporation, for bond repayment and 
     administrative expenses; and
       (6) develop a formula, subject to approval by the Board of 
     Directors before the issuance of bonds under section 505(b), 
     for determining when there is a sufficient trust income 
     stream for purposes of paragraph (7); and
       (7) transfer net spendable proceeds to the Board of 
     Directors to be used for grants under title VI of this Act 
     after determining that adequate trust funds are available, or 
     that there is a trust income stream sufficient, to allow the 
     Board of Trustees to meet its obligations under paragraphs 
     (4) and (5).
       (e) Reporting Requirements and Fiduciary Standards.--The 
     following reporting requirements and fiduciary standards 
     shall apply with respect to the Trust:
       (1) Duties of the Board of trustees.--The Trust and each 
     member of the Board of Trustees shall discharge the duties of 
     the Trust and the duties of the Trustee, respectively 
     (including the voting of proxies), with respect to the assets 
     of the Trust solely in the interests of the Rail 
     Infrastructure Finance Corporation and the programs funded 
     under this title--
       (A) for the exclusive purposes of--
       (i) providing sufficient funds to repay qualified rail 
     infrastructure bonds issued by the Rail Infrastructure 
     Finance Corporation,
       (ii) funding the administrative costs of the Rail 
     Infrastructure Finance Corporation;
       (iii) defraying reasonable expenses of administering the 
     Trust; and
       (iv) providing grants for rail capital projects under title 
     VI of this Act; and
       (B) with the care, skill, prudence, and diligence under the 
     circumstances then prevailing that a prudent person acting in 
     a like capacity and familiar with such matters would use in 
     the conduct of an enterprise of a like character and with 
     like aims;
       (C) by diversifying investments so as to minimize the risk 
     of large losses and to avoid disproportionate influence over 
     a particular industry or firm, unless under the

[[Page S15999]]

     circumstances it is clearly prudent not to do so; and
       (D) in accordance with Trust governing documents and 
     instruments insofar as such documents and instruments are 
     consistent with this title.
       (2) Prohibitions with respect to members of the board of 
     trustees.--A member of the Board of Trustees may not--
       (A) deal with the assets of the Trust in the Trustee's own 
     interest or for the Trustee's own account;
       (B) act in an individual or in any other capacity, in any 
     transaction involving the assets of the Trust on behalf of a 
     party (or represent a party) whose interests are adverse to 
     the interests of the Trust and the Rail Infrastructure 
     Finance Corporation; or
       (C) receive any consideration for the Trustee's own 
     personal account from any party dealing with the assets of 
     the Trust.
       (3) Exculpatory provisions and insurance.--Any provision in 
     an agreement or instrument that purports to relieve a Trustee 
     from responsibility or liability for any responsibility, 
     obligation, or duty under this Act shall be void. Nothing in 
     this paragraph shall be construed to preclude--
       (A) the Trust from purchasing insurance for its Trustees or 
     for itself to cover liability or losses occurring by reason 
     of the act or omission of a Trustee, if such insurance 
     permits recourse by the insurer against the Trustee in the 
     case of a breach of a fiduciary obligation by such Trustee;
       (B) a Trustee from purchasing insurance to cover liability 
     under this section from and for his own account; or
       (C) an employer or an employee organization from purchasing 
     insurance to cover potential liability of 1 or more Trustees 
     with respect to their fiduciary responsibilities, 
     obligations, and duties under this section.
       (4) Trustees, bonds.--
       (A) Requirement.--Each Trustee and every person who handles 
     funds or other property of the Trust (hereafter in this 
     section referred to as ``Trust official'') shall be bonded. 
     The bond shall provide protection to the Trust against loss 
     by reason of acts of fraud or dishonesty on the part of any 
     Trust official, directly or through the connivance of others.
       (B) Amount.--The amount of a bond for a Trustee under this 
     paragraph shall be fixed at the beginning of each fiscal year 
     of the Trust by the Board of Directors of the Rail 
     Infrastructure Finance Corporation. The amount may not be 
     less than 10 percent of the amount of the funds 
     administered by the Trust.
       (C) Unlawful conduct.--It shall be unlawful for--
       (i) any Trust official to receive, handle, disburse, or 
     otherwise exercise custody or control of any of the funds or 
     other property of the Trust without being bonded as required 
     by this subsection;
       (ii) any Trust official, or any other person having 
     authority to direct the performance of such functions, to 
     permit such functions, or any of them, to be performed by any 
     Trust official, with respect to whom the requirements of this 
     subsection have not been met; and
       (iii) any person to procure any bond required by this 
     subsection from any surety or other company or through any 
     agent or broker in whose business operations such person has 
     any control or significant financial interest, direct or 
     indirect.
       (f) Administrative Matters.--
       (1) Authority.--The Board of Trustees shall have the 
     authority to make rules to govern its operations, employ 
     professional staff, and contract with outside advisors 
     (including the Rail Infrastructure Finance Corporation) to 
     provide legal, accounting, investment advisory, or other 
     services necessary for the proper administration of this 
     section. In the case of a contract for investment advisory 
     services, compensation for such services may be provided on a 
     fixed fee basis or on such other terms and conditions as are 
     customary for such services.
       (2) Quorum and proceedings.--Three members of the Board of 
     Trustees shall constitute a quorum for the Board to conduct 
     business. Investment guidelines shall be adopted by a 
     unanimous vote of the entire Board of Trustees. All other 
     decisions of the Board of Trustees shall be decided by a 
     majority vote of the quorum present. All decisions of the 
     Board of Trustees shall be entered upon the records of the 
     Board of Trustees.
       (3) Compensation of trustees and employees.--The salaries 
     of the Trustees are subject to the limitations in section 
     502(h).
       (4) Compensation arrangements.--The Board of Trustees may 
     compensate investment advisory service providers and 
     employees of the Trust on a fixed contract fee basis or on 
     such other terms and conditions as are customary for such 
     services.
       (5) Funding.--The expenses of the Trust and the Board of 
     Trustees that are incurred under this section shall be paid 
     from the Trust.
       (g) Audit and Report.--
       (1) Requirement for annual audit.--The Trust shall annually 
     engage an independent qualified public accountant to audit 
     the financial statements of the Trust.
       (2) Annual management report.--The Trust shall submit an 
     annual management report to be included in the annual report 
     of the Corporation required under section 506. The management 
     report under this paragraph shall include the following 
     matters:
       (A) A statement of financial position.
       (B) A statement of operations.
       (C) A statement of cash flows.
       (D) A statement on internal accounting and administrative 
     control systems.
       (E) The report resulting from an audit of the financial 
     statements of the Trust conducted under paragraph (1).
       (F) Any other comments and information necessary to inform 
     Congress about the operations and financial condition of the 
     Trust.
       (h) Enforcement.--The Rail Infrastructure Finance 
     Corporation may commence a civil action--
       (1) to enjoin any act or practice by the Trust, its Board 
     of Trustees, or its employees or agents that violates any 
     provision of this title; or
       (2) to obtain other appropriate relief to redress such 
     violations, or to enforce any provisions of this title.
       (i) Exemption From Tax for Rail Infrastructure Finance 
     Trust.--Subsection (c) of section 501 of the Internal Revenue 
     Code of 1986 is amended by adding at the end the following 
     new paragraph:
       ``(29) The Rail Infrastructure Finance Trust established 
     under section 408 of the Arrive 21 Act.''Add to Title IV 
     where appropriate:

               TITLE VI--RAIL DEVELOPMENT GRANT PROGRAMS

     SEC. 601. INTERCITY PASSENGER RAIL DEVELOPMENT GRANT PROGRAM.

       (a) Grants to States.--The Board of Directors of the Rail 
     Infrastructure Finance Corporation may, by grant, provide 
     financial assistance to a State, a group of States, or the 
     National Railroad Passenger Corporation for, or in 
     connection with, 1 or more intercity passenger rail 
     capital projects that--
       (1) in accordance with section 22504(a)(5) of title 49, 
     United States Code, are listed in a State rail plan approved 
     for such State under chapter 225 of such title; and
       (2) as determined by the Board, would primarily benefit 
     intercity passenger rail infrastructure or services or the 
     development of passenger rail corridors (including high-speed 
     rail corridors designated by the Secretary under section 
     104(d) of title 23, United States Code) and provide 
     significant public benefits.
       (b) Purposes Eligible for Grant Funding.--The purposes for 
     which grants may be made under subsection (a) for, or in 
     connection with, an intercity passenger rail capital project 
     described in that subsection are as follows:
       (1) Planning, including activities described in section 
     26101(b)(1) of title 49, United States Code, and 
     environmental impact studies.
       (2) New rail line development, including right of way and 
     infrastructure acquisition and construction of track and 
     facilities.
       (3) Track upgrades and restoration.
       (4) Highway-rail grade crossing improvement or elimination.
       (5) Track, infrastructure, and facility relocation.
       (6) Acquisition, financing, or refinancing of locomotives 
     and rolling stock.
       (7) Intermodal and station facilities.
       (8) Tunnel and bridge repair or replacement.
       (9) Communications and signaling improvements.
       (10) Environmental impact mitigation.
       (11) Security improvements.
       (12) Supplemental funding for direct loans or loan 
     guarantees made under title V of the Railroad Revitalization 
     and Regulatory Reform Act of 1976 (45 U.S.C. 821 et seq.).
       (13) Payment of credit risk premiums, to lower rates of 
     interest, or to provide for a holiday on principal payments 
     on loan or financing directly associated with rail capital 
     projects described in paragraphs (1) through (11).
       (c) Project Selection Criteria.--The Board, in selecting 
     the recipients of financial assistance to be provided under 
     subsection (a), shall--
       (1) require that each proposed project meet all safety 
     requirements that are applicable to the project under law, 
     and give a preference to any project determined by the Board 
     as having provided for particularly high levels of safety;
       (2) give preference to projects with high levels of 
     estimated ridership, increased ontime performance, reduced 
     trip time, additional service frequency, or other significant 
     service enhancements as measured against minimum standards 
     developed under section 415 of this Act;
       (3) encourage intermodal connectivity through projects that 
     provide direct connections between train stations, airports, 
     bus terminals, subway stations, ferry ports, and other modes 
     of transportation;
       (4) ensure a general balance across geographic regions of 
     the United States in providing such assistance and avoid a 
     concentration of a disproportionate amount of such financial 
     assistance in a single project, State, or region of the 
     country;
       (5) encourage projects that also improve freight or 
     commuter rail operations;
       (6) ensure that each project is compatible with, and is 
     operated in conformance with--
       (A) plans developed pursuant to the requirements of 
     sections 135 of title 23, United States Code;
       (B) State rail plans under chapter 225 of title 49, United 
     States Code; and
       (C) the national rail plan (if it is available); and
       (8) favor the following kinds of projects:
       (A) Projects that are expected to have a significant 
     favorable impact on air or highway traffic congestion, 
     capacity, or safety.
       (B) Projects that have significant environmental benefits.

[[Page S16000]]

       (C) Projects that are--
       (i) at a stage of preparation that all pre-commencement 
     compliance with environmental protection requirements has 
     already been completed; and
       (ii) ready to be commenced.
       (D) Projects with positive economic and employment impacts.
       (E) Projects that encourage the use of positive train 
     control technologies.
       (F) Projects that have commitments of funding from non-
     Federal Government sources in a total amount that exceeds the 
     minimum amount of the non-Federal contribution required 
     for the project.
       (G) Projects that involve donated property interests or 
     services.
       (H) Projects that enhance national security.
       (d) Amtrak Eligibility.--To receive a grant under this 
     section, the National Railroad Passenger Corporation may 
     enter into a cooperative agreement with 1 or more States to 
     carry out 1 or more projects on an approved State rail plan's 
     ranked list of priority freight and passenger rail capital 
     projects developed under section 22504(a)(5) of title 49, 
     United States Code, or may submit an independent application 
     for a grant for any eligible project under this section. Any 
     such independent grant request shall be subject to the same 
     selection criteria as apply under subsection (b) to projects 
     of States, except the criteria set forth in subsection (a) 
     (1) and subparagraphs (A) and (B) of subsection (b)(12).
       (e) Limitations.--
       (1) 2-year availability.--If any amount provided as a grant 
     to a State or the National Railroad Passenger Corporation 
     under this section is not obligated or expended for the 
     purposes described in subsection (a) or (b) within 2 years 
     after the date on which the State or Corporation received the 
     grant, such sums shall be returned to the Board for other 
     intercity passenger rail development projects under this 
     section at the discretion of the Board.
       (2) Single project amount.--In awarding grants to States or 
     the National Railroad Passenger Corporation for eligible 
     projects under this section, the Board shall limit the amount 
     of any grant made for a particular project in a fiscal year 
     to not more than 30 percent of the total amount of the funds 
     available for grants under this section for that fiscal year.
       (3) Amtrak.--The total amount of grants made under this 
     section solely to the National Railroad Passenger Corporation 
     in a fiscal year may not exceed 50 percent of the total 
     amount available under this section for all grants in that 
     fiscal year.
       (f) Funding.--Amounts reserved for grants for a fiscal year 
     under section 606(b)(1) shall be available for grants under 
     this section.
       (e) Public benefit.--The term ``public benefit'' means a 
     benefit accrued to the public in the form of enhanced 
     mobility of people or goods, environmental protection or 
     enhancement, congestion mitigation, enhanced trade and 
     economic development, improved air quality or land use, more 
     efficient energy use, enhanced public safety or security, 
     reduction of public expenditures due to improved 
     transportation efficiency or infrastructure preservation, and 
     any other positive community effects as defined by the 
     Secretary.

     SEC. 602. FREIGHT RAIL INFRASTRUCTURE DEVELOPMENT GRANT 
                   PROGRAM.

       (a) Grants to States.--The Board of Directors of the Rail 
     Infrastructure Finance Corporation shall, by grant, provide 
     financial assistance to a State or group of States--
       (1) for, or in connection with, 1 or more freight rail 
     capital projects that--
       (A) in accordance with section 22504(a)(5) of title 49, 
     United States Code, are listed in a State rail plan approved 
     for such State under chapter 225 of such title; and
       (B) as determined by the Board, would primarily benefit 
     freight rail transportation infrastructure or services, but 
     also would provide significant public benefits; or
       (2) for the payment of staff expenses associated with the 
     management of State rail programs and the development and 
     updating of State rail plans under chapter 225 of title 49, 
     United States Code.
       (b) Purposes Eligible for Grant Funding.--The purposes for 
     which grants may be made under subsection (a)(1) for, or in 
     connection with, a freight rail capital project are as 
     follows:
       (1) Planning, including activities described in section 
     26101(b)(1) of title 49, United States Code, and 
     environmental impact studies.
       (2) New rail line development, including infrastructure 
     acquisition and construction of track and facilities.
       (3) Track upgrades and restoration.
       (4) Highway-rail grade crossing improvement or elimination.
       (5) Track, infrastructure, and facility relocation.
       (6) Intermodal facilities.
       (7) Tunnel and bridge repair or replacement.
       (8) Communications and signaling improvements.
       (9) Environmental impact mitigation.
       (10) Security improvements.
       (11) Supplemental funding for direct loans or loan 
     guarantees made under title V of the Railroad Revitalization 
     and Regulatory Reform Act of 1976 (45 U.S.C. 821 et seq.) 
     for projects described in the last sentence of section 
     502(d) of that Act (45 U.S.C. 822(d)).
       (12) Payment of credit risk premiums, to lower rates of 
     interest, or to provide for a holiday on principal payments 
     on loan or financing directly associated with capital 
     projects described paragraphs (1) through (9).
       (c) State Grant Funding Formula.--Of the total amount 
     reserved for a grant program under section 606(b)(2) for a 
     fiscal year, there shall be reserved for each State (to fund 
     grants made to such State under this section) the amount 
     determined for such State in accordance with a formula 
     prescribed by the Board to weigh equally for each State--
       (1) the number of rail miles in active use in the State;
       (2) the number of rail cars loaded in the State;
       (3) the number of rail cars unloaded in the State; and
       (4) the number of railroad and public road grade crossings 
     in the State.
       (d) Period of Availability for Grants.--
       (1) Three-year reservation.--The amount reserved for grant 
     to a State under section (c) in a fiscal year shall be 
     available for grant to such State in such fiscal year and the 
     2 successive fiscal years.
       (2) Cancellation at end of period.--At the end of the third 
     of the 3 successive fiscal years, the reservation of any part 
     of the amount for a State that has not been awarded in a 
     grant to such State shall be canceled, and the amount of the 
     canceled reservation--
       (A) shall be merged with the funds reserved for the grant 
     program under section 606(b)(2) for the next fiscal year; and
       (B) shall be reserved for each State in accordance with the 
     formula provided under this section.
       (e) Two-Year Availability.--If any amount provided as a 
     grant to a State under this section is not obligated or 
     expended for the purposes described in subsection (a) or (b) 
     within 2 years after the date on which the State received the 
     grant, such sums shall be returned to the Board for other 
     freight rail capital projects under this section at the 
     discretion of the Board.

     SEC. 603. HIGH PRIORITY PROJECTS GRANT PROGRAM.

       (a) Grants to States.--The Board of Directors of the Rail 
     Infrastructure Finance Corporation may, by grant, provide 
     financial assistance to a State, a group of States, or the 
     National Railroad Passenger Corporation for intercity 
     passenger rail and freight rail infrastructure development 
     projects that are designated as high priority projects under 
     section 22505 of title 49, United States Code.
       (b) Purposes.--The purposes for which a grant may be made 
     under this section are--
       (1) in the case of an intercity passenger rail corridor 
     development project, the same purposes as are provided under 
     section 601; and
       (2) in the case of a freight rail infrastructure 
     development project, the same purposes as are provided under 
     section 602.
       (c) Preferred Projects.--In selecting the projects to 
     receive financial assistance under this section, the Board 
     shall give preference to a project that--
       (1) provides for use of positive train control 
     technologies;
       (2) provides for particularly high levels of safety;
       (3) increases intermodal connectivity by providing or 
     improving direct connections between rail facilities and 
     other modes of transportation;
       (4) assists the Board--
       (A) to achieve a general balance across geographic regions 
     of the United States in the awarding of grants under this 
     section; and
       (B) to avoid a concentration of a disproportionate amount 
     of such financial assistance in a single project, State, or 
     region of the country;
       (5) has a significant favorable impact on highway, 
     aviation, or maritime capacity, congestion, or safety;
       (6) improves the national intercity passenger rail system 
     through higher levels of estimated ridership, reduced trip 
     time, increased ontime performance, additional service 
     frequency, or other significant service enhancements as 
     measured against minimum standards developed under section 
     415 of this Act;
       (7) has positive economic and employment impacts;
       (8) has significant environmental benefits;
       (9) is--
       (A) at the stage of preparation that all pre-commencement 
     compliance with environmental protection requirements has 
     been completed; and
       (B) ready to be commenced;
       (10) has received financial commitments and other support 
     from non-Federal entities such as States, local governments, 
     and private entities;
       (11) has commitments of funding from nonFederal Government 
     sources in a total amount that exceeds the minimum amount of 
     the non-Federal contribution required; and
       (12) involves donated property interests or services.
       (d) Amtrak Eligibility.--To receive a grant under this 
     section, the National Railroad Passenger Corporation may 
     submit an independent application or may enter into a 
     cooperative agreement with 1 or more States to carry out 1 or 
     more high priority projects designated under section 22506 of 
     title 49, United States Code. Any such independent grant 
     request shall be subject to the same conditions as apply 
     under this section to projects of States.
       (e) Limitations.--
       (1) Two-year availability.--If any amount provided as a 
     grant to a State or the National Railroad Passenger 
     Corporation under

[[Page S16001]]

     this section is not obligated or expended for the purposes 
     for which the grant is made within 2 years after the date on 
     which the State or the National Railroad Passenger 
     Corporation received the grant, such sums shall be returned 
     to the Board for other high priority projects under this 
     section at the discretion of the Board.
       (2) Single project amount.--In awarding grants to States 
     for eligible projects under this section, the Board shall 
     limit the amount of any grant made for a particular project 
     in a fiscal year to not more than 30 percent of the total 
     amount of the funds available for grants under this section 
     for that fiscal year.
       (f) Funding.--Amounts reserved for grants for a fiscal year 
     under section 606(b)(3) shall be available for grants under 
     this section.

     SEC. 604. GRANT PROGRAM REQUIREMENTS AND LIMITATIONS.

       (a) Authorized Uses.--The proceeds of a grant made for a 
     project under this title may be used to defray the costs of 
     the project or to reimburse the recipient for costs of the 
     project paid by the recipient.
       (b) Non-Federal Contribution.--The proceeds of a grant 
     under this title may be released upon receipt by the Board of 
     Directors of the Rail Infrastructure Finance Corporation of 
     cash payment by a non-Federal Government source, or 1 or more 
     such sources jointly, in an amount not less than the amount 
     equal to 20 percent of the amount of the grant disbursed. The 
     cash payment may not be derived, directly or indirectly, from 
     Federal funds. Amounts received under this subsection shall 
     be credited to the Rail Infrastructure Investment Account 
     established under section 507(e).
       (c) Preference Involving Donated Property Interests and 
     Services.--In selecting projects for grant funding under this 
     title, the Board may give preference to projects that involve 
     donated right-of-way, property, or in-kind services by a 
     public sector or private sector entity. The value of a 
     donation under this subsection may not be counted toward 
     satisfaction of the requirement in subsection (b).
       (d) Flexibility.--Notwithstanding any other provision of 
     this title, amounts made available under section 506 may be 
     combined and used for projects that significantly benefit 
     either freight rail service, intercity passenger rail 
     service, or both.
       (e) Suballocation; Public-Private Partnerships.--
       (1) In general.--A metropolitan planning organization, 
     State transportation department, or other project sponsor may 
     enter into an agreement with any public, private, or 
     nonprofit entity to cooperatively implement any project 
     funded with a grant under this title.
       (2) Forms of participation.--Participation by an entity 
     under paragraph (1) may consist of--
       (A) ownership or operation of any land, facility, 
     locomotive, rail car, vehicle, or other physical asset 
     associated with the project;
       (B) cost-sharing of any project expense;
       (C) carrying out administration, construction management, 
     project management, project operation, or any other 
     management or operational duty associated with the project; 
     and
       (D) any other form of participation approved by the Board.
       (3) Sub-allocation.--A State may allocate funds under this 
     section to any entity described in paragraph (1).
       (f) Special Transportation Circumstances.--In carrying out 
     this section, the Board shall allocate an appropriate portion 
     of the amounts available under section 601 or 602 to provide 
     appropriate transportation-related assistance in any State in 
     which the rail transportation system--
       ``(1) is not physically connected to rail systems in the 
     continental United States; and
       ``(2) may not otherwise qualify for assistance under 
     section 601 or 602 due to the constraints imposed on the 
     railway infrastructure in that State due to the unique 
     characteristics of the geography of that State or other 
     relevant considerations, as determined by the Board.
       (g) Applications.--To seek a grant under this title, a 
     State or, in the case of a grant under section 601 or 603, 
     the National Railroad Passenger Corporation shall submit an 
     application for the grant to the Board. The application shall 
     be submitted at such time and contain such information as the 
     Board requires.
       (h) Procedures for Grant Award.--The Board shall prescribe 
     procedures and schedules for the awarding of grants under 
     this title, including application and qualification 
     procedures and a record of decision on applicant eligibility. 
     The procedures shall include the execution of a grant 
     agreement between the applicant and the Board. The Board 
     shall issue a final rule establishing the procedures not 
     later than 90 days after the date on which a sufficient 
     number of the members of Board to constitute a quorum has 
     taken office.
       (i) Domestic Buying Preference.--
       (1) Requirement.--
       (A) In general.--In carrying out a project funded in whole 
     or in part with a grant under this title, the grant recipient 
     shall purchase only--
       (i) unmanufactured articles, material, and supplies mined 
     or produced in the United States; or
       (ii) manufactured articles, material, and supplies 
     manufactured in the United States substantially from 
     articles, material, and supplies mined, produced, or 
     manufactured in the United States.
       (B) De minimis amount.--Subparagraph (1) applies only to a 
     purchase in an total amount that is not less than $1,000,000.
       (2) Exemptions.--On application of a recipient, the Board 
     may exempt a recipient from the requirements of this 
     subsection if the Board decides that, for particular 
     articles, material, or supplies--
       (A) such requirements are inconsistent with the public 
     interest;
       (B) the cost of imposing the requirements is unreasonable; 
     or
       (C) the articles, material, or supplies, or the articles, 
     material, or supplies from which they are manufactured, are 
     not mined, produced, or manufactured in the United States in 
     sufficient and reasonably available commercial quantities and 
     are not of a satisfactory quality.
       (3) United States defined.--In this subsection, the term 
     ``the United States'' means the States, territories, and 
     possessions of the United States and the District of 
     Columbia.

     SEC. 605. STANDARDS AND CONDITIONS.

       (a) Operators Deemed Rail Carriers and Employers for 
     Certain Purposes.--A person that con ducts rail operations 
     over rail infrastructure constructed or improved with funding 
     provided in whole or in part in a grant made under this title
       (1) shall be considered an employer for purposes of the 
     Railroad Retirement Act of 1974 (45 U.S.C. 231 et seq.); and
       (2) shall be considered a carrier for purposes of the 
     Railway Labor Act (43 U.S.C. 151 et seq.).
       (b) Grant Conditions.--The Board of Directors of the Rail 
     Infrastructure Finance Corporation shall require as a 
     condition of making any grant under this title that includes 
     the improvement or use of rights-of-way owned by a railroad 
     that--
       (1) a written agreement exist between the applicant and the 
     railroad regarding such use and owner ship, including--
       (A) any compensation for such use;
       (B) assurances regarding the adequacy of infrastructure 
     capacity to accommodate both existing and future freight and 
     passenger operations; and
       (C) an assurance by the railroad that collective bargaining 
     agreements with the railroad's employees (including terms 
     regulating the contracting of work) will remain in full force 
     and effect according to their terms for work performed by the 
     railroad on the railroad transportation corridor; and
       (2) the applicant agrees to comply with--
       (A) the standards of section 24312 of title 49, United 
     States Code, as such section was in effect on September 1, 
     2003, with respect to the project in the same manner that the 
     National Railroad Passenger Corporation is required to comply 
     with those standards for construction work financed under an 
     agreement made under section 24308(a) of that title; and
       (B) the protective arrangements established under section 
     504 of the Railroad Revitalization and Regulatory Reform Act 
     of 1976 (45 U.S.C. 836) with respect to employees affected by 
     actions taken in connection with the project to be financed 
     in whole or in part by the Rail Infrastructure Finance 
     Corporation.
       (c) Replacement of Existing Intercity Passenger Rail 
     Service.--
       (1) Collective bargaining agreement for intercity passenger 
     rail projects.--Any entity providing intercity passenger 
     railroad transportation that begins operations after the date 
     of enactment of this Act on a project funded in whole or in 
     part by grants made under this title and replaces intercity 
     rail passenger service that was provided by another entity as 
     of such date shall enter into an agreement with the 
     authorized bargaining agent or agents for employees of the 
     predecessor provider that--
       (A) gives each qualified employee of the predecessor 
     provider priority in hiring according to the employee's 
     seniority on the predecessor provider for each position with 
     the replacing entity that is in the employee's craft or class 
     and is available within 3 years after the termination of the 
     service being replaced;
       (B) establishes a procedure for notifying such an employee 
     of such positions;
       (C) establishes a procedure for such an employee to apply 
     for such positions; and
       (D) establishes rates of pay, rules, and working 
     conditions.
       (2) Immediate replacement service.--
       (A) Negotiations.--If the replacement of preexisting 
     intercity rail passenger service occurs concurrent with or 
     within a reasonable time before the commencement of the 
     replacing entity's rail passenger service, the replacing 
     entity shall give written notice of its plan to replace 
     existing rail passenger service to the authorized collective 
     bargaining agent or agents for the employees of the 
     predecessor provider at least 90 days before the date on 
     which it plans to commence service. Within 5 days after the 
     date of receipt of such written notice, negotiations between 
     the replacing entity and the collective bargaining agent or 
     agents for the employees of the predecessor provider shall 
     commence for the purpose of reaching agreement with respect 
     to all matters set forth in subparagraphs (A) through (D) of 
     paragraph (1). The negotiations shall continue for 30 days or 
     until an agreement is reached whichever is sooner. If at the 
     end of 30 days the parties have not entered into an agreement 
     with respect to all such matters, the unresolved issues shall 
     be submitted for arbitration in accordance with the procedure 
     set forth in subparagraph (B).
       (B) Arbitration.--If an agreement has not been entered into 
     with respect to all matters

[[Page S16002]]

     set forth in subparagraphs (A) through (D) of paragraph (1) 
     as described in subparagraph (A) of this paragraph, the 
     parties shall select an arbitrator. If the parties are unable 
     to agree upon the selection of such arbitrator within 5 days, 
     either or both parties shall notify the National Mediation 
     Board, which shall provide a list of seven arbitrators with 
     experience in arbitrating rail labor protection disputes. 
     Within 5 days after such notification, the parties shall 
     alternately strike names from the list until only 1 name 
     remains, and that person shall serve as the neutral 
     arbitrator. Within 45 days after selection of the arbitrator, 
     the arbitrator shall conduct a hearing on the dispute and 
     shall render a decision with respect to the unresolved issues 
     among the matters set forth in subparagraphs (A) through (D) 
     of paragraph (1). This decision shall be final, binding, and 
     conclusive upon the parties. The salary and expenses of the 
     arbitrator shall be borne equally by the parties; all other 
     expenses shall be paid by the party incurring them.
       (3) Service commencement.--A replacing entity under this 
     subsection shall commence service only after an agreement is 
     entered into with respect to the matters set forth in 
     subparagraphs (A) through (D) of paragraph (1) or the 
     decision of the arbitrator has been rendered.
       (4) Subsequent replacement of service.--If the replacement 
     of existing rail passenger service takes place within 3 years 
     after the replacing entity commences intercity passenger rail 
     service, the replacing entity and the collective bargaining 
     agent or agents for the employees of the predecessor provider 
     shall enter into an agreement with respect to the matters set 
     forth in subparagraphs (A) through (D) of paragraph (1). If 
     the parties have not entered into an agreement with respect 
     to all such matters within 60 days after the date on which 
     the replacing entity replaces the predecessor provider, 
     the parties shall select an arbitrator using the 
     procedures set forth in paragraph (2)(B), who shall, 
     within 20 days after the commencement of the arbitration, 
     conduct a hearing and decide all unresolved issues. This 
     decision shall be final, binding, and conclusive upon the 
     parties.
       (d) Inapplicability to Certain Rail Operations.--Nothing in 
     this section applies to--
       (1) commuter rail passenger transportation (as defined in 
     section 24102(4) of title 49, United States Code) operations 
     of a State or local government authority (as those terms are 
     defined in section 5302(11) and (6), respectively, of that 
     title) eligible to receive financial assistance under section 
     5307 of that title, or to its contractor performing services 
     in connection with commuter rail passenger operations (as so 
     defined); or
       (2) the Alaska Railroad or its contractors.
       (3) The National Railroad Passenger Corporation's access 
     rights to railroad rights of way and facilities under current 
     law for projects funded under this title where train 
     operating speeds do not exceed 79 miles per hour.

     SEC. 606. GRANT PROGRAM FUNDING.

       (a) Annual Reservation of Funds.--Each fiscal year, the 
     Board of directors of the Rail Infrastructure Finance 
     Corporation Board shall reserve for grants under each of the 
     grant programs authorized under sections 501, 502, and 503 
     the amount determined by multiplying the percent applicable 
     to the program under subsection (b) times the amount of the 
     net spendable proceeds (as defined under section 507(c)(7)) 
     that is available for such fiscal year.
       (b) Applicable Percent.--The percent applicable to a grant 
     program under subsection (a) is as follows:
       (1) Intercity passenger rail development grant program.--
     For the intercity passenger rail development grant program 
     under section 601, 40 percent.
       (2) Freight infrastructure development grant program.--For 
     the freight infrastructure development grant program under 
     section 602, 40 percent.
       (4) High priority projects grant program.--For the high 
     priority projects grant program under section 603, 20 
     percent.

               TITLE VII--AUTHORIZATION OF APPROPRIATIONS

     SEC. 701. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated $5,000,000 for 
     fiscal year 2004 for the establishment and payment of initial 
     administrative costs of the Rail Infrastructure Finance 
     Corporation, including the Rail Infrastructure Finance Trust.
  Mr. CARPER. Mr. President, I rise today to join Senators Hollings, 
Collins, Specter, Jeffords and Lautenberg in introducing ``ARRIVE 21,'' 
the American Railroad Revitalization, Investment, and Enhancement Act 
of the 21st Century. ARRIVE 21 is a comprehensive proposal that creates 
a new public/private partnership to fund rail infrastructure 
development, reauthorizes and improves Amtrak, and enhances Federal and 
State rail policy and planning efforts.
  As our Nation faces a mobility crisis of staggering proportions, with 
freight movements expected to double and our highways and airways 
already overburdened with congestion, ARRIVE 21 will give our States a 
new and powerful tool to unlock the potential of intercity passenger 
rail, bringing high-speed rail to viable corridors across the country 
while providing capital funding for freight rail projects that deliver 
public benefits. Today's passenger and freight railroads are already 
essential components of our surface transportation system and I believe 
that greater use of rail offers one of the best opportunities to 
augment the capacity of our existing transportation network, while 
benefiting the environment and reducing our dependency on foreign oil.
  Historically, railroads have been built, maintained and operated 
outside of the publicly funded programs that finance our other 
transportation modes, relying almost exclusively on the private sector 
to fund their infrastructure. However, today's railroads face 
restricted access to capital and capacity constraints that limit 
service quality and expansion, all the while facing ever-growing modal 
competition financed by federally funded trust funds. If rail is to 
remain viable or increase its share of the intercity passenger and 
freight markets--necessary developments if we are to reach other 
transportation and public policy goals including highway infrastructure 
preservation, highway and air congestion relief, energy efficiency, 
environmental stewardship and smart growth development--then the pubic 
sector, through arm's length voluntary partnerships with private 
railroads, must play a more active role in financing the development of 
freight and passenger rail infrastructure, as it has with all other 
modes.
  Today, America's freight railroads carry 16 percent of the nation's 
freight by tonnage and intercity passenger rail carriers roughly 23 
million passenger annually. But, the ability of our passenger and 
freight rail systems to generate the sufficient investment capital 
needed to maintain this market share, or expand it to handle the 
expected increases in passenger and freight traffic over the next 20 
years, is limited or in jeopardy. According to the America Association 
of State Highway and Transportation Officials' (ASSHTO) ``Freight Rail 
Bottom Line Report,'' the nation's freight railroads will need an 
additional $2.65 billion of public sector annual capital investment 
over the next 20 years above and beyond what they can finance 
themselves just to maintain their current share of the freight tonnage.
  Without this additional investment, freight traffic is likely to 
shift from rail to our highways, resulting in an additional 450 million 
tons of freight and 15 billion truck VMT (Vehicle Miles Traveled) on 
our roads and $162 billion in increased shipper costs, $238 billion in 
increased highway user costs, and approximately $20 billion in direct 
additional highway infrastructure costs. Alternatively, ASSHTO has 
concluded that with a public investment of $4 billion annually in 
freight rail infrastructure over the next 20 years, freight rail's 
tonnage share would increase 1 percentage point to 17 percent. This 
shift would thereby relieve our highways of an estimated 600 million 
tons of freight traffic and 25 billion VMT, while saving shippers $239 
billion and highways users $397 billion, and reducing direct highway 
infrastructure costs by $17 billion.
  For intercity passenger rail, ASSHTO similarly concludes that roughly 
$3 billion in annual public sector investment over the next 20 years is 
needed to expand intercity passenger rail services and advance the many 
viable high speed rail corridors that could reduce highway and aviation 
congestion. The Texas Transportation Institute's ``2003 Urban Mobility 
Report,'' which looks at transportation mobility in 75 cities of 
varying sizes, concludes that the average annual transportation delay 
time per person climbed from ``16 hours in 1982 to 60 hours in 2001'' 
due to the congestion of our surface system.
  High-quality and high-speed intercity passenger service, especially 
in intercity corridors of 500 miles or less where rail can offer 
competitive trip times, offers a tremendous opportunity to relieve such 
congestion by shifting travelers who current drive and fly onto trains. 
Today, roughly 80 percent off all trips of more than 100 miles are less 
than 500 miles in length. Successful rail corridors in California, the 
Pacific Northwest, and in the Northeast have shown that rail can be 
viable option for travelers in such markets, capturing significant 
market share and in same cases becoming the dominate mode when frequent 
and high-quality service

[[Page S16003]]

is offered. Where intercity passenger rail is successful, congestion in 
our airports and on our highways is reduced, smart development is 
induced, jobs are created and citizens' safety and quality of life are 
improved.
  Theses facts lead to the obvious conclusion that leveraging modest 
public investment in our rail system will reap benefits to our entire 
surface transportation system and to our Nation as a whole. In my State 
of Delaware, we have clearly seen the value that high-quality passenger 
and freight rail service brings and we have made significant 
investments to upgrade both Amtrak facilities and infrastructure and 
enhance freight capacity for the railroads that serve Delaware 
industries. But despite of all the good reasons to invest in our 
railroad infrastructure, Delaware and other States are limited in what 
they can do on there own without the benefit of the financing 
partnership that our Federal Government provides the State for all 
other transportation investments. ARRIVE 21 is designed to change that.
  ARRIVE 21 will empower our States to make rational investments in our 
rail system when such investments provide significant pubic benefits. 
Through the creation of the Rail Infrastructure Finance Corporation 
(RIFCO) a non-profit, non-Federal, congressionally-chartered 
corporation that can issue $30 billion in tax-credit bonds over 6 
years, States will have a new partner to assist them in undertaking 
rail capital projects. RIFCO will award, using a portion of the 
proceeds from the bond issuance, discretionary capital matching grants 
to States and Amtrak for high-speed rail and intercity passenger rail 
projects and State formula matching grants for freight capital 
projects. Prior to issuing grants, a portion of the bond proceeds will 
be deposited in a secure and continually monitored repayment fund 
managed by the RIFCO investment trust to retire the debt over the life 
of the bonds.
  Passenger and freight rail projects eligible for funding through 
RIFCO include planning and environmental review, rail line 
rehabilitation, upgrades and development, safety and security projects, 
passenger equipment acquisition, station improvements, and intermodal 
facilities development. In order to receive grants, States must prepare 
a State rail plan and provide a 20 percent non-Federal match to RIFCO, 
thereby replicating the cost sharing relationship our States currently 
have for investments in other modes.
  ARRIVE 21 will promote jobs and economic growth through the 
rehabilitation and expansion of rail infrastructure, the manufacture 
and procurement of new rail equipment and the enhancement of mobility 
and development in and around or cities and towns. Our bill provides a 
total $42 billion investment in U.S. rail infrastructure and service to 
expand high-speed passenger rail in congested corridors, strengthen 
Amtrak, and improve freight mobility. Such investment will revitalize 
the U.S. rail supply industry and create thousands of jobs. According 
to U.S. Transportation Secretary Mineta, every $1 billion invested in 
transportation infrastructure creates roughly 47,500 jobs. That means 
ARRIVE 21 stands to create roughly 2 million jobs, if enacted.
  ARRIVE 21 reauthorizes and reforms Amtrak. Designed to improve upon 
Amtrak's current congressional and State funding processes, our bill 
authorizes approximately $1.5 billion annually for 6 years to Amtrak 
for the basic capital and operating needs required to run and maintain 
the current system. In addition to these funds, the States and Amtrak 
can pursue major capital improvements and equipment acquisition through 
RIFCO, with reductions in Amtrak's capital authorizations for projects 
funded through RIFCO capital grants. Through this process, the amount 
needed for annual Amtrak appropriation for capital will be reduced over 
the life of the reauthorization, as RIFCO begins to finance a growing 
share of Amtrak's capital needs. As is the case today, operating costs 
on long distance trains will be covered by Amtrak's annual 
appropriation, while States will share the costs with Amtrak for 
operations of short distance corridors.
  For such shot distance corridors, ARRIVE 21 infuse fairness into the 
current system by requiring parity between Amtrak and all States for 
cost sharing, putting an end to disparate treatment among the States 
that contract with Amtrak to provide corridor service. Furthermore, it 
authorizes a study of new methodologies to determine Amtrak routes and 
services while defining the national passenger rail system based on 
existing service and high-speed rail corridors. ARRIVE 21 also requires 
a whole host of new reforms including accounting transparency measures, 
the establishment of a quarterly grant process for Amtrak through the 
U.S. Department of Transportation to ensure accountability, and the 
creation of new service metrics that will improve the monitoring and 
quantification of Amtrak service performance and quality.
  ARRIVE 21 helps to coordinate rail-planning efforts across the U.S. 
at the national and State level and increases the Federal Railroad 
Administration's advocacy role in promoting a safe, secure, efficient, 
environmentally sound rail transportation system nationwide. The bill 
directs the Federal Government to develop a national rail plan in 
coordination with State rail plans and creates a rail cooperative 
research program through the National Academies of Sciences. It also 
authorizes additional funds for planning of high-speed rail projects 
through the U.S. Secretary of Transportation and addresses rail safety 
needs by authorizing funding for emergency passenger safety improvement 
projects. In light of the security risks facing our railroads, ARRIVE 
21 authorizes $515 million in 2004 for rail security threat assessments 
and grants through the Department of Homeland Security.
  In total, ARRIVE 21 provides the needed funding for the more than $5 
billion annual shortfall in U.S. rail infrastructure investment cited 
by AASHTO Bottom Line Report without involving the Highway Trust Fund 
or sapping funds away from other important transportation priorities. 
This bill will provide our States and the Nation with a fiscally 
responsible and innovative opportunity to enhance our entire 
transportation system. We owe it to the American people to support this 
bill and move towards the type of high-quality, high-speed intercity 
passenger rail service that Americans desire and deserve, while meeting 
the ever-growing demands that trade and our economy are placing on our 
freight system. I ask my colleagues to join me in supporting ARRIVE 21.
  Mr. JEFFORDS. Mr. President, I have frequently reiterated my 
conviction that investment in transportation is a means to an end. Our 
national transportation policy must be designed to serve the public 
good. In my view, the outcomes we seek are a strong economy, safe and 
healthy communities, and a clean environment. A balanced transportation 
system, including a strong freight and passenger rail system, is 
necessary for us to attain these goals.
  As ranking member of the Committee on Environment and Public Works, I 
have been highly involved in the Senate's effort to reauthorize the 
nation's surface transportation program. Over the past two years, I 
have traveled around the country, visiting local examples of national 
transportation challenges. I have heard critiques and suggestions from 
dozens of transportation officials, users, and advocates.
  In order to best serve the needs of this country, we must redouble 
our investment in an efficient, intermodal transportation system. I 
have often expressed my view that the success of our surface 
transportation program rests on four fundamental `pillars':
  First, asset management. We must maintain and preserve existing 
infrastructure. Second, we must enhance access and mobility, 
particularly for Americans living in our most congested urban areas.
  The third pillar is freight and trade. We need new and improved 
facilities to accommodate the quantity of goods moving through our 
system.
  Fourth, I believe that rail is the final component of a successful 
surface transportation system. We are not currently meeting the 
nation's freight and passenger rail needs. We must invest in a modern 
national rail system, comparable to our highway and aviation systems. 
The bill that we are introducing today will help us achieve that goal.
  The American Railroad Revitalization, Investment, and Enhancement

[[Page S16004]]

Act of the 21st Century (ARRIVE 21) strives to provide sustainable, 
meaningful, and continuous funding opportunities for states that want 
to improve and expand their rail systems. Currently, the federal 
government provides few funding sources to assist states in their 
efforts to maintain and improve freight and passenger rail service. 
This bill creates a nonprofit, public-private partnership--the Rail 
Infrastructure Finance Corporation (RIFCO)--with the authority to issue 
$30 billion in tax-credit bonds over six years. With the resulting 
revenue, RIFCO will award capital grants to states and to Amtrak.
  My State of Vermont has long displayed a commitment to maintaining an 
effective and efficient freight and passenger rail system. This 
legislation would provide Vermont a significant new source of revenue 
to fund capital projects such as rail line rehabilitation, safety and 
security projects, and development of intermodal facilities. In fact, 
grants awarded by RIFCO could be used to reimburse States for the 
capital investments they've already made, a provision that is 
particularly helpful to States, like Vermont, that have invested State 
money into eligible projects.
  For Amtrak, this legislation introduces financial and policy 
commitments to dramatically improve passenger rail service in this 
country. We envision a future that includes a healthy and efficient 
passenger rail system and provide the resources to move Amtrak in that 
direction.
  ARRIVE 21 authorizes approximately $1.5 billion per year, for six 
years, for capital and operating expenses. We have under-funded Amtrak 
for too long. This funding level will provide Amtrak the resources it 
needs to address urgent infrastructure needs and system-wide service 
improvements.
  Amtrak will also benefit from provisions in this bill that encourage 
long-term sustainability and enhanced operations. ARRIVE 21 requires 
improved accounting procedures and oversight. Additionally, states that 
currently share responsibility with Amtrak for supporting services 
through or within their states will see changes to equalize their cost 
burden. This bill requires that Amtrak, in collaboration with the 
Department of Transportation, adopt fair and uniform standards for cost 
sharing on short-distance services that states contract with Amtrak to 
provide.
  ARRIVE 21 also directs an independent study to research Amtrak's 
current and past procedures for determining intercity passenger rail 
routes and services. The study will recommend changes to that process 
to improve the efficiency, accessibility, and effectiveness of our 
national rail service.
  I have long been a strong advocate for rail. I firmly believe that 
nation-wide investment in freight and passenger rail infrastructure 
will invite rewards in the form of reduced congestion, improved 
environmental quality, and improved mobility options for our nation's 
travelers. ARRIVE 21 encourages States, and the Federal Government, to 
more fully integrate freight and passenger rail into the surface 
transportation system. Improved rail planning policy, at both the 
Federal and State levels, will enhance the efficiency and longevity of 
our transportation system and will promote safe, efficient, and 
environmentally sound transportation options.
  Mr. LAUTENBERG. Mr. President, I am proud to be a cosponsor of 
ARRIVE-21. I believe rail is a vital component of our national 
transportation system, and investment in our Nation's rail 
infrastructure is necessary for our economy, our security, and the 
effective and safe movement of people and goods in our country.
  The importance of rail service became apparent in the Northeast long 
ago, as we dealt with the myriad transportation planning and congestion 
issues that many other States are now just facing. These States are 
joining us Northeasterners in looking to the Federal Government to 
provide the leadership needed to ensure that passenger rail is given 
the priority it deserves.
  It took Federal money, not just gasoline taxes, to build the Dwight 
D. Eisenhower Interstate Highway System. It took Federal money to build 
our national aviation system.
  Here in the Northeast, the first part of the country to become 
densely populated, we faced congestion problems long ago, and passenger 
rail service became a mainstay. In the Northeast, we rely heavily on 
Amtrak's high-speed service between Boston and Washington, D.C. The 
Northeast Corridor serves cities with four of the Nation's seven most 
congested airports: Logan, LaGuardia, Newark, and Reagan National. 
Amtrak carries more passengers between New York and Washington than all 
of the airlines combined and, unlike airline passengers, rail travelers 
are able to stop in Trenton and Newark, New Jersey, and in other places 
along the way.
  Next month, New Jersey Transit will open for service a new rail 
station in Secaucus, NJ. As a result of this opening, more than 15,000 
cars will be diverted from our roads each day by 2010. That will reduce 
carbon monoxide emissions by nearly 277,000 pounds each year. New 
Jersey riders who switch to rail because of this one station will cut 
their gasoline consumption by 1.3 million gallons each year.
  Also, in this post-9-11 environment we have a new perspective about 
the national security interest in ensuring that there is more than one 
way to get from here to there, and this includes passenger rail. 
September 11 underscored just how important passenger rail is to 
America's economy and security.
  New Jersey's economy is so dependent on passenger rail and mass 
transit as a result of being the most densely populated State in the 
Nation. New Jersey needs federal assistance for passenger rail 
infrastructure. But New Jersey is not alone. As metropolitan areas 
across the country continue to swell with people, our roads and 
airports become more and more congested. I think the prudence of 
increasing our investment in another way to move people--passenger 
rail--has become more and more obvious. And ARRIVE-21 provides this 
investment opportunity.
  The benefits of rail service are not limited to urban areas. In rural 
towns across America, passenger trains may be the only option for 
intercity travel for many people.
  From 1987 through 2000, I was the Chairman or Ranking Member of the 
Senate Appropriations Subcommittee on Transportation. During that time, 
I helped to secure 10.3 billion dollars in operating funds for AMTRAK 
and an additional 2.2 billion dollars in tax-advantaged financing for 
capital improvements. Unfortunately, during that time, we have not been 
able to make the capital investments necessary to bring Amtrak's 
infrastructure up to a state of good repair.
  ARRIVE-21 gives the Federal Government the impetus to step up and 
take charge with a strong program to invest in our rail infrastructure. 
The States are interested, the traveling public is interested. This 
kind of investment will lay the tracks for the future of all Americans 
to have travel options, provide a national security role, and support 
our economy.
  For these reasons, I am proud to cosponsor ARRIVE-21.
                                 ______
                                 
      By Mr. SPECTER (for himself and Mrs. Boxer):
  S. 1963. A bill to amend the Communications Act of 1934 to protect 
the privacy right of subscribers to wireless communication services; to 
the Committee on Commerce, Science, and Transportation.
  Mr. SPECTER. Mr. President, I rise today to introduce the Wireless 
Consumer Privacy Protection Act.
  As every Senator is aware, consumers today rely on their wireless 
telephones as a vital and important means of communication. Wireless 
telephones enable families to stay connected, permit commerce to be 
conducted anywhere at any time, and provide a vital link in the event 
of an emergency. Some people have even abandoned traditional telephones 
and now use their wireless phones as their primary phone service. In 
fact, just this month, the Federal Communications Commission began 
requiring number portability for wireless phones so that consumers, if 
they wish, can make their wireless phone their only phone.
  The wireless industry is on the verge of introducing a ``wireless 
white pages'' service, and though this step could have positive 
benefits, it raises concerns about how consumers' expectation of 
privacy will be protected. The

[[Page S16005]]

legislation I am introducing today along with Senator Boxer ensures 
that consumers expectations will be preserved.
  An important reason that Americans increasingly trust their cell 
phone service is that they have a great deal of privacy on their cell 
phone numbers. For more than 20 years of cellular service, consumers 
have become accustomed to not having their wireless phone numbers 
available to the public. The protection of wireless telephone number is 
important. For example, wireless customers are typically charged for 
incoming calls. Without protections for wireless numbers, subscribers 
could incur large bills, or use up their allotted minutes of use, 
simply by receiving calls they do not want--from telemarketers and 
others. Because consumers often take their cell phones with them 
everywhere, repeated unwanted calls are particularly disruptive, and 
may even present safety concerns for those behind the wheel.
  It may surprise my colleagues that today, no federal or state law or 
regulation prohibits a carrier from divulging your wireless telephone 
number. And with the industry poised to introduce wireless director 
assistance services, it is important for Congress to act now to 
preserve the expectation of privacy that consumers have in their 
wireless phone numbers. Because wireless directory assistance offer 
great benefits as well as posing significant privacy concerns, the 
legislation I am introducing today strikes an important balance. It 
enables those consumers who want to be reached to be accessible, while 
providing privacy protections that are important to consumers.
  First, this legislation permits wireless subscribers to choose not to 
be listed in wireless directory assistance databases. This feature 
gives consumers the ultimate ability to keep their numbers entirely 
private. Second, for those in the directory assistance database, the 
bill requires wireless providers to use systems that give users privacy 
protections and control over the use of their wireless numbers. These 
services must not divulge a subscriber's wireless number (unless the 
subscriber consents to disclosure), the service must provide 
identifying information to the wireless subscriber so that the 
subscriber knows who is calling through the forwarding service, and the 
service must give a subscriber the option of rejecting or accepting 
each incoming call. Finally, this legislation prohibits wireless 
carriers from charging any special fees to consumers who wish to 
receive the privacy protections provided by the bill. Customers should 
not have to pay extra for the privacy protections that they have come 
to expect. There should be no ``privacy tax'' for consumers to continue 
the privacy protection they have long enjoyed, and this bill ensures 
that will be the case.
  I urge my colleagues to join me in supporting this important 
legislation. 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. 1963

       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 ``Wireless 411 Privacy Act''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) there are roughly 150 million wireless subscribers in 
     the United States, up from approximately 15 million 
     subscribers just a decade ago;
       (2) wireless phone service has proven valuable to millions 
     of Americans because of its mobility, and the fact that 
     government policies have expanded opportunities for new 
     carriers to enter the market, offering more choices and ever 
     lower prices for consumers;
       (3) in addition to the benefits of competition and 
     mobility, subscribers also benefit from the fact that 
     wireless phone numbers have not been publicly available;
       (4) up until now, the privacy of wireless subscribers has 
     been safeguarded and thus vastly diminished the likelihood of 
     subscribers receiving unwanted or annoying phone call 
     interruptions on their wireless phones;
       (5) moreover, because their wireless contact information, 
     such as their phone number, have never been publicly 
     available in any published directory or from any directory 
     assistance service, subscribers have come to expect that if 
     their phone rings it's likely to be a call from someone to 
     whom they have personally given their number;
       (6) the wireless industry is poised to begin implementing a 
     directory assistance service so that callers can reach 
     wireless subscribers, including subscribers who have not 
     given such callers their wireless phone number;
       (7) while some wireless subscribers may find such directory 
     assistance service useful, current subscribers deserve the 
     right to choose whether they want to participate in such a 
     directory;
       (8) because wireless users are typically charged for 
     incoming calls, consumers must be afforded the ability to 
     maintain the maximum amount of control over how many calls 
     they may expect to receive and, in particular, control over 
     the disclosure of their wireless phone number;
       (9) current wireless subscribers who elect to participate, 
     or new wireless subscribers who decline to be listed, in any 
     new wireless directory assistance service directory, 
     including those subscribers who also elect not to receive 
     forwarded calls from any wireless directory assistance 
     service, should not be charged for exercising such rights;
       (10) the marketplace has not yet adequately explained an 
     effective plan to protect consumer privacy rights;
       (11) Congress previously acted to protect the wireless 
     location information of subscribers by enacting prohibitions 
     on the disclosure of such sensitive in formation without the 
     express prior authorization of the subscriber; and
       (12) the public interest would be served by similarly 
     enacting effective and industry-wide privacy protections for 
     consumers with respect to wireless directory assistance 
     service.

     SEC. 3. CONSUMER CONTROL OF WIRELESS PHONE NUMBERS.

       Section 332(c) of the Communications Act of 1934 (47 U.S.C. 
     332(c)) is amended by adding at the end the following:
       ``(9) Wireless consumer privacy protection.--
       ``(A) Current subscribers.--A provider of commercial mobile 
     services, or any direct or indirect affiliate or agent of 
     such a provider, may not include the wireless telephone 
     number information of any current subscriber in any wireless 
     directory assistance service database unless--
       ``(i) the mobile service provider provides a conspicuous, 
     separate notice to the subscriber informing the subscriber of 
     the right not to be listed in any wireless directory 
     assistance service; and
       ``(ii) the mobile service provider obtains express prior 
     authorization for listing from such subscriber, separate from 
     any authorization obtained to provide such subscriber with 
     commercial mobile service, or any calling plan or service 
     associated with such commercial mobile service, and such 
     authorization has not been subsequently withdrawn.
       ``(B) New subscribers.--A provider of commercial mobile 
     services, or any direct or indirect affiliate or agent of 
     such a provider, may include the wireless telephone number 
     information of any new subscriber in a wireless directory 
     assistance service database only if the commercial mobile 
     service provider--
       ``(i) provides a conspicuous, separate notice to the 
     subscriber, at the time of entering into an agreement to 
     provide commercial mobile service, and at least once each 
     year thereafter, informing the subscriber of the right not to 
     be listed in any wireless directory assistance service 
     database; and
       ``(ii) provides the subscriber with convenient mechanisms 
     by which the subscriber may decline or refuse to participate 
     in such database, including mechanisms at the time of 
     entering into an agreement to provide commercial mobile 
     service, in the billing of such service, and when receiving 
     any connected call from a wireless directory assistance 
     service.
       ``(C) Call forwarding.--A provider of commercial mobile 
     services, or any direct or indirect affiliate or agent of 
     such provider, may connect a calling party from a wireless 
     directory assistance service to a commercial mobile service 
     subscriber only if--
       ``(i) such subscriber is provided prior notice of the 
     calling party's identity and is permitted to accept or reject 
     the incoming call on a per-call basis;
       ``(ii) such subscriber's wireless telephone number 
     information is not disclosed to the calling party; and
       ``(iii) such subscriber is not an unlisted commercial 
     mobile service subscriber.
       ``(D) Publication of directories prohibited.--A provider of 
     commercial mobile services, or any direct or indirect 
     affiliate or agent of such a provider, may not publish, in 
     printed, electronic, or other form, the contents of any 
     wireless directory assistance service database, or any 
     portion or segment thereof.
       ``(E) No consumer fee for retaining privacy.--A provider of 
     commercial mobile services may not charge any subscriber for 
     exercising any of the rights under this paragraph.
       ``(F) Definitions.--For purposes of this paragraph--
       ``(i) the term `current subscriber' means any subscriber to 
     commercial mobile service as of the date when a wireless 
     directory assistance service is implemented by a provider of 
     commercial mobile service;
       ``(ii) the term `new subscriber' means any subscriber to 
     commercial mobile service who becomes a subscriber after the 
     date when a wireless directory assistance service is 
     implemented by a provider of commercial mobile service, and 
     includes any subscriber of a different provider of commercial 
     mobile

[[Page S16006]]

     service who subsequently switches to a new provider of 
     commercial mobile service;
       ``(iii) the term `wireless telephone number information' 
     means the telephone number, electronic address, and any other 
     identifying information by which a calling party may reach a 
     subscriber to commercial mobile services, and which is 
     assigned by a commercial mobile service provider to such 
     subscriber, and includes such subscriber's name and address;
       ``(iv) the term `wireless directory assistance service' 
     means any service for connecting calling parties to a 
     subscriber of commercial mobile service when such calling 
     parties themselves do not possess such subscriber's wireless 
     telephone number information; and
       ``(v) the term `calling party's identity' means the 
     telephone number of the calling party or the name of 
     subscriber to such telephone, or an oral or text message 
     which provides sufficient information to enable a commercial 
     mobile services subscriber to determine who is calling;
       ``(vi) the term `unlisted commercial mobile services 
     subscriber' means--

       ``(I) a current subscriber to commercial mobile services 
     who has not provided express prior consent to a commercial 
     mobile service provider to be included in a wireless 
     directory assistance service database; and
       ``(II) a new subscriber to commercial mobile service who 
     has exercised the right contained in subparagraph (B)(ii) to 
     decline or refuse to such inclusion.''.

  Mrs. BOXER. Mr. President, I am pleased to join Senator Specter in 
introducing the Wireless 411 Privacy Act of 2003.
  About 150 million Americans subscribe to wireless telephone service. 
They rely on wireless service to stay in touch with friends, family, 
and the workplace. As a cellular phone user myself, I value the privacy 
of my wireless number. I want to have control over who can reach me on 
my cell phone.
  However, the wireless phone industry is planning to list customers in 
a wireless phone directory starting sometime next year. The Specter-
Boxer bill would protect consumers by providing them with the right not 
to have their cell phone number listed in the directory and the right 
not to be charged a fee for being unlisted.
  As we saw with the strong consumer support for the right to keep a 
cell phone when you switch carriers, consumers consider their cell 
phone number their property. It is not the property of the carrier to 
hand out to whomever the carrier wishes, and the carrier should not be 
allowed to charge consumers for the right to keep that number private.
  This is especially important when you consider that wireless users 
pay for both their incoming and outgoing calls. Having your number 
listed could easily lead to receiving calls that you did not want but 
for which you will have to pay. That seems wrong to me.
  To date, the wireless phone industry has been unclear on how they 
will address these valid concerns when they move forward with their 
directory plans next year. To avoid any confusion or uncertainty, 
Congress must make clear to the cell phone companies that the rights of 
consumers to keep their cell phone numbers private is paramount.
                                 ______
                                 
      By Ms. STABENOW (for herself and Mr. Graham of South Carolina):
  S. 1964. A bill to amend the Internal Revenue Code of 1986 to comply 
with the World Trade Organization rulings on the FSC/ETI benefit in a 
manner that preserves jobs and production activities in the United 
States, and for other purposes; to the Committee on Finance.
  Ms. STABENOW. Mr. President, I rise today to introduce the 
Manufacturing Opportunities to Revitalize our Economy's JOBS Act, or 
the MORE JOBS Act. We are facing a manufacturing job crisis in this 
country, and that is why I am introducing this bill to help our U.S. 
manufacturers to create manufacturing jobs here at home.
  Since January of 2001, the State of Michigan has faced devastating 
losses in the manufacturing sector. While the U.S. has lost 3.3 million 
private sector jobs--2.5 million in the manufacturing sector, Michigan 
has lost 162,300 manufacturing jobs. That is 18 percent of the state's 
manufacturing employment. In other words, 1 in 6 Michiganians has lost 
their manufacturing job in the last 2 years.
  It is an unfortunate fact that Michigan is one of the leading states 
in the country in manufacturing job loss. Indeed, while the U.S. 
employment rate is around 6 percent, Michigan's unemployment rate is 
currently around 7.6 percent. In some parts of Michigan, the 
unemployment rate is as high as 12 percent.
  The people of Michigan and the people of the United States need 
relief to help revitalize our economy. In the midst of these troubling 
times, we are faced with a new challenge: complying with a World Trade 
Organization (WTO) decision finding that our Foreign Sales Corporation 
(FSC) and Extraterritorial Income (ETI) tax code must be reformed to 
meet international trade law requirements. I understand that our 
colleagues on the Senate Finance Committee have been and continue to 
work diligently on this issue. Our country is one that plays by the 
rules and we will ultimately fix our tax code.
  The tax benefits of the FSC and ETI, however, are valued at nearly 
$50 billion over 10 years. We cannot just take away these benefits to 
our American manufacturers without creating new tax relief for them. 
The practical effect of that would be a $50 billion tax increase. And, 
that is why we must create a new tax credit for our U.S. manufacturers.
  The MORE JOBS Act that I am introducing today lays out a vision on 
how I believe we should reform the code. First of all it, it phases out 
the non-compliant FSC/ETI tax code over the next three years.
  Then, to help our U.S. manufacturers, the bill creates a 
Manufacturers' Tax Credit for domestic companies. A company, under my 
proposal, would be allowed to deduct 9 percent of its domestic 
production income before it has to figure its tax liability. In effect, 
this would result in a new tax rate for our U.S. manufacturers that are 
3 percent lower--32 percent instead of 35 percent. And, my bill would 
make this effective immediately, not phased in as others have 
suggested.
  The credit would be extended to a wide array of companies: small 
businesses, large businesses and agricultural cooperatives. So whether 
it is a small furniture manufacturer in western Michigan, a tool and 
die company in Grand Rapids, or one of our automakers in metro Detroit, 
companies will be rewarded for their domestic production. And, our 
farmers will benefit, too.
  I often say that we in Michigan pride ourselves on what we make and 
what we grow. These two activities are vital to a strong economy, and 
our farmers would also benefit under my bill.
  Farmers themselves, if they have at least one employee, will directly 
benefit under my bill, since they qualify for the tax benefit as 
manufacturers. In addition, agricultural cooperatives would also 
receive this tax benefit. Farmers often belong to an agricultural 
cooperative which is covered under my bill. Agricultural cooperatives 
do the processing, handling, storing, and marketing for their members. 
For example, a farmer will sell his specialty crop to the cooperative. 
The cooperative then takes the farmer's crop and puts it with other 
farmers' produce and then stores and prepares the produce for sale to a 
food processing company. The coop passes its profits on to the members 
of the cooperative based on the amount of business each member does 
with the cooperative. So the tax benefits for the cooperative can be 
passed-through to farmer members of the coop.
  Finally, one of the cornerstones of my legislation is that my bill 
would create incentives for companies to keep jobs in the U.S. and to 
bring more jobs to our country. The MORE JOBS Act would encourage 
companies to keep their manufacturing in the U.S. by basing the amount 
of their tax credit on how much of their manufacturing is done in the 
U.S. Companies that have all of their manufacturing in the U.S. would 
receive the full 3 percent tax credit. Companies that have much their 
manufacturing outside of the U.S. would receive a reduced credit in 
proportion to their U.S. manufacturing. While other proposals being 
circulated eventually eliminate this incentive, my bill would make this 
incentive permanent.
  Why would we want to reward companies if they send their jobs 
overseas? We want to reward those who are contributing to our economy 
and putting Americans to work here at home.
  I want to work closely with my colleagues to reform our manufacturing

[[Page S16007]]

tax code. In doing so, we will make our country stronger, our economy 
more resilient, and we can create millions of new good jobs in the 
manufacturing and agricultural sector. But we must do it carefully and 
with a priority on our U.S. manufacturing base. I urge my colleagues to 
support the MORE JOBS Act.
                                 ______
                                 
      By Mr. BAYH:
  S. 1965. A bill to provide for the creation of private-sector-led 
Community Workforce Partnerships, and for other purposes; to the 
Committee on Health, Education, Labor, and Pensions.
  Mr. BAYH. 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. 1965

       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 ``Community Workforce 
     Development and Modernization Partnership Act''.

     SEC. 2. AUTHORIZATION.

       (a) In General.--From amounts made available to carry out 
     this Act, the Secretary of Labor (referred to in this Act as 
     the ``Secretary''), in consultation with the Secretary of 
     Commerce and the Secretary of Education, shall award grants 
     on a competitive basis to eligible entities described in 
     subsection (b) to assist each entity to--
       (1) help workers improve those job skills that are 
     necessary for employment by businesses in the industry with 
     respect to which the entity was established;
       (2) help dislocated workers find employment; and
       (3) upgrade the operating and competitive capacities of 
     businesses that are members of the entity.
       (b) Eligible Entities.--An eligible entity described in 
     this subsection is a consortium (either established prior to 
     the date of enactment of this Act or established specifically 
     to carry out programs under this Act) that--
       (1) shall include--
       (A) 2 or more businesses (or nonprofit organizations 
     representing businesses) that are facing similar workforce 
     development or business modernization challenges;
       (B) labor organizations, if the businesses described in 
     subparagraph (A) employ workers who are covered by collective 
     bargaining agreements; and
       (C) 1 or more businesses (or nonprofit organizations that 
     represent businesses) with resources or expertise that can be 
     brought to bear on the workforce development and business 
     modernization challenges referred to in subparagraph (A); and
       (2) may include--
       (A) State governments and units of local government;
       (B) educational institutions;
       (C) labor organizations; or
       (D) nonprofit organizations.
       (c) Common Geographic Region.--To the maximum extent 
     practicable, the organizations that are members of an 
     eligible entity described in subsection (b) shall be located 
     within a single geographic region of the United States.
       (d) Priority Consideration.--In awarding grants under 
     subsection (a), the Secretary shall give priority 
     consideration to--
       (1) eligible entities that serve dislocated workers or 
     workers who are threatened with becoming totally or partially 
     separated from employment;
       (2) eligible entities that include businesses with fewer 
     than 250 employees; or
       (3) eligible entities from a geographic region in the 
     United States that has been adversely impacted by the 
     movement of manufacturing operations or businesses to other 
     regions or countries, due to corporate restructuring, 
     technological advances, Federal law, international trade, or 
     another factor, as determined by the Secretary.

     SEC. 3. PARTNERSHIP ACTIVITIES.

       (a) Use of Grant Amounts.--Each eligible entity that 
     receives a grant under section 2 shall use the amount made 
     available through the grant to carry out a program that 
     provides--
       (1) workforce development activities to improve the job 
     skills of individuals who have, are seeking, or have been 
     dislocated from, employment with a business that is a member 
     of that eligible entity, or with a business that is in the 
     industry of a business that is a member of that eligible 
     entity;
       (2) business modernization activities; or
       (3) activities that are--
       (A) workforce investment activities (including such 
     activities carried out through one-stop delivery systems) 
     carried out under subtitle B of title I of the Workforce 
     Investment Act of 1998 (42 U.S.C. 2811 et seq.); or
       (B) activities described in section 25 of the National 
     Institute of Standards and Technology Act (15 U.S.C. 278k).
       (b) Activities Included.--
       (1) Workforce development activities.--The workforce 
     development activities referred to in subsection (a)(1) may 
     include activities that--
       (A) develop skill standards and provide training, 
     including--
       (i) assessing the training and job skill needs of the 
     industry involved;
       (ii) developing a sequence of skill standards that are 
     benchmarked to advanced industry practices;
       (iii) developing curricula and training methods;
       (iv) purchasing, leasing, or receiving donations of 
     training equipment;
       (v) identifying and developing the skills of training 
     providers;
       (vi) developing apprenticeship programs; and
       (vii) developing training programs for dislocated workers;
       (B) assist workers in finding new employment; or
       (C) provide supportive services to workers who--
       (i) are participating in a program carried out by the 
     entity under this Act; and
       (ii) are unable to obtain the supportive services through 
     another program providing the services.
       (2) Business modernization activities.--The business 
     modernization activities referred to in subsection (a)(2) may 
     include activities that upgrade technical or organizational 
     capabilities in conjunction with improving the job skills of 
     workers in a business that is a member of that entity.

     SEC. 4. APPLICATION.

       To be eligible to receive a grant under section 2, an 
     entity shall submit an application to the Secretary at such 
     time, in such manner, and containing such information as the 
     Secretary may reasonably require.

     SEC. 5. SEED GRANTS AND OUTREACH ACTIVITIES.

       (a) Seed Grants.--The Secretary shall provide technical 
     assistance and award financial assistance (not to exceed 
     $150,000 per award) on such terms and conditions as the 
     Secretary determines to be appropriate--
       (1) to businesses, nonprofit organizations representing 
     businesses, and labor organizations, for the purpose of 
     establishing an eligible entity; and
       (2) to entities described in paragraph (1) and established 
     eligible entities, for the purpose of preparing such 
     application materials as may be required under section 4.
       (b) Outreach and Promotional Activities.--The Secretary may 
     undertake such outreach and promotional activities as the 
     Secretary determines will best carry out the objectives of 
     this Act.
       (c) Limitations on Expenditures.--The Secretary may not use 
     more than 10 percent of the amount authorized to be 
     appropriated under section 8 to carry out this section.

     SEC. 6. LIMITATIONS ON FUNDING.

       (a) Requirement of Matching Funds.--The Secretary may not 
     award a grant under this Act to an eligible entity unless 
     such entity agrees that the entity will make available non-
     Federal contributions toward the costs of carrying out 
     activities funded by that grant in an amount that is not less 
     than $2 for each $1 of Federal funds made available through 
     the grant.
       (b) In-Kind Contributions.--The Secretary--
       (1) shall, in awarding grants under this Act, give priority 
     consideration to those entities whose members offer in-kind 
     contributions; and
       (2) may not consider any in-kind contribution in lieu of or 
     as any part of the contributions required under subsection 
     (a).
       (c) Senior Management Training and Development.--An 
     eligible entity may not use any amount made available through 
     a grant awarded under this Act for training and development 
     activities for senior management, unless that entity 
     certifies to the Secretary that expenditures for the 
     activities are--
       (1) an integral part of a comprehensive modernization plan; 
     or
       (2) dedicated to team building or employee involvement 
     programs.
       (d) Performance Measures.--Each eligible entity shall, in 
     carrying out the activities described in section 3, provide 
     for development of, and tracking of performance according to, 
     performance outcome measures.
       (e) Administrative Costs.--Each eligible entity may use not 
     more than 10 percent of the amount made available to that 
     entity through a grant awarded under this Act to pay for 
     administrative costs.
       (f) Maximum Amount of Grant.--No eligible entity may 
     receive--
       (1) a grant under this Act in an amount of more than 
     $1,000,000 for any fiscal year; or
       (2) grants under this Act in any amount for more than 3 
     fiscal years.
       (g) Support for Existing Operations.--
       (1) In general.--In making grants under this Act, the 
     Secretary may use a portion equal to not more than 50 percent 
     of the funds appropriated to carry out this Act for a fiscal 
     year, to support the existing training and modernization 
     operations of existing eligible entities.
       (2) Entities.--The Secretary may award a grant to an 
     existing eligible entity for existing training and 
     modernization operations only if the entity--
       (A) currently offers (as of the date of the award of the 
     grant) a combination of training, modernization, and business 
     assistance services; and
       (B) has demonstrated success in accomplishing the 
     objectives of activities described in section 3.
       (3) Application.--Paragraph (1) shall not apply to support 
     for the expansion of training and modernization operations of 
     existing eligible entities.
       (4) Definitions.--In this subsection:
       (A) Existing training and modernization activity.--The term 
     ``existing training and

[[Page S16008]]

     modernization activity'' means a training and modernization 
     activity carried out prior to the date of enactment of this 
     Act.
       (B) Existing eligible entity.--The term ``existing eligible 
     entity'' means an eligible entity that was established prior 
     to the date of enactment of this Act.

     SEC. 7. GENERAL ACCOUNTING OFFICE STUDY.

       (a) Study.--Beginning 3 years after the date of enactment 
     of this Act, the Comptroller General of the United States 
     shall conduct a study concerning the activities carried out 
     under this Act. In conducting the study, the Comptroller 
     General shall assess the effectiveness of the activities and 
     suggest improvements to the grant program established under 
     this Act, including recommending whether the program should 
     be administered by the Department of Labor or by another 
     agency or an alternative entity.
       (b) Report.--Not later than 3 years and 6 months after the 
     date of enactment of this Act, the Comptroller General of the 
     United States shall prepare and submit to Congress a report 
     containing the results of the study.

     SEC. 8. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to carry out this 
     Act--
       (1) $15,000,000 for fiscal year 2004;
       (2) $20,000,000 for fiscal year 2005;
       (3) $25,000,000 for fiscal year 2006; and
       (4) $30,000,000 for fiscal year 2007.

                                 ______
                                 
      By Mr. BINGAMAN:
  S. 1966. A bill to require a report on the detainees held at 
Guantanamo Bay, Cuba; to the Committee on Armed Services.
  Mr. BINGAMAN. Mr. President, I want to speak for just a few minutes 
today on an issue on which I have introduced a bill. The bill is S. 
1966. It is a bill to require a report on the detainees being held at 
Guantanamo Bay, Cuba.
  The purpose of this legislation is to shed some light on the process 
that is being used by this administration to determine the status of 
so-called enemy combatants who are held by our Government at Guantanamo 
Bay Naval Base. It has now been nearly 2 years since the first 
detainees arrived at Guantanamo as prisoners of the United States. Yet 
these individuals are still being held in what most would refer to as 
legal limbo.
  My colleagues will recall that on July 16, I urged the Senate to 
adopt an amendment to the Defense appropriations bill. That amendment 
was tabled 52 to 42. It is essentially the same provision--it contained 
the same provisions I have now put into S. 1966, this freestanding 
legislation I have introduced.
  The day after that amendment was defeated I sent a letter to 
Secretary Rumsfeld expressing my concern over the apparent lack of any 
kind of legal process being extended to the detainees being held at 
Guantanamo. Only recently I received a reply from the Department of 
Defense. In that letter, the Department of Defense maintains that it:

       . . . reviews on a regular basis the continued detention of 
     each enemy combatant and assesses the appropriate disposition 
     of each individual case.

  According to the Defense Department, at the time they wrote back to 
me, they said that the review had resulted in the release of 64 
detainees who were determined to no longer pose a threat to the United 
States, and more releases were expected.
  However, the letter fails to address the more important question, 
which is whether the Department's review of these detainees is being 
done in accordance with any recognized civilian or military legal 
process.
  I ask unanimous consent to have the letter printed in the Record at 
the conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 1.)
  Mr. BINGAMAN. What prompted me to come to the floor of the Senate 
today was an article I saw in the morning paper. This appeared in 
various papers around the country, but the one I have here in front of 
me is from the Boston Globe. It says:

       The U.S. military sent home 20 ``enemy combatants'' last 
     weekend who were being held without trial at Guantanamo Bay 
     Naval Base in Cuba, only to replace them with the same number 
     of new prisoners.
  It has a quotation from a spokesperson for the military saying:

       We cannot talk about any of the individuals that may have 
     departed the island due to security concerns.

  According to this article, all those transferred last week have been 
returned, many of them to Pakistan, and all of those transferred last 
weekend, according to representatives from the countries they are 
citizens of, said they will be released once they have arrived in those 
countries.
  The figure now, as I understand it, is there are 88 suspects who have 
been transferred out of Guantanamo Bay. Four were released, 4 were 
handed over to Saudi Arabia, and the remaining 650 or 700 are still 
there. As this article indicated, we continue to add additional people 
to this prison we are operating there at Guantanamo.
  There are various complaints described in the article by foreign 
diplomats about the process we are following. There is a statement by 
the attorney for one of the human rights organizations that has 
complained bitterly about the improvisational policy decisions and the 
arbitrary power over prisoners at the base.
  My motives for offering this legislation are very simple. While I 
obviously have concerns about judicial treatment and the failure of any 
kind of legal process being followed in the treatment of these 
detainees in Guantanamo, I am even more concerned about the 
implications of this treatment we are affording these individuals for 
our own fighting forces as well as our international reputation.
  The bill I filed here in the Senate today requires the Secretary of 
Defense to report on the status of these detainees, including the 
process that was utilized to determine that status for those who have 
already been released from Guantanamo. The bill requires the Secretary 
to provide information related to this release, how long they were 
detained, the conditions of their release, if any, the explanations of 
why the Department of Defense has now determined these individuals 
could be released after what has in many cases been a very long 
detention.
  For the remaining detainees--those who are still at Guantanamo--the 
administration has still refused to provide ``access to an impartial 
tribunal to review whether any basis exists for [detainees] continued 
detention.'' The detainees have not been allowed to speak with their 
families or their counsel, nor have they been informed of any charges 
against them, as far as I am informed.
  The bill I filed requires that within 90 days of its enactment the 
Secretary of Defense provide the Senate with information related to the 
process used to categorize and hold these detainees. It does not call 
for release of the detainees. It does not in any way, shape, or form 
require the release of any classified information other than to the 
chairman and vice chairman of the Senate and House committees. The 
amendment merely seeks to clarify for the Senate and for the Congress 
the process by which the detainees' status is determined.
  Like most Americans, I have always thought that what distinguished 
our country in the history of the world was our commitment to 
individual freedom and to the rule of law; that the bedrock of a free 
society is the obligation taken by the Government to afford individuals 
with certain legal protections, and as a Nation committed to these 
principles we have been instrumental in the formulation and enforcement 
of international law, particularly when it came to the treatment of 
prisoners of war. For over 75 years, the United States has adhered to 
the Geneva Convention. Even during conflicts with insurgents and 
irregular forces, we have adhered to the Geneva Convention. Whenever 
our Nation has gone to war, we have taken pride in going above and 
beyond the requirements of international law as set out in the third 
Geneva Convention of 1929. In fact, the Department of Defense has 
adopted its own detailed regulations and doctrine and field manuals 
built on the provisions of the Geneva Convention which have guided our 
military through many conflicts regardless of size and scope and 
duration.

  These regulations we have in our own military, like international 
law, do not contemplate the legal limbo we are holding these detainees 
in at Guantanamo. Neither the Geneva Convention nor the established 
military regulations define or use the term the President is using 
here. This term, unlawful combatant, is a new term which has come up in 
order to sidestep the requirements both of the Geneva Convention and of 
our own military regulations. Army Regulation 190-8 provides an 
effective and efficient process to

[[Page S16009]]

categorize the detainees on the battlefield. According to that 
provision, detainees must be classified either as an enemy prisoner of 
war, a recommended retained person entitled to enemy prisoner-of-war 
protections, an innocent civilian who should be immediately returned to 
his or her home or released, or a civilian internee who, for reasons of 
operational security, or probable cause incident to criminal 
investigation, should be retained. Such internees have the right to 
appeal the order directing their internment by challenging the 
existence of imperative security reasons that led to their detention.
  The President's unilateral determination of the detainee's status at 
Guantanamo Bay signals a significant departure from the spirit of the 
Geneva Convention and a significant departure from the letter of 
established military regulations. In stark contrast to our Government's 
previous commitment to adherence to the rule of law and human rights, 
this administration has adopted a position that once the President 
designates that a person is a so-called enemy combatant or unlawful 
combatant, a term created by the administration, that person can be 
locked up and held incommunicado as long as the President desires, with 
absolutely no legal rights; no right to review of that decision. This 
means even if the administration makes a mistake or is given faulty 
information, it is virtually impossible for the person involved to 
prove his or her innocence because not only can they not talk to a 
lawyer or to family members, but they do not have the right even to 
know what they are being charged with.
  The U.S. Supreme Court has agreed to consider the narrow question of 
whether the Federal courts have the power to hear challenges to the 
detainees' imprisonment. This is a significant move towards restoring 
the system of checks and balances, which needs to be restored--the 
system of checks and balances our Founders felt was essential to 
preserving liberty in the country. Similarly, the bill I have filed 
begins to fulfill Congress's constitutional responsibility to oversee 
what the executive branch does. It calls on the administration to tell 
us whether its actions are in accordance with military regulations and 
doctrine.
  Our goal is to bring transparency to the issue and to fulfill 
Congress's constitutional role of oversight of the executive. We should 
know what process the administration is using to determine the status 
of these detainees.
  My concern is much broader than what happens to these particular 
detainees. I am concerned about the impact of our treatment of these 
detainees on the treatment of our own military personnel who are 
captured in future conflicts. Former U.S. diplomats and judge advocate 
generals and even former U.S. prisoners of war filed ``friend of the 
court'' briefs in the Supreme Court questioning the legality and wisdom 
of the administration's policy of open-ended detentions at Guantanamo. 
Some of those briefs were extremely thoughtful, in my view. One former 
diplomat wrote:

       It has been the experience of each of us that our most 
     important diplomatic asset has been this Nation's values. . . 
     . The hint that America is not all that it claims, that it . 
     . . can accept that the Executive Branch may imprison whom it 
     will and do so beyond the reach of due process of law demeans 
     and weakens this Nation's voice abroad.

  In their brief, former judge advocate generals, the military's legal 
prosecutors and those most familiar with the law as it applies to enemy 
prisoners of war, strongly argue:

       To be sure, this is a perilous time, as the President has 
     stated. But that does not justify indefinite confinement 
     without any type of hearing or judicial review. The United 
     States played a major role in the development and adoption of 
     the Geneva Conventions. The requirements of those 
     Conventions. The requirements of those Conventions are 
     incorporated directly into American Military Regulations. 
     American failure to provide foreign prisoners with the 
     protections of the Geneva Conventions may well provide 
     foreign authorities, in current or future conflicts, with an 
     excuse not to comply with the Geneva Conventions with respect 
     to captured American military forces.

   Just as compelling are the stories told in the ``friends of the 
court'' brief filed by former prisoners of war. They argue that as a 
result of their own experience as prisoners of war, the United States 
has an interest ``in fostering the development, acceptance and 
enforcement of international norms pursuant to which prisoners of war 
and others captured during armed conflicts will be treated humanely and 
in accordance with the rule of law.'' They emphasize, that in 
particular, they ``wish to ensure that the treatment by the Untied 
States of foreign detainees . . . is such that the United States and 
former American POWs retain the moral authority to demand fair and 
humane treatment for any future Americans detained by foreign 
governments.''

  However, nothing more clearly demonstrates this point than the actual 
stories themselves. Leslie H. Jackson, Edward Jackfert, and Neal 
Harrington are former prisoners of war. Mr. Jackson was captured by the 
Germans, who adhered to the Geneva Conventions. Mr. Jackfert and Mr. 
Harrington were held by Japan, which had not ratified and did not 
purport to follow international law.
  If you will allow me to read them their brief:

       Mr. Jackson was captured by the German Army on April 24, 
     1944, when his B-17 bomber crashed. Jailed and interrogated 
     for approximately one week, he was then transported to Stalag 
     17, a converted concentration camp. In his 13 months of 
     captivity, Mr. Jackson was granted the bare necessities: 
     shelter, minimal food, and the ability to socialize with 
     other American POWs. While the experience was harsh and 
     unpleasant, Mr. Jackson was never tortured or otherwise hurt 
     by the German guards. To follow the terms of the Geneva 
     Conventions of 1929, to which Germany was a party, Mr. 
     Jackson's German captors placed the appropriate Geneva 
     Convention signage in the barracks, permitted the 
     international Red Cross to ship basic necessities to POWs, 
     and allowed a Geneva inspector to survey the premises. Mr. 
     Jackson believes that his survival and relatively good health 
     while in captivity are the result of the German Army's 
     adherence to the 1929 Geneva Conventions.
       The experiences of Mr. Jackfert and Mr. Harrington in the 
     custody of Japan, which had not ratified and did not purport 
     to follow the 1929 Geneva Conventions, offer a sharp 
     contrast. Both men were serving with the U.S. Army in the 
     Philippines when it surrendered to the Japanese in 1942, and 
     both subsequently served several years of hard captivity 
     beyond the reach of any Geneva Convention protections. Both 
     were part of the Bataan Death March and its well-documented 
     horrors. Mr. Harrington was forced into slave labor in a 
     Japanese coalmine, and saw his compatriots starved, beaten 
     and killed. Mr. Jackfert was also forced into slave labor 
     and suffered the extreme effects of heavy labor, cruelty 
     and inadequate nourishment, going from 125 pounds to 90 
     pounds in a matter of months. There was no Geneva signage, 
     no recognition of prisoner rights, and virtually no Red 
     Cross access.
       Nor were the experiences of Mr. Harrington and Mr. Jackfert 
     atypical. Studies have determined that the death rate of U.S. 
     Military personnel interned by Japan was as high as 40 
     percent while the death rate of personnel captured and 
     interned by Germany was little more than 1 percent. . . . 
     Moreover, while it was rare for American POWs detained in 
     Germany to be tortured, the opposite was true for American 
     POWs in Japan. No one can adequately impart the suffering 
     most allied prisoners endured [in Japan]. . . . They were 
     beaten, kicked, robbed . . . and were buried alive. . . . 
     [T]he overwhelming majority endured ``hell on earth.''

  Again, let me say, I am in no way suggesting that the detainees are 
not being treated humanely. In fact, from all information I have 
received, they are being treated humanely. But what I and these briefs 
that were filed in the Supreme Court are suggesting is that our failure 
to adhere to some recognized legal process in determining the status of 
these detainees opens the door for other countries to refuse to adhere 
to any legal process as well. It may very well result in arbitrary 
confinement and harsh treatment or other inhumane practices applied to 
our own citizens.
  This bill will help Congress fulfill its duties and obligations as 
outlined in the Constitution and in U.S. law and regulation.
  I hope we can quickly pass this legislation when we return for the 
second session of the Congress in January.
  I yield the floor.

                               Exhibit 1

                 [From the Boston Globe, Nov. 25, 2003]

          US Releases 20 Detainees, Transfers 20 More to Cuba

                          (By Charlie Savage)

       Washington.--The U.S. military sent home 20 ``enemy 
     combatants'' last weekend who were being held without trial 
     at Guantanamo Bay naval base in Cuba--only to replace them 
     with the same number of new prisoners.
       The prisoner transfer, the first such movement since mid-
     July, followed a determination by senior military and 
     intelligence officials that the outgoing group ``either no

[[Page S16010]]

     longer posed a threat to U.S. security or no longer required 
     detention by the United States,'' according to a statement 
     the Department of Defense released yesterday.
       ``We can't talk about any of the individuals that may have 
     departed the island due to security concerns,'' said 
     Lieutenant Colonel Pamela Hart, a spokeswoman for the 
     isolated facility at which the United States detains and 
     interrogates suspected terrorists.
       But a high-ranking Pakistani official, who said yesterday 
     that at least five of the outgoing transferees were Pakistani 
     citizens, offered a chilly reaction to the Pentagon's news.
       ``The government is happy, but this is too damn late,'' 
     said Imran Ali, second secretary of the Pakistan Embassy, 
     adding that 21 Pakistanis have been released from Guantanamo, 
     but another 37 are still there.
       ``Their lives have been destroyed. Their families have gone 
     through psychological trauma, since they were not terrorists; 
     they were just low-level Taliban fighters.''
       The Pakistani official's reaction illustrated the pressure 
     on the United States to resolve the situation--especially 
     from allies in the war on terrorism who have expressed 
     concern for their citizens who are among the 660 prisoners 
     from 42 countries being held at the base.
       Although the State Department has been negotiating with a 
     number of countries to continue the detention of some, all 
     those transferred last weekend will be released by their 
     countries, U.S. officials said.
       The Pentagon statement said that ``at the time of their 
     detention, these enemy combatants posed a threat to U.S. 
     security.'' It offered little information about the new 
     arrivals, except that they were transferred from U.S. Central 
     Command in the Middle East.
       Navy Lieutenant Commander Barbara Burfeind, a Pentagon 
     spokeswoman, said none of the new detainees were captured in 
     Iraq.
       The weekend transfers of the detainees bring to 88 the 
     number of Al Qaeda or Taliban suspects who have been 
     transferred out. Of those, 84 were released and four were 
     handed over to Saudi Arabia.
       Ruth Wedgwood, an international law professor at Johns 
     Hopkins University, said the arrival of the 20 new detainees 
     follows a flare-up of fighting by Taliban insurgents in 
     Afghanistan.
       Wedgwood has defended the Bush administration's position 
     that the rules of the Geneva Conventions do not apply to the 
     detainees because they were not soldiers of a regular Afghan 
     army.
       ``Dismayingly, the Taliban have become very active again in 
     the southern area, so really . . . the war isn't over in that 
     area,'' she said.
       Not among those who were transferred for release, according 
     to a senior Pentagon official, were the three ``juvenile 
     enemy combatants''--Afghans ages 13 to 15 who were captured 
     fighting alongside the Taliban and whose detention at the 
     prison has attracted particularly intense international 
     criticism. The commander of Guantanamo operations, Major 
     General Geoffrey Miller, had recommended that they be sent 
     home in August.
       U.S. officials say they have been coordinating with UNICEF 
     in the event that the young fighters are released. UNICEF, a 
     United Nations agency that has offered to handle the juvenile 
     combatants, runs a program to ease the reintegration of 
     former child soldiers back into their home societies.
       ``The State Department and UNICEF will make sure that if 
     they're returned to Afghanistan, they won't just be plopped 
     down,'' a Pentagon official told The Boston Globe last week.
       Ken Hurwitz of the Lawyers Committee for Human Rights, a 
     New York-based organization, said that the surprise release 
     reflected the military's ``improvisational'' policy decisions 
     and its arbitrary power over the prisoners at the base.
       ``It's the rule of law that's the point,'' he said. 
     ``They're saying, `Trust us, and we'll do the right thing.' 
     But there is no right thing unless it's pursuant to some kind 
     of ordered, lawful proceeding.''
       Challenges to the detentions that have been filed in 
     federal court have so far been dismissed because the base is 
     located on Cuban soil--it has been leased and controlled by 
     the United States for a century--and outside the jurisdiction 
     of U.S. sovereignty. Two weeks ago, the Supreme Court said it 
     would review the question of whether federal court 
     jurisdiction may extend there.
       In a related development, the lawyer for Army Captain James 
     ``Yousef'' Yee, the former Muslim chaplain at Guantanamo who 
     was arrested in September in the alleged mishandling of 
     classified material, sent a letter to President Bush 
     yesterday asking that his client be released from pretrial 
     detention for Thanksgiving and his daughter's birthday.
       ``These charges do not warrant pretrial confinement of any 
     kind,'' Eugene Fidell wrote in the letter. ``While military 
     sources initially reported a wild laundry list of suspected 
     offenses, such as spying or aiding the enemy, these have now 
     been reduced to two relatively minor [charges]. . . . 
     Nonetheless, he is being treated as if the original laundry 
     list of charges was the legal basis for his confinement. This 
     is totally wrong and unfair.''
       Sean McCormack, a spokesman for the National Security 
     Council, said he would look into the letter, but had no 
     comment on the president's behalf.

                                 ______
                                 
      By Mr. HAGEL (for himself and Ms. Snowe):
  S. 1967. A bill to allow all businesses to make up to 24 transfers 
each month from interest-bearing transaction accounts to other 
transaction accounts, to require the payment of interest on reserves 
held for depository institutions at Federal reserve banks, to repeal 
the prohibition of interest on business accounts, and for other 
purposes; to the Committee on Banking, Housing, and Urban Affairs.
  Mr. HAGEL. 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. 1967

       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 ``Interest on Business 
     Checking Act of 2003''.

     SEC. 2. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED FOR 
                   ALL BUSINESSES.

       (a) In General.--Section 2(a) of Public Law 93-100 (12 
     U.S.C. 1832(a)) is amended by inserting after paragraph (2) 
     the following:
       ``(3) Notwithstanding any other provision of law, any 
     depository institution may permit the owner of any deposit or 
     account which is a deposit or account on which interest or 
     dividends are paid and is not a deposit or account described 
     in paragraph (2) to make not more than 24 transfers per month 
     (or such greater number as the Board of Governors of the 
     Federal Reserve System may determine by rule or order), for 
     any purpose, to another account of the owner in the same 
     institution. An account offered pursuant to this paragraph 
     shall be considered a transaction account for purposes of 
     section 19 of the Federal Reserve Act, unless the Board of 
     Governors of the Federal Reserve System determines 
     otherwise.''.
       (b) Conforming Amendments.--
       (1) In general.--Section 2(a) of Public Law 93-100 (12 
     U.S.C. 1832(a)), as amended by subsection (a), is further 
     amended--
       (A) in paragraph (1), by striking ``but subject to 
     paragraph (2)'';
       (B) by amending paragraph (2) to read as follows:
       ``(2) No provision of this section may be construed as 
     conferring the authority to offer demand deposit accounts to 
     any institution that is prohibited by law from offering 
     demand deposit accounts.''; and
       (C) in paragraph (3), by striking ``and is not a deposit or 
     account described in paragraph (2)''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on the date which is 2 years after the date 
     of enactment of this Act.

     SEC. 3. AUTHORIZATION OF INTEREST-BEARING TRANSACTION 
                   ACCOUNTS.

       (a) Repeal of Prohibition on Payment of Interest on Demand 
     Deposits.--
       (1) Federal reserve act.--Section 19(i) of the Federal 
     Reserve Act (12 U.S.C. 371a) is repealed.
       (2) Home owners' loan act.--Section 5(b)(1)(B) of the Home 
     Owners' Loan Act (12 U.S.C. 1464(b)(1)(B)) is amended by 
     striking ``savings association may not--'' and all that 
     follows through ``(ii) permit any'' and inserting ``savings 
     association may not permit any''.
       (3) Federal deposit insurance act.--Section 18(g) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is 
     repealed.
       (b) Joint Rulemaking Required.--
       (1) In general.--Not later than 2 years after the date of 
     enactment of this Act, the Secretary of the Treasury and the 
     Federal banking agencies shall issue joint final regulations 
     authorizing the payment of interest and dividends on 
     transaction accounts at depository institutions that are 
     subject to regulation by those entities.
       (2) Contents.--Regulations required by this subsection 
     shall--
       (A) establish the scope of the authorization described in 
     paragraph (1) and the types of transaction accounts to which 
     that authorization shall apply; and
       (B) include any appropriate limitations, exceptions, or 
     restrictions on that authorization, consistent with the 
     purposes of this section.
       (3) Effective date of regulations.--The regulations 
     required by this subsection shall take effect not later than 
     2 years after the date of enactment of this Act.
       (4) Definitions.--As used in this subsection--
       (A) the terms ``depository institution'' and ``transaction 
     account'' have the meanings given such terms in subparagraphs 
     (A) and (C), respectively, of section 19(b)(1) of the Federal 
     Reserve Act (12 U.S.C. 461(b)(1)); and
       (B) the term ``Federal banking agency'' has the meaning the 
     term in section 3 of the Federal Deposit Insurance Act (12 
     U.S.C. 1813).
       (c) Effective Date of Repeal.--The amendments made by 
     subsection (a) shall become effective on the earlier of--
       (1) 2 years after the date of enactment of this Act; or
       (2) the date on which final regulations required to be 
     issued under subsection (b) become effective.

[[Page S16011]]

     SEC. 4. PAYMENT OF INTEREST ON RESERVES AT FEDERAL RESERVE 
                   BANKS.

       (a) In General.--Section 19(b) of the Federal Reserve Act 
     (12 U.S.C. 461(b)) is amended by adding at the end the 
     following:
       ``(12) Earnings on reserves.--
       ``(A) In general.--Balances maintained at a Federal reserve 
     bank by or on behalf of a depository institution may receive 
     earnings to be paid by the Federal reserve bank at least once 
     each calendar quarter at a rate or rates not to exceed the 
     general level of short-term interest rates.
       ``(B) Regulations relating to payments and distribution.--
     The Board may promulgate regulations concerning--
       ``(i) the payment of earnings in accordance with this 
     paragraph;
       ``(ii) the distribution of such earnings to the depository 
     institutions which maintain balances at such banks or on 
     whose behalf such balances are maintained; and
       ``(iii) the responsibilities of depository institutions, 
     Federal home loan banks, and the National Credit Union 
     Administration Central Liquidity Facility with respect to the 
     crediting and distribution of earnings attributable to 
     balances maintained, in accordance with subsection (c)(1)(A), 
     in a Federal reserve bank by any such entity on behalf of 
     depository institutions.
       ``(C) Depository institution defined.--For purposes of this 
     paragraph, the term `depository institution', in addition to 
     any institution described in paragraph (1)(A), includes any 
     trust company, corporation organized under section 25A or 
     having an agreement with the Board under section 25, or any 
     branch or agency of a foreign bank (as defined in section 
     1(b) of the International Banking Act of 1978).''.
       (b) Authorization for Pass Through Reserves for Member 
     Banks.--Section 19(c)(1)(B) of the Federal Reserve Act (12 
     U.S.C. 461(c)(1)(B)) is amended by striking ``which is not a 
     member bank''.
       (c) Technical and Conforming Amendments.--Section 19 of the 
     Federal Reserve Act (12 U.S.C. 461) is amended--
       (1) in subsection (b)(4),
       (A) by striking subparagraph (C); and
       (B) by redesignating subparagraphs (D) and (E) as 
     subparagraphs (C) and (D), respectively; and
       (2) in subsection (c)(1)(A), by striking ``subsection 
     (b)(4)(C)'' and inserting ``subsection (b)''.

     SEC. 5. INCREASED FEDERAL RESERVE BOARD FLEXIBILITY IN 
                   SETTING RESERVE REQUIREMENTS.

       Section 19(b)(2)(A) of the Federal Reserve Act (12 U.S.C. 
     461(b)(2)(A)) is amended--
       (1) in clause (i), by striking ``the ratio of 3 per 
     centum'' and inserting ``a ratio not greater than 3 percent 
     (and which may be zero)''; and
       (2) in clause (ii), by striking ``and not less than 8 per 
     centum,'' and inserting ``(and which may be zero),''.

     SEC. 6. TREATMENT OF CERTAIN ESCROW ACCOUNTS.

       (a) In General.--In the case of an escrow account 
     maintained at a depository institution for the purpose of 
     completing the settlement of a real estate transaction, 
     activities described in subsection (b) shall not be treated 
     as the payment or receipt of interest for purposes of this 
     Act or any other provision of law relating to the payment of 
     interest on accounts or deposits maintained at depository 
     institutions, including such provisions in--
       (1) Public Law 93-100;
       (2) the Federal Reserve Act;
       (3) the Home Owners' Loan Act; or
       (4) the Federal Deposit Insurance Act.
       (b) Exclusions.--For purposes of subsection (a), activities 
     described in this paragraph are--
       (1) the absorption, by the depository institution, of 
     expenses incidental to providing a normal banking service 
     with respect to an escrow account described in subsection 
     (a);
       (2) the forbearance, by the depository institution, from 
     charging a fee for providing any such banking function; and
       (3) any benefit which may accrue to the holder or the 
     beneficiary of such escrow account as a result of an action 
     of the depository institution described in paragraph (1) or 
     (2) or a similar action.

                                 ______
                                 
      By Mr. ENZI (for himself, Mr. Akaka, Mr. Corzine, and Mr. 
        Sarbanes):
  S. 1968. A bill to amend the Higher Education Act of 1965 to enhance 
literacy in finance and economics, and for other purposes; to the 
Committee on Health, Education, Labor, and Pensions.
  Mr. ENZI. Mr. President, it wasn't all that long ago that a good 
education consisted of providing our children with a strong background 
in reading, writing and arithmetic skills, mixed with an understanding 
of history and a good hard look at civics and how our government works. 
We thought, if our sons and daughters had taken courses in those 
subjects and mastered them, they were as prepared as they could be to 
face the real world, get good jobs, and one day, live happily ever 
after. Unfortunately, we left one vital skill out of the mix.
  As an accountant, I have become increasingly concerned about the lack 
of knowledge we have as a society, and especially, the lack of insight 
we share with our children about money and how to properly handle it, 
budget it, and use it to plan for their retirement. The numbers are 
quite startling when you take a close look at how many of our children 
are leaving college already saddled with credit card debt and school 
loans that need to be repaid. It wasn't like that when many of us were 
in college. School didn't seem to cost nearly as much as it does now, 
and the scourge of a strong economy, easily available credit, hadn't 
reached the ranks of our schools yet.
  This is a problem at the present time, but if we don't act quickly to 
make sure our Nation's young people receive the advice and education 
they need on handling money and planning their finances for the future, 
we will have a disaster on our hands. Young men and women, in their 
prime earning years, are facing a mountain of personal debt at high 
interest rates, with little hope of paying it off anytime soon. 
Clearly, that is something we must take every action to help future 
generations of students avoid.
  That is why I am introducing the Financial Literacy in Higher 
Education Act with my colleague, Senator Akaka. Senator Akaka and I 
share many of the same ideas with respect to the importance of 
financial literacy and ensuring our children have a grasp of the 
implications of their actions when they use the credit they have been 
extended by banks eager to make quick loans at high interest rates. 
Senator Akaka and I worked together on language included in the No 
Child Left Behind Act to ensure elementary and secondary students would 
have more access to financial literacy training that we hope will make 
our children wiser and better users of consumer credit.
  This bill builds on the activities we helped authorize in No Child 
Left Behind. It emphasizes financial literacy for students enrolled in 
institutions of higher education, or students who will soon be 
enrolled. With the training and real life advice they will receive in 
these courses we will be able to reduce the number of our children who 
leave high school and head out into the world on their own with little 
or no preparation for the demands that will be placed on their limited 
incomes.
  Our legislation would include financial literacy and personal finance 
in the list of permissible activities of several programs authorized 
under the Higher Education Act. These programs are set up to support 
students, and I believe financial literacy should be an important 
aspect of the support process. Attending college is a necessary step 
that must be taken if our young adults are to succeed in the work 
force, and learning how to make a personal budget and meet individual 
financial obligations should be a priority in that process.
  Our bill would also emphasize financial literacy in exit counseling 
for college students receiving federal student financial assistance. 
Today's undergraduate students are leaving school with an average of 
nearly $17,000 in student loan obligations. This can be a large burden 
to bear, but it becomes impossible to address if a young man or woman 
is unable to successfully manage their own finances.
  The answer to this challenge is to start educating students before 
they experience financial difficulty. Students who are faced with the 
possibility of accruing larger and larger levels of debt must be taught 
the full meaning and significance of concepts as simple as compound 
interest, credit scores, and minimum payments. That way, when they 
leave school with their lives before them, they will be able to plan 
how to pay back their student loans, and keep credit card debt to a 
minimum. Taking the initiative while these students are in school will 
help them avoid some of the serious problems that can develop when 
someone has little or poor financial skills. These problems can 
literally have lifelong implications for those who overextend their 
resources or fail to learn to live within the limits of a budget.
  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. 1968

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

[[Page S16012]]

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Financial Literacy in Higher 
     Education Act''.

     SEC. 2. AREAS OF EMPHASIS.

       Part B of title I of the Higher Education Act of 1965 (20 
     U.S.C. 1011 et seq.) is amended by adding at the end the 
     following:

     ``SEC. 123. AREAS OF EMPHASIS.

       ``In carrying out activities under this Act related to 
     improving financial and economic literacy, education, and 
     counseling, the Secretary shall emphasize, among other 
     elements, basic personal income and household money 
     management and financial planning skills, and basic economic 
     decision making skills, including how to--
       ``(1) create household budgets, initiate savings plans, and 
     make strategic investment decisions for education, 
     employment, retirement, home ownership, wealth building, or 
     other savings goals;
       ``(2) manage credit and debt effectively, including student 
     financial aid and credit card debt, and understand the merits 
     of establishing and maintaining excellent credit history;
       ``(3) understand, evaluate, and compare fair and favorable 
     financial products, services, and opportunities, and avoid 
     abusive, predatory, or deceptive financial products, 
     services, and opportunities;
       ``(4) complete tax returns and understand tax consequences 
     when making certain financial decisions, such as placing an 
     investment or purchasing a home;
       ``(5) identify economic problems, alternatives, benefits, 
     and costs;
       ``(6) analyze the incentives at work in an economic 
     situation;
       ``(7) examine the consequences of changes in economic 
     conditions and public policies;
       ``(8) collect and organize economic evidence, including 
     understanding, evaluating, and making strategic decisions 
     using economic indicators;
       ``(9) compare benefits with costs; and
       ``(10) improve financial and economic literacy and 
     education through all other related skills.''.

     SEC. 3. COORDINATION.

       In carrying out the financial and economic literacy 
     activities authorized under this Act and the amendments made 
     by this Act, the Secretary of Education, to the greatest 
     extent practicable, shall coordinate such activities with the 
     financial and economic literacy efforts of a Federal 
     commission comprised of the following:
       (1) The Secretary of the Treasury.
       (2) The respective head of each of the following:
       (A) Each of the Federal banking agencies (as defined in 
     section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
     1813)).
       (B) The National Credit Union Administration.
       (C) The Securities and Exchange Commission.
       (D) Each of the Departments of Education, Agriculture, 
     Defense, Health and Human Services, Housing and Urban 
     Development, Labor, and Veterans Affairs.
       (E) The Federal Trade Commission.
       (F) The General Services Administration.
       (G) The Small Business Administration.
       (H) The Social Security Administration.
       (I) The Commodity Futures Trading Commission.
       (J) The Office of Personal Management.
       (3) At the discretion of the President, not more than 5 
     individuals appointed by the President from among the 
     administrative heads of any other Federal agencies, 
     departments, or other Government entities, whom the President 
     determines to be engaged in a serious effort to improve 
     financial literacy and education.

     SEC. 4. ENHANCEMENT OF FINANCIAL LITERACY AND ECONOMIC 
                   LITERACY.

       The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) 
     is amended--
       (1) in section 201(a)(3), by inserting ``personal 
     finance,'' after ``economics,'';
       (2) in section 311(c)--
       (A) by redesignating paragraphs (7) through (12) as 
     paragraphs (8) through (13), respectively; and
       (B) by inserting after paragraph (6) the following:
       ``(7) Education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents.'';
       (3) in section 316(c)(2)--
       (A) by redesignating subparagraphs (G) through (L) as 
     subparagraphs (H) through (M), respectively;
       (B) by inserting after subparagraph (F) the following:
       ``(G) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;''; and
       (C) in subparagraph (M), as redesignated by subparagraph 
     (A), by striking ``subparagraphs (A) through (K)'' and 
     inserting ``subparagraphs (A) through (L)'';
       (4) in section 317(c)(2)--
       (A) in subparagraph (G), by striking ``and'' after the 
     semicolon;
       (B) in subparagraph (H), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following:
       ``(I) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents.'';
       (5) in section 323(a)--
       (A) by redesignating paragraphs (7) through (12) as 
     paragraphs (8) through (13), respectively; and
       (B) by inserting after paragraph (6) the following:
       ``(7) Education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents.'';
       (6) in section 326(c)--
       (A) by redesignating paragraphs (5) through (7) as 
     paragraphs (6) through (8), respectively; and
       (B) by inserting after paragraph (4) the following:
       ``(5) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;'';
       (7) in section 503(b)--
       (A) by redesignating paragraphs (5) through (14) as 
     paragraphs (6) through (15), respectively; and
       (B) by inserting after paragraph (4) the following:
       ``(5) Education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents.'';
       (8) in section 402B(b)--
       (A) by redesignating paragraphs (3) through (10) as 
     paragraphs (4) through (11), respectively;
       (B) by inserting after paragraph (2) the following:
       ``(3) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;''; and
       (C) in paragraph (11), as redesignated by subparagraph (A), 
     by striking ``paragraphs (1) through (9)'' and inserting 
     ``paragraphs (1) through (10)'';
       (9) in section 402C--
       (A) in subsection (b)--
       (i) by redesignating paragraphs (2) through (12) as 
     paragraphs (3) through (13), respectively;
       (ii) by inserting after paragraph (1) the following:
       ``(2) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;''; and
       (iii) in paragraph (13), as redesignated by clause (i), by 
     striking ``paragraphs (1) through (11)'' and inserting 
     ``paragraphs (1) through (12)''; and
       (B) in subsection (e), by striking ``subsection (b)(10)'' 
     and inserting ``subsection (b)(11)'';
       (10) in section 402D(b)--
       (A) by redesignating paragraphs (2) through (10) as 
     paragraphs (3) through (11), respectively;
       (B) by inserting after paragraph (1) the following:
       ``(2) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;''; and
       (C) in paragraph (11), as redesignated by subparagraph (A), 
     by striking ``paragraphs (1) through (9)'' and inserting 
     ``paragraphs (1) through (10)'';
       (11) in section 402E(b)--
       (A) by redesignating paragraphs (7) and (8) as paragraphs 
     (8) and (9), respectively; and
       (B) by inserting after paragraph (6) the following:
       ``(7) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;'';
       (12) in section 402F(b)--
       (A) by redesignating paragraphs (4) through (10) as 
     paragraphs (5) through (11), respectively;
       (B) by inserting after paragraph (3) the following:
       ``(4) education or counseling services designed to improve 
     the financial literacy and economic literacy of students and 
     their parents;''; and
       (C) in paragraph (11), as redesignated by subparagraph (A), 
     by striking ``paragraphs (1) through (9)'' and inserting 
     ``paragraphs (1) through (10)'';
       (13) in section 404D(b)(2)(A)(ii), by striking ``and 
     academic counseling'' and inserting ``academic counseling, 
     and financial literacy and economic literacy education or 
     counseling'';
       (14) by striking section 418A(c)(1)(B)(i) and inserting the 
     following:
       ``(i) personal, academic, career, and economic education or 
     personal finance counseling as an ongoing part of the 
     program;'';
       (15) in section 428F, by adding at the end the following:
       ``(c) Financial and Economic Literacy.--Where appropriate, 
     each program described under subsection (b) shall include 
     making available financial and economic education materials 
     for the borrower.'';
       (16) in section 432(k)(1), by striking ``and offering'' and 
     all that follows through the period and inserting ``, 
     offering loan repayment matching provisions as part of 
     employee benefit packages, and providing employees with 
     financial and economic education and counseling.'';
       (17) in section 441(c)--
       (A) in paragraph (1), by inserting ``financial literacy and 
     economic literacy,'' after ``social services,''; and
       (B) in paragraph (4)(C), by striking the period at the end 
     and inserting ``and counseling for the purposes of improving 
     financial literacy and economic literacy.'';
       (18) in section 485--

[[Page S16013]]

       (A) in subsection (a)(1)(D), by striking the semicolon at 
     the end and inserting ``, including the merits of taking a 
     personal finance course, if the institution offers such a 
     course, and of the student reviewing the student's personal 
     credit profile not less frequently than once a year;'';
       (B) in subsection (b)--
       (i) in paragraph (1)(A)--

       (I) in clause (i), by striking ``and'' after the semicolon;
       (II) in clause (ii), by striking the period at the end and 
     inserting ``; and''; and
       (III) by adding at the end the following:

       ``(iii) if it is determined during the counseling that the 
     borrower is not connected to a mainstream financial 
     institution, information about low-cost financial services 
     and the benefits of using such services, and where and how 
     the borrower could open a low-cost account in a federally 
     insured credit union or bank.''; and
       (ii) by adding at the end the following:
       ``(3) Pilot program.--
       ``(A) Authorization.--
       ``(i) In general.--The Secretary shall establish a pilot 
     program that awards a total of 5 grants to 5 different 
     institutions of higher education that are located in 
     geographically different parts of the United States to enable 
     the institutions to provide annual personal finance 
     counseling for students enrolled at such institutions.
       ``(ii) Minority serving institutions.--In awarding grants 
     under this paragraph, the Secretary shall award not less than 
     2 of the 5 grants to institutions of higher education that 
     are eligible to receive assistance under title III or title 
     V.
       ``(B) Application.--An institution of higher education that 
     desires to receive a grant under this paragraph shall submit 
     an application to the Secretary at such time, in such manner, 
     and containing such information as the Secretary may require.
       ``(C) Use of funds.--
       ``(i) Counseling.--

       ``(I) In general.--In addition to making available exit 
     counseling under paragraph (1), an institution of higher 
     education that receives a grant under this paragraph shall 
     through financial aid officers or otherwise, make available 
     counseling to borrowers of loans which are made, insured, or 
     guaranteed under part B (other than loans made pursuant to 
     section 428B) of this title or made under part D or E of this 
     title at the commencement of the borrower's course of study 
     at the institution, not less frequently than once annually 
     while the borrower is enrolled at the institution, and not 
     later than 30 days after completion of the course of study 
     for which the borrower enrolled at the institution or at the 
     time of departure from such institution.
       ``(II) Content.--The counseling required under subclause 
     (I) shall include the average anticipated monthly repayments, 
     a review of the repayment options available, the total amount 
     of interest that would be paid over a range of possible 
     interest rates and the amount of interest in the monthly 
     payments, information on the availability and content of a 
     personal finance course if such course is offered by the 
     institution and if not already completed by the individual, 
     and such debt and management strategies as the institution 
     determines are designed to facilitate the repayment of such 
     indebtedness, which may be implemented in partnership with 
     State or local public, private, and nonprofit entities 
     approved by the local educational agency that serves schools 
     in the area where the institution is located, or a campus 
     committee formed for the purpose of evaluating the 
     qualifications of such entities. If it is determined during 
     the counseling that the borrower is not connected to a 
     mainstream financial institution, the counseling shall 
     include information about low-cost financial services and the 
     benefits of using such services, and where and how the 
     borrower could open a low-cost account in a federally insured 
     credit union or bank.

       ``(ii) Permissive use.--Grant funds received under this 
     paragraph may be used to pay for additional financial aid 
     personnel or for training for existing financial aid 
     personnel.
       ``(iii) Study.--

       ``(I) In general.--An institution of higher education that 
     receives a grant under this paragraph shall conduct a study 
     to evaluate the impacts, if any, of the financial and 
     economic literacy and counseling activities on students' 
     levels of savings and indebtedness, and creditworthiness, and 
     such activities' effectiveness in reducing the incidence of 
     problems with handling credit, including bankruptcy filing 
     and student financial loan default.
       ``(II) Assistance.--An institution of higher education may 
     conduct the study under subclause (I) with the assistance of 
     appropriate Federal agencies or other entities approved by 
     the Secretary.
       ``(III) Report.--Not later than 6 months after completion 
     of the study under subclause (I), the institution of higher 
     education shall report the results of such study to the 
     Secretary, the Secretary of the Treasury, the Committee on 
     Health, Education, Labor, and Pensions of the Senate, the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate, the Committee on Education and the Workforce of the 
     House of Representatives, and the Committee on Financial 
     Services of the House of Representatives.

       ``(D) Duration.--Grants awarded under this paragraph shall 
     be for a period of 3 years.
       ``(E) Amount.--The Secretary shall award grants of not more 
     than $1,000,000 annually to each institution of higher 
     education awarded a grant under this paragraph. The Secretary 
     may determine the grant award amount based on the number of 
     students to be counseled at the institution of higher 
     education.
       ``(F) Report.--Not later than 90 days after the date of 
     completion of the pilot program under this paragraph, the 
     Secretary shall submit a report to Congress on the 
     effectiveness of the program.
       ``(G) Authorization of appropriations.--There is authorized 
     to be appropriated to carry out this paragraph such sums as 
     may be necessary for each of fiscal years 2005 through 
     2009.''; and
       (C) in subsection (c), by adding at the end the following: 
     ``Appropriate Federal agencies shall provide material 
     developed by such agencies for the purpose of financial 
     education, to financial assistance information personnel at 
     institutions of higher education for the use of such 
     personnel in financial aid counseling.''; and
       (19) in section 491(d)(8), by inserting ``, including those 
     related to financial literacy activities,'' after ``resources 
     and services''.

     SEC. 5. EVALUATION.

       Not later than 6 years after the date of enactment of this 
     Act, the Comptroller General of the United States shall 
     submit to the Committee on Health, Education, Labor, and 
     Pensions of the Senate, the Committee on Banking, Housing, 
     and Urban Affairs of the Senate, the Committee on Education 
     and the Workforce of the House of Representatives, and the 
     Committee on Financial Services of the House of 
     Representatives, an evaluation of the range and effectiveness 
     of financial and economic education and financial aid 
     counseling activities of institutions of higher education, 
     lenders, servicers, and guaranty agencies as emphasized by 
     the Secretary of Education pursuant to section 123 of the 
     Higher Education Act of 1965.

  Mr. AKAKA. Mr. President, I am pleased to introduce the Financial 
Literacy in Higher Education Act with Senator Enzi and original 
cosponsors of S. 1800, the College LIFE, Literacy in Finance and 
Economics Act, Senators Sarbanes and Corzine.
  This is truly a bipartisan compromise on the provisions of S. 1800, 
the College LIFE Act, and I appreciate Senator Enzi's willingness to 
collaborate on this matter. As in S. 1800, the Financial Literacy in 
Higher Education Act proposes a pilot program for five higher education 
institutions to encourage students to take a personal finance course 
and participate in preventive annual credit counseling, working in 
conjunction with State or local public, private, and nonprofit entities 
selected by the local education agency or the school, and measuring the 
effectiveness of efforts in any behavioral changes that may result.
  The bill emphasizes the importance of personal finance and economic 
education and counseling by authorizing these activities as allowable 
uses in existing Higher Education Act programs, such as TRIO, GEAR UP, 
and title III and title V Serving Institutions. These are programs that 
have been successful in expanding higher education access to 
populations with unique needs and, therefore, are ideal avenues through 
which we can further the important components of financial and economic 
literacy, such as wise budgeting, saving, debt management, tax 
preparation, and avoiding predatory or abusive practices.
  The bill promotes greater collaboration with and support from Federal 
agencies in the higher education arena with respect to economic and 
financial literacy, including coordination with the Financial Literacy 
and Education Commission, which was created by title V of H.R. 2622, 
the Fair and Accurate Credit Transactions Act of 2003. The conference 
report of H.R. 2622 was adopted recently by this Chamber and the other 
body. For those who may not be familiar with the Commission, the new 
entity will work to improve financial literacy and education in the 
United States through the development of a national strategy.
  I urge my colleagues to support this bipartisan effort to increase 
the financial and economic literacy of our college students. I will 
also work with my colleagues on advancing the grant programs in S. 1800 
that are not in our compromise package, because I feel that those, too, 
are important parts of our overall effort. Students in higher education 
are some of our Nation's best and brightest, and we must work to give 
them the tools that will help them succeed. Not the least among these 
is literacy in personal finance and economics.
                                 ______
                                 
      By Mr. ROCKEFELLER:

[[Page S16014]]

  S. 1970. A bill to amend title 11, United States Code, to increase 
the amount of unsecured claims for salaries and wages given priority in 
bankruptcy, to provide for cash payments to retirees to compensate for 
lost health insurance benefits resulting from the bankruptcy of their 
former employer, and for other purposes; to the Committee on the 
Judiciary.
  Mr. ROCKEFELLER. Mr. President, over the last several years as the 
economy came down from the high of the 1990s, we have seen how 
devastating it can be for workers when their companies declare 
bankruptcy. From the enormous Enron bankruptcy at the end of 2001 to 
the bankruptcies of Wheeling-Pitt and then Weirton Steel in my own home 
State, every bankruptcy has brought heartache for workers who had 
dedicated themselves to their employers. In many cases, employees and 
retirees have very limited ability to recover the wages, severance, or 
benefits they are due when their companies seek protection from 
creditors.
  Workers deserve better. So today I am introducing the Bankruptcy 
Fairness Act to strengthen workers' rights in bankruptcy and to provide 
greater authority to bankruptcy courts to ensure a fair distribution of 
assets. Specifically, my bill will do three things. It will ensure that 
retirees whose promised health insurance is taken away receive at least 
some compensation for their lost benefits. Second, my legislation would 
allow employees to recover more of the back-pay or other compensation 
that is owed to them at the time of the bankruptcy. And lastly, I would 
provide bankruptcy courts the authority to recover company assets in 
cases where company managers flagrantly paid excessive compensation to 
favored employees just before declaring bankruptcy.
  I am proposing this legislation as a way to start a dialogue about 
how we can better protect workers whose companies file for bankruptcy. 
I do not pretend to have all the answers. But I do know that we must do 
a better job of easing the burden that bankruptcy imposes on employees 
and retirees. And I believe that we can do so in creative ways that do 
not make it more difficult for companies to successfully reorganize and 
emerge from bankruptcy. I look forward to the ideas and suggestions of 
my colleagues.
  In the simplest economic terms, employees sell their labor to their 
companies. They toil away in offices, plants, factories, mills, and 
mines, because they are promised that at the end of the day they will 
receive certain compensation. One of the most important types of 
compensation that workers earn is the right to enjoy certain benefits 
when they retire. Pensions, life insurance, or health care coverage are 
earned by workers in addition to their weekly paychecks. Yet, sadly we 
have seen many companies in the last few years abandon these promises 
when they declare bankruptcy.
  More and more we see companies taking the easy road to profitability 
by abandoning commitments that they made to workers. For retirees who 
have planned for their golden years based on the benefits they have 
earned, losing health insurance can be a devastating blow. Retirees 
must have the right to reasonable compensation if the company seeks to 
break its promise to provide health insurance. Under current law, these 
retirees receive what is called a general unsecured claim for the value 
of the benefits they lost. As any creditor will tell you, a general 
unsecured claim is essentially worthless in most bankruptcies. It means 
you are at the end of the line, and there are not enough assets to go 
around. This law allows companies to essentially rescind compensation 
that retirees have earned with virtually no cost to the company. Of 
course that is a great deal for the company, but it is spectacularly 
unfair to the retirees.
  Recognizing that so-called legacy costs are often an impossible 
burden for a company that is trying to emerge from bankruptcy, my 
legislation would still allow companies in some circumstances to alter 
the health coverage offered to retirees. However, it would require that 
the company pay a minimum level of compensation to retirees. Under this 
bill, each retiree would be entitled to a payment equal to the cost of 
purchasing comparable health insurance for a period of 18 months. Of 
course, 18 months of health insurance coverage is a lot less than many 
of these retirees are losing, but it can ease the transition as 
retirees make alternative plans, and it will discourage companies from 
thinking that terminating retiree health coverage is an easy solution. 
The retirees would still be entitled to a general unsecured claim for 
the value of the benefits lost in excess of this one time payment. This 
change would ensure that retirees, while still not being made whole on 
lost benefits, will at least receive some compensation for the broken 
promises.
  Many active workers, too, have a difficult time recovering what is 
owed to them by their employer when the company files bankruptcy. Under 
current law, employees are entitled to a priority claim of up to 
$4,650. But that figure is usually not enough to cover the back-wages, 
vacation time, severance pay, or benefit payments that the employees 
are owed for work done prior to the bankruptcy. Congress needs to 
update the amount of the priority claim to ensure that more workers are 
able to receive what is rightfully theirs. The Bankruptcy Fairness Act 
would establish a priority claim for the first $15,000 of compensation 
owed to an employee.
  In most cases, employees have been working their hardest to help the 
company avoid the nightmare of bankruptcy, only to find that they will 
not be compensated for their services as promised. As we saw so clearly 
with the Enron case, employees are often left holding the bag when 
their company declares bankruptcy. In that case, employees were owed an 
average of $35,000 in back-wages, severance, and other promised 
compensation. They deserved to recover more than a mere $4,650 of what 
was owed them. Let me be clear, this bill does not establish any new 
obligation for a company to pay severance or other compensation to 
employees caught up in a company's bankruptcy. It merely ensures that 
employees can recover more of what is already owed to them through the 
bankruptcy process.
  I understand that many creditors or investors are not able to recover 
what is rightfully owed to them in bankruptcy, but employees deserve 
protection that recognizes the unique nature of their dependence on 
their employer. Any smart investor diversifies his or her portfolio so 
that a bankruptcy at one company does not bankrupt the investor. 
Likewise, suppliers and creditors that do business with a company 
typically have many other clients. This is not the case with workers. 
They cannot diversify away from the risk of working for a bankrupt 
company, and the financial hardship a bankruptcy brings is more 
devastating to the average worker than the average creditor or 
supplier.

  Now, I know that some of my colleagues listening to this may be 
worrying that this legislation is insensitive to the needs of companies 
that are trying to reorganize in order to emerge from bankruptcy and go 
forward as successful businesses. I am fully aware that sometimes, too 
often in the real world, the bankruptcy process can help companies stay 
open and maintain jobs by restructuring obligations to creditors. Too 
many companies in West Virginia have had to go through the painful 
process of Chapter 11 reorganization. I completely understand the need 
to keep the factories open. And I have always worked side by side with 
companies to help them recover.
  I will continue that important work, and I have included a provision 
in this bill to help bankrupt companies that are struggling to survive 
to recover assets that have been pilfered from the corporate coffers. 
In too many cases, company executives reward themselves even as their 
companies careen toward bankruptcy. The most egregious recent example 
is at Enron in 2001. In the days and weeks leading up to the bankruptcy 
filing, executives granted large bonuses to themselves and their 
favored employees. Millions of dollars were paid to a select group of 
employees just before the company declared bankruptcy. It is 
unconscionable that executives would grant themselves undeserved 
bonuses and then weeks later claim that the company did not have the 
resources to pay its rank and file employees.
  My legislation provides bankruptcy courts greater authority to 
recover excessive compensation that was paid just prior to the 
bankruptcy filing. If

[[Page S16015]]

the court finds that compensation was out of the ordinary course of 
business or was unjust enrichment, the court can recover those assets 
for the bankrupt company, ensuring that more creditors, employees, and 
retirees can receive what is rightfully owed to them by the company.
  The reforms I have outlined are modest. They will not take the sting 
out of bankruptcy. By definition a bankruptcy is a failure, and it is 
painful for the company's employees, retirees, and business partners. 
But the Bankruptcy Fairness Act I am introducing today would make 
progress toward ensuring that bankruptcies are more fair to the workers 
who gave their time and energy and sweat to the company in exchange for 
certain promised compensation. And by helping a company recover assets 
that should not have been paid out as undeserved bonuses just before 
bankruptcy the bill ensures that more of a company's assets are paid to 
the employees, retirees, and creditors who are rightfully owed.
  It is my hope that this legislation will receive serious 
consideration from my colleagues, and that this can open an important 
debate about how workers and retirees can be better protected from the 
ugly side of prolonged economic downturns.
                                 ______
                                 
      By Mr. CORZINE (for himself, Mr. Dodd, and Mr. Lieberman):
  S. 1971. A bill to improve transparency relating to the fees and 
costs that mutual fund investors incur and to improve corporate 
governance of mutual funds; to the Committee on Banking, Housing, and 
Urban Affairs.
  Mr. DODD. Mr. President, I rise today, with my colleague from New 
Jersey, to introduce a measure that is critical to improving the 
investing public's faith in our capital markets. This legislation, the 
``Mutual Fund Investor Confidence Restoration Act'' will fundamentally 
strengthen protections for the millions of investors who rely on mutual 
funds for their financial security.
  America is the land of opportunity. Millions of Americans and 
countless others around the world seek the opportunity to participate 
in the economic life of our nation. Mutual funds are a principal 
pathway through which most investors achieve financial security. Mutual 
funds have in the past not only lived up to, but in many cases 
exceeded, the grand expectations of investors. They are a true success 
story of our securities markets and our system of securities 
regulation.
  However, in recent months, a series of revelations has shaken 
investor confidence in the promise of mutual funds. We must restore the 
faith of investors in mutual funds and those who manage them. This 
legislation is designed to address some of the abuses and shortcomings 
which have received so much recent attention.
  There are five broad areas which this legislation addresses: 
corporate governance, disclosures to investors, late trading and market 
timing, increased regulatory oversight, and financial literacy.
  This legislation significantly improves corporate governance 
standards at mutual funds. Investors have begun to lose faith that 
their hard earned savings are not being managed with their best 
interests in mind. Mutual fund boards must have greater independence 
from fund managers and be more accountable to shareholders of the fund. 
Directors and chairmen must exercise greater oversight to ensure that 
funds are run in the interest of their shareholders--and be accountable 
to shareholders for failing to do so. Additionally, this legislation 
directs the SEC to determine whether directors and chairmen need 
additional tools to carry out that job.
  This legislation mandates that corporate governance requirements 
created in the Sarbanes-Oxley Act, such as director independence 
requirements, financial expertise, and certification measures apply to 
mutual funds. Of particular note, this legislation mandates that funds 
employ a chief compliance officer to ensure that internal controls, 
policies and procedures are met by the fund in the interest of 
shareholders.
  We need to improve the disclosures to investors about the fees and 
costs associated with mutual funds. Current disclosures are inadequate 
in providing investors the information necessary to understand the true 
costs of investing through mutual funds. The current expense ratio by 
no means includes all of the fund's expenses.
  This legislation requires that currently unaccounted for expenses, 
such as brokerage commissions, advertising fees and research costs, 
among others, are fully disclosed.
  Additionally, the legislation requires the breakout of these 
respective costs to be displayed as a graph provided to shareholders 
that will enable them to compare the costs associated with owning 
shares of different mutual funds. The ability to compare the total 
costs of mutual funds with each other will drive competition and lower 
costs for investors.
  Investors deserve to know if their broker has a financial incentive 
to steer them into particular mutual funds. This legislation mandates 
greater disclosure of financial incentives provided to intermediaries 
and requires fund companies and investment advisers to fully disclose 
certain sales practices, including revenue-sharing and directed 
brokerage arrangements and disclose the value of research and other 
services paid for as part of brokerage commissions.
  The recent abuses that we have seen with respect to late trading and 
market timing must be stopped to restore investors faith in mutual 
funds. Insider dealings at mutual funds must never recur. Fund insiders 
must be prohibited from trading against their own shareholders' 
interest. Neither fund insiders nor preferred customers must enjoy 
privileges like market timing that are denied to the millions of 
average mutual fund investors.
  Late trading is already illegal, but we now know it isn't isolated. 
The system for prohibiting late trading in mutual funds must be 
strengthened, so all mutual fund investors are treated fairly. This 
legislation creates new requirements for intermediaries and funds to 
ensure that illegal late trading activities are stopped.
  As a result of the recent widespread scandals in this area, we must 
rededicate our regulatory oversight of the mutual fund industry. Due to 
the tremendous size of mutual funds and how critical of an investment 
tool they are to small investors, this legislation directs the General 
Accounting Office to consider the value of creating a new self 
regulatory body and/or independent regulator for mutual fund oversight.
  Lastly, this legislation calls for improved efforts to promote 
financial literacy among mutual fund shareholders. Ensuring that 
investors have the resources available to them to understand the 
benefits and costs of mutual funds is a fundamental importance.
  The Mutual Fund Investor Confidence Restoration Act is an important 
step in the right direction of restoring the integrity of the mutual 
fund industry and will greatly improve the basic protections given to 
investors who rely upon these investment vehicles for their economic 
security.
  Mr. CORZINE. Mr. President, I rise along with my colleague from 
Connecticut, Senator Dodd, to introduce the Mutual Fund Investor 
Confidence Restoration Act of 2003, a bill that would improve the 
oversight of the mutual fund industry, enhance fund governance, and 
protect the millions of Americans who invest in these funds.
  Mutual funds are the primary means for investors to participate in 
the market. Approximately 95 million Americans invest in mutual funds, 
and investments total near $7 trillion dollars. The industry, one of 
our oldest and most-revered, is entrusted by those shareholders with 
their dreams of a comfortable retirement, the ability to pay their 
children's college tuition, buy a first home or pursue other life-long 
dreams.
  It's not a stretch to say that in many ways the mutual fund industry 
has been the standard bearer for ethical behavior, strong oversight and 
governance committed to investor protection in our capital markets. 
Few, if anyone, would dare to have suggested that our mutual fund 
industry could become fertile ground for the types of `infectious 
greed' we witnessed during the governance and accounting scandals a few 
years ago.
  But that is just what has happened.
  Today, the mutual fund industry faces its own litany of scandals 
centered on allegations of investor fraud,

[[Page S16016]]

flawed corporate governance, financial conflicts of interest and 
outright investor abuse. Names like Putnam and Canary Capital have 
become synonymous with Enron, Tyco and WorldCom in terms of the 
financial harm inflicted upon investors, undermining their confidence 
and trust in America's financial markets.
  The vast majority of those who work in this industry are decent, 
hard-working individuals who make a significant contribution to the 
betterment of our nation.
  Unfortunately, there are also far too many associated with this 
profession--including some investment advisors, fund board members, and 
those in fund company management--who are all too willing to disregard 
their fiduciary obligation to shareholders in order to pursue their own 
personal self-enrichment.
  Investors should not perceive that the deck is stacked against them. 
They should not think that there are different rules--one that applies 
to them and a different and considerably less stringent set that 
applies to wealthy industry insiders.
  The legislation we are introducing today, The Mutual Fund Investor 
Confidence Restoration Act will make sure that the playing field stays 
level.
  This bill has five primary themes: improving mutual fund governance; 
enhancing cost, fee and other important disclosures to shareholders; 
preventing abusive mutual fund practices such as late trading and 
market timing; strengthening mutual fund industry oversight; and 
promoting fund shareholder literacy.
  Let me give a more detailed summation of what this legislation would 
do and why it is so important.
  Boards of directors for mutual funds have been criticized recently 
for the high number of directorships that members hold, the lack of 
board independence from fund management and the failure of several to 
fulfill their fiduciary responsibility to shareholders. This 
legislation would strengthen fund governance by establishing truly 
independent mutual fund boards, chairmen, nominating committees and 
independent audit committees that conform to Sarbanes-Oxley Act 
requirements for those at publicly traded companies.
  The bill would also improve fund governance by requiring Sarbanes-
Oxley-like ``certification'' from Board Chairmen and newly-designated 
Chief Compliance Officers that shareholders safeguards are in place 
within the fund.
  Also, it would ensure that accurate disclosures to shareholders, 
including cost and fee information, are contained in the prospectus.
  The legislation includes other `certifiable' requirements for board 
chairmen and chief compliance officers, including disclosures that 
internal controls, a code of ethics and personnel designated to 
ensuring adherence to stated polices and compliance with relevant 
securities laws, including measures preventing market-timing and late 
trading abuses, are in place at the fund and with the investment 
adviser. Additionally, the legislation calls for the disclosure of 
insider transactions by mutual fund managers and Board notification of 
Securities and Exchange Commission (SEC) deficiency letters.
  Another issue of concern with the mutual fund industry is the 
inadequate and confusing disclosure provided to shareholders regarding 
expenses. Fund shareholders are responsible for paying various fees and 
costs related to the operation and trading activity of the fund. While 
funds provide investors with certain fee-related disclosure, 
shareholders are largely in the dark about many other costs that impact 
the value of their fund's assets.
  The legislation includes numerous provisions aimed at improving the 
cost, fee and other disclosures shareholders receive from mutual funds. 
These would include requirements that funds disclose the actual cost 
borne by each shareholder for the operating expenses of the fund and 
the estimated expenses paid for costs associated with management of the 
fund that reduces the fund's overall value, including brokerage 
commissions, revenue sharing and directed brokerage arrangements, 
transactions costs another fees.
  The legislation would require a breakdown of these respective costs 
to be displayed graphically, in order to provide shareholders with the 
requisite information to compare the costs associated with owning 
shares of various mutual funds.
  In addition these requirements, the legislation would require fund 
companies and investment advisers to fully disclose certain sales 
practices, including revenue-sharing and directed brokerage 
arrangements, shareholder eligibility for breakpoint discounts and the 
value of research and other services paid for as part of brokerage 
commissions, directing the SEC to study so-called ``soft-dollar'' 
arrangements.
  As I mentioned earlier, Mr. President, this bill includes measures 
aimed at preventing abusive mutual fund practices, such as late trading 
and market timing, that diminish the shareholders' assets of a 
particular fund. First, the legislation seeks to ensure that fund 
companies and investment advisers have adequate shareholder safeguards 
in palace, and that they `certify' these internal control procedures. 
Those would include establishing a code of ethics, improving the 
accurate disclosure of fund company policies, and ensuring compliance 
efforts are overseen by the chief compliance officer.
  The bill also would also take steps aimed at directly preventing 
abusive practices and conflicts of interest. The recent scandals 
surrounding mutual funds primarily focus on brokers and fund officials 
that have engaged in the improper trading of mutual fund shares through 
late trading and market timing. Late trading refers to the practice of 
placing orders to buy or sell mutual fund shares after 4 p.m., and 
market timing is short-term trading in and out of stocks in the hope of 
exploiting an inefficiency in the fund's share price.
  To address the issue of market timing, the legislation requires the 
SEC to ensure that fund companies are in compliance with the Investment 
Company Act rules requiring them to use fair value calculation to 
determine the net asset value a fund company's securities when market 
quotations are otherwise unavailable or do not accurately reflect the 
companies fair market value. This provision would eliminate the stale 
pricing that allows market timers to profit, often illicitly, from the 
inaccurate pricing of a fund's shares.
  The legislation would also require the SEC to establish a rule 
requiring fund companies and investment advisers to develop and 
disclose formal policies related to market timing and short term 
trading. Certification by fund company management would further ensure 
that policies are being adhered to.
  To address late trading, the bill requires the SEC to issues rules 
and establishes guidelines for trades in fund securities that go 
through newly established ``permitted intermediaries'', such as broker-
dealers. The rules would allow these permitted intermediaries to 
execute trades of a fund after the funds net asset value has been 
derived, if the intermediary has; a policy in place that the company 
does not permit late trades, mechanisms in place to detect late-trades 
and if that intermediary make those procedures available for inspection 
by the SEC. Non-permitted intermediaries would be required to submit 
their transactions to the fund company prior to market close.
  To reduce other conflicts, the legislation would prohibit mutual fund 
managers from jointly managing a hedge fund, and would prohibit short-
term trading by fund and investment company management and requires 
disclosure of insider transactions.
  In seeking to bolster mutual fund industry oversight, this 
legislation would require the SEC to review the allocation of the 
resources it has dedicated to industry oversight and the General 
Accounting Office (GAO) to study the feasibility of establishing a new, 
independent regulator--the Mutual Fund Oversight Board. The bill also 
would direct the SEC to establish incentives and protections for 
whistleblowers and would require the GAO to independently review and 
report to Congress on the coordination of enforcement efforts between 
the SEC, its regional offices, and state regulators.
  Finally, this bill calls for a study into ways in which we can 
improve and promote financial literacy among mutual fund shareholders. 
And the legislation, through its enhanced disclosures to shareholders, 
already makes a significant contribution to improving

[[Page S16017]]

shareholder understanding of the policies of the fund and the costs 
associated with its management and operation.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1971

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Mutual 
     Fund Investor Confidence Restoration Act of 2003''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

  TITLE I--ENHANCING COST, FEE, AND OTHER DISCLOSURES TO SHAREHOLDERS

Sec. 101. Improved transparency of mutual fund costs.
Sec. 102. Obligations regarding certain distribution and soft dollar 
              arrangements.
Sec. 103. Definition of no-load mutual fund.
Sec. 104. Disclosure of incentive compensation and mutual fund sales.

                    TITLE II--MUTUAL FUND GOVERNANCE

Sec. 201. Independent mutual fund boards.
Sec. 202. Audit committee requirements for investment companies.
Sec. 203. Informing directors of significant deficiencies.
Sec. 204. Certification by chairman and chief compliance officer.

          TITLE III--PREVENTING ABUSIVE MUTUAL FUND PRACTICES

Sec. 301. Prevention of fraud; internal compliance and control 
              procedures.
Sec. 302. Ban on joint management of mutual funds and hedge funds.
Sec. 303. Restrictions on short term trading and mandatory redemption 
              fees.
Sec. 304. Elimination of stale prices.
Sec. 305. Formal policies and procedures related to market timing.
Sec. 306. Prevention of late trades.
Sec. 307. Disclosure of insider transactions.

         TITLE IV--STRENGTHENING MUTUAL FUND INDUSTRY OVERSIGHT

Sec. 401. Study of Mutual Fund Oversight Board.
Sec. 402. Study of coordination of enforcement efforts.
Sec. 403. Review of Commission resources.
Sec. 404. Commission study and report regulating soft dollar 
              arrangements.
Sec. 405. Report on adequacy of regulatory response to late trading and 
              market timing.
Sec. 406. Study of arbitration claims.

                TITLE V--PROMOTING SHAREHOLDER LITERACY

Sec. 501. Financial literacy among mutual fund investors study.

  TITLE I--ENHANCING COST, FEE, AND OTHER DISCLOSURES TO SHAREHOLDERS

     SEC. 101. IMPROVED TRANSPARENCY OF MUTUAL FUND COSTS.

       (a) Regulation Revision Required.--
       (1) In general.--Not later than 180 days after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall revise regulations under the Securities Act of 1933, 
     the Securities Exchange Act of 1934, or the Investment 
     Company Act of 1940, or any combination thereof, to require, 
     consistent with the protection of investors and the public 
     interest, improved disclosure with respect to an open-end 
     management investment company, in the quarterly statement or 
     other periodic report to shareholders or other appropriate 
     disclosure document, of--
       (A) the actual dollar amount, borne by each shareholder, of 
     the expenses of the company;
       (B) the structure of, method used to determine, and the 
     total amount of the compensation of individuals employed by 
     the investment adviser of the company to manage the portfolio 
     of the company, and the ownership interest of such 
     individuals in the securities of the company, including when 
     such individuals have no ownership interest in the company;
       (C) whether the chairman of the board of directors of the 
     open-end management investment company or any directors of 
     the investment adviser of such company employed to manage the 
     portfolio of the company do not own any securities of the 
     company;
       (D) the estimated total annual dollar amount of fees, 
     costs, expenses, taxes, and any other payments made by the 
     company for any purpose, excluding only pro rata 
     distributions to shareholders, and set forth in a manner that 
     facilitates comparison among different companies;
       (E) information concerning the company's policies and 
     practices with respect to the payment of commissions for 
     effecting securities transactions to a member of an exchange, 
     broker, or dealer who--
       (i) furnishes advice, either directly or through 
     publications or writings, as to the value of securities, the 
     advisability of investing in, purchasing, or selling 
     securities, and the availability of securities or purchasers 
     or sellers of securities;
       (ii) furnishes analyses and reports concerning issuers, 
     industries, securities, economic factors and trends, 
     portfolio strategy, and the performance of accounts; or
       (iii) facilitates the sale and distribution of the 
     company's shares;
       (F) information concerning payments by any person other 
     than the company that are intended to facilitate the sale and 
     distribution of the company's shares; and
       (G) information concerning discounts on front-end sales 
     loads for which investors may be eligible, including the 
     minimum purchase amounts required for such discounts.
       (2) Rules and regulations.--
       (A) Other management and service-related cost.--Not later 
     than 180 days after the date of enactment of this Act, the 
     Securities and Exchange Commission shall issue rules or 
     regulations defining ``fees, costs, expenses, taxes, and any 
     other payments made by the company'' for purposes of 
     paragraph (1)(D). Such definition shall include any 
     management fees, transfer agency expenses, custodial fees, 
     shareholder servicing fees, portfolio transaction costs 
     (including commissions, market impact, spread, and 
     opportunity costs, fees charged under a plan adopted pursuant 
     to rule 12b-1 of the rules of the Securities and Exchange 
     Commission (17 C.F.R. 270.12b-1), and other distribution 
     expenses, directors' fees, and registration fees.
       (B) Manner that facilitates comparison among investment 
     companies.--
       (i) In general.--Not later than 180 days after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall issue rules or regulations defining ``manner that 
     facilitates comparison amount investment companies'' for 
     purposes of paragraph (1)(D). Such definition shall include 
     definitions of functional categories of fees, costs, 
     expenses, taxes, and other payments disclosed under paragraph 
     (1)(D) that shall not be based on the contract under which or 
     with whom the services are provided, and shall instead be 
     based on the nature of the services provided.
       (ii) Display.--Each category of costs under clause (i) 
     shall be presented in a graphical display (such as a bar or 
     pie chart) that shows each category as a percentage of the 
     total dollar amount under paragraph (1)(D).
       (C) Certification.--Not later than 90 days after the date 
     of enactment of this Act, the Securities and Exchange 
     Commission shall issue rules or regulations requiring the 
     independent audit of the estimate required under paragraph 
     (1)(D) and certification by the investment adviser and the 
     chairman of the board of directors of the open-end investment 
     company.
       (b) Appropriate Disclosure Document.--
       (1) In general.--For purposes of subsection (a)(1), a 
     disclosure shall not be considered to be made in an 
     appropriate disclosure document if the disclosure is made 
     exclusively in a prospectus or statement of additional 
     information, or both such documents.
       (2) Exceptions.--Notwithstanding paragraph (1), the 
     disclosures required by paragraph (1)(B), (C), and (E) of 
     subsection (a) may be considered to be made in an appropriate 
     disclosure document if the disclosure is made exclusively in 
     a prospectus or statement of additional information, or both 
     such documents.

     SEC. 102. OBLIGATIONS REGARDING CERTAIN DISTRIBUTION AND SOFT 
                   DOLLAR ARRANGEMENTS.

       Section 15 of the Investment Company Act of 1940 (15 U.S.C. 
     80a-15) is amended by adding at the end the following:
       ``(g) Obligations Regarding Certain Distribution and Soft 
     Dollar Arrangements.--
       ``(1) Reporting requirements.--Each investment adviser to a 
     registered investment company shall, not less frequently than 
     annually, submit to the board of directors of the company a 
     report on--
       ``(A) payments during the reporting period by the adviser 
     (or an affiliated person of the adviser) that were directly 
     or indirectly made for the purpose of promoting the sale of 
     shares of the investment company (referred to in paragraph 
     (2) as a `revenue sharing arrangement');
       ``(B) services to the company provided or paid for by a 
     broker or dealer or an affiliated person of the broker or 
     dealer (other than brokerage and research services) in 
     exchange for the direction of brokerage to the broker or 
     dealer (referred to in paragraph (2) as a `directed brokerage 
     arrangement'); and
       ``(C) research services obtained by the adviser (or an 
     affiliated person of the adviser) during the reporting period 
     from a broker or dealer, the receipt of which may reasonably 
     be attributed to securities transactions effected on behalf 
     of the company or any other company that is a member of the 
     same group of investment companies (referred to in paragraph 
     (2) as a `soft dollar arrangement').
       ``(2) Fiduciary duty of board of directors.--The board of 
     directors of a registered investment company shall have a 
     fiduciary duty--
       ``(A) to review the investment adviser's direction of the 
     company's brokerage transactions, including directed 
     brokerage arrangements and soft dollar arrangements, and that 
     the direction of such brokerage adheres to the Fund's stated 
     policies and is in the best interests of the shareholders of 
     the company; and
       ``(B) to review any revenue sharing arrangements to ensure 
     compliance with this Act and the rules adopted thereunder, 
     and that such revenue sharing arrangements adheres to the 
     Fund's stated policies and are in the best interests of the 
     shareholders of the company.
       ``(3) Summaries of reports in annual reports to 
     shareholders.--In accordance

[[Page S16018]]

     with regulations prescribed by the Commission under paragraph 
     (4), annual reports to shareholders of a registered 
     investment company shall include a summary of the most recent 
     report submitted to the board of directors under paragraph 
     (1).
       ``(4) Regulations.--The Commission shall adopt rules and 
     regulations implementing this section, which rules and 
     regulations shall, among other things, prescribe the content 
     of the required reports.
       ``(5) Definition.--For purposes of this subsection--
       ``(A) the term `brokerage and research services' has the 
     same meaning as in section 28(e)(3) of the Securities 
     Exchange Act of 1934; and
       ``(B) the term `research services' means the services 
     described in subparagraphs (A) and (B) of such section.''.

     SEC. 103. DEFINITION OF NO-LOAD MUTUAL FUND.

       Not later than 180 days after the date of enactment of this 
     Act, the Securities and Exchange Commission shall, by rule 
     adopted by the Commission or a self-regulatory organization 
     (or both)--
       (1) clarify the definition of ``no-load'' as such term is 
     used by investment companies that impose any fee under a plan 
     adopted pursuant to rule 12b-1 of the rules of the Securities 
     and Exchange Commission (17 C.F.R. 270.12b-1); and
       (2) require disclosure to prevent investors from being 
     misled by the use of such terminology by the company or its 
     adviser or principal underwriter.

     SEC. 104. DISCLOSURE OF INCENTIVE COMPENSATION AND MUTUAL 
                   FUND SALES.

       (a) In General.--Section 15(b) of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78o(b)) is amended by adding at the 
     end the following:
       ``(11) Confirmation of transactions for mutual funds.--
       ``(A) In general.--Each broker shall disclose in writing to 
     customers that purchase the shares of an open-end company 
     registered under section 8 of the Investment Company Act of 
     1940 (15 U.S.C. 80a-8)--
       ``(i) the amount of any compensation received or to be 
     received by the broker in connection with such transaction 
     from any sources, including--

       ``(I) the amount and source of sales fees, payments by 
     persons other than the investment company that are intended 
     to facilitate the sale and distribution of the securities, 
     and commissions for effecting portfolio securities 
     transactions, or other payments, paid to such broker or 
     dealer, or municipal securities broker or dealer, or 
     associated person thereof in connection with such sale;
       ``(II) any commission or other fees or charges the investor 
     has paid or will or might be subject to, including as a 
     result of purchases or redemptions;
       ``(III) any conflicts of interest that any associated 
     person of the broker, dealer, or municipal securities broker 
     or dealer of the investor may face due to the receipt of 
     differential compensation in connection with such sale; and
       ``(IV) information about the estimated amount of any asset-
     based distribution expenses incurred, or to be incurred, by 
     the investment company in connection with the purchase of 
     securities by the investor; and

       ``(ii) such other information as the Commission determines 
     appropriate.
       ``(B) Timing of disclosure.--The disclosure required under 
     subparagraph (A) shall be made to a customer not later than 
     as of the date of the completion of the transaction.
       ``(C) Limitation.--The disclosures required under 
     subparagraph (A) may not be made exclusively in--
       ``(i) a registration statement or prospectus of an open-end 
     company; or
       ``(ii) any other filing of an open-end company with the 
     Commission.
       ``(D) Commission authority.--Not later than 1 year after 
     the date of enactment of the Mutual Fund Investor Confidence 
     Restoration Act of 2003, the Commission shall, by rule, 
     establish, to the extent practicable, standards for the 
     disclosures required under subparagraph (A).
       ``(E) Definition of open-end company.--In this paragraph, 
     the term `open-end company' has the same meaning as in 
     section 5 of the Investment Company Act of 1940 (15 U.S.C. 
     80a-5).
       ``(F) Definitions of differential compensation and 
     municipal fund security.--
       ``(i) Differential compensation.--In this paragraph, an 
     associated person of a broker or dealer shall be considered 
     to receive differential compensation if such person receives 
     any increased or additional remuneration, in whatever form--

       ``(I) for sales of the securities of an investment company 
     or municipal fund security that is affiliated with, or 
     otherwise specifically designated by, such broker or dealer 
     or municipal securities broker or dealer, as compared with 
     the remuneration for sales of securities of an investment 
     company or municipal fund security offered by such broker or 
     dealer or municipal securities broker or dealer that are not 
     so affiliated or designated; or
       ``(II) for the sale of any class of securities of an 
     investment company or municipal fund security as compared 
     with the remuneration for the sale of a class of securities 
     of such investment company or municipal fund security 
     (offered by such broker or dealer or municipal securities 
     broker or dealer) that charges a sales load (as defined in 
     section 2(a)(35) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(35)) only at the time of such a sale.

       ``(ii) Municipal fund security.--In this paragraph, a 
     municipal fund security is any municipal security issued by 
     an issuer that, but for the application of section 2(b) of 
     the Investment Company Act of 1940 (15 U.S.C. 80a-2(b)), 
     would constitute an investment company within the meaning of 
     section 3 of the Investment Company Act of 1940 (15 U.S.C. 
     80a-3).''.

                    TITLE II--MUTUAL FUND GOVERNANCE

     SEC. 201. INDEPENDENT MUTUAL FUND BOARDS.

       (a) Director Independence.--
       (1) In general.--Section 10(a) of the Investment Company 
     Act of 1940 (15 U.S.C. 80a-10(a)) is amended--
       (A) by striking ``more than 60 per centum'' and inserting 
     ``more than 25 percent''; and
       (B) by striking the period at the end and inserting ``, and 
     such company shall not have as a member of its board of 
     directors any person--
       ``(1) who has served without being approved or elected by 
     the shareholders of such registered investment company at 
     least once every 5 years; and
       ``(2) unless such director is an interested person or has 
     been found, on an annual basis, by a majority of the 
     directors who are not interested persons, after reasonable 
     inquiry by such directors, not to have any material business 
     or familial relationship with the registered investment 
     company, a significant service provider to the company, or 
     any entity controlling, controlled by, or under common 
     control with such service provider, that is likely to impair 
     the independence of the director.''.
       (2) Chairman; financial expert; independent committee.--
     Section 10 of the Investment Company Act of 1940 (15 U.S.C. 
     80a-10) is amended by adding at the end the following:
       ``(i) Chairman.--No registered investment company shall 
     have as chairman of its board of directors an interested 
     person of such registered company.
       ``(j) Independent Committee.--
       ``(1) In general.--The members of the board of directors of 
     a registered investment company who are not interested 
     persons of such registered investment company shall establish 
     a committee comprised solely of such members, which committee 
     shall be responsible for--
       ``(A) selecting persons to be nominated for election to the 
     board of directors; and
       ``(B) adopting qualification standards for the nomination 
     of directors.
       ``(2) Disclosure.--The standards developed under paragraph 
     (1)(B) shall be disclosed in the registration statement of 
     the registered investment company.
       ``(k) Financial Expert.--
       ``(1) In general.--Each registered investment company shall 
     have as a member of its board of directors not less than 1 
     member who is a financial expert, as such term is defined by 
     the Commission.
       ``(2) Rules defining financial expert.--In defining the 
     term `financial expert' for purposes of paragraph (1), the 
     Commission shall consider whether a person has, through 
     education and experience as a public accountant or auditor or 
     principal financial officer, comptroller, or principal 
     accounting officer of a registered investment company, or 
     from a position involving the performance of similar 
     functions--
       ``(A) an understanding of generally accepted accounting 
     principles and financial statements; and
       ``(B) experience in the preparation or auditing of 
     financial statements of general comparable registered 
     investment companies.
       ``(3) Deadline for rulemaking.--Not later than 180 days 
     after the date of enactment of the Mutual Fund Investor 
     Confidence Restoration Act of 2003, the Commission shall 
     issue rules under paragraph (2).''.
       (c) Definition of Interested Person.--Section 2(a)(19) of 
     the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(19)) 
     is amended--
       (1) in subparagraph (A)--
       (A) in clause (iv), by striking ``two'' and inserting 
     ``5''; and
       (B) by striking clause (vii) and inserting the following:
       ``(vii) any natural person who has served as an officer or 
     director, or as an employee within the preceding 10 fiscal 
     years, of an investment adviser or principal underwriter to 
     such registered investment company, or of any entity 
     controlling, controlled by, or under common control with such 
     investment adviser or principal underwriter;
       ``(viii) any natural person who has served as an officer or 
     director, or as an employee within the preceding 10 fiscal 
     years, of any entity that has within the preceding 5 fiscal 
     years acted as a significant service provider to such 
     registered investment company, or of any entity controlling, 
     controlled by, or under the common control with such service 
     provider; or
       ``(ix) any natural person who is a member of a class of 
     persons that the Commission, by rule or regulation, 
     determines is unlikely to exercise an appropriate degree of 
     independence as a result of--

       ``(I) a material business relationship with the investment 
     company or an affiliated person of such investment company;

[[Page S16019]]

       ``(II) a close familial relationship with any natural 
     person who is an affiliated person of such investment 
     company; or
       ``(III) any other reason determined by the Commission.''; 
     and

       (2) in subparagraph (B)--
       (A) in clause (iv), by striking ``two'' and inserting 
     ``5''; and
       (B) by striking clause (vii) and inserting the following:
       ``(vii) any natural person who is a member of a class of 
     persons that the Commission, by rule or regulation, 
     determines is unlikely to exercise an appropriate degree of 
     independence as a result of--

       ``(I) a material business relationship with such investment 
     adviser or principal underwriter or affiliated person of such 
     investment adviser or principal underwriter;
       ``(II) a close familial relationship with any natural 
     person who is an affiliated person of such investment adviser 
     or principal underwriter; or
       ``(III) any other reason as determined by the 
     Commission.''.

       (d) Definition of Significant Service Provider.--Section 
     2(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-
     2(a)) is amended by adding at the end the following:
       ``(53) Significant service provider.--
       ``(A) In general.--Not later than 180 days after the date 
     of enactment of the Mutual Fund Investor Confidence 
     Restoration Act of 2003, the Securities and Exchange 
     Commission shall issue final rules defining the term 
     `significant service provider'.
       ``(B) Requirements.--The definition developed under 
     paragraph (1) shall include, at a minimum, the investment 
     adviser and principal underwriter of a registered investment 
     company for purposes of paragraph (19).''.

     SEC. 202. AUDIT COMMITTEE REQUIREMENTS FOR INVESTMENT 
                   COMPANIES.

       (a) Amendments.--Section 32 of the Investment Company Act 
     of 1940 (15 U.S.C. 80a-31) is amended--
       (1) in subsection (a)--
       (A) by striking paragraphs (1) and (2) and inserting the 
     following:
       ``(1) such accountant shall have been selected at a meeting 
     held within 30 days before or after the beginning of the 
     fiscal year or before the annual meeting of stockholders in 
     that year by the vote, cast in person, of a majority of the 
     members of the audit committee of such registered company;
       ``(2) such selection shall have been submitted for 
     ratification or rejection at the next succeeding annual 
     meeting of stockholders if such meeting be held, except that 
     any vacancy occurring between annual meetings, due to the 
     death or resignation of the accountant, may be filled by the 
     vote of a majority of the members of the audit committee of 
     such registered company, cast in person at a meeting called 
     for the purpose of voting on such action;''; and
       (B) by adding at the end the following new sentence: ``The 
     Commission, by rule, regulation, or order, may exempt a 
     registered management company or registered face-amount 
     certificate company subject to this subsection from the 
     requirement in paragraph (1) that the votes by the members of 
     the audit committee be cast at a meeting in person when such 
     a requirement is impracticable, subject to such conditions as 
     the Commission may require.''; and
       (2) by adding at the end the following:
       ``(d) Audit Committee Requirements.--
       ``(1) Requirements as prerequisite to filing financial 
     statements.--Any registered management company or registered 
     face-amount certificate company that files with the 
     Commission any financial statement signed or certified by an 
     independent public accountant shall comply with the 
     requirements of paragraphs (2) through (6) of this subsection 
     and any rule or regulation of the Commission issued 
     thereunder.
       ``(2) Responsibility relating to independent public 
     accountants.--The audit committee of the registered company, 
     in its capacity as a committee of the board of directors, 
     shall be directly responsible for the appointment, 
     compensation, and oversight of the work of any independent 
     public accountant employed by such registered company 
     (including resolution of disagreements between management and 
     the auditor regarding financial reporting) for the purpose of 
     preparing or issuing the audit report or related work, and 
     each such independent public accountant shall report directly 
     to the audit committee.
       ``(3) Independence.--
       ``(A) In general.--Each member of the audit committee of 
     the registered company shall be a member of the board of 
     directors of the company, and shall otherwise be independent.
       ``(B) Criteria.--In order to be considered to be 
     independent for purposes of this paragraph, a member of an 
     audit committee of a registered company may not, other than 
     in his or her capacity as a member of the audit committee, 
     the board of directors, or any other board committee--
       ``(i) accept any consulting, advisory, or other 
     compensatory fee from the registered company or the 
     investment adviser or principal underwriter of the registered 
     company; or
       ``(ii) be an `interested person' of the registered company, 
     as such term is defined in section 2(a)(19).
       ``(4) Complaints.--The audit committee of the registered 
     company shall establish procedures for--
       ``(A) the receipt, retention, and treatment of complaints 
     received by the registered company regarding accounting, 
     internal accounting controls, or auditing matters; and
       ``(B) the confidential, anonymous submission by employees 
     of the registered company and its investment adviser or 
     principal underwriter of concerns regarding questionable 
     accounting or auditing matters.
       ``(5) Authority to engage advisers.--The audit committee of 
     the registered company shall have the authority to engage 
     independent counsel and other advisers, as it determines 
     necessary to carry out its duties.
       ``(6) Funding.--The registered company shall provide 
     appropriate funding, as determined by the audit committee, in 
     its capacity as a committee of the board of directors, for 
     payment of compensation--
       ``(A) to the independent public accountant employed by the 
     registered company for the purpose of rendering or issuing 
     the audit report; and
       ``(B) to any advisers employed by the audit committee under 
     paragraph (5).
       ``(7) Audit committee.--For purposes of this subsection, 
     the term `audit committee' means--
       ``(A) a committee (or equivalent body) established by and 
     among the board of directors of a registered investment 
     company for the purpose of overseeing the accounting and 
     financial reporting processes of the company and audits of 
     the financial statements of the company; and
       ``(B) if no such committee exists with respect to a 
     registered investment company, the entire board of directors 
     of the company.''.
       (b) Conforming Amendment.--Section 10A(m) (15 U.S.C. 78j-
     1(m)) of the Securities Exchange Act of 1934 is amended by 
     adding at the end the following:
       ``(7) Exemption for investment companies.--Effective 1 year 
     after the date of enactment of the Mutual Fund Investor 
     Confidence Restoration Act of 2003, for purposes of this 
     subsection, the term `issuer' shall not include any 
     investment company that is registered under section 8 of the 
     Investment Company Act of 1940.''.
       (c) Implementation.--
       (1) In general.--Not later than 180 days after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall issue final regulations to carry out section 32(d) of 
     the Investment Company Act of 1940, as added by subsection 
     (a) of this section.
       (2) Incentives.--Not later than 180 days after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall, by rule, establish--
       (A) a program of incentives to encourage the filing of 
     meritorious complaints under section 32(d)(4)(A) of the 
     Investment Company Act of 1940; and
       (B) appropriate penalties for the willful filing of 
     materially false complaints under such section.

     SEC. 203. INFORMING DIRECTORS OF SIGNIFICANT DEFICIENCIES.

       Section 42 of the Investment Company Act of 1940 (15 U.S.C. 
     80a-41) is amended by adding at the end the following:
       ``(f) Informing Directors of Significant Deficiencies.--
       ``(1) In general.--If the report of an inspection by the 
     Commission of a registered investment company identifies 
     significant deficiencies in the operations of such company, 
     or of its investment adviser or principal underwriter, the 
     company shall provide such report to the directors of such 
     company.
       ``(2) Disclosure of deficiencies.--The Commission shall, on 
     an annual basis, review all inspection reports of registered 
     investment companies and publicly disclose the 10 most common 
     deficiencies cited in those reports.''.

     SEC. 204. CERTIFICATION BY CHAIRMAN AND CHIEF COMPLIANCE 
                   OFFICER.

       (a) In General.--Subsection (j) of section 17 of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-17(j)), as 
     amended by section 301 of this Act, is amended by adding at 
     the end the following:
       ``(4) Certification by chairman.--The rules and regulations 
     established under paragraph (1) shall require the chairman of 
     the board of directors of each registered open-end investment 
     company to certify, in the periodic report to shareholders, 
     or other appropriate disclosure document, that--
       ``(A) procedures are in place for verifying that the 
     determination of current net asset value of any redeemable 
     security issued by the company used in computing periodically 
     the current price for the purpose of purchase, redemption, 
     and sale complies with the requirements of the Investment 
     Company Act of 1940 and the rules and regulations thereunder, 
     and the company is in compliance with such procedures;
       ``(B) procedures are in place for the oversight of the flow 
     of funds into and out of the securities of the company, and 
     the company is in compliance with such procedures;
       ``(C) procedures are in place to ensure that investors are 
     receiving any applicable discounts on front-end sales loads 
     that are disclosed in the company's prospectus;
       ``(D) procedures are in place to ensure that, if the 
     company's shares are offered as different classes of shares, 
     such classes are designed in the interests of investors, and 
     could reasonably be an appropriate investment option for an 
     investor;
       ``(E) procedures are in place to ensure that information 
     about the company's portfolio securities is not disclosed in 
     violation of the securities laws or the company's code of 
     ethics;

[[Page S16020]]

       ``(F) the members of the board of directors who are not 
     interested persons of the company have reviewed and approved 
     the compensation of the company's portfolio manager in 
     connection with their consideration of the investment 
     advisory contract under section 15(c);
       ``(G) the company has established and enforces a code of 
     ethics as required by paragraph (2) of this subsection;
       ``(H) the company is in compliance with the additional 
     requirements of paragraph (3) of this subsection;
       ``(I) the report submitted to the board of directors under 
     section 15(g)(1) is complete and accurate; and
       ``(J) the board of directors has fulfilled its obligations 
     under section 15(g)(2).''
       ``(5) Certification by chief compliance officer.--The rules 
     and regulations established under paragraph (1) shall require 
     the chief compliance officer of each registered open-end 
     investment company to certify, on an annual basis, that--
       ``(A) appropriate internal controls are in place for the 
     review required under subparagraphs (A) through (H) of 
     paragraph (4); and
       ``(B) such internal controls have been reviewed, and 
     determined to reasonably achieve their stated purpose, by the 
     chief compliance officer.
       ``(6) Review of advisory contracts.--The rules and 
     regulations established under paragraph (1) shall require 
     that the chairman of the board of directors and the chief 
     compliance officer of a registered open-end investment 
     company certify, on an annual basis, that any advisory 
     contract entered into by the company and associated 
     management fees have been negotiated and are in the best 
     interests of the company.''.
       (b) Deadline for Rules.--Not later than 90 days after the 
     date of enactment of this Act, the Securities and Exchange 
     Commission shall prescribe--
       (1) rules to implement subsection (a); and
       (2) minimum standards for compliance with the certification 
     requirements of paragraphs (4) and (5) of section 17(j) of 
     the Investment Company Act of 1940 (15 U.S.C. 80a-17(j)).

          TITLE III--PREVENTING ABUSIVE MUTUAL FUND PRACTICES

     SEC. 301. PREVENTION OF FRAUD; INTERNAL COMPLIANCE AND 
                   CONTROL PROCEDURES.

       (a) Amendment.--Subsection (j) of section 17 of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-17(j)) is 
     amended to read as follows:
       ``(j) Detection and Prevention of Fraud.--
       ``(1) Commission rules to prohibit fraud, deception, and 
     manipulation.--It shall be unlawful for any affiliated person 
     of or principal underwriter for a registered investment 
     company or any affiliated person of an investment adviser of 
     or principal underwriter for a registered investment company, 
     to engage in any act, practice, or course of business in 
     connection with the purchase or sale, directly or indirectly, 
     by such person of any security held or to be acquired by such 
     registered investment company, or any security issued by such 
     registered investment company or by an affiliated registered 
     investment company, in contravention of such rules and 
     regulations as the Commission may adopt to define, and 
     prescribe means reasonably necessary to prevent, such acts, 
     practices, or courses of business as are fraudulent, 
     deceptive, or manipulative.
       ``(2) Codes of ethics.--The rules and regulations 
     established under paragraph (1) shall include requirements 
     for the adoption of codes of ethics by registered investment 
     companies and investment advisers of, and principal 
     underwriters for, such investment companies establishing such 
     standards as are reasonably necessary to prevent such acts, 
     practices, or courses of business. Such rules and regulations 
     shall require each such registered investment company to 
     disclose such codes of ethics (and any changes therein) in 
     the periodic report to shareholders of such company, and to 
     disclose such code of ethics and any waivers and material 
     violations thereof on a readily accessible electronic public 
     information facility of such company and in such additional 
     form and manner as the Commission shall require by rule or 
     regulation.
       ``(3) Additional compliance procedures.--The rules and 
     regulations established under paragraph (1) shall--
       ``(A) require each investment company and investment 
     adviser registered with the Commission to adopt and implement 
     policies and procedures reasonably designed to prevent 
     violation of the Securities Act of 1933 (15 U.S.C. 78a et 
     seq.), the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
     seq.), the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201 et 
     seq.), the Trust Indenture Act of 1939 (15 U.S.C. 77aaa et 
     seq.), the Investment Company Act of 1940 (15 U.S.C. 80a-1 et 
     seq.), the Investment Advisers Act of 1940 (15 U.S.C. 80b et 
     seq.), the Securities Investor Protection Act of 1970 (15 
     U.S.C. 78aaa et seq.), subchapter II of chapter 53 of title 
     31, United States Code, chapter 2 of title I of Public Law 
     91-508 (12 U.S.C. 1951 et seq.), or section 21 of the Federal 
     Deposit Insurance Act (12 U.S.C. 1829b);
       ``(B) require each such company and adviser to review such 
     policies and procedures annually for their adequacy and the 
     effectiveness of their implementation;
       ``(C) require each such company to appoint a chief 
     compliance officer to be responsible for overseeing such 
     policies and procedures, ensuring that the practices of the 
     company adhere to those policies and procedures, and promote 
     the interest of shareholders--
       ``(i) whose compensation shall be approved by the members 
     of the board of directors of the company who are not 
     interested persons of such company;
       ``(ii) who shall report directly to the members of the 
     board of directors of the company who are not interested 
     persons of such company, privately as such members request, 
     but no less frequently than annually; and
       ``(iii) whose report to such members shall include any 
     violations or waivers of, and any other significant issues 
     arising under, such policies and procedures; and
       ``(D) require each such company to establish policies and 
     procedures reasonably designed to protect any officer, 
     director, employee, contractor, subcontractor, or agent of 
     such company from retaliation, including discharge, demotion, 
     suspension, harassment, or any other manner of discrimination 
     in the terms and conditions of employment, because of any 
     lawful act done by such officer, director, employee, 
     contractor, subcontractor, or agent to provide information, 
     cause information to be provided, or otherwise assist in an 
     investigation that relates to any conduct which such officer, 
     director, employee, contractor, subcontractor, or agent 
     reasonably believes constitutes a violation of the securities 
     laws or the code of ethics of such investment company.''.
       (b) Deadline for Rules.--Not later than 90 days after the 
     date of enactment of this Act, the Securities and Exchange 
     Commission shall prescribe rules to implement subsection (a).

     SEC. 302. BAN ON JOINT MANAGEMENT OF MUTUAL FUNDS AND HEDGE 
                   FUNDS.

       (a) Amendment.--Section 15 of the Investment Company Act of 
     1940 (15 U.S.C. 80a-15) is further amended by adding at the 
     end the following:
       ``(h) Ban on Joint Management of Mutual Funds and Hedge 
     Funds.--
       ``(1) Prohibition of joint management.--It shall be 
     unlawful for any individual to serve or act as the portfolio 
     manager or investment adviser of a registered open-end 
     investment company if such individual also serves or acts as 
     the portfolio manager or investment adviser of an investment 
     company that is not registered, or of such other categories 
     of companies as the Commission shall prescribe by rule in 
     order to prohibit conflicts of interest, such as conflicts in 
     the selection of the portfolio securities.
       ``(2) Exceptions.--Notwithstanding paragraph (1), the 
     Commission may, by rule, regulation, or order, permit joint 
     management by a portfolio manager in exceptional 
     circumstances when necessary to protect the interest of 
     investors, provided that such rule, regulation, or order 
     requires--
       ``(A) enhanced disclosure by the registered open-end 
     investment company to investors of any conflicts of interest 
     raised by such joint management; and
       ``(B) fair and equitable policies and procedures for the 
     allocation of securities to the portfolios of the jointly 
     managed companies, and certification by the members of the 
     board of directors who are not interested persons of such 
     registered open-end investment company, in the periodic 
     report to shareholders, or other appropriate disclosure 
     document, that such policies and procedures of such company 
     are fair and equitable.
       ``(3) Definition.--For purposes of this subsection, the 
     term `portfolio manager' means the individual or individuals 
     who are designated as responsible for decision-making in 
     connection with the securities purchased and sold on behalf 
     of a registered open-end investment company, but shall not 
     include individuals who participate only in making research 
     recommendations or executing transactions on behalf of such 
     company.''.
       (b) Deadline for Rules.--The Securities and Exchange 
     Commission shall prescribe rules to implement the amendment 
     made by subsection (a) of this section within 90 days after 
     the date of enactment of this Act.

     SEC. 303. RESTRICTIONS ON SHORT TERM TRADING AND MANDATORY 
                   REDEMPTION FEES.

       (a) Short Term Trading Prohibited.--Section 17 of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-17) is amended 
     by adding at the end the following:
       ``(k) Short Term Trading Prohibited.--It shall be unlawful 
     for any officer, director, partner, or employee of a 
     registered investment company, any affiliated person, 
     investment adviser, or principal underwriter of such company, 
     or any officer, director, partner, or employee of such an 
     affiliated person, investment adviser, or principal 
     underwriter, to engage in short-term transactions, as such 
     term is defined by the Commission by rule, in any securities 
     of which such company, or any affiliate of such company, is 
     the issuer, except that this subsection shall not prohibit 
     transactions in money market funds, other funds the 
     investment policy of which expressly permits short-term 
     transactions, or such other categories of registered 
     investment companies as the Commission shall specify by 
     rule.''.
       (b) Mandatory Redemption Fees.--Not later than 180 days 
     after the date of enactment of this Act, the Securities and 
     Exchange Commission shall, by rule, require that any 
     investment company that does not allow for market timing 
     practices to charge a redemption fee upon the short-term 
     redemption of any securities of such company.
       (c) Deadline for Rules.--Not later than 180 days after the 
     date of enactment of this

[[Page S16021]]

     Act, the Securities and Exchange Commission shall prescribe 
     rules to implement the amendment made by subsection (a) of 
     this section.

     SEC. 304. ELIMINATION OF STALE PRICES.

       (a) In General.--Not later than 180 days after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall prescribe, by rule or regulation, standards concerning 
     the obligation of registered open-end investment companies 
     under the Investment Company Act of 1940 to apply and use 
     fair value methods of determination of net asset value when 
     market quotations are unavailable or do not accurately 
     reflect the fair market value of the companies' portfolio 
     securities, in order to prevent dilution of the interests of 
     long-term investors or as necessary in the other interests of 
     investors. Such rule or regulation shall identify, in 
     addition to significant events, the conditions or 
     circumstances from which such obligation will arise, such as 
     the need to value securities traded on foreign exchanges, and 
     the methods by which fair value methods shall be applied in 
     such events, conditions, and circumstances.
       (b) Formal Policies and Procedures.--
       (1) In general.--Not later than 180 days after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall, by rule or regulation--
       (A) require that each registered open-end investment 
     company and registered investment advisor establish formal 
     policies with respect to compliance with the regulations 
     established under subsection (a);
       (B) require such policies to be publicly disclosed to 
     shareholders;
       (C) require the adoption of internal procedures to ensure 
     compliance with such policies;
       (D) require that such policies be subject to ongoing review 
     by the company or investment adviser; and
       (E) require, on an annual basis, a certification by the 
     chief executive officer of the company or investment adviser 
     that such policies are being adhered to.
       (2) Changes to policies.--Any policies adopted by a 
     registered open-end company or registered investment adviser 
     under paragraph (1) shall not be altered without the prior 
     approval of a majority of the shareholders of such company or 
     adviser.

     SEC. 305. FORMAL POLICIES AND PROCEDURES RELATED TO MARKET 
                   TIMING.

       (a) In General.--Not later than 180 days after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall, by rule--
       (1) require that each registered open-end investment 
     company and registered investment advisor establish formal 
     policies with respect to whether it permits market timing and 
     short term trading, and under what circumstances such 
     practices will be permitted;
       (2) require such policies to be publicly disclosed in any 
     prospectus delivered by the company or investment advisor;
       (3) require the adoption of internal procedures reasonably 
     designed to ensure compliance with such policies;
       (4) require that such policies be subject to ongoing review 
     by the company or investment advisor; and
       (5) require, on an annual basis, a certification by the 
     chief executive officer of the investment adviser, and 
     chairman of the board of directors and chief compliance 
     officer of the company that such policies are being adhered 
     too by the investment adviser or the company.

     SEC. 306. PREVENTION OF LATE TRADES.

       (a) Additional Rules Required.--Not later than 180 days 
     after the date of enactment of this Act, the Securities and 
     Exchange Commission shall issue rules to prevent transactions 
     in the securities of any registered open-end investment 
     company in violation of section 22 of the Investment Company 
     Act of 1940 (15 U.S.C. 80a-22), including after-hours trades 
     that are executed at a price based on a net asset value that 
     was determined as of a time prior to the actual execution of 
     the transaction.
       (b) Trades Collected by Intermediaries.--
       (1) In general.--The rules established under subsection (a) 
     shall permit execution of after-hours trades that are 
     provided to the registered open-end investment company by a 
     broker-dealer, retirement plan administrator, insurance 
     company, or other intermediary, after the time as of which 
     such net asset value was determined, if the late trading and 
     detection procedures and policies of such intermediary are 
     subject to inspection by the Commission (in this subsection, 
     a ``permitted intermediary'').
       (2) Rules.--The Commission, by rule, shall--
       (A) require each permitted intermediary to certify that it 
     has policies and procedures in place to prevent and detect 
     late-trades, and that such policies have been adhered too by 
     the permitted intermediary;
       (B) require each permitted intermediary to submit an 
     independent annual audit verifying that its policies and 
     procedures do not permit the acceptance of late order 
     trading; and
       (C) provide that any intermediary that is not a permitted 
     intermediary shall be required to submit all transactions to 
     the open-end investment company before the determination of 
     the related net asset value.

     SEC. 307. DISCLOSURE OF INSIDER TRANSACTIONS.

       Not later than 180 days after the date of enactment of this 
     Act, the Securities and Exchange Commission shall, by rule, 
     require--
       (1) that any senior executive officer of an open-end 
     management investment company publicly disclose, prior to the 
     actual time of purchase, any intended sale or purchase of 
     securities of an open-end management investment company that 
     employs the same investment adviser as the company with whom 
     such senior executive officer is employed; and
       (2) that any such securities purchased be held by the 
     senior executive officer for not less than 6 months.

         TITLE IV--STRENGTHENING MUTUAL FUND INDUSTRY OVERSIGHT

     SEC. 401. STUDY OF MUTUAL FUND OVERSIGHT BOARD.

       (a) In General.--The General Accounting Office shall 
     conduct a study to determine the feasibility of, and assess 
     what, if any, benefits to shareholders, mutual fund 
     governance and mutual fund supervision would result from 
     establishing a Mutual Fund Oversight Board that would--
       (1) have inspection, examination, and enforcement authority 
     over mutual fund boards of directors;
       (2) be funded by assessments against mutual fund assets or 
     management fees;
       (3) have members selected by Commission; and
       (4) have rulemaking authority.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the General Accounting Office shall 
     submit a report on the study required under paragraph (1) 
     to--
       (1) the Committee on Banking, Housing, and Urban Affairs of 
     the Senate; and
       (2) the Committee on Financial Services of the House of 
     Representatives.

     SEC. 402. STUDY OF COORDINATION OF ENFORCEMENT EFFORTS.

       (a) In General.--The General Accounting Office shall 
     conduct a study of the coordination of enforcement efforts 
     related to allegations of misconduct by open-end management 
     companies between the headquarters of the Securities and 
     Exchange Commission, the regional offices of the Commission, 
     and appropriate State regulatory and law enforcement 
     entities, such as State attorney generals and the North 
     American Securities Administrators Association.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the General Accounting Office shall 
     submit a report on the study required under subsection (a) to 
     Congress.

     SEC. 403. REVIEW OF COMMISSION RESOURCES.

       (a) In General.--The Securities and Exchange Commission 
     shall conduct a study on the allocation and adequacy of the 
     supervision and enforcement resources of the Commission 
     dedicated to the oversight of open-end management companies.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall submit a report on the study required under subsection 
     (a) to--
       (1) the Committee on Banking, Housing, and Urban Affairs of 
     the Senate; and
       (2) the Committee on Financial Services of the House of 
     Representatives.

     SEC. 404. COMMISSION STUDY AND REPORT REGULATING SOFT DOLLAR 
                   ARRANGEMENTS.

       (a) Study Required.--
       (1) In general.--The Commission shall conduct a study of 
     the use of soft dollar arrangements by investment advisers as 
     contemplated by section 28(e) of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78bb(e)).
       (2) Areas of consideration.--The study required by this 
     section shall examine--
       (A) the trends in the average amounts of soft dollar 
     commissions paid by investment advisers and investment 
     companies in the past 3 years;
       (B) the types of services provided through soft dollar 
     arrangements;
       (C) the benefits and disadvantages of the use of soft 
     dollars for investors, including the extent to which use of 
     soft dollar arrangements affects the ability of mutual fund 
     investors to evaluate and compare the expenses of different 
     mutual funds;
       (D) the potential or actual conflicts of interest (or both 
     potential and actual conflicts) created by soft dollar 
     arrangements, including whether certain potential conflicts 
     are being managed effectively by other laws and regulations 
     specifically addressing those situations, the role of the 
     board of directors in managing these potential or actual (or 
     both) conflicts, and the effectiveness of the board in this 
     capacity;
       (E) the transparency of such soft dollar arrangements to 
     investment company shareholders and investment advisory 
     clients of investment advisers, the extent to which enhanced 
     disclosure is necessary or appropriate to enable investors to 
     better understand the impact of these arrangements, and an 
     assessment of whether the cost of any enhanced disclosure or 
     other regulatory change would result in benefits to the 
     investor; and
       (F) whether such section 28(e) should be modified, and 
     whether other regulatory or legislative changes should be 
     considered and adopted to benefit investors.
       (b) Report Required.--Not later than 1 year after the date 
     of enactment of this Act, the Commission shall submit a 
     report on the study required by subsection (a) to the 
     Committee on Financial Services of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs of the Senate.

[[Page S16022]]

     SEC. 405. REPORT ON ADEQUACY OF REGULATORY RESPONSE TO LATE 
                   TRADING AND MARKET TIMING.

       (a) Report Required.--Not later than 180 days after the 
     date enactment of this Act, the Securities and Exchange 
     Commission shall submit a report to the Committee on 
     Financial Services of the House of Representatives and the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate on market timing and late trading of mutual funds.
       (b) Required Contents of Report.--The report required by 
     this section shall include the following:
       (1) The economic harm of market timing and late trading of 
     mutual fund shares on long-term mutual fund shareholders.
       (2) The findings by the Commission's Office of Compliance, 
     Inspections and Examinations, and the actions taken by the 
     Commission's Division of Enforcement, regarding--
       (A) illegal late trading practices;
       (B) illegal market timing practices; and
       (C) market timing practices that are not in violation of 
     prospectus disclosures.
       (3) When the Commission became aware that the use of market 
     timing practices was harming long-term shareholders, and the 
     circumstances surrounding the Commission's discovery of that 
     activity.
       (4) The steps the Commission has taken since becoming aware 
     of market timing practices to protect long-term mutual fund 
     investors.
       (5) Any additional legislative or regulatory action that is 
     necessary to protect long-term mutual fund shareholders 
     against the detrimental effects of late trading and market 
     timing practices.

     SEC. 406. STUDY OF ARBITRATION CLAIMS.

       (a) Study Required.--The Securities and Exchange Commission 
     shall conduct a study of the increased rate of arbitration 
     claims and decisions involving mutual funds since 1995 for 
     the purposes of identifying trends in arbitration claim rates 
     and, if applicable, the causes of such increased rates and 
     the means to avert such causes.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall submit a report on the study required by subsection (a) 
     to the Committee on Financial Services of the House of 
     Representatives and the Committee on Banking, Housing, and 
     Urban Affairs of the Senate.

                TITLE V--PROMOTING SHAREHOLDER LITERACY

     SEC. 501. FINANCIAL LITERACY AMONG MUTUAL FUND INVESTORS 
                   STUDY.

       (a) In General.--The Securities and Exchange Commission 
     shall conduct a study to identify--
       (1) the existing level of financial literacy among 
     investors that purchase shares of open-end companies, as such 
     term is defined under section 5 of the Investment Company Act 
     of 1940, that are registered under section 8 of such Act;
       (2) the most useful and understandable relevant information 
     that investors need to make sound financial decisions prior 
     to purchasing such shares;
       (3) methods to increase the transparency of expenses and 
     potential conflicts of interest in transactions involving the 
     shares of open-end companies;
       (4) the existing private and public efforts to educate 
     investors; and
       (5) a strategy to increase the financial literacy of 
     investors that results in a positive change in investor 
     behavior.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall submit a report on the study required under subsection 
     (a) to--
       (1) the Committee on Banking, Housing, and Urban Affairs of 
     the Senate; and
       (2) the Committee on Financial Services of the House of 
     Representatives.

                                 ______
                                 
      By Mrs. BOXER:
  S. 1972. A bill to amend the Internal Revenue Code of 1986 to provide 
for a tax credit for small employer-based health insurance coverage in 
States in which such coverage is mandated, and for other purposes; to 
the Committee on Finance.
  Mrs. BOXER. Mr. President, today, I am introducing the ``Small 
Business State Mandated Health Insurance Assistance Act.''
  The legislation would provide a tax credit to small businesses in 
states where the law mandates that they provide health insurance to 
their employees. The credit would be for 50 percent of the amount the 
employer spends providing health insurance for his or her employees.
  In California 6.4 million people are uninsured. That's more than 18 
percent of the state. To deal with the issue, the state legislature 
recently passed a law mandating that employers provide their workers 
with health insurance.
  Many smaller businesses have told me that they do not object to the 
law itself, but that they will have a hard time financially complying 
with the mandate--especially in these tough economic times. 
Furthermore, there is concern that neighboring States without such a 
mandate will recruit our small businesses entrepreneurs to move to 
their states where they would not have to provide insurance for their 
workers.
  While businesses can currently deduct from federal taxes, as costs of 
doing businesses, the costs of the health insurance provided to their 
employees, this assistance is simply not large enough to provide the 
help that small businesses truly need. That is why I am introducing 
this bill today. I encourage my colleagues to join me in this effort.
                                 ______
                                 
      By Mr. DASCHLE:
  S. 1974. A bill to make improvements to the Medicare Prescriptions 
Drug, Improvement, and Modernization Act of 2003; to the Committee on 
Finance.
  Mr. DASCHLE. Mr. President, by adopting the Medicare Conference 
Report today, the Senate has done great harm to one of our most 
successful and important social programs. As I have said over the past 
week, I believe that this will not be the end of the issue. I believe 
this is just the end of the first chapter.
  And I predict that the call from beneficiaries and future 
beneficiaries to repair this damage will be so loud that Congress will 
be compelled to act. We are hearing already from seniors in South 
Dakota and all across the country. For that reason, I am introducing 
today the Medicare Preservation and Drug Price Fairness Act. It is only 
a first step in addressing some of the many problems in the Republican 
Medicare bill--but it is an important step.
  This summer, the Senate passed a prescription drug bill. It was not 
perfect. But it was a start at providing the most necessary reform 
Medicare needs--covering prescription drugs for the program's 41 
million beneficiaries. And I reluctantly supported it.
  What came back from the Conference was no longer a bill to add a drug 
benefit to Medicare. It was a vehicle for Republicans to harm Medicare 
under the guise of ``reforms.''
  I am introducing a bill today to address some of the main weaknesses 
in the Conference bill. It will not be the last of these bills 
introduced. And it does not repair all of the damage done to Medicare 
by the Conference bill.
  The bill I introduce today is simply an initial effort to carve out 
some of the more egregious provisions of the Conference bill. It does 
not address the critical issues of the 2.7 million retirees who will 
lose their good coverage or the 6 million of the lowest-income seniors 
who will be worse off than they are now. It does not address the 
inadequacy of the drug benefit itself. We will come back to those 
issues in the near future.
  The Medicare Preservation and Drug Price Fairness Act is a start 
toward righting the wrongs done to Medicare today. It repeals the 
language in the Republican bill that prohibits Medicare from 
negotiating lower prices on behalf of beneficiaries. It repeals the 
highly controversial ``premium support'' demonstration projects that 
would force beneficiaries who do not want to join an HMO to pay higher 
premiums. It ensures that the guaranteed Medicare fallback is triggered 
whenever there are not two stand-alone drug plans available in an area 
so that seniors are not forced to join an HMO if the one that is 
available to them is priced too high. It repeals the $12 billion slush 
fund giveaway to HMOs and the $6 billion tax shelters for the wealthy 
and healthy. And, unlike the Republican bill, it allows Americans to 
obtain US-made drugs at lower prices safely from other industrialized 
countries.
  I noted earlier today when we voted on the Conference Report that 
there were few, if any, seniors looking on expectantly from the 
gallery. And in fact, we have heard from them in large numbers that 
they do not support the Conference bill. In contrast, the lobbies were 
full of well-tailored lobbyists--and the big drug companies and the 
HMOs are the ones celebrating the passage of the Conference bill. The 
Republicans got it backwards. The Medicare Preservation and Drug Price 
Fairness Act is a first step toward the bill Congress should have 
passed--a bill that truly benefits America's seniors.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1974

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

[[Page S16023]]

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medicare Preservation and 
     Drug Price Fairness Act''.

     SEC. 2. AUTHORITY TO NEGOTIATE PRICES.

       Subsection (i) of section 1860D-11, as added by section 101 
     of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003, is repealed.

     SEC. 3. REPEAL OF COMPARATIVE COST ADJUSTMENT (CCA) PROGRAM.

       Subtitle E of title II of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003, and the 
     amendments made by such subtitle, are repealed.

     SEC. 4. PHARMACEUTICAL MARKET ACCESS.

       (a) Importation of Prescription Drugs.--Section 804 of the 
     Federal Food, Drug, and Cosmetic Act (21 U.S.C. 384) is 
     amended--
       (1) in subsection (a)--
       (A) by striking ``The Secretary'' and inserting ``Not later 
     than 180 days after the date of the enactment of the Medicare 
     Prescription Drug, Improvement, and Modernization Act of 
     2003, the Secretary''; and
       (B) by striking ``pharmacists and wholesalers'' and 
     inserting ``pharmacists, wholesalers, and qualifying 
     individuals'';
       (2) in subsection (b)--
       (A) by amending paragraph (1) to read as follows:
       ``(1) require that each covered product imported pursuant 
     to such subsection complies with sections 501, 502, and 505, 
     and other applicable requirements of this Act; and'';
       (B) in paragraph (2), by striking ``, including subsection 
     (d); and'' and inserting a period; and
       (C) by striking paragraph (3);
       (3) in subsection (c), by inserting ``by pharmacists and 
     wholesalers (but not qualifying individuals)'' after 
     ``importation of covered products'';
       (4) in subsection (d)--
       (A) by striking paragraphs (3) and (10);
       (B) in paragraph (5), by striking ``, including the 
     professional license number of the importer, if any'';
       (C) in paragraph (6)--
       (i) in subparagraph (C), by inserting ``(if required under 
     subsection (e))'' before the period;
       (ii) in subparagraph (D), by inserting ``(if required under 
     subsection (e))'' before the period; and
       (iii) in subparagraph (E), by striking ``labeling'';
       (D) in paragraph (7)--
       (i) in subparagraph (A), by inserting ``(if required under 
     subsection (e))'' before the period; and
       (ii) by amending subparagraph (B) to read as follows:
       ``(B) Certification from the importer or manufacturer of 
     such product that the product meets all requirements of this 
     Act.''; and
       (E) by redesignating paragraphs (4) through (9) as 
     paragraphs (3) through (8), respectively;
       (5) by amending subsection (e) to read as follows:
       ``(e) Testing.--
       ``(1) In general.--Subject to paragraph (2), regulations 
     under subsection (a) shall require that testing referred to 
     in paragraphs (5) through (7) of subsection (d) be conducted 
     by the importer of the covered product, unless the covered 
     product is a prescription drug subject to the requirements of 
     section 505B for counterfeit-resistant technologies.
       ``(2) Exception.--The testing requirements of paragraphs 
     (5) through (7) of subsection (d) shall not apply to an 
     importer unless the importer is a wholesaler.'';
       (6) in subsection (f), by striking ``or designated by the 
     Secretary, subject to such limitations as the Secretary 
     determines to be appropriate to protect the public health'';
       (7) in subsection (g)--
       (A) by striking ``counterfeit or''; and
       (B) by striking ``and the Secretary determines that the 
     public is adequately protected from counterfeit and violative 
     covered products being imported pursuant to subsection (a)'';
       (8) in subsection (i)(1)--
       (A) by amending subparagraph (A) to read as follows:
       ``(A) In general.--The Secretary shall conduct, or contract 
     with an entity to conduct, a study on the imports permitted 
     pursuant to subsection (a), including consideration of the 
     information received under subsection (d). In conducting such 
     study, the Secretary or entity shall evaluate the compliance 
     of importers with regulations under subsection (a), and the 
     incidence of shipments pursuant to such subsection, if any, 
     that have been determined to be misbranded or adulterated, 
     and determine how such compliance contrasts with the 
     incidence of shipments of prescription drugs transported 
     within the United States that have been determined to be 
     misbranded or adulterated.''; and
       (B) in subparagraph (B), by striking ``Not later than 2 
     years after the effective date of final regulations under 
     subsection (a),'' and inserting ``Not later than 18 months 
     after the date of the enactment of the Medicare Prescription 
     Drug, Improvement, and Modernization Act of 2003,'';
       (9) in subsection (k)(2)--
       (A) by redesignating subparagraphs (D) and (E) as 
     subparagraphs (E) and (F), respectively; and
       (B) by inserting after subparagraph (C) the following:
       ``(D) The term `qualifying individual' means an individual 
     who is not a pharmacist or a wholesaler. ''; and
       (10) by striking subsections (l) and (m).
       (b) Use of Counterfeit-Resistant Technologies To Prevent 
     Counterfeiting.--
       (1) Misbranding.--Section 502 of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 352; deeming drugs and devices to 
     be misbranded) is amended by adding at the end the following:
       ``(w) If it is a drug subject to section 503(b), unless the 
     packaging of such drug complies with the requirements of 
     section 505B for counterfeit-resistant technologies.''.
       (2) Requirements.--Title V of the Federal Food, Drug, and 
     Cosmetic Act (21 U.S.C. 351 et seq.) is amended by inserting 
     after section 505A the following:

     ``SEC. 505B. COUNTERFEIT-RESISTANT TECHNOLOGIES.

       ``(a) Incorporation of Counterfeit-Resistant Technologies 
     Into Prescription Drug Packaging.--The Secretary shall 
     require that the packaging of any drug subject to section 
     503(b) incorporate--
       ``(1) overt optically variable counterfeit-resistant 
     technologies that are described in subsection (b) and comply 
     with the standards of subsection (c); or
       ``(2) technologies that have an equivalent function of 
     security, as determined by the Secretary.
       ``(b) Eligible Technologies.--Technologies described in 
     this subsection--
       ``(1) shall be visible to the naked eye, providing for 
     visual identification of product authenticity without the 
     need for readers, microscopes, lighting devices, or scanners;
       ``(2) shall be similar to that used by the Bureau of 
     Engraving and Printing to secure United States currency;
       ``(3) shall be manufactured and distributed in a highly 
     secure, tightly controlled environment; and
       ``(4) should incorporate additional layers of non-visible 
     covert security features up to and including forensic 
     capability.
       ``(c) Standards for Packaging.--
       ``(1) Multiple elements.--For the purpose of making it more 
     difficult to counterfeit the packaging of drugs subject to 
     section 503(b), manufacturers of the drugs shall incorporate 
     the technologies described in subsection (b) into multiple 
     elements of the physical packaging of the drugs, including 
     blister packs, shrink wrap, package labels, package seals, 
     bottles, and boxes.
       ``(2) Labeling of shipping container.--Shipments of drugs 
     described in subsection (a) shall include a label on the 
     shipping container that incorporates the technologies 
     described in subsection (b), so that officials inspecting the 
     packages will be able to determine the authenticity of the 
     shipment. Chain of custody procedures shall apply to such 
     labels and shall include procedures applicable to contractual 
     agreements for the use and distribution of the labels, 
     methods to audit the use of the labels, and database access 
     for the relevant governmental agencies for audit or 
     verification of the use and distribution of the labels.''.
       (c) Repeal.--Subtitle C of title XI of the Medicare 
     Prescription Drug, Improvement, and Modernization Act of 
     2003, and the amendments made by such subtitle, are repealed.

     SEC. 5. ASSURING ACCESS TO COVERAGE.

       Paragraph (3) of section 1860D-3(a), as added by section 
     101 of the Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003, is amended to read as follows:
       ``(3) Qualifying plan defined.--For purposes of this 
     section, the term `qualifying plan' means a prescription drug 
     plan offered by a PDP sponsor.''.

     SEC. 6. REPEAL OF MA REGIONAL PLAN STABILIZATION FUND.

       (a) In General.--Section 1858 of the Social Security Act, 
     as added by section 221(c) of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003, is amended--
       (1) by striking subsection (e);
       (2) by redesignating subsections (f), (g), and (h) as 
     subsections (e), (f), and (g), respectively; and
       (3) in subsection (e), as so redesignated, by striking 
     ``subject to subsection (e),''.
       (b) Conforming Amendment.--Section 1851(i)(2) of the Social 
     Security Act (42 U.S.C. 1395w-21(i)(2)), as amended by 
     section 221(d)(5) of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003, is amended by 
     striking``1858(h)'' and inserting ``1858(g)''.

     SEC. 7. REPEAL OF HEALTH SAVINGS ACCOUNTS.

       Section 1201 of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003, and the 
     amendments made by such section, are repealed.

     SEC. 8. EFFECTIVE DATE.

       (a) In General.--The amendments made by this Act shall take 
     effect as if included in the enactment of the Medicare 
     Prescription Drug, Improvement, and Modernization Act of 
     2003.
       (b) Application of Laws.--If any amendment to any provision 
     of any Act is repealed by this Act, such provision shall be 
     applied and administered as if the amendment had never been 
     enacted.

                                 ______
                                 
      By Mr. DODD (for himself and Mr. McCain):
  S. 1975. A bill to amend the Internal Revenue Code of 1986 to deny a 
deduction for securities-related fines, penalties, and other amounts, 
and to provide that revenues resulting from such denial be transferred 
to Fair Funds for the relief of victims; to the Committee on Finance.

[[Page S16024]]

  Mr. DODD. Mr. President, I rise today to introduce important 
legislation designed to ensure that corporate wrongdoers are held fully 
responsible for their illegal actions and that investors are given fair 
compensation for such actions.
  As most of my colleagues are aware, in April of this year, 10 large 
securities firms agreed to pay a total of $1.4 billion in fines and 
payments for giving their investment clients tainted and misleading 
advice--advice which cost those clients hundreds of millions of 
dollars.
  The ``global settlement'' was initially lauded as a historic victory 
against corporate wrongdoers. And indeed, thanks to the efforts of 
Federal and State securities regulators, and New York State Attorney 
General Eliot Spitzer, the settlement has the potential to 
fundamentally change pervasive business practices that were so harmful 
to so many.
  But the settlement's impact could be significantly weakened by a 
loophole that would allow the firms to avoid paying taxes on nearly 
$900 million of the penalties--by deducting them as standard business 
costs.
  Only one-third of the total settlement is specifically prohibited by 
law from being tax-deductible. If the firms are able to write off the 
remainder of the costs as business expenses, then the total price tag 
of the settlement will be much smaller than advertised.
  However, there is much more at stake. America's financial markets are 
the most vibrant in the world for one reason--investor confidence. The 
securities laws of the 1930's built the foundation for the deepest, 
most liquid markets in the world. They have created a public trust in 
our markets among investors worldwide who know that we have a zero-
tolerance policy towards corporate malfeasance.
  If we allow firms to write off fines as the cost of doing business, 
then we will perpetuate the idea that fraud is no longer a crime, but 
an accepted business practice. And we will compromise the very 
principles on which our markets are based--credibility, honesty, and 
responsibility.
  We need to send the strongest possible message to corporate America 
that defrauding people of their life savings can never, under any 
circumstances, be considered ``business as usual.'' Our tax code should 
not reward these practices--it should discourage and punish them, to 
the greatest extent possible. Otherwise, the victims of corporate 
misconduct will include not only individual investors, but the 
credibility of our capital markets. And if our markets suffer, so will 
America's place in the world economy.
  That is why I rise today to introduce my legislation. This 
legislation takes two important steps towards fixing this problem. 
First, it expressly prohibits any tax deduction on payments for 
violations of securities laws, including those required by the global 
settlement. Second, it directs all of the tax revenues gained from 
those payments into existing funds administered by the Securities and 
Exchange Commission which repay money to defrauded investors. Under my 
bill, the perpetrators of corporate misdeeds will be fairly punished, 
and the victims will be fairly compensated.
  Everyone agrees that restoring investor confidence is a crucial part 
of getting our economy back on the right track. The vitality of 10 
largest securities firms represent an important piece of this puzzle. 
But Americans will only be willing to entrust them with their hard-
earned money if they can be sure that they are being dealt with 
ethically and honestly.
  The global settlement represents a tremendous opportunity to help 
mend the tattered relationship between corporate America and the 
American people. We can't afford to lose that opportunity in a tax 
loophole. We need to show Americans that corporate fraud is a real 
crime--not business as usual. I urge my colleagues to support this 
bill.
                                 ______
                                 
      By Mr. BINGAMAN (for himself, Mr. Domenici, Mrs. Murray, Mr. 
        Jeffords, Ms. Cantwell, Mr. Akaka, Mr. Reed, Mr. Chafee, and 
        Mr. Inouye:
  S. 1976. A bill to amend title XXI of the Social Security Act to 
permit qualifying States to use a portion of their allotments under the 
State children's health insurance program for any fiscal year for 
certain medical expenditures, and for other purposes; to the Committee 
on Finance.
  Mr. BINGAMAN. Mr. President, I rise today to introduce legislation 
with Senators Domenici, Murray, Jeffords, Cantwell, Akaka, Reed, 
Chafee, and Inouye entitled the ``Children's Health Equity Technical 
Amendments Act of 2003.''
  Since the passage of the Children's Health Insurance Program, or 
CHIP, in 1997, a group of States that expanded coverage to children in 
Medicaid prior to the enactment of CHIP have been unfairly penalized 
for that expansion. States are not allowed to use the enhanced matching 
rate available to other States for children at similar levels of 
poverty under the act. As a result, a child in the States of New York, 
Florida, and Pennsylvania, because they were grandfathered in the 
original act or in Iowa, Montana, or a number of other States at 134 
percent of poverty is eligible for an enhanced matching rate in CHIP 
but that has not been the case for States such as New Mexico, Vermont, 
Washington, Rhode Island, Hawaii, and a number of others, including 
Connecticut, Tennessee, Minnesota, New Hampshire, Wisconsin, and 
Maryland.
  As the health policy statement by the National Governors' Association 
reads, ``The Governors believe that it is critical that innovative 
states not be penalized for having expanded coverage to children before 
the enactment of S-CHIP, which provides enhanced funding to meet these 
goals. To this end, the Governors support providing additional funding 
flexibility to states that had already significantly expanded coverage 
of the majority of uninsured children in their states.
  For six years, our group of States have sought to have this inequity 
addressed. Early this year, I introduced the ``Children's Health Equity 
of 2003'' with Senators Jeffords, Murray, Leahy, and Ms. Cantwell and 
we worked successfully to get a compromise worked out for inclusion in 
S. 312 by Senators Rockefeller, and Chafee. This compromise extended 
expiring CHIP allotments only for fiscal years 1998 through 2001 in 
order to meet budgetary caps.
  The compromise allowed States to be able to use up to 20 percent of 
our State's CHIP allotments to pay for Medicaid eligible children about 
150 percent of poverty that were part of our State's expansions prior 
to the enactment of CHIP. That language was maintained in conference 
and included in H.R. 2854 that was signed by the President as Public 
Law 108-74. Unfortunately, a slight change was made in the conference 
language that excluded New Mexico and Hawaii, Maryland, and Rhode 
Island needed specific changes so an additional bill was passed, H.R. 
3288, and signed into law as Public Law 108-107, on November 17, 2003. 
This second bill included language from legislation that I introduced 
with Senator Domenici, S. 1547, to address the problem caused to New 
Mexico by the conference committee's change.
  Unfortunately, one major problem with the compromise was that it 
would allow the 10 States flexibility with its CHIP funds for 
allotments between 1998 and 2001 and not in the future. Therefore, the 
inequity continues with CHIP allotments last year, this year, and into 
the future. This legislation would address that problem and ensure that 
all future allotments give these 11 States the flexibility to use up to 
20 percent of our CHIP allotments to pay for health care services of 
children above 150 percent of poverty in our respective state Medicaid 
programs.
  This rather technical issue has real and negative consequences in 
States such as New Mexico. In fact, due to the CHIP inequity, New 
Mexico has been allocated $266 million from CHIP between fiscal years 
1998 and 2002, and yet, has only been able to spend slightly over $26 
million as of the end of last fiscal year. In other words, New Mexico 
has been allowed to spend less than 10 percent of its federal CHIP 
allocations.
  With the passage of H.R. 2854 and H.R. 3288, that situations will 
improve somewhat. Unfortunately, the change was not made permanent and 
does not apply to future CHIP allotments. This legislation would 
correct this problem.
  It is important to note that this initiative includes strong 
maintenance of effort language as well as incentives for our State to 
conduct outreach and

[[Page S16025]]

enrollment efforts and program simplification to find and enroll 
uninsured kids because we feel strongly that they must receive the 
health coverage for which they are eligible.
  The bill does not take money from other States's CHIP allotments. It 
simple allows our States to spend our States' specific CHIP allotments 
from the Federal government on our uninsured children--just as other 
States across the country are doing.
  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. 1976

       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 ``Children's Health Equity 
     Technical Amendments Act of 2003''.

     SEC. 2. AUTHORITY FOR QUALIFYING STATES TO USE PORTION OF 
                   SCHIP ALLOTMENT FOR ANY FISCAL YEAR FOR CERTAIN 
                   MEDICAID EXPENDITURES.

       (a) In General.--Section 2105(g)(1)(A) of the Social 
     Security Act (42 U.S.C. 1397ee(g)(1)(A)) (as added by section 
     1(b) of Public Law 108-74) is amended by striking ``, 1999, 
     2000, or 2001'' and inserting ``and any fiscal year 
     thereafter''.
       (b) Special Rule for Use of Allotments for Fiscal Year 2002 
     or Thereafter.--Section 2105(g) of the Social Security Act 
     (42 U.S.C. 1397ee(g)) (as so added and as amended by Public 
     Law 108-127) is amended--
       (1) in paragraph (2), by striking ``In this subsection'' 
     and inserting ``Subject to paragraph (4), in this 
     subsection''; and
       (2) by adding at the end the following:
       ``(4) Special rule regarding authority to use portion of 
     allotments for fiscal year 2002 or thereafter.--
     Notwithstanding paragraph (2), the authority provided under 
     paragraph (1)(A) with respect to any allotment under section 
     2104 for fiscal year 2002 or any fiscal year thereafter 
     (insofar as the allotment is available under subsections (e) 
     and (g) of such section), shall only apply to a qualifying 
     State if the State has implemented at least 3 of the 
     following policies and procedures (relating to coverage of 
     children under title XIX and this title):
       ``(A) Uniform, simplified application form.--With respect 
     to children who are eligible for medical assistance under 
     section 1902(a)(10)(A), the State uses the same uniform, 
     simplified application form (including, if applicable, 
     permitting application other than in person) for purposes of 
     establishing eligibility for benefits under title XIX and 
     this title.
       ``(B) Elimination of asset test.--The State does not apply 
     any asset test for eligibility under section 1902(l) or this 
     title with respect to children.
       ``(C) Adoption of 12-month continuous enrollment.--The 
     State provides that eligibility shall not be regularly 
     redetermined more often than once every year under this title 
     or for children described in section 1902(a)(10)(A).
       ``(D) Same verification and redetermination policies; 
     automatic reassessment of eligibility.--With respect to 
     children who are eligible for medical assistance under 
     section 1902(a)(10)(A), the State provides for initial 
     eligibility determinations and redeterminations of 
     eligibility using the same verification policies (including 
     with respect to face-to-face interviews), forms, and 
     frequency as the State uses for such purposes under this 
     title, and, as part of such redeterminations, provides for 
     the automatic reassessment of the eligibility of such 
     children for assistance under title XIX and this title.
       ``(E) Outstationing enrollment staff.--The State provides 
     for the receipt and initial processing of applications for 
     benefits under this title and for children under title XIX at 
     facilities defined as disproportionate share hospitals under 
     section 1923(a)(1)(A) and Federally-qualified health centers 
     described in section 1905(l)(2)(B) consistent with section 
     1902(a)(55).''.
       (c) Conforming Amendment.--Section 2105(g)(3) of the Social 
     Security Act (42 U.S.C. 1397ee(g)(3)) is amended by striking 
     ``paragraphs (1) and (2)'' and inserting ``this subsection''.
       (d) Effective Date.--The amendments made by this section 
     take effect as if enacted on October 1, 2003.

                                 ______
                                 
      By Ms. SNOWE (for herself and Mr. Voinovich):
  S. 1977. A bill to promote the manufacturing industry in the United 
States by establishing an Assistant Secretary for Manufacturing within 
the Department of Commerce, an Interagency Manufacturing Task Force, 
and a Small Business Manufacturing Task Force, and for other purposes; 
to the Committee on Small Business and Entrepreneurship.
  Ms. SNOWE. Mr. President, I rise today to introduce the ``Small 
Manufacturers Assistance, and Trade (SMART) Act,'' which responds to 
the needs of America's small manufacturers. This bill offers a new 
emphasis on programs and services within the Federal Government that 
will provide small companies a better opportunity to survive in these 
challenging times and compete in our global economy. The SMART Act 
introduces new resources, improves existing programs, and expands those 
programs that work to serve a larger constituency. It is critical that 
we revitalize our country's manufacturing base and establish an 
environment for economic growth and job creation.
  Small manufacturers constitute over 98 percent of our Nation's 
manufacturing enterprises, employ 12 million people, and supply more 
than 50 percent of the value-added U.S. production. It is a sector we 
cannot afford to ignore. In addition, no industry has witnessed a more 
profound erosion of jobs.
  The damage manufacturing has sustained is nothing short of alarming. 
Since July 2000, almost 2.8 million U.S. manufacturing jobs have been 
eliminated. New England alone lost more than 214,000 jobs between June 
1993 through June 2003, with 78 percent of those losses, 166,000 jobs, 
occurring since January of 2001.
  In my home State of Maine, we've been shedding jobs at a startling 
rate over the past decade--and even more so in the past 2 years. 
Between July 2000 and June 2003 an astounding 17,300 manufacturing jobs 
were lost.
  The bottom line is that we must bolster our manufacturing industry, 
especially with the current 6.0 percent unemployment rate in the United 
States. To ensure that the road to recovery is robust, we have a 
special obligation to provide the investment to allow small companies 
to grow. In fact, it has been reported that for every dollar of final 
manufacturing output, an additional $1.26 is created in other industry 
sectors such as suppliers of raw materials, marketing, and retail 
industries.
  Looking even more broadly, a healthy manufacturing base is essential 
to the preservation of our Nation's security and its status as a world 
power. We must end the trend of becoming increasingly dependent upon 
other countries for the products we use and rely upon. Now is the 
crucial time for everyone--industry representatives, Congress, the 
President, Republicans and Democrats alike--to work together toward the 
common goal of revitalizing this industry.
  As the Chair of the Committee on Small Business, I have been focusing 
considerable attention on the concerns of small business manufacturers 
and efforts to aid in their recovery. Last month, I held a field 
hearing on this critical subject in Lewiston, ME. I invited Grant 
Aldonas, Under Secretary for International Trade of the Commerce 
Department, and Pamela Olson, Assistant Secretary for Tax Policy of the 
Treasury Department, to participate and explored with them ways to 
strengthen and expand this vital industry. Their testimony and comments 
confirmed that we cannot delay and must act quickly to support our 
small manufacturing base.
  Additionally, I heard from a number of small businesses in the 
manufacturing industry. Their testimony confirmed the damage sustained 
by our country's manufacturing sector, and the sense of urgency that we 
need to act immediately to assist them. The SMART Act is a vital first 
step toward helping them do what they do best--create jobs.
  The bill I introduce today starts by establishing a strong and 
influential voice for manufacturers within the Federal Government 
through the creation of an Assistant Secretary for Manufacturing within 
the U.S. Department of Commerce. The new Assistant Secretary will be 
responsible for identifying and addressing the concerns of small 
manufacturers at the highest level of our Federal Government. Senator 
Voinovich has introduced S. 1326, which similarly creates an Assistant 
Secretary for Manufacturing. I support that bill and Senator 
Voinovich's efforts to assisting our country's manufacturers.

  To ensure that the government acts on the needs of manufacturers, the 
SMART Act creates an Interagency Manufacturing Task Force (IMTF). The 
mission of the IMTF will be to encourage the Federal departments and 
agencies to coordinate their efforts by identifying and addressing 
manufacturing concerns collectively. The IMTF will

[[Page S16026]]

be chaired by the Commerce Department's new Assistant Secretary for 
Manufacturing and will be comprised of representatives from the Federal 
departments and agencies that directly affect this sector of our 
economy. In addition, the IMTF will be tasked with the duty of 
submitting an annual report on their findings and recommendations to 
the President and the Senate and House Small Business Committees.
  In conjunction with this government-wide task force, the SMART Act 
also continues to improve the Federal infrastructure supporting the 
industry by establishing a Small Business Manufacturing Task Force 
(SBMTF) within the Small Business Administration (SBA). The SBA has a 
wide spectrum of programs and services available to small 
manufacturers. The mission of the new SBMTF will be to refocus the 
agency's programs and services to ensure that they respond to the 
particular needs of small manufacturers while still serving all aspects 
of the small business community.
  Adding to the information gained from the Committee's hearing, we 
have reviewed the SBA's programs and services that are geared 
specifically toward manufacturing and international trade. I was 
alarmed to learn, during this hearing, that small manufacturers were 
unfamiliar with the SBA programs that can assist them. These findings 
revealed that the SBA needs to realign its efforts specifically to 
include manufacturers in the delivery of the agency's program and 
services.
  In order to improve existing SBA small business development programs, 
the agency needs to take its services beyond the traditional small 
business enterprise. The SMART Act improves the SBA's entrepreneurial 
development programs and services so that small manufacturers can grow 
their business operation, expand their facilities, and purchase new 
equipment--all of which will result in creating jobs throughout the 
industry and its supply chain.
  Partnerships developed between SBA related organizations and non-SBA 
related entities will be an additional asset for these producers. The 
SMART Act directs the SBA to develop partnerships with the 
Manufacturing Extension Partnership (MEP), community economic 
development organizations, and the agency's resource partners--such as 
Small Business Development Centers and SCORE--to create new outreach 
and training programs for small manufacturers and small businesses in 
the manufacturing supply chain.
  The SMART Act requires SCORE, with its long established expertise in 
counseling, to extend its reach to small manufacturers and exporters 
through its online counseling services and its community based offices. 
The Act also directs SCORE to recruit more counselors with 
manufacturing and international trade expertise and increase its 
partnerships with manufacturing and exporting related organizations, 
which will help increase the marketing capabilities of these small 
producers and exporters.
  I have also learned that small and medium sized companies are often 
hesitant to engage in the export of their product as a way to grow 
their small business, because they are often fearful of the many 
unfamiliar intricacies involved in doing business in a foreign market. 
Small businesses currently account for almost $300 billion of yearly 
export sales--nearly one-third of total U.S. exports. However, 
according to an Administration survey through the SBA's Export Trade 
Assistance Partnership, approximately 30 percent of non-exporting small 
businesses are interested in exporting their products and services. 
These businesses hold the potential to be a major source for even more 
economic activity and job growth.
  The SBA is a pivotal resource in delivering financial and business 
development tools to businesses seeking to export. The SMART Act 
improves the SBA's international trade and exporting programs to assist 
small businesses and manufacturers expand into the export market and 
play an even greater role in the balance of U.S. trade.
  The SMART Act also requires the SBA to establish annual goals that 
are linked to its trade promotion activities, and to develop programs 
that will help small businesses compete against imports. This objective 
will be more easily obtained by incrementally increasing the number of 
SBA representatives at the U.S. Export Assistance Centers (USEACs) over 
the next 3 years. To ensure that all States have the same services 
available, the SBA Office of International Trade will have at least one 
financial specialist dedicated to the international loan programs and 
providing oversight of trade financing issues.
  The SBA's financing programs have helped American small businesses 
create and retain jobs, even as other sources of financing have become 
more scarce. This bill provides improvements to the SBA's 7(a), 504, 
and Surety Bond programs.
  From Fiscal Year 1999 through Fiscal Year 2002, the 7(a) loan program 
helped small businesses create more than 1.3 million new jobs by making 
$37.7 billion in financing available to more than 182,000 small 
businesses. This bill increases the maximum size of 7(a) loans for 
small exporters from $2 million to $2.6 million by increasing the 
maximum amount guaranteed by the SBA from $1 million to $1.3 million.
  During that same period, the 504 loan program provided more than 
20,000 new loans to small businesses, allowing those businesses to 
create or retain almost 450,000 jobs. The SMART Act increases 504 loan 
sizes in two ways. First, the bill increases the maximum loan size for 
manufacturing projects by increasing the SBA's maximum guarantee, which 
is 40 percent of the total loan size, from $1 million to $4 million. 
Second, for loans to exporters, the bill increases the maximum loan 
size from $3.25 million to $5 million by increasing the SBA's maximum 
guarantee from $1.3 million to $2 million.
  Finally, the bill clarifies that under the SBA's Surety Bond 
Guarantee Program, the SBA may guarantee bonds for specific contracts 
of $2 million or less, even if the total range of affiliated contracts 
may exceed $2 million.
  These SBA financing programs have helped to create millions of jobs 
in America, and manufacturers and exporters have been an important part 
of that success. This bill will increase small companies' and 
exporters' ability to obtain vital capital that will help them compete 
in a very difficult international environment and enable them to create 
more jobs for American workers.
  I am drawing these provisions from another bill I have authored, the 
Small Business Administration 50th Anniversary Reauthorization Act of 
203 (S. 1375), which the Committee and the Senate unanimously approved 
earlier this year. While we are waiting for the House of 
Representatives to pass an SBA reauthorization bill, I believe that 
given the importance of these financing provisions, they must be 
included in this bill as well to increase their chance of being signed 
into law.
  Because Federal assistance for small manufacturers should extend 
beyond the SBA, the SMART Act will also establish a new Assistant 
United States Trade Representatives for Small Business within the 
Office of the United States Trade Representatives (USTR). This office 
will be tasked with focusing on small businesses', including small 
manufacturers, concerns in trade negotiations and promoting their 
exports.
  There are currently 21 Assistant USTRs covering issues from services 
to telecommunications to labor. While small businesses face many of the 
same issues that serve as barriers to trade as many of the largest 
multinational corporations, they do not have the same resources to 
overcome these barriers, thus blocking them from reaping the benefits 
of international trade. In particular, small businesses do not have the 
resources necessary to settle private trade disputes in a timely and 
cost effective fashion, meet physical presence requirements in other 
countries, conform to complex customs procedures, or meet off-set 
exclusions in government procurement. By establishing a new Assistant 
U.S. Trade Representative, we will ensure that the views and concerns 
of small businesses will have an appropriate seat at the negotiating 
table and help secure the competitiveness of our small exporters 
abroad.
  The Small Manufacturers Assistance, Recovery, and Trade Act answers 
the call for help that I have heard too often of late from small 
manufacturers in this country. These improvements to existing resources 
within the Federal

[[Page S16027]]

government will give these companies a better opportunity to survive in 
these challenging times and compete in the global economy.
  This bill is a critical starting point to revitalize our country's 
manufacturing base and create an environment that allows them to grow 
and create jobs again. We must help these businesses access the global 
marketplace through expanded exporting opportunities and assistance. I 
intend to work with all groups and interested parties that are 
committed to improving and passing this bill. There are still many 
needs that face our Nation's manufacturers--and this is just the 
beginning.
  I look forward to working with my colleagues in the Senate to ensure 
that the provisions of this bill are enacted so that these companies 
can continue to grow and reach their full potential.
  Mr. President, I ask unanimous consent that the text of the bill and 
a section-by-section analysis be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1977

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Small 
     Manufacturers Assistance, Recovery, and Trade Act'' or 
     ``SMART Act''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

    TITLE I--MANUFACTURING AND TRADE REPRESENTATIVES AND TASK FORCE

Sec. 101. Assistant Secretary of Commerce for Manufacturing.
Sec. 102. Interagency Manufacturing Task Force.
Sec. 103. Assistant United States Trade Representative for Small 
              Business.

                TITLE II--SMALL BUSINESS ADMINISTRATION

       Subtitle A--Manufacturing and Entrepreneurial Development

Sec. 201. Small Business Manufacturing Task Force.
Sec. 202. Entrepreneurial development programs and services.

                Subtitle B--Small Business Loan Programs

Sec. 211. Increased loan amounts for exporters.
Sec. 212. Debenture size.
Sec. 213. Job creation or retention standards.
Sec. 214. Clarification of maximum surety bond guarantee.

                    Subtitle C--International Trade

Sec. 221. Office of International Trade.

    TITLE I--MANUFACTURING AND TRADE REPRESENTATIVES AND TASK FORCE

     SEC. 101. ASSISTANT SECRETARY OF COMMERCE FOR MANUFACTURING.

       (a) Establishment.--There shall be in the Department of 
     Commerce, in addition to the Assistant Secretaries of 
     Commerce provided by law as of the date of enactment of this 
     Act, 1 additional Assistant Secretary of Commerce, to be 
     known as the Assistant Secretary of Commerce for 
     Manufacturing, who shall--
       (1) be appointed by the President, by and with the advice 
     and consent of the Senate; and
       (2) be compensated at the rate of pay provided for under 
     level IV of the Executive Schedule (5 U.S.C. 5315).
       (b) Duties.--The Assistant Secretary of Commerce for 
     Manufacturing shall--
       (1) identify and address the concerns of manufacturers;
       (2) represent and advocate for the interests of United 
     States manufacturers;
       (3) aid in the development of policies that promote the 
     vitality and expansion of United States manufacturing;
       (4) review policies that adversely impact manufacturers;
       (5) identify and address issues that are unique to small 
     manufacturers and those that are exacerbated by the size or 
     limited capital of small manufacturers; and
       (6) perform such other duties as the Secretary of Commerce 
     may prescribe.
       (c) Reporting Requirements.--The Assistant Secretary of 
     Commerce for Manufacturing shall submit to Congress an annual 
     report that contains--
       (1) an overview of the state of the manufacturing sector in 
     the United States;
       (2) a forecast of the future state of the manufacturing 
     sector in the United States; and
       (3) an analysis of current and significant laws, 
     regulations, and policies that adversely impact the 
     manufacturing sector in the United States.
       (d) Technical and Conforming Amendment.--Section 5315 of 
     title 5, United States Code, is amended by striking 
     ``Assistant Secretaries of Commerce (11)'' and inserting 
     ``Assistant Secretaries of Commerce (12)''.

     SEC. 102. INTERAGENCY MANUFACTURING TASK FORCE.

       (a) Establishment.--There is established an Interagency 
     Manufacturing Task Force (referred to in this section as the 
     ``IMTF'') for the purposes of--
       (1) maximizing the efforts and resources of Federal 
     agencies in assisting the manufacturing industry;
       (2) improving interagency cooperation in their efforts to 
     assist the manufacturing industry;
       (3) encouraging additional efforts to assist United States 
     manufacturers;
       (4) coordinating the agencies' efforts to assist the 
     manufacturing industry; and
       (5) identifying and addressing collective manufacturing 
     concerns.
       (b) Membership.--The IMTF shall be composed of 14 members, 
     including--
       (1) the Assistant Secretary of Commerce for Manufacturing, 
     who shall serve as chair of the IMTF;
       (2) a representative of the Department of the Treasury, to 
     be designated by the Secretary of the Treasury;
       (3) a representative of the Department of Defense, to be 
     designated by the Secretary of Defense;
       (4) a representative of the Department of Education, to be 
     designated by the Secretary of Education;
       (5) a representative of the Department of Energy, to be 
     designated by the Secretary of Energy;
       (6) a representative of the Department of Health and Human 
     Services, to be designated by the Secretary of Health and 
     Human Services;
       (7) a representative of the Department of Homeland 
     Security, to be designated by the Secretary of Homeland 
     Security;
       (8) a representative of the Department of Labor, to be 
     designated by the Secretary of Labor;
       (9) a representative of the Environmental Protection 
     Agency, to be designated by the Administrator of the 
     Environmental Protection Agency;
       (10) a representative of the Office of the United States 
     Trade Representative, to be designated by the United States 
     Trade Representative;
       (11) a representative of the Small Business Administration, 
     to be designated by the Administrator of the Small Business 
     Administration;
       (12) a representative of the Executive Office of the 
     President, to be designated by the President; and
       (13) 2 additional members, to be designated by the 
     President.
       (c) Duties.--Under the direction of the Assistant Secretary 
     of Commerce for Manufacturing, the IMTF shall--
       (1) provide advice and counsel to the President and 
     Congress on matters of importance to manufacturers;
       (2) monitor, coordinate, and promote the plans, programs, 
     and operations of the departments and agencies of the Federal 
     Government that may contribute to the growth of the United 
     States manufacturing industry;
       (3) develop and promote new public sector initiatives, 
     policies, programs, and plans designed to foster the 
     manufacturing industry;
       (4) review, monitor, and coordinate plans and programs 
     developed in the public sector, which affect the ability of 
     manufacturers to obtain capital, credit, and access to 
     technology;
       (5) identify and address regulations that are needlessly 
     burdensome on manufacturers; and
       (6) design a comprehensive plan for a joint public-private 
     sector effort to facilitate the growth and development of the 
     United States manufacturing industry.
       (d) Meetings.--
       (1) Frequency.--The IMTF shall meet not less than 4 times 
     per year to perform the duties under subsection (c).
       (2) Quorum.--A majority of the members of the IMTF shall 
     constitute a quorum to approve recommendations or reports.
       (e) Personnel Matters.--
       (1) Compensation of members.--
       (A) Federal employees.--Each member of the IMTF who is an 
     officer or employee of the Federal Government shall serve 
     without compensation in addition to that received for 
     services rendered as an officer or employee of the United 
     States.
       (B) Other members.--Each member of the IMTF who is not an 
     officer or employee of the Federal Government shall be 
     compensated at a rate equal to the daily equivalent for level 
     IV of the Executive Schedule (5 U.S.C. 5315) for each day 
     (including travel time) during which such member is engaged 
     in the performance of the duties of the IMTF.
       (2) Travel expenses.--The members of the IMTF shall be 
     allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of Federal 
     agencies under subchapter I of chapter 57 of title 5, United 
     States Code, while away from their homes or regular place of 
     business in the performance of services for the IMTF.
       (3) Detail of federal employees.--Any employee of the 
     Federal Government may be detailed to the IMTF without 
     reimbursement, and such detail shall be without interruption 
     or loss of civil service status or privilege.
       (f) Reports.--
       (1) Findings and recommendations.--Not later than 1 year 
     after the date of enactment of this Act, and annually 
     thereafter, the IMTF shall submit a report containing the 
     findings and recommendations described in paragraphs (1) 
     through (5) of subsection (c) to--
       (A) the President;

[[Page S16028]]

       (B) the Committee on Small Business and Entrepreneurship of 
     the Senate; and
       (C) the Committee on Small Business of the House of 
     Representatives.
       (2) Growth plan.--Not later than 1 year after the date of 
     enactment of this Act, the Assistant Secretary of Commerce 
     for Manufacturing shall submit the plan prepared pursuant to 
     subsection (c)(6) to--
       (A) the President;
       (B) the Committee on Small Business and Entrepreneurship of 
     the Senate; and
       (C) the Committee on Small Business of the House of 
     Representatives.

     SEC. 103. ASSISTANT UNITED STATES TRADE REPRESENTATIVE FOR 
                   SMALL BUSINESS.

       Section 141(c) of the Trade Act of 1974 (19 U.S.C. 2171(c)) 
     is amended by adding at the end the following:
       ``(6)(A) There is established within the Office the 
     position of Assistant United States Trade Representative for 
     Small Business, which shall be appointed by the United States 
     Trade Representative.
       ``(B) The Assistant United States Trade Representative for 
     Small Business shall--
       ``(i) promote the trade interests of small businesses, 
     including manufacturers;
       ``(ii) identify and address foreign trade barriers that 
     impede small business exporters;
       ``(iii) enforce existing trade agreements beneficial to 
     small businesses;
       ``(iv) maintain an open line of communication with the 
     Small Business Administration concerning small business trade 
     issues;
       ``(v) ensure that small business concerns are considered in 
     trade negotiations and agreements; and
       ``(vi) perform such other duties as the United States Trade 
     Representative may direct.
       ``(C) The Assistant United States Trade Representative for 
     Small Business shall be paid at the level of a member of the 
     Senior Executive Service with equivalent time and service.''.

                TITLE II--SMALL BUSINESS ADMINISTRATION

       Subtitle A--Manufacturing and Entrepreneurial Development

     SEC. 201. SMALL BUSINESS MANUFACTURING TASK FORCE.

       (a) Establishment.--The Administrator of the Small Business 
     Administration (referred to in this subtitle as the 
     ``Administrator'') shall establish a Small Business 
     Manufacturing Task Force (referred to in this section as the 
     ``Task Force'') to address the concerns of small 
     manufacturers.
       (b) Membership.--
       (1) In general.--The Task Force shall be composed of a 
     representative from--
       (A) the Office of Capital Access;
       (B) the Office of Entrepreneurial Development;
       (C) the Office of Administration and Management;
       (D) the Office of Government Contracting and Business 
     Development; and
       (E) any other employee of the Small Business 
     Administration, on a temporary basis, as determined necessary 
     by the Administrator to carry out the goals of the Task 
     Force.
       (2) Chair.--The Administrator shall assign a member of the 
     Task Force to serve as chair of the Task Force.
       (c) Duties.--The Task Force shall--
       (1) evaluate and identify whether programs and services are 
     sufficient to serve the needs of small manufacturers;
       (2) ensure that the Small Business Administration 
     implements the small business manufacturing training programs 
     established under section 202;
       (3) actively promote the programs and services of the Small 
     Business Administration that serve small manufacturers; and
       (4) identify and study the unique conditions facing small 
     manufacturers and develop and propose policy initiatives to 
     support and assist small manufacturers.
       (d) Meetings.--
       (1) Frequency.--The Task Force shall meet not less than 4 
     times per year, and more frequently if necessary to perform 
     its duties.
       (2) Quorum.--A majority of the members of the Task Force 
     shall constitute a quorum to approve recommendations or 
     reports.
       (e) Personnel Matters.--
       (1) Compensation of members.--Each member of the Task Force 
     shall serve without compensation in addition to that received 
     for services rendered as an officer or employee of the United 
     States.
       (2) Detail of sba employees.--Any employee of the Small 
     Business Administration may be detailed to the Task Force 
     without reimbursement, and such detail shall be without 
     interruption or loss of civil service status or privilege.
       (f) Report.--Not later than 1 year after the date of 
     enactment of this Act, and annually thereafter, the Task 
     Force shall submit a report containing the findings and 
     recommendations of the task force to--
       (1) the President;
       (2) the Committee on Small Business and Entrepreneurship of 
     the Senate; and
       (3) the Committee on Small Business of the House of 
     Representatives.

     SEC. 202. ENTREPRENEURIAL DEVELOPMENT PROGRAMS AND SERVICES.

       (a) Manufacturing Outreach and Training Programs.--The 
     Office of Entrepreneurial Development of the Small Business 
     Administration shall develop new outreach and training 
     programs for small manufacturers and small businesses in the 
     manufacturing supply chain, in partnership with 1 or more of 
     the following:
       (1) The Manufacturing Extension Partnership.
       (2) Community economic development organizations.
       (3) Small Business Development Centers.
       (4) The Service Corps of Retired Executives.
       (5) Women's Business Centers.
       (b) Reporting Requirement.--The Small Business 
     Administration shall include ``manufacturing'' as a category 
     on the scorecard that tracks the goals of the Small Business 
     Administration on its annual performance report to Congress.
       (c) Manufacturing Workshops.--The Office of Entrepreneurial 
     Development of the Small Business Administration, in 
     consultation with manufacturing and economic development 
     organizations, shall develop workshops to be conducted by 
     district offices, in conjunction with the entities listed in 
     paragraphs (1) through (5) of subsection (a), addressing--
       (1) product design and testing;
       (2) the patent process;
       (3) prototype demonstrations;
       (4) product production;
       (5) market research; and
       (6) business financing.
       (d) SCORE.--The Service Corps of Retired Executives shall--
       (1) make their counseling services available to small 
     manufacturers and exporters through their on-line counseling 
     services and community-based offices;
       (2) recruit counselors with manufacturing and international 
     trade expertise; and
       (3) develop additional partnerships with manufacturing and 
     exporting organizations.
       (e) Entrepreneurial Development Program Improvements.--The 
     Office of Entrepreneurial Development of the Small Business 
     Administration shall develop programs and services to 
     strengthen small business vendors and suppliers that 
     participate in the manufacturing supply chain.
       (f) Simplified Reporting Requirements.--The Small Business 
     Administration shall review and simplify, as appropriate, its 
     reporting requirements for the Small Business Development 
     Centers, the Service Corps of Retired Executives, and Women's 
     Business Centers so that these organizations can maximize the 
     time spent assisting their clients.
       (g) District Offices.--The Small Business Administration 
     shall provide district offices with adequate resources, 
     including budget allocations for travel and materials used to 
     conduct outreach and training activities.

                Subtitle B--Small Business Loan Programs

     SEC. 211. INCREASED LOAN AMOUNTS FOR EXPORTERS.

       Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) 
     is amended--
       (1) in paragraph (3)--
       (A) in subparagraph (A), by inserting before the semicolon 
     at the end the following: ``and paragraph (14)''; and
       (B) in subparagraph (B), by striking ``$1,250,000'' and 
     inserting ``$1,300,000''; and
       (2) in paragraph (14), by adding at the end the following:
       ``(D) The total amount of financings under this paragraph 
     that are outstanding and committed (by participation or 
     otherwise) to the borrower from the business loan and 
     investment fund established under this Act may not exceed 
     $1,300,000 and the gross loan amount under this paragraph may 
     not exceed $2,600,000.''.

     SEC. 212. DEBENTURE SIZE.

       Section 502(2) of the Small Business Investment Act of 1958 
     (15 U.S.C. 696(2)) is amended--
       (1) by striking ``$1,300,000'' and inserting 
     ``$2,000,000''; and
       (2) by inserting before the period at the end the 
     following: ``, and loans for which the loan proceeds will be 
     directed toward manufacturing projects, which shall be 
     limited to $4,000,000 for each such identifiable small 
     business concern''.

     SEC. 213. JOB CREATION OR RETENTION STANDARDS.

       Section 501 of the Small Business Investment Act of 1958 
     (15 U.S.C. 695) is amended by adding at the end the 
     following:
       ``(e) Job Creation or Retention for Manufacturing 
     Projects.--A manufacturing project being funded by the 
     debenture is deemed to satisfy the job creation or retention 
     requirement under subsection (d)(1) if the project creates or 
     retains 1 job opportunity for every $100,000 guaranteed by 
     the Administration.''.

     SEC. 214. CLARIFICATION OF MAXIMUM SURETY BOND GUARANTEE.

       Section 411(a)(1) of the Small Business Investment Act of 
     1958 (15 U.S.C. 694b(a)(1)) is amended by striking ``contract 
     up to'' and inserting ``total work order or contract amount 
     at the time of bond execution that does not exceed''.

                    Subtitle C--International Trade

     SEC. 221. OFFICE OF INTERNATIONAL TRADE.

       Section 22 of the Small Business Act (15 U.S.C. 649) is 
     amended--
       (1) by striking ``Sec. 22'' and inserting the following:

     ``SEC. 22. OFFICE OF INTERNATIONAL TRADE.'';

       (2) in subsection (a)--
       (A) by inserting ``Establishment.--'' after ``(a)''; and
       (B) by inserting ``(referred to in this section as the 
     `Office'),'' after ``Trade'';
       (3) in subsection (b)--
       (A) by striking ``The Office'' and inserting the following:

[[Page S16029]]

       ``(b) Trade Distribution Network.--The Office, including 
     United States Export Assistance Centers (referred to as `one-
     stop shops' in section 2301(b)(8) of the Omnibus Trade and 
     Competitiveness Act of 1988 (15 U.S.C. 4721(b)(8)) and as 
     `Export Centers' in this section),''; and
       (B) by amending paragraph (1) to read as follows:
       ``(1) assist in maintaining a distribution network using 
     regional and local offices of the Administration, the Small 
     Business Development Center network, the Women's Business 
     Center network, and Export Centers for--
       ``(A) trade promotion;
       ``(B) trade finance;
       ``(C) trade adjustment;
       ``(D) trade remedy assistance; and
       ``(E) trade data collection.'';
       (4) in subsection (c)--
       (A) by redesignating paragraphs (1) through (8) as 
     paragraphs (2) through (9);
       (B) by inserting before paragraph (2), as redesignated, the 
     following:
       ``(1) establish annual goals within the Office relating 
     to--
       ``(A) enhancing the exporting ability of small business 
     concerns and small manufacturers;
       ``(B) facilitating technology transfers;
       ``(C) enhancing programs and services to assist small 
     business concerns and small manufacturers to compete 
     effectively and efficiently against foreign entities;
       ``(D) increasing the access to capital by small business 
     concerns;
       ``(E) disseminating information concerning Federal, State, 
     and private programs and initiatives;
       ``(F) ensuring that the interests of small business 
     concerns are adequately represented in trade negotiations;'';
       (C) in paragraph (2), as redesignated, by striking 
     ``mechanism for'' and all that follows through ``(D)'' and 
     inserting the following: ``mechanism for--
       ``(A) identifying subsectors of the small business 
     community with strong export potential;
       ``(B) identifying areas of demand in foreign markets;
       ``(C) prescreening foreign buyers for commercial and credit 
     purposes; and
       ``(D)''; and
       (D) in paragraph (9), as redesignated--
       (i) by striking ``full-time export development specialists 
     to each Administration regional office and assigning'';
       (ii) by striking ``office. Such specialists'' and inserting 
     ``office and providing each Administration regional office 
     with a full-time export development specialist, who'';
       (iii) in subparagraph (D), by striking ``and'' at the end;
       (iv) in subparagraph (E), by striking the period at the end 
     and inserting a semicolon; and
       (v) by adding at the end the following:
       ``(F) participate jointly with employees of the Office in 
     an annual training program that focuses on current small 
     business needs for exporting; and
       ``(G) jointly develop and conduct training programs for 
     exporters and lenders in cooperation with the United States 
     Export Assistance Centers, the Department of Commerce, Small 
     Business Development Centers, and other relevant Federal 
     agencies.'';
       (5) in subsection (d)--
       (A) by inserting ``Export Financing Programs.--'' after 
     ``(d)'';
       (B) by redesignating paragraphs (1) through (5) as 
     subparagraphs (A) through (E); and
       (C) by striking ``To accomplish this goal, the Office shall 
     work'' and inserting ``To accomplish this goal, the Office 
     shall--
       ``(1) designate at least 1 individual within the 
     Administration as a trade financial specialist to oversee the 
     international loan programs and assist Administration 
     employees with trade finance issues; and
       ``(2) work'';
       (6) in subsection (e), by inserting ``Trade Remedies.--'' 
     after ``(e)'';
       (7) by amending subsection (f) to read as follows:
       ``(f) Reporting Requirement.--The Office shall submit an 
     annual report to the Committee on Small Business and 
     Entrepreneurship of the Senate and the Committee on Small 
     Business of the House of Representatives that contains--
       ``(1) a description of the progress of the Office in 
     implementing the requirements under this section;
       ``(2) the destinations and benefits to the Administration 
     and to small business concerns of travel by Office staff; and
       ``(3) a description of the participation by the Office in 
     trade negotiations.'';
       (8) in subsection (g), by inserting ``Studies.--'' after 
     ``(g)''; and
       (9) by adding at the end the following:
       ``(h) Export Assistance Centers.--
       ``(1) Additional centers.--The Administration, in 
     accordance with the March 29, 2002, agreement with the 
     Department of Commerce and the Export-Import Bank, shall 
     assign not less than 4 additional employees to Export Centers 
     during each of the fiscal years 2004 through 2006.
       ``(2) Placement.--The Administration shall use the resource 
     allocation methodology, used by the Department of Commerce as 
     of the date of enactment of this subsection, to strategically 
     assign Administration employees to all Export Centers based 
     on the needs of exporters.
       ``(3) Goals.--The Office shall work with the Department of 
     Commerce and the Export-Import Bank to establish shared 
     annual goals for the Export Centers.
       ``(4) Oversight.--The Office shall designate an individual 
     within the Administration to oversee all activities conducted 
     by Administration employees assigned to Export Centers.''.

    Title 1. Manufacturing and Trade Representatives and Task Force

     Section 101. Assistant Secretary of Commerce for 
         Manufacturing.
       This section establishes an Assistant Secretary of Commerce 
     for Manufacturing within the Department of Commerce. The 
     Assistant Secretary shall be responsible for identifying and 
     addressing manufacturers' concerns and representing and 
     advocating for their interests. A person shall be appointed 
     to this position by the President of the United States, in 
     accordance with the Constitution, and shall serve at the 
     discretion of the President of the United States.
     Section 102. The Interagency Manufacturing Task Force.
       This provision establishes an Interagency Manufacturing 
     Task Force (IMTF). The IMTF will be chaired by the new 
     Assistant Secretary of Commerce for Manufacturing and will be 
     comprised of representatives of the Departments of Treasury, 
     Defense, Education, Energy, Health and Human Services, 
     Homeland Security, and Labor, the Environmental Protection 
     Agency, the Small Business Administration, the United States 
     Trade Representative, a representative of the Executive staff 
     of the President and two additional members designated by the 
     President.
       Under the Chair's direction, the IMTF shall: (a) identify 
     and address regulations that are needlessly burdensome on 
     manufacturers; (b) provide advice and counsel to the 
     President and Congress on matters of importance to 
     manufacturers; (c) monitor, coordinate and promote the plans, 
     programs and operations of the departments and agencies of 
     the Federal Government that may contribute to the U.S. 
     manufacturing industry's growth; (d) develop and promote new 
     public-sector initiatives, policies, programs and plans 
     designed to foster the manufacturing industry; (e) review, 
     monitor and coordinate plans and programs developed in the 
     public sector that affect manufacturers' ability to obtain 
     capital, credit and access to technology; and (f) design a 
     comprehensive plan for a joint public-private sector effort 
     to facilitate the growth and development of the U.S. 
     manufacturing industry, which shall be submitted, not later 
     than 1 year after the effective date of the bill, to the 
     President and the Senate and House Small Business Committees. 
     This section also instructs the IMTF to submit a report of 
     its findings and recommendations to the President and the 
     Senate and House Small Business Committees not later than 1 
     year after the effective date of the bill and annually 
     thereafter.
     Section 103. Assistant United States Trade Representative for 
         Small Business.
       This section establishes a new Assistant United States 
     Trade Representative for Small Business, within the Office of 
     the United States Trade Representative (USTR). This new 
     position shall promote trade interest for small businesses 
     and ensure that their concerns are considered in trade 
     negotiations and agreements.

                Title II--Small Business Administration


       subtitle a--manufacturing and entrepreneurial development

     Section 201. The Small Business Manufacturing Task Force.
       This section establishes a Small Business Manufacturing 
     Task Force (SBMTF) within the Small Business Administration 
     (SBA), which will be comprised of the SBA personnel appointed 
     by the SBA Administrator. The SBMTF will: (a) evaluate and 
     identify whether existing programs and services are 
     sufficient to serve small manufacturers' needs, or whether 
     additional programs or services are necessary; (b) ensure 
     that the SBA implements the small business manufacturing 
     training initiatives referenced in this legislation; (c) 
     actively promote the SBA's programs and services that serve 
     small manufacturers; and (d) identify and study the unique 
     conditions of small manufacturers and develop and propose 
     policy initiatives to support and assist them. This section 
     also instructs the SBMTF to submit a report of its findings 
     and recommendations to the President and the Senate and House 
     Small Business Committees not later than 12 months after the 
     effective date of the bill and annually thereafter.
     Section 202. Entrepreneurial development programs and 
         services.
       This section: (a) directs the SBA to create new outreach 
     and training programs for small manufacturers and small 
     businesses in the manufacturing supply chain by developing 
     partnerships with other manufacturing and business-assistance 
     organizations and SBA's resource partners; (b) directs the 
     SBA to include ``manufacturing'' on their scorecard that 
     tracks the goals of the SBA and to report this information to 
     Congress; (c) directs the SBA to consult with manufacturing 
     and economic development organizations to develop and conduct 
     specialized workshops to address important aspects of the 
     manufacturing business; (d) requires SCORE to expand and 
     improve their present counseling services for small 
     manufacturers and exporters; (e) directs the SBA's Office of 
     Entrepreneurial Development to develop programs

[[Page S16030]]

     and services to strengthen small business vendors and 
     suppliers that participate in the manufacturing supply chain; 
     (f) directs the SBA to review and simplify its reporting 
     requirements for the Small Business Development Centers, 
     SCORE, and Women's Business Centers; and (g) directs the SBA 
     to provide adequate resources to the district offices for 
     outreach and training activities.


                subtitle b--small business loan programs

     Section 211. Increased loan amounts for exporters.
       This section increases the maximum size of a loan that an 
     exporter may receive under the SBA's 7(a) Export Working 
     Capital Program (EWCP) to $2.6 million (instead of the 
     current maximum loan size of $2 million) by increasing the 
     maximum SBA guarantee to $1.3 million (instead of the current 
     maximum SBA guarantee of $1 million). In order to conform the 
     size of the guaranteed portion of an EWCP loan to that of a 
     loan under the SBA's 7(a) International Trade Loan Program, 
     the section also increases the maximum SBA-guaranteed portion 
     of an ITL Program loan from $1.25 million to $1.3 million.
     Section 212. Debenture size.
       This section increases the maximum loan guarantee amount 
     from $1.3 million to $2 million for loans that support a 
     public policy goal, which includes loans to exporters. The 
     guaranteed amount of $2 million represents 40 percent of the 
     total loan size, so small businesses will be able to receive 
     loans of up to $5 million for these types of projects. This 
     section also increases the maximum size of the SBA's 
     guarantee from $1 million to $4 million for loans that will 
     be used for manufacturing projects (leading to a maximum loan 
     size of $10 million for small manufacturers, because the 
     guarantee represents 40 percent of the maximum loan size).
     Section 213. Job creation or retention standards.
       This section modifies the job retention or creation 
     standard for small manufacturers (currently one job per 
     $35,000 guaranteed by the SBA) so that the small 
     manufacturers must create or retain one job for each $100,000 
     guaranteed by the SBA.
     Section 214. Clarification of maximum surety bond guarantee.
       This section clarifies that the SBA may guarantee surety 
     bonds for specific contracts of $2 million or less when the 
     total range of affiliated contracts exceeds $2 million, or 
     has the potential to exceed $2 million. The surety's bond 
     liability, however, may not exceed $2 million.


                    subtitle c--international trade

     Section 221. Office of International Trade.
       This section: (a) establishes annual goals for the Office 
     of International Trade--specifically, to enhance the export 
     ability of small businesses and small manufacturers, to 
     facilitate technological transfers, to enhance the ability of 
     small business and small manufacturers to compete against 
     foreign corporations, to increase small businesses' access to 
     capital, to disseminate information on programs and 
     initiatives, and to ensure that small businesses are 
     represented in trade negotiations; (b) instructs the Office 
     of International Trade and district office export development 
     specialist to participate in an annual training program that 
     focuses on current small business needs for exporting; (c) 
     instructs the district offices to jointly develop and conduct 
     training programs for exporters and lenders in cooperation 
     with USEACs, the Department of Commerce, Small Business 
     Development Centers and other relevant Federal agencies; (d) 
     amends the Office of International Trade's reporting 
     requirements to include a description and justification for 
     the Office of International Trade's expenditures on travel 
     and participation in trade negotiations; and (e) requires 
     that the SBA increase the number of SBA representatives at 
     the United States Export Assistance Centers (USEACs) over the 
     next 3 years according to the Commerce Department's resource 
     allocation methodology and to designate an individual within 
     the SBA to oversee the agency's participation as well as to 
     work with the USEACs partners to establish annual goals for 
     the Export Centers.
                                 ______
                                 
      By Mr. GRASSLEY (for himself and Mr. Baucus):
  S. 1979. A bill to amend the Internal Revenue Code of 1986 to prevent 
the fraudulent avoidance of fuel taxes; to the Committee on Finance.
  Mr. GRASSLEY. Mr. President, today we introduce a bill to fight tax 
fraud. I am not talking about just moving around a few numbers on a tax 
return. Today we will begin closing the loop holes that have created 
millions of gallon and billions of dollars of missing fuel and missing 
tax dollars. This problem not only robs the U.S. Treasury it also robs 
the American Taxpayer.
  We rely on these tax dollars to fund not only the Highway Trust Fund, 
which is charged with constructing and maintaining our national 
transportation system, this also robs money from our Airport Trust 
Fund.
  In light of investigations completed since September 11th, the safety 
and soundness of maintaining our nation's transportation infrastructure 
is now more than ever of the utmost importance. These issues are not 
just tax fraud--not only are we concerned with the tax loss, but where 
else is this money going--is it being used to fund terrorism? We need 
to know where all of this fuel is going. What makes us think that if we 
cannot find the fuel to collect the tax, that we could find the fuel to 
stop the terrorists acts. A missing barge could hold ninety tanker 
truck loads of fuel, that's about $500,000 in Federal and State excise 
taxes left uncollected, its also hundreds of thousands of gallons that 
we cannot account. That cannot happen, and this bill should help our 
enforcement officers close the loop holes and collect the tax that 
builds our highways.
  Mr. BAUCUS. Mr. President, today Senator Grassley and I introduce a 
bill that is the essence of good government. For a few years now the 
Senate Finance Committee has been working to increase the revenue into 
the Highway Fund Trust so we can fund a strong national highway 
program.
  The committee has also been looking at preventing several schemes, 
scams and cons against the federal government. These are schemes that 
are used by participants in the fuel distribution chain to evade 
federal and state fuel taxes, fuel fraud prevention marries both those 
goals-fighting fraud and increasing revenue into the Highway Trust 
Fund.
  It is crucial to ensure that all the taxes that are due to the Trust 
Fund are actually getting there, not being diverted as part of some 
scam to defraud the Federal Government.
  That is why I am proud to introduce today the Fuel Fraud Prevention 
Act of 2003.
  I am aware that this is a very controversial subject, but one that we 
must address. This fraud represents money that the federal government 
is losing while crooked individuals are getting rich on the backs of 
good honest citizens.
  Uncovering this kind of corruption is what we mean by practicing good 
government. We need to catch these folks and make sure the money is 
going where it should.
  This is money that goes to transportation projects and creates 
transportation jobs. That is important to Montana and to all states.
  As a result of both TEA 21 and AIR 21, revenues collected by the 
Trust Funds are directly tied to spending on surface and air 
transportation. Therefore adequately funding the nation's 
transportation infrastructure--both surface and air--is almost entirely 
based on actually collecting all the taxes that should be collected by 
law.
                                 ______
                                 
      By Mr. ALLARD (for himself, Mr. Brownback, Mr. Sessions, Mr. 
        Bunning, and Mr. Inhofe):
  S.J. Res. 26. A joint resolution proposing an amendment to the 
Constitution of the United States relating to marriage; to the 
Committee on the Judiciary.
  Mr. ALLARD. Mr. President, I rise today to submit legislation that 
would amend the United States Constitution identifying and reaffirming 
the institution of marriage as a union between a man and a woman. The 
language I submit today is brief and simple:
  Marriage in the United States shall consist only of the union of a 
man and a woman. Neither this Constitution, nor the Constitution of any 
State, nor State or Federal law, shall be construed to require that 
marital status or the legal incidents thereof be conferred upon 
unmarried couples or groups.
  This language is simple, direct and to the point. This union is 
sacred and must remain so.
  This resolution is a starting point for a more comprehensive 
discussion. I look forward to having an involved, informed debate with 
the other members of this chamber.
  I am pleased to be joined in this effort by my colleagues Senator Sam 
Brownback and Senator Jeff Sessions who are original cosponsors of this 
Resolution.
  I ask unanimous consent that the text of this Resolution be printed 
in the Record.
  There being no objection, the joint resolution was ordered to be 
printed in the Record, as follows:

                              S.J. Res. 26

       Resolved by the Senate and House of Representatives of the 
     United States of America in Congress assembled (two-thirds of 
     each House concurring therein), That the following article

[[Page S16031]]

     is proposed as an amendment to the Constitution of the United 
     States, which shall be valid to all intents and purposes as 
     part of the Constitution when ratified by the legislatures of 
     three-fourths of the several States within seven years after 
     the date of its submission by the Congress:

                              ``Article --

       ``Marriage in the United States shall consist only of the 
     union of a man and a woman. Neither this Constitution, nor 
     the Constitution of any State, nor State or Federal law, 
     shall be construed to require that marital status or the 
     legal incidents thereof be conferred upon unmarried couples 
     or groups.''.

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