Congressional Record, Volume 150 Issue 49 (Thursday, April 8, 2004)

[Congressional Record Volume 150, Number 49 (Thursday, April 8, 2004)]
[Senate]
[Pages S4026-S4053]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

By Mr. EDWARDS:
S. 2303. A bill to help American families save, invest, and build a
better future, and for other purposes; to the Committee on Finance.
Mr. EDWARDS. Mr. President, I rise to introduce the Better Future for
American Families Act. Today's legislation will strengthen progressive
tax credits to help middle-class families save, invest, and get ahead.
For more than 200 years, our country has been propelled by this
single, powerful idea: All Americans should have the opportunity to
rise as far as their hard work and God-given potential can take them.
In the last generation, however, the American Dream of building
something better has been replaced with the hope of just getting by.
Due to the rising costs of housing, health care, and other
necessities, many families are no longer saving for the future. In
fact, they need to borrow to get through the present. Personal
bankruptcies reached an all-time high of 1.6 million a year in 2002.
Almost one in five households approaching retirement can expect to
retire in poverty, and this rate is even higher for African American
and Hispanic households. The middle-class--the foundation of this
country--is sinking.
If we want to create new wealth in this country, we should start by
rewarding the work and responsibility of America's families. What's
right for our economy, our democracy, and our society is consistent
with our values as well: Every American should have the chance to be an
owner--to buy a home, save for college, invest in America, or put money
aside for a secure retirement.
In current law, there is a Saver's Credit that matches retirement
savings of low-income families up to dollar-for-dollar. The credit has
been a success, but it does suffer from some limitations.
First, the Saver's Credit will expire in 2006. The Republican budget
plan fails to extend it, even as it extends other tax cuts enacted in
2001. My legislation would make it permanent.
Second, the credit phases out rapidly, providing only a small benefit
to many middle-income families and creating high marginal tax rates for
millions of savers. My legislation would expand benefits for families
earning less than $50,000.
Finally, although 57 million taxpayers are eligible for the maximum
credit on paper, 80 percent of them cannot actually benefit from it
because they lack income tax liability. These are families that need
help as much as anyone, and my legislation would make them eligible for
the credit.
This legislation would make a real difference for American families.
A family that saves the maximum under this plan every year from age 25
to retirement will have a nest egg of $200,000 on top of any other
savings, pensions, and Social Security.
Here in Congress, it is our responsibility to make sure that families
working for a living have the tools they need to move forward. My
legislation is not about creating another government program to protect
families; it is about helping families help themselves.
If we help families save, we can unleash a new era of possibilities
with a stronger economy because we're saving and investing more; with
families at ease because they have financial security; and with our
children prospering because they have a strong foundation on which to
build. I urge all of my colleagues to join me in supporting this
effort.
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. 2393

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 ``Better Future for American
Families Act''.

SEC. 2. MODIFICATIONS TO SAVER'S CREDIT.

(a) Saver's Credit.--Section 25B of the Internal Revenue
Code of 1986 is amended by striking the heading thereof and
inserting ``THE SAVER'S CREDIT.''.
(b) Modifications to Applicable Percentage.--Subsection (b)
of section 25B of the Internal Revenue Code of 1986 is
amended to read as follows:
``(b) Applicable Percentage.--For purposes of this
section--
``(1) In general.--The applicable percentage is 50 percent
reduced (but not below zero) by 1 percentage point for each
phaseout amount by which the taxpayer's adjusted gross income
for the taxable year exceeds the threshold amount.
``(2) Phaseout amount; threshold amount.--The phaseout
amount and the threshold amount shall be determined as
follows:

In the case of an individual The phaseout amount The threshold
filing: is: amount is:

A joint return................. $400 $30,000
A head of household return..... $300 $22,500
Any other return............... $200 $15,000.''.

(c) Repeal of Termination.--Section 25B of the Internal
Revenue Code of 1986 is amended by striking subsection (h).
(d) Credit refundable.--
(1) In general.--Section 25B of the Internal Revenue Code
of 1986, as amended by this Act, is hereby moved to subpart C
of part IV of subchapter A of chapter 1 of such Code
(relating to refundable credits) and inserted after section
35.
(2) Conforming amendments.--
(A) Section 24(b)(3)(B) of the Internal Revenue Code of
1986 is amended by striking ``and 25B''.
(B) Section 25(e)(1)(C) of such Code is amended by striking
``, 25B''.
(C) Section 26(a)(1) of such Code is amended by striking
``24, and 25B'' and inserting ``and 24''.
(D) Section 25B of such Code, as moved by paragraph (1), is
redesignated as section 36.
(E) Section 904(h) of such Code is amended by striking
``24, and 25B'' and inserting `` and 24''.
(F) Section 1400C of such Code is amended by striking ``24,
and 25B'' and inserting `` and 24''.
(G) The table of sections for subpart C of part IV of
subchapter A of chapter 1 of such

[[Page S4027]]

Code is amended by striking the item relating to section 36
and inserting the following:

``Sec. 36. The Saver's Credit.
``Sec. 37. Overpayments of tax.''.

(H) The table of sections for subpart A of part IV of such
Code is amended by striking the item relating to section 25B.
(I) Section 1324 of title 31, United States Code, is
amended by inserting ``, or enacted by the Better Future for
American Families Act'' before the period at the end.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2003.
______

By Mr. HAGEL (for himself and Mr. Lieberman):
S. 2305. A bill to authorize programs that support economic and
political development in the Greater Middle East and Central Asia and
support for three new multilateral institutions, and for other
purposes; to the Committee on Foreign Relations.
Mr. HAGEL. Mr. President, I rise today to introduce The Greater
Middle East and Central Asia Development Act of 2004 with my colleague,
Senator Lieberman. This bill supports economic and private sector
development in the countries of the Greater Middle East and Central
Asia.
The terrorist attacks of September 11, 2001 signaled a turning point
in United States foreign policy. Al-Qaida and affiliated groups have
established a terrorist network with linkages in Afghanistan, Pakistan,
throughout the Greater Middle East and Central Asia, and around the
world. The war on terrorism requires that the United States consider
the Greater Middle East and Central Asia as a strategic region with its
own political, economic and security dynamics. While rich in cultural,
geographic and language diversity, the Greater Middle East and Central
Asia face common impediments to economic development and political
freedom. Although poverty and economic underdevelopment alone do not
``cause'' terrorism, the expansion of economic growth, free trade, and
private sector development can contribute to an environment that
undercuts radical political tendencies that give rise to terrorism.
The economic problems of the Greater Middle East and Central Asia
cannot be considered in isolation. We must work with the governments
and peoples of the region on a cohesive program of political and
economic reforms that builds a better future. We cannot lose the next
generation to hopelessness and despair. Our initiatives must support
progress toward market economies, enhanced trade, the development of
democratic institutions, expansion of citizen-to-citizen contacts,
educational reform, and private sector development. UN Secretary
General Kofi Annan has said that we cannot reach the UN's goals for
improving health, education, and living standards over the next 12
years ``without a strong private sector in the developing countries
themselves, to create jobs and bring prosperity.'' This region needs
more jobs, economic growth, a vibrant private sector, and good
governance practices to help stabilize societies and lead to a stronger
foundation for political reform and conflict prevention.
President Bush has committed the United States to a ``forward
strategy of freedom'' in the Greater Middle East to combat terrorism
and encourage reform in these countries. This is a multi-layered
strategy, including increased spending and support for the National
Endowment for Democracy, greater emphasis on public diplomacy, and
initiating programs that support political liberalization and free
markets. The G-8 summit in June and other forthcoming multi-lateral
forums will provide opportunities to consult with our allies on many of
these issues. Similarly, Senator Dick Lugar, chairman of the Senate
Foreign Relations Committee, has called for a Greater Middle East
Twenty First Century Trust as part of a program of greater engagement
with this region, and Senator Joseph Biden, ranking member on the
committee, has proposed a Middle East Foundation to support political
participation and civil society in the Middle East.
Our bill deepens and expands America's commitment to economic reform
and private sector development in the Greater Middle East and Central
Asia by authorizing $1 billion per year for five years and creating
three new multilateral mechanisms: a Greater Middle East and Central
Asia Development Bank to promote private sector development; a Greater
Middle East and Central Asia Development Foundation to implement and
administer economic and political programs; and a Trust for Democracy
to provide small grants to promote development of civil society.
These are not traditional foreign aid programs. Our legislation seeks
to help stimulate private sector development, promote strong market
economies, invigorate trade relations within the region, and empower
states to rebuild and open their economies. Through a combination of
government initiative and flexible private sector financing, we can
bring the resources and expertise needed to launch a new beginning for
economic development to the Greater Middle East and Central Asia. Our
bill also encourages the State Department and other relevant government
agencies to consider new and creative approaches to coordination of
political and economic support for the region.
Over the past 2 years, the United States has spent at least $120
billion on our military efforts in Iraq and Afghanistan. Investing in
political and economic development is equally important in order to
achieve stability in the Greater Middle East and Central Asia.
Promoting trade and economic growth in the region complements our
political and diplomatic objectives in the war on terrorism. People
need hope for better lives. We cannot succeed in our war on terrorism
until hope replaces despair among the next generation in the Greater
Middle East and Central Asia.
Just this week, the editorial page of the Omaha World-Herald, my
State's leading newspaper, supported the Bush administration's efforts
to encourage economic openness among Muslim nations. Our bill today
complements these worthy initiatives. Working with our allies to
encourage free market development and political liberalization in the
Muslim countries of the Greater Middle East and Central Asia would
create, in the World-Herald's words, ``a win-win situation'' for the
United States and those Muslim countries.
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. 2305

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 ``Greater Middle East and
Central Asia Development Act of 2004''.

SEC. 2. PURPOSE.

The purpose of this Act is to authorize assistance for
political freedom and economic development, particularly
through private sector development, in the Greater Middle
East and Central Asia, including contributions to and
participation in 3 new entities: a Trust for Democracy, a
Development Foundation, and a Development Bank.

SEC. 3. FINDINGS.

Congress makes the following findings:
(1) The terrorist attacks of September 11, 2001, signaled a
turning point in United States foreign policy.
(2) Al Qaeda and affiliated groups have established a
terrorist network with linkages in Afghanistan, Pakistan,
throughout the Greater Middle East and Central Asia, and
around the world.
(3) The war on terrorism requires that the United States
consider the Greater Middle East and Central Asia as a
strategic region with its own political, economic, and
security dynamics.
(4) While rich in cultural, geographic, and language
diversity, the Greater Middle East and Central Asia face
common impediments to economic development and political
freedom.
(5) Although poverty and economic underdevelopment do not
alone cause terrorism, the expansion of economic growth, free
trade, and private sector development can contribute to an
environment that undercuts radical political tendencies that
give rise to terrorism.
(6) Given the relationship between economic and political
development and winning the global war on terror, America's
support for freedom in the Greater Middle East and Central
Asia must be matched with expanded and new programs of
partnership with the people and governments of the region to
promote good governance, political freedom, private sector
development, and more open economies.
(7) The United States and other donors should support those
citizens of the Greater Middle East and Central Asia who
share our desire to undertake reforms that result in more
open political and economic systems.
(8) Turkey, which should be supported in its aspirations
for membership in the European Union, plays a pivotal and
unique role

[[Page S4028]]

in efforts to bring economic development and stability to the
Greater Middle East and Central Asia.
(9) The President should seek new mechanisms to work
together with European and other nations, as well as with the
countries of the Greater Middle East and Central Asia to
promote political and economic development in the Greater
Middle East and Central Asia.
(10) Because the dynamics of the Greater Middle East and
Central Asia have a serious impact on global security, the
North Atlantic Treaty Organization (NATO) should now shift
its strategic focus to the region, including expanded roles
in Iraq, Afghanistan, and the Mediterranean.

SEC. 4. DEFINITION; SPECIAL RULE.

(a) Greater Middle East and Central Asia Defined.--In this
Act, the term ``Greater Middle East and Central Asia'' means
the 22 nations of the Arab world (Algeria, Bahrain, Comoros,
Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya,
Mauritania, Morocco, Oman, Palestine/West Bank/Gaza, Qatar,
Saudi Arabia, Somalia, Sudan, Syria, Tunisia, United Arab
Emirates, and Yemen), Afghanistan, Iran, Israel, Kazakhstan,
Kyrgyzstan, Pakistan, Tajikistan, Turkey, Turkmenistan, and
Uzbekistan.
(b) Special Rule.--A country listed in subsection (a) may
not receive assistance under this Act if such country is
identified as a country supporting international terrorism
pursuant to section 6(j)(1)(A) of the Export Administration
Act of 1979 (as in effect pursuant to the International
Emergency Economic Powers Act; 50 U.S.C. 1701 et seq.),
section 40(d) of the Arms Export Control Act (22 U.S.C.
2780(d)), section 620A of the Foreign Assistance Act of 1961
(22 U.S.C. 2371), or any other provision of law.

SEC. 5. AUTHORIZATION OF ASSISTANCE.

Notwithstanding any other provision of law, the President
is authorized to provide assistance to countries of the
Greater Middle East and Central Asia for the purpose of
promoting economic and political freedoms, free trade, and
private sector development, including the programs described
in the following paragraphs:
(1) United states contribution to and membership in a
greater middle east and central asia development bank.--The
President is authorized to work with other donors and the
countries of the Greater Middle East and Central Asia to
establish a Greater Middle East and Central Asia Development
Bank to promote private sector development, trade, including
intra-regional trade, and investment in the Greater Middle
East and Central Asia.
(2) Creation of a greater middle east and central asia
development foundation.--The President is authorized to work
with other donors and the countries of the Greater Middle
East and Central Asia to establish a multilateral Greater
Middle East and Central Asia Development Foundation to assist
in the administration and implementation of assistance
programs, including public-private programs, pursuant to this
Act, with specific emphasis on programs at the grass-roots
level, to include volunteer-based organizations and other
nongovernmental organizations that support private sector
development, entrepreneurship, and development of small- and
medium-size enterprises and exchanges.
(3) Creation of trust for democracy.--The President is
authorized to establish, together with other donors and
private sector and nongovernmental leaders from the Greater
Middle East and Central Asia, a multilateral, public-private
Trust for Democracy to support grass-roots development of
civil society, democratic reform, good governance practices,
and rule of law reform in the Greater Middle East and Central
Asia. Private foundations shall be encouraged to participate
in the Trust through the provision of matching funds.

SEC. 6. SENSE OF CONGRESS REGARDING COORDINATION OF
ASSISTANCE TO COUNTRIES OF THE GREATER MIDDLE
EAST AND CENTRAL ASIA.

Recognizing the importance of coordination of assistance to
the countries of the Greater Middle East and Central Asia,
and the strategic imperatives required by the war on
terrorism, it is the sense of Congress that--
(1) the Secretary of State and the heads of other relevant
Government agencies should consider new approaches to the
coordination of the provision of political and economic
support for the countries of the Greater Middle East and
Central Asia; and
(2) the Secretary of State should consider appointing a
Coordinator for Assistance to the Greater Middle East and
Central Asia.

SEC. 7. PROGRAM REPORTS.

(a) Requirement for Reports.--Beginning on January 31,
2005, and annually thereafter, the President shall submit to
Congress a report on the progress of the countries of the
Greater Middle East and Central Asia, the Greater Middle East
and Central Asia Development Bank, the Greater Middle East
and Central Asia Development Foundation, and the Trust for
Democracy in developing more open political and economic
systems and the degree to which United States assistance has
been effective at promoting these changes.
(b) Content.--The reports required by subsection (a) shall
include general information regarding such progress and
specific information on the progress of each of the Greater
Middle East and Central Asia Development Bank, the Greater
Middle East and Central Asia Development Foundation, and the
Trust for Democracy in--
(1) encouraging entrepreneurial development and supporting
growth of small- and medium-size enterprises in the countries
of the Greater Middle East and Central Asia;
(2) promoting private sector development, democratic
political reform, good governance building, rule of law
reform, and other appropriate goals in the countries of the
Greater Middle East and Central Asia;
(3) fostering intra-regional trade and investment by United
States businesses and financial institutions in the countries
of the Greater Middle East and Central Asia;
(4) developing public-private partnerships to carry out the
purpose of this Act; and
(5) encouraging the involvement of the countries of the
Greater Middle East and Central Asia, and other donors in
each institution.

SEC. 8. ENTERPRISE FUNDS REPORTS TO CONGRESS.

Not later than 1 year after the date of enactment of this
Act, the President shall submit to Congress a comprehensive
report evaluating the appropriateness of the establishment of
enterprise funds for 1 or more countries of the Greater
Middle East and Central Asia. The report shall evaluate
whether and to what extent enterprise funds might be an
effective mechanism for promoting economic reform and
investment in the countries of the Greater Middle East and
Central Asia.

SEC. 9. REPORT ON COORDINATION OF ASSISTANCE TO THE GREATER
MIDDLE EAST AND CENTRAL ASIA.

Not later than 1 year after the date of enactment of this
Act, the President shall submit to Congress a report that
describes the measures that have been employed, and the
measures that are planned to be employed, to improve the
coordination within the Department of State and among the
heads of the relevant Government agencies of the provision of
support to the countries of the Greater Middle East and
Central Asia.

SEC. 10. NOTIFICATIONS TO CONGRESS REGARDING ASSISTANCE.

Section 634A of the Foreign Assistance Act of 1961 (22
U.S.C. 2394-1) (relating to reprogramming notifications)
shall apply with respect to obligations of funds made
available to carry out this Act.

SEC. 11. AUTHORIZATION OF APPROPRIATIONS.

(a) Authorization of Appropriations.--In addition to funds
otherwise available for such purpose and for the countries to
which this Act applies, there are authorized to be
appropriated to the Department of State to carry out the
provisions of this Act, $1,000,000,000 for each of the fiscal
years 2005 through 2009.
(b) Availability of Funds.--Amounts appropriated pursuant
to subsection (a) shall remain available until expended.

Mr. LIEBERMAN. Madam President, I rise today, along with my friend
and colleague from Nebraska, Senator Hagel, to introduce the Greater
Middle East and Central Asia Development Act of 2004. This would be a
Marshall Plan for the Greater Middle East.
Let me put it in the context of the news we are receiving from Iraq
today. While public opinion surveys that have been taken by independent
groups have shown recently that the substantial majority of the people
of Iraq, quite understandably, are grateful that Saddam Hussein is no
longer in power, and while a majority of them are optimistic about
their future--a better life for themselves and their children--it is
clear, of course, every day there is a growing group of Saddam
loyalists left over from the previous regime, and terrorists, fanatical
jihadists, insurgents who will attack and kill Americans and Iraqis to
stop the forward movement of progress and freedom and prosperity in
Iraq.
We clearly have to respond to that with force in defense of our
values, of liberty, of freedom for the Iraqis. We have, if you will
allow me to use Scriptural words, to employ our swords. But it is also
true in Iraq and throughout the world that we will only win the war on
terrorism if we use not just our swords but plowshares as well. That is
what this piece of legislation Senator Hagel and I are introducing
today is all about.
I want to speak for a few moments about it. Senator Hagel will be
over later in the day to offer his remarks on the bill.
Madam President, a half century ago, at the dawn of the cold war,
Congress authorized the Marshall Plan for Europe--a bold initiative
inspired by Secretary of State George Marshall and premised on a simple
but transformational idea: that to stop communism, we had to rebuild
and democratize Europe. The Marshall Plan offered monetary aid, of
course, but it offered much more. It was a national commitment of
American values to transform the future of Europe by offering the
Europeans the blessings of liberty and prosperity, and thereby

[[Page S4029]]

linking, in the deepest way, Europe's future with our own. The same
ideals and goals of the Marshall Plan can and must now be applied to
the people of the Greater Middle East.
The predominantly Muslim countries of the Middle East and Central
Asia have, unfortunately, emerged at this moment in history as the
cradle of fanatical Islamic jihadist terrorism. There is a great civil
war being fought in the Arab world between the peace-loving, law-
abiding majority of Muslims and the minority of jihadists. This civil
war unleashed the violent terrorist forces that led to September 11,
2001, the attacks on America; March 11, 2004, the attacks on Spain; and
the repeated attacks in places such as Fallujah in Iraq that are
occurring almost every day. The outcome of our war against Islamic
terrorists will be determined by the way in which we use our swords and
our plowshares to determine the outcome of the civil war in the Muslim
world.
To stop al-Qaida and other terrorist groups from expanding this civil
war and recruiting a new generation of killers, we must use all of our
military power to capture and kill the enemy. We must drain the swamps
of terrorists in Iraq and wherever they grow.
At the same time we must combat the conditions that fuel terrorism
and drive recruits to al-Qaida and hate and despair. To do this we must
seed the garden, not just drain the swamp, with freedom, hope, and
economic opportunity. If we invest in the political and economic future
of the Middle East and Central Asia in our time, as we did in Europe
with the Marshall plan after the end of the Second World War and at the
beginning of the cold war, we will expand democracy's reach, choke off
the terrorists, strengthen our own national security, and move the
world toward greater peace.
That is the underlying premise of the legislation Senator Hagel and I
are introducing today. It is designed to complement our swords in the
war against terrorism with the plowshares of political and economic
assistance.
Our legislation is not soft. It is not welfare. It is in fact a
different kind of warfare on the battlefield of ideas and ideologies,
visions for the future. Although there are compelling humanitarian
reasons for offering assistance to the people of the Greater Middle
East, there are also compelling American national security reasons for
doing so. The political and economic assistance Senator Hagel and I are
proposing might be though of as additional weapons in America's arsenal
in the fight against terrorists.
Let me summarize what our legislation contains. We advocate making a
major financial investment in the future of the Middle East and Central
Asia. How we propose making this investment is in some ways as
significant as how much we propose investing. The key to the success of
our Marshall plan for the Middle East, as it was of the Marshall plan
for Europe, is it is not a detailed list of programs. It is a statement
of values and purposes. It is the creation of a structure to carry out
those values and purposes, and it is a commitment of American and
international resources to realize those purposes.
Our legislation would create three new international institutions
that will support economic and political development in the Greater
Middle East and Central Asia, open institutions that will require
participation by representatives of the countries benefiting from this
support, a partnership. Institutionalizing involvement of a wide group
of donors and recipients will promote better cooperation and give
ownership and accountability to the impacted nations and to the private
reformers in those nations--key ingredients to successful foreign
assistance.
The first new institution Senator Hagel and I would create is a trust
for democracy for the Middle East that would support the development of
civil society in the region, not unlike efforts we made to help those
who had the dream of freedom and opportunity in countries of the former
Soviet Union, now living to experience that dream. Modeled on the
Balkan Trust for Democracy, this institution we propose would marshal
the support of civic leaders and reformers as well as private
foundations to provide grants to worthy grassroots projects that
support free association and promote civic responsibility, the building
blocks of democracy.
Second, Senator Hagel and I would build a multilateral development
foundation that would provide a second track for assistance, together
with other donors, assistance that would be additional to that already
being provided bilaterally by the U.S. and other international donors.
This foundation will be a public place where we and other donors can
come together with the countries of the region to set priorities
together, to work together for the greater good of this troubled
region. Many countries in the Greater Middle East are richer than they
are developed, meaning their wealth has not translated to economic
progress for most of the people. We would invite all governments in the
region to sit on the board of this foundation, and we would ask all to
contribute financially and programmatically to it.

Finally, our legislation would establish a new Middle East and
Central Asia development bank, like the European Bank for
Reconstruction and Development. This bank would include private sector
participation and would underwrite large-scale infrastructure projects
in the region. It would also have a microcredit lending facility and a
project development facility.
We also believe it is important and necessary to make American
assistance more effective. That is why we are calling for the
establishment of an office of the coordinator for Greater Middle East
and Central Asia at our Department of State. The creation of such an
office would help ensure all assistance provided by any government
agency of ours is in line with the overarching goals and objectives of
our foreign policy. It would also give other donors and countries of
the region a simple place to go when seeking information about the
programs we would create.
With this collaborative structure in place, Senator Hagel and I would
authorize $5 billion in assistance over the next 5 years. That is no
small sum. But it is in fact small in comparison to the tens of
billions of dollars in today's money that were spent on the Marshall
plan in Europe 50 years ago and the hundreds of billions of dollars we
are spending now and will continue to have to spend for the military
side of the war against terror. That figure, we believe, is the minimum
required to have a positive, measurable impact in the region and to
signal the seriousness of our intentions.
Earlier this month, civil society leaders from all over the Arab
world gathered in Alexandria, Egypt to discuss an Arab reform agenda.
At that meeting participants agreed on a declaration that calls for
significant reforms that encompass the ``political, economic, social,
and cultural aspects'' of society. The fact is the reforms those Arab
world reformers seek are at least as far-reaching as those that are
being suggested by others from the outside, including from the United
States. I know there are similar reform efforts underway in Central
Asia. They deserve our support.
In introducing this legislation today, Senator Hagel and I hope to
give new impetus to the discussions taking place in Washington and
elsewhere about what we collectively can do to support political and
economic reform in the Greater Middle East and to give the people in
those great regions an alternative to a better life than the hatred and
suicidal death al-Qaida offers.
The Bush administration has put forward serious proposal along the
same lines as ours. It certainly has the same goals. This bill Senator
Hagel and I are introducing today is intended to build on that effort.
We hope it helps shape the debate of the best method to implement,
which should be one of partnership and collaboration along with a
serious commitment of American resources.

In June, the United States will host the G-8 summit in Sea Island,
GA. That summit will be followed by the U.S.-EU and NATO summits also
in June. The future of the Greater Middle East will be placed high on
the agenda of all those important meetings.
By introducing this legislation today, Senator Hagel and I hope to
enable our Government to go into these summits with the bipartisan
support of the Congress and also to provide some direction as to what
we believe should be done and how it might best be done.

[[Page S4030]]

Senator Hagel and I hope our colleagues will take a look at this
proposal and join us in cosponsoring it and sending thereby a message
no less profound and no less necessary than the message of the Marshall
plan half a century ago, that the United States is serious about
improving the lives and expanding the freedoms of the millions of
people who live in the Greater Middle East and Central Asia.
Today, that is our most urgent international imperative. At the dawn
of the cold war, America answered the challenge of communism by seeding
a garden of peace, hope, and prosperity in Europe. Today, at the dawn
of our current war against terrorism, it is equally essential that we
answer the inhumane, barbaric threats of terrorism and acts of
terrorism with all necessary force, but also by seeding the same kind
of garden of peace, hope, and prosperity in the Greater Middle East.
______

By Mr. McCAIN (for himself and Mr. Sununu):
S. 2306. A bill to reauthorize, restructure, and reform the intercity
passenger rail service program; to the Committee on Commerce, Science,
and Transportation.
Mr. McCAIN. Mr. President, today, joined by Senator Sununu, I am
introducing legislation to fundamentally reform our Nation's intercity
rail passenger program. The proposal adopts the core concepts for
reform advanced by the administration in its Amtrak legislation--cost-
sharing with the States, a network of trains that makes economic sense,
and fair and open competition for Amtrak. However, in recognition of
the magnitude and complexity of the task of restructuring Amtrak, the
legislation takes a more moderate, realistic approach to reform. While
I would prefer to see more accomplished in the next 6 years, enactment
of the restructuring and reforms we are proposing today would represent
meaningful progress toward creating an intercity passenger rail program
that makes economic sense and meets the needs of the traveling public.
It is past time for Congress to come to terms with Amtrak's problems
and why it is largely a failure. Year after year, for more than 3
decades, Congress has funded an essentially nationalized passenger
railroad, that in most areas of the country neither meets a market
demand nor provides needed public transportation. After 34 years and
$27 billion in taxpayer subsidies, Amtrak still serves less than 1
percent of intercity travelers.
My colleagues and I may not agree on exactly how Amtrak should be
restructured, but we should agree that what exists today is far from
ideal. Amtrak loses over $1 billion annually. Its debt stands at almost
$5 billion, a legacy the taxpayers will bear for years to come. It has
mortgaged nearly every asset it owns, including a portion of New's
York's Penn Station, to avoid bankruptcy. It operates routes, many of
them in the middle of the night, that lose hundreds of dollars per
passenger. And despite a Federal investment of $3.2 billion for high-
speed service on the Northeast Corridor, the Acela service has been
plagued by equipment and operating problems. In a report prepared at my
request, the General Accounting Office recently found that Amtrak
mismanaged the project, blatantly ignoring the Federal master plan and
failing to complete 51 of the project's 72 work elements.
It is past time to end the status quo. If the collective wisdom of
Congress is to continue to fund intercity passenger rail service, then
we should do so in a manner that makes economic sense. The legislation
we are introducing today would restructure the passenger rail program
in a realistic way and provide responsible funding for existing service
and new corridor development.
First, the legislation would make cost-sharing on shorter-distance
corridor routes more equitable. Today, California, Washington, Oregon,
and a number of other States play an active role in funding and
managing passenger service on corridor routes in their States, while
other States pay nothing. This legislation would require equitable
cost-sharing for all corridor trains. By the end of the 6-year
reauthorization period, States would be required to fund 70 percent of
the operating losses on corridor services, the level of contribution
already being made by California, the Pacific Northwest, Oklahoma,
Missouri, and several other States. Furthermore, the Federal share of
operating subsidies would be payable as grants to the States. Where
States have taken an active role in managing Amtrak service, there has
been more accountability, better customer service, and a higher level
of efficiency.

Second, the legislation would restructure Amtrak's long distance
routes. I am not proposing, as many of my colleagues would expect, to
``whack'' every long distance train. In fact, closure and consolidation
would be a last resort under my proposal. The ultimate goal would be to
reduce the annual operating subsidy required for these routes by at
least 50 percent whether by restructuring the route, reducing operating
expenses, contracting out service to a private operator, or securing
State financial support. Amtrak operates 16 long distance trains,
including the Sunset Limited, a train that runs through Arizona on its
3-day odyssey from Los Angeles to Orlando and loses over $400 per
passenger. Reducing the burden of these trains on the taxpayer is one
of my top priorities.
This proposal would also establish fair and open competition for
Amtrak. If, after 34 years of being told by Amtrak that profitability
is just a few years away or, more recently, that it is on a ``glide-
path'' to self-sufficiency, we are now to conclude that Amtrak will
always run operating and capital deficits. Our duty to the taxpayers is
to ensure that service is operated as efficiently as possible to
minimize subsidies. To achieve this goal, there must be fair and open
competition for Amtrak from private sector companies and commuter
authorities.
Some of my colleagues contend that the private sector would not be
interested in operating passenger service, noting that Amtrak was
created because the freight railroads did not wish to continue
providing what had become unprofitable service with the development of
air travel and the Interstate Highway System. But times have changed.
Norfolk Southern recently told transportation officials in Georgia that
it wants to be considered to run the State's planned commuter service
between Atlanta and Macon. Herzon, a private company headquarted in
Missouri, operates commuter services in Texas and California, and has
been trying to bid against Amtrak to operate the ``Mules'' service
between St. Louis and Kansas City. Further, 14 private corporations
expressed interest in operating service following a Commerce Committee
hearing in which the question of private sector interest was posed.
Fourth, this legislation would establish a process for corridor
development modeled after the transit ``new starts'' program. Many
States have expressed interest in developing new conventional or high-
speed intercity passenger service in highly-traveled corridors. My
proposal would evaluate new intercity services on a competitive basis
and require that projects meet planning and design requirements similar
to those that apply to the well-respected new starts program
administered by the Federal Transit Administration. As the States
assume more responsibility for operating subsidies, the amount of
funding available for corridor development would increase. By year 6 of
the reauthorization period, $800 million would be authorized for
corridor development.
This legislation also addresses ownership, management, and
maintenance of Northeast Corridor. As recommended by the
administration, the bill proposes that the Federal Government assume
ownership of the Northeast Corridor and implement a plan to restore the
Corridor to a state of good repair. The Northeast Corridor States would
be encouraged to adopt an interstate compact within 5 years and assume
responsibility for the Corridor's management. Other States would be
expected to manage their corridor services, and the Northeast Corridor
should be no exception. Moreover, over 1,000 of the 1,200 or so trains
operated daily on the Corridor are commuter trains, not intercity
services. Until the interstate compact is in place, Amtrak would
continue to operate and maintain the Corridor.

Finally, the legislation institutes reforms at Amtrak. Amtrak would
be required to perform its services under

[[Page S4031]]

contract with the Federal Government or States, and would be required
to develop a more accurate and transparent cost accounting system. As
recommended by the DOT Inspector General, an effort would be made to
restructure Amtrak's debt to reduce the cost to the taxpayers.
We encourage our colleagues to support this legislation. Reforming
Amtrak and the way our intercity passenger rail program is now
organized must be accomplished before Congress considers expanding
intercity service. Simply throwing billions more at Amtrak as some of
my colleagues propose--whether through appropriations, bonds, or some
other funding scheme--will not solve the fundamental problems. We can
and must do better.
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. 2306

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 ``Rail Passenger Service
Restructuring, Reauthorization, and Development Act''.

SEC. 2. TABLE OF CONTENTS; AMENDMENT OF TITLE 49, UNITED
STATES CODE.

(a) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents; amendment of title 49, United States Code.

Title I--Network Restructuring and Cost-sharing

Subtitle A--Restructuring

Sec. 101. Findings, purpose, and goals.
Sec. 102. Passenger rail service restructuring.
Sec. 103. Definitions.
Sec. 104. Operating grants for corridor routes.
Sec. 105. Operating grants for long distance routes
Sec. 106. Long distance route restructuring commission.
Sec. 107. Criteria for restructuring.
Sec. 108. Implementation of restructuring plan.
Sec. 109. Redemption of common stock.
Sec. 110. Retirement of preferred stock; transfer of assets.
Sec. 111. Real estate and asset sales; other.

Subtitle B--Northeast Corridor

Sec. 131. Interstate compact for the Northeast Corridor.
Sec. 132. Shut-down of commuter or freight operations.
Sec. 133. Capital grants for the Northeast Corridor.

Subtitle C--Related Matters

Sec. 151. Fair and open competition.
Sec. 152. Access to other railroads.
Sec. 153. Limitations on rail passenger transportation liability.
Sec. 154. Train operations insurance pool.
Sec. 155. Collective bargaining arrangements.

Title II--Rail Development

Sec. 201. Capital assistance for intercity passenger rail service.
Sec. 202. Regulations

Title III--Reforms

Sec. 301. Management of secured debt.
Sec. 302. Employee transition assistance.
Sec. 303. Termination of authority for GSA to provide services to
Amtrak.
Sec. 304. Amtrak reform board of directors.
Sec. 305. Limitations on availability of grants.
Sec. 306. Repeal of obsolete and executed provisions of law.
Sec. 307. Establishment of financial accounting system.
Sec. 308. Restructuring of long-term debt and capital leases.
Sec. 309. Authorization of appropriations.
(b) Amendment of Title 49.--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.

TITLE I--NETWORK RESTRUCTURING AND COST-SHARING

Subtitle A--Restructuring

SEC. 101. FINDINGS, PURPOSE, AND GOALS.

Section 24101 is amended to read as follows:

``Sec. 24101. Findings, purpose, and goals

``(a) Findings.--
``(1) It is in the public interest of the United States to
encourage and promote the development of various modes of
transportation and transportation infrastructure to
efficiently maximize the mobility of passengers and goods.
``(2) Despite Federal subsidies of nearly $27 billion over
the past 34 years, intercity rail passenger service still
accounts for less than 1 percent of all intercity travel.
``(3) Intercity rail passenger service can be competitive
with other modes of transportation and achieve a significant
share of the travel market in short-distance corridors
connecting metropolitan areas.
``(4) Rail passenger transportation can help alleviate
overcrowding of airways and airports, and can provide needed
intermodal connections to airports, bus terminals, and mass
transit services.
``(5) Corridor routes account for approximately 85 percent
of Amtrak's ridership but only one-third of Amtrak's
operating losses, excluding depreciation.
``(6) A number of Amtrak's long-distance routes may be more
efficiently operated and attract higher ridership as
connected corridors.
``(7) Long-distance routes that cannot be restructured as
connected corridors, do not receive State financial support,
cannot be operated on a for-profit basis, or are not an
essential link to the rest of the intercity passenger rail
network, should be consolidated or discontinued.
``(8) Some States with corridor services provide
significant financial support for such services, while other
States with routes and all States with long-distance routes
contribute nothing for such services. More equitable cost-
sharing is needed to justify Federal investment in intercity
rail passenger service.
``(9) The need to invest taxpayer dollars in intercity rail
passenger service demands that fair and open competition be
permitted for the provision of such services to ensure that
service is provided in the most efficient manner without
jeopardizing the safety of such operations.
``(10) A greater degree of cooperation is necessary among
intercity passenger service operators, freight railroads,
State, regional, and local governments, the private sector,
labor organizations, and suppliers of services and equipment
to achieve the performance sufficient to justify the
expenditure of additional public money on intercity rail
passenger service.
``(11) Transportation services provided by the private
freight railroads are vital to the economy and national
defense and should not be disadvantaged by the operation of
intercity passenger rail service over their rights-of-way.
``(12) The Northeast Corridor is a valuable resource of the
United States used by intercity and commuter rail passenger
transportation and freight transportation and should be
restored to a state of good repair.
``(b) Purpose.--The purpose of this part is to assist in
the preservation and development of conventional and high-
speed intercity rail passenger services where such services
can play an important role in facilitating passenger mobility
in the United States.
``(c) Goals.--The goals of this part are--
``(1) to move toward a national network of interconnected
short-distance passenger rail corridor services;
``(2) to return the Northeast Corridor to a state of good
repair;
``(3) to establish a framework for the development of new
conventional and high-speed rail services;
``(4) to allow for train services to be operated under
contract to a State or group of States, with the operator of
the service selected by the State or group of States;
``(5) to establish equitable cost-sharing for capital
expenses and operating losses with the States; and
``(6) to encourage greater participation in the provision
of intercity rail passenger services by the private
sector.''.

SEC. 102. PASSENGER RAIL SERVICE RESTRUCTURING.

(a) In General.--Chapter 243 is amended by inserting before
section 24301 the following:

``Sec. 24300. Restructuring mandate

``(a) In General.--Within 6 months after the date of
enactment of the Rail Passenger Service Restructuring,
Reauthorization, and Development Act, the Amtrak Reform Board
shall restructure Amtrak as 2 independent entities, as
follows:
``(1) The national railroad passenger corporation.--One
entity shall be the National Railroad Passenger Corporation,
otherwise known as Amtrak, that shall provide overall
supervision of the restructuring of the intercity passenger
rail program.
``(2) The american passenger railway corporation.--The
other entity shall be a for profit corporation, to be known
as the American Passenger Railway Corporation, that shall be
responsible for conducting the passenger operations,
infrastructure maintenance, and related services, including
operation of reservation centers and ownership and
maintenance of rolling stock.
``(b) Articles of Incorporation and Other Documentation.--
Within 6 months after the date of enactment of the Rail
Passenger Service Restructuring, Reauthorization, and
Development Act, the Amtrak Reform Board shall--
``(1) file appropriate articles of incorporation under
State law for the American Passenger Railway Corporation; and
``(2) amend the articles of incorporation and bylaws of the
National Railroad Passenger Corporation to reflect its
changed functions and responsibilities.
``(c) Roles and Responsibilities of the American Passenger
Railway Corporation.--
``(1) Railroad activities.--Consistent with the business
corporation law of the State of incorporation of the American
Passenger Railway Corporation, the Corporation shall be
qualified to undertake railroad activities of an operational
or infrastructure nature.

[[Page S4032]]

``(2) Rail operations and related functions.--The American
Passenger Railway Corporation--
``(A) shall have the exclusive right, until October 1,
2005, to continue to provide the intercity passenger services
provided by Amtrak on the date of enactment of the Rail
Passenger Service Restructuring, Reauthorization, and
Development Act;
``(B) shall, beginning October 1, 2005, operate intercity
passenger service only on a contractual basis under
negotiated terms and conditions;
``(C) shall operate a national reservations system; and
``(D) subject to fulfillment of its contractual
obligations, shall have the exclusive right, until management
of the mainline of the Northeast Corridor between Boston,
Massachusetts, and Washington, District of Columbia, is
transferred to the interstate compact created under section
131 or to another entity, to provide the train operations,
dispatching, maintenance, and infrastructure services that
are being provided by Amtrak on the date of enactment of the
Rail Passenger Service Restructuring, Reauthorization, and
Development Act, but may provide such services beginning
October 1, 2005, only on a contractual basis with the
National Railroad Passenger Corporation under negotiated
terms and conditions.
``(3) Status of corporation.--
``(A) The American Passenger Railway Corporation--
``(i) is a railroad carrier under section 20102(2) and
chapters 261 and 281 of this title;
``(ii) shall be operated and managed as a for-profit
corporation; and
``(iii) is not a department, agency, or instrumentality of
the United States Government nor a Government corporation (as
defined in section 103 of title 5).
``(B) Chapter 105 of this title does not apply to the
American Passenger Railway Corporation, except that laws and
regulations governing safety, employee representation for
collective bargaining purposes, the handling of disputes
between carriers and employees, employee retirement, annuity,
and unemployment systems, and other dealings with employees
apply to the American Passenger Railway Corporation to the
same extent as they applied to Amtrak before the
restructuring required by this section.
``(C) Subsections (c), (d), and (f) through (l) of section
24301 of this title shall apply to the Corporation.
``(4) Chief executive officer.--Subject to further action
by the board of directors of the American Passenger Railway
Corporation, the individual who, on the date of enactment of
the Rail Passenger Service Restructuring, Reauthorization,
and Development Act, is President of Amtrak shall be offered
the position of chief executive officer of the American
Passenger Railway Corporation as soon as practicable after
the corporation is established.
``(5) Issuance of stock and assumption of debt.--The
Corporation may not issue stock or incur debt without the
express approval of the Secretary of Transportation.

``Sec. 24300A. American Passenger Railway Corporation board
of directors

``(a) In General.--
``(1) Membership.--The American Passenger Railway
Corporation shall be governed by a board of directors
consisting of 7 members appointed by the President, by and
with the advice and consent of the Senate.
``(2) Qualifications.--
``(A) In general.--Members of the board shall be chosen
from among individuals who have technical qualifications,
professional standing, and demonstrated expertise in the
field of transportation, corporate management, or financial
management.
``(B) Federal employees disqualified.--No individual who is
an officer or employee of the United States may serve as a
member of the board.
``(3) Term of office.--Each member shall serve for a term
of 5 years. An individual may not serve for more than 2
terms.
``(4) Quorum.--A majority of the board members who have
been lawfully appointed and qualified at any moment shall
constitute a quorum for the conduct of business.
``(b) Bylaws.--The board of directors shall adopt bylaws
governing the corporation consistent with the provisions of
this section and its articles of incorporation, and may
amend, repeal, and otherwise modify the bylaws from time to
time as necessary or appropriate.
``(c) Transition Board Members.--Individuals who are
serving as members of the Amtrak Reform Board on the day
before the date on which the American Passenger Railway
Corporation is established, with the exception of the
Secretary of Transportation, shall serve as members of the
board of directors of the American Passenger Railway
Corporation until 4 members of that board have been appointed
and qualified.

``Sec. 24300B. National Railroad Passenger Corporation board
after restructuring

``(a) In General.--After the American Passenger Railway
Corporation is established, the Reform Board established
under section 24302(a) shall be dissolved, and the National
Railroad Passenger Corporation shall be governed by a board
of directors consisting of--
``(1) the Secretary of Transportation;
``(2) the Federal Railroad Administrator or another officer
of the United States within the Department of Transportation
compensated under the Executive Schedule under title 5,
United States Code, who is designated by the Secretary; and
``(3) the Federal Transit Administrator or another officer
of the United States within the Department of Transportation
compensated under the Executive Schedule under title 5, who
is designated by the Secretary.
``(b) Roles and Responsibilities.--
``(1) Supervision and management.--After the board of
directors described in subsection (a) takes office, the
National Railroad Passenger Corporation shall--
``(A) provide overall supervision of the restructuring of
the intercity passenger rail program;
``(B) manage residual Amtrak responsibilities; and
``(C) retain and manage Amtrak's legal rights, including
its legal right of access to other railroads, and ownership
of Amtrak's real property, until that property is transferred
to the Secretary of Transportation under section 110 of the
Rail Passenger Service Restructuring, Reauthorization, and
Development Act.
``(2) Contracts for service.--The National Railroad
Passenger Corporation shall, by contract, permit an operator
to provide intercity passenger rail service over any route
operated by Amtrak on the date prior to the date the
restructuring required by section 24300 becomes effective, at
the frequencies in effect on that date, on its behalf and to
use its right of access to any segment of rail line owned by
another rail carrier needed for the operation of that train.
The operator may be the American Passenger Railway
Corporation or another operator, but there shall be no more
than 1 intercity passenger rail operator at a time over any
segment of rail line owned by another rail carrier, except in
terminal areas as determined by the Secretary or as may
otherwise be provided by agreement among the National
Railroad Passenger Corporation, the operators, and the owner
of the rail line.
``(3) Use of amtrak name.--
``(A) In general.--The National Railroad Passenger
Corporation shall retain all legal rights pertaining to the
name `Amtrak,' and may, at its option, license or otherwise
make the name `Amtrak' commercially available in connection
with intercity passenger rail and related services.
``(B) Use by american passenger railway corporation.--
Amtrak shall by contract, permit the American Passenger
Railway Corporation to market its services under the Amtrak
name.
``(4) Amtrak personnel.--All Amtrak employees shall become
American Passenger Railway Corporation employees unless
retained by the National Railroad Passenger Corporation. The
American Passenger Railway Corporation shall succeed to the
collective bargaining agreements in effect between Amtrak and
labor organizations that are in effect on the day before the
date on which that Corporation is established. An employee
who elects employment with National Railroad Passenger
Corporation shall become an employee of that Corporation,
with only such rights regarding pay and benefits as that
Corporation shall determine.
``(5) Freight and commuter operations.--The National
Railroad Passenger Corporation shall ensure that the
implementation of the restructuring required by section 24300
gives due consideration to the needs of freight and commuter
operations that, as of the date of enactment of the Rail
Passenger Service Restructuring, Reauthorization, and
Development Act, operate on the Northeast Corridor using
Amtrak rights-of-way.
``(6) Rolling stock.--The National Railroad Passenger
Corporation shall set the terms under which the American
Passenger Railway Corporation must make available to any
replacement operator the legacy equipment associated with any
intercity passenger rail service provided as of the date of
the restructuring required by section 24300.''.
(b) Spinning-off of Reservations System.--Not later than 2
years after the date of enactment of the Rail Passenger
Service Restructuring, Reauthorization, and Development Act,
the Inspector General of the Department of Transportation
shall submit to the Secretary of Transportation, the Senate
Committee on Commerce, Science, and Transportation, and the
House of Representatives Committee on Transportation and
Infrastructure recommendations on the feasibility,
advantages, and disadvantages of spinning off the national
reservations system as a private for-profit entity.
(c) Conforming Amendment.--The chapter analysis for chapter
243 is amended by inserting the following after the item
relating to section 24309:

``24300. Restructuring mandate
``24300A. American Passenger Railway Corporation board of directors
``24300B. Amtrak board after restructuring''.

SEC. 103. DEFINITIONS.

Section 24102 is amended--
(1) by striking paragraph (2) and redesignating paragraphs
(3) through (9) as paragraphs (2) through (8), respectively;
(2) by redesignating paragraphs (3) through (8), as
redesignated, as paragraphs (4) through (9), respectively,
and inserting after paragraph (2) the following:
``(3) `corridor route' means--
``(A) a train route operated by Amtrak with a route length
of 750 miles or less as of January 1, 2004; or
``(B) a new conventional or high-speed route eligible for
funding under chapter 244 of this title.'';
(3) by redesignating paragraphs (6) through (9), as
redesignated, as paragraphs (8)

[[Page S4033]]

through (11), respectively, and inserting after paragraph (5)
the following:
``(6) `long distance route' means a train route operated by
Amtrak with a route length greater than 750 miles as of
January 1, 2004.
``(7) `legacy equipment' means the rolling stock required
to provide intercity passenger rail service owned or leased
by Amtrak on the day prior to the date on which the
restructuring required by section 24300 is completed (as such
date is determined by the Secretary).''.

SEC. 104. OPERATING GRANTS FOR CORRIDOR ROUTES.

(a) In General.--Chapter 243 is amended by adding at the
end the following:

``Sec. 24316. Operating grants for corridor routes

``(a) In General.--
``(1) Operating grant authority.--Beginning on October 1,
2005, the Secretary of Transportation may make grants to
States for operating assistance under the authority of this
section, and not under any other provision of law, to
reimburse operators of the corridor routes operated by Amtrak
on the day before the date on which the restructuring
required by section 24300 is completed (as determined by the
Secretary) for a portion of the operating subsidies required
to operate those routes with the same train frequencies.
``(2) Conditions.--A grant under this section shall be
subject to the terms, conditions, requirements, and
provisions the Secretary decides are necessary or appropriate
for the purposes of this section, including limitations on
what operating expenses are eligible for reimbursement.
``(b) Federal Share of Operating Losses.--
``(1) Reimbursable amount.--A grant to a State under this
section for any fiscal year may not exceed an amount equal to
the lower of--
``(A) the applicable percentage of the Federal operating
subsidy for that fiscal year; or
``(B) the percentage of the operating subsidy for a route
not borne by a State during the last fiscal year ending
before the date of enactment of the Rail Passenger Service
Restructuring, Reauthorization, and Development Act.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage of the operating subsidy for a
fiscal year is--
``(A) 70 percent for fiscal year 2006;
``(B) 60 percent for fiscal year 2007;
``(C) 50 percent for fiscal year 2008;
``(D) 40 percent for fiscal year 2009; and
``(E) 30 percent for fiscal year 2010.
``(c) Determination of Expenses Eligible for
Reimbursement.--
``(1) Annual determination of subsidy.--On an annual basis,
the Inspector General for the Department of Transportation
shall analyze and advise the Secretary of Transportation as
to the operating subsidy required on each corridor route
operated by the American Passenger Railway Corporation under
contract with a State without competitive bid. The operating
loss on such routes shall--
``(A) reflect the fully allocated costs of operating the
route, including an appropriate share of overhead expenses,
including general and administrative expenses; and
``(B) exclude depreciation and interest expense on long-
term debt.
``(2) Aggregation of northeast corridor profits and
losses.--Operating profits and losses on corridor routes
operated exclusively on the mainline of the Northeast
Corridor extending from Washington, D.C. to Boston, MA may be
aggregated for purposes of determining the operating subsidy
required on the routes.
``(3) Determination with competitive bidding.--Expenses
eligible for Federal support pursuant to paragraph (b)(2) for
reimbursement for a corridor route that has been
competitively bid shall consist of the operating subsidy
agreed upon by the State, group of States, or other entity
and the operator.
``(d) Exception to Date Cost-sharing Required.--For any
State whose legislature has not convened in regular session
after the date of enactment of the Rail Passenger Service
Restructuring, Reauthorization, and Development Act and
before October 1, 2005, the additional cost-sharing
requirements of this section shall become effective on
October 1, 2006.
``(e) Authorization of Appropriations.--There are
authorized to be appropriated to the Secretary to carry out
this section--
``(1) $125,000,000 for fiscal year 2006;
``(2) $100,000,000 for fiscal year 2007;
``(3) $90,000,000 for fiscal year 2008;
``(4) $75,000,000 for fiscal year 2009; and
``(5) $50,000,000 for fiscal year 2010.''.
(b) Conforming Amendment.--The chapter analysis for chapter
243 is amended by adding at the end the following:

``24316. Operating grants for corridor routes''.

SEC. 105. OPERATING GRANTS FOR LONG DISTANCE ROUTES

(a) In General.--Chapter 243, as amended by section 104, is
amended by adding at the end the following:

``Sec. 24317. Operating grants for long distance routes

``(a) In General.--
``(1) Operating grant authority.--Beginning on October 1,
2005, the Secretary of Transportation may make grants to the
American Passenger Railway Corporation or to a State
providing financial support for a long distance route for
operating assistance under the authority of this section, and
not under any other provision of law, to reimburse operators
of the long distance routes operated by Amtrak on the day
before the date on which the restructuring required by
section 24300 is completed (as determined by the Secretary)
for a portion of the operating subsidies required to operate
those routes with the same train frequencies.
``(2) Conditions.--
``(A) A grant under this section shall be subject to the
terms, conditions, requirements, and provisions the Secretary
decides are necessary or appropriate for the purposes of this
section, including limitations on what operating expenses are
eligible for reimbursement.
``(B) The Secretary shall require the American Passenger
Railway Corporation, as a condition of a grant under this
section, to systematically reduce its route and system-wide
overhead expenses by a minimum of 5 percent annually through
fiscal year 2010. A contract between the National Railroad
Passenger Corporation and the American Passenger Railway
Corporation for the operation of a long distance route or
routes must provide for a reduction in the annual operating
subsidy to reflect the reduction in such expenses.
``(3) Annual determination of subsidy.--On an annual basis,
the Inspector General for the Department of Transportation
shall analyze and advise the Secretary of Transportation as
to the operating subsidy required on each long distance route
operated by the American Passenger Railway Corporation
without competitive bid and the portion of the subsidy
attributable to route and system-wide overhead expenses.
``(b) Federal Share of Operating Losses.--Pending
restructuring of the long distance routes required by
sections 106 through 108 of the Rail Passenger Service
Restructuring, Reauthorization, and Development Act, the
Federal share for an operating grant may be 100 percent of
the qualifying operating subsidy for the route.
``(c) Cost-sharing Process for Long Distance Routes.--
Within 9 months after the date of enactment of the Rail
Passenger Service Restructuring, Reauthorization, and
Development Act, the Secretary shall develop a process to
facilitate State cost-sharing on long distance routes. The
process shall--
``(1) provide States the option of either--
``(A) receiving Federal grants, managing the service, and
selecting the train operator; or
``(B) having the service managed by the Federal government
with a train operator selected by the National Rail Passenger
Corporation;
``(2) include a methodology to assist States interested in
providing financial support in equitably allocating the share
of a route's required operating subsidy among the affected
States; and
``(3) be made available to the Long Distance Restructuring
Commission established under section 106 of the Rail
Passenger Service Restructuring, Reauthorization, and
Development Act and the States to assist in the development
of the restructuring plan under that section.
``(d) Authorization of Appropriations.--There are
authorized to be appropriated to the Secretary of
Transportation to carry out this section--
``(1) $550,000,000 for fiscal year 2006;
``(2) $425,000,000 for fiscal year 2007;
``(3) $375,000,000 for fiscal year 2008;
``(4) $325,000,000 for fiscal year 2009; and
``(5) $300,000,000 for fiscal year 2010.''.
(b) Conforming Amendment.--The chapter analysis for chapter
243, as amended by section 104 of this Act, is amended by
adding at the end the following:

``24317. Operating grants for long distance routes

SEC. 106. LONG DISTANCE ROUTE RESTRUCTURING COMMISSION.

(a) Establishment.--There is established an independent
commission to be known as the Long Distance Route
Restructuring Commission.
(b) Duty.--
(1) In general.--The Commission shall submit a plan to
Congress for restructuring long distance intercity passenger
rail routes in a manner that will reduce Federal operating
subsidies on the routes by at least 50 percent by the end of
fiscal year 2010 (as compared to the operating subsidies for
those routes for fiscal year 2003) by--
(A) retaining routes that provide a unique service that can
be contracted out by the National Railroad Passenger
Corporation on a for-profit basis;
(B) restructuring other routes as linked corridor routes
between major metropolitan areas; and
(C) consolidating or discontinuing service over remaining
routes.
(2) Preservation of national network.--The restructuring
plan submitted by the Commission shall ensure that no
corridor route is completely isolated from the rest of the
intercity passenger rail network.
(3) Exceptions.--
(A) In general.--A route will be excluded from
consideration for restructuring, consolidation, or closure if
a State or group of States commits, by contractual
arrangement with the American Passenger Railway Corporation
or another operator selected through a competitive process,
to provide financial operating support at a level sufficient
to offset at least
(i) 30 percent of the operating subsidy for fiscal year
2007;

[[Page S4034]]

(ii) 40 percent of the operating subsidy for fiscal year
2008; and
(iii) 50 percent of the operating subsidy thereafter.
(B) Failure of support.--If a State or group of States
fails to provide the financial support to which it committed
under this paragraph, then service over the route shall be
discontinued.
(4) Consultation required.--In carrying out its duties, the
Commission shall consult with the American Passenger Railway
Corporation, State and local officials, freight railroads,
companies with expertise in intercity passenger
transportation, and other organizations with an interest in
the restructuring of the long distance train routes.
(c) Appointment.--
(1) The Commission shall be composed of 7 members appointed
by the President within 6 months after the date of enactment
of this Act.
(2) The Commission members shall elect 1 member to serve as
Chairman.
(d) Termination.--The Commission shall terminate 90 days
after the Commission's recommendations for consolidation and
closure are submitted to Congress.
(e) Vacancies.--A vacancy on the Commission shall be filled
in the same manner as the original appointment.
(f) Detailees.--Upon the request of the Chairman of the
Commission, the head of any Federal department or agency may
detail personnel of that department or agency to the
Commission to assist the Commission in carrying out its
duties.
(g) Compensation; reimbursement.--Members of the Commission
shall serve without pay, but shall receive travel expenses,
including per diem in lieu of subsistence, in accordance with
sections 5702 and 5703 of title 5, United States Code.
(h) Other Authority.--
(1) The Commission may procure by contract, to the extent
funds are available, the temporary or intermittent services
of experts or consultants pursuant to section 3109 of title
5, United States Code.
(2) The Commission may lease space and acquire personal
property to the extent funds are available.
(i) Authorization of Appropriations.--There are authorized
to be appropriated for the use of the Commission in carrying
out its responsibilities under this section for each of
fiscal years 2005 and 2006, $4,000,000, such sums to remain
available until expended.

SEC. 107. CRITERIA FOR RESTRUCTURING.

(a) Restructuring as Linked Corridors.--
(1) Prerequisite for restructuring.--A long distance route
or portion thereof may be recommended for restructuring as a
linked corridor if--
(A) the origin-to-destination travel time of each corridor
link in the new route, at conventional train speeds,
including all station stops, will be competitive with other
modes of transportation;
(B) each corridor link in the new route connects at least 2
major metropolitan areas or provides a link between 2 or more
existing corridor routes;
(C) the route as restructured can be reasonably expected to
attract at least 10 percent of the combined common carrier
market in the markets served;
(D) the projected cash operating loss of each of the
restructured links does not exceed 11 cents per passenger-
mile on a fully allocated cost basis; and
(E) by the end of fiscal year 2010 the Federal operating
subsidy will be reduced by at least 50 percent (as compared
to the operating subsidy for the route for fiscal year 2003),
taking into account commitments by the affected States to
provide financial support for the route so that no Federal
operating subsidy is available for any portion of a route for
which there is no such State commitment.
(2) Hours of operation.--In addition to the eligibility
criteria in paragraph (1), any long distance routes
recommended for restructuring as linked corridors shall be
designed to operate between the hours of 6:00 a.m. and 11:00
p.m.
(3) Modification of routes.--With the concurrence of the
affected States and the host railroad, the route and stations
service by a restructured long distance route may be modified
to improve ridership and financial performance.
(4) New capital plans.--As part of the restructuring plan
for reconfigured routes, the Commission shall develop a
capital plan, if additional capital is needed to reconfigure
the route as linked corridors.
(b) Contracting-Out of Profitable Long Distance Routes and
Services.--The Commission shall determine which long distance
routes or services on such routes, including auto-ferry
transportation, food service, and sleeping accommodations,
could be contracted to a private operator on a for-profit
basis. In making these determinations, the Commission shall
solicit expressions of interest from the private sector in
operating long distance routes or services, including the
conditions under which private companies may be interested in
operating such services.
(c) Consolidation and Closure.--The Commission shall make
recommendations to Congress for consolidating and closing
long distance train routes or portions of routes that cannot
be restructured under subsection (a) or contracted out under
subsection (b), to reduce the Federal operating subsidy
required by at least 50 percent by the end of fiscal year
2010 (as compared to the operating subsidies for those routes
for fiscal year 2003), taking into consideration--
(1) the operating loss on a fully allocated cost basis,
including capital costs, of the route or portion thereof;
(2) the extent to which train service is the only available
public transportation to the cities and towns along the route
or portion thereof;
(3) whether an alternate route could significantly reduce
operating losses and capital requirements or increase
ridership;
(4) available capacity on the rights-of-way of the host
railroad or railroads; and
(5) commitments by the affected States to provide financial
support for the route or portion thereof.
(d) Cooperation of American Passenger Railway
Corporation.--
(1) The American Passenger Railway Corporation shall
cooperate and comply, subject to the agreement of the
Commission to protect the confidentiality of proprietary
information, with all requests for financial, marketing, and
other information about the routes under consideration by the
Commission.
(2) The Secretary of Transportation may withhold all or
part of an operating or capital grant to the Corporation if
the Secretary determines the American Passenger Railway
Corporation is not cooperating with the Commission as
required by this subsection.
(e) Report.--The Commission shall submit its
recommendations for restructuring the long distance routes to
the Senate Committee on Commerce, Science, and Transportation
and the House of Representatives Committee on Transportation
and Infrastructure within 18 months after the date of
enactment of this Act. The report shall include a description
of--
(1) the analysis performed by the Commission to reach its
conclusions;
(2) options considered in the development of a
restructuring plan; and
(3) the impact of the restructuring on employees of the
American Passenger Railway Corporation for any long distance
route restructured under this section.

SEC. 108. IMPLEMENTATION OF RESTRUCTURING PLAN.

(a) In General.--The Secretary of Transportation shall
implement the restructuring plan submitted to Congress by the
Long Distance Route Restructuring Commission in its report
pursuant to section 106 unless a joint resolution is enacted
by the Congress disapproving such recommendations of the
Commission before the earlier of--
(1) the end of the 60-day period beginning on the date the
Commission submits its report to Congress; or
(2) the adjournment of Congress sine die for the session
during which such report is submitted.
(b) Certain Days Disregarded.--For purposes of subsection
(a), the days on which either House of Congress is not in
session because of an adjournment of more than 4 days to a
day certain shall be excluded in the computation of a period.
(c) 1-year Implementation Period.--Unless disapproved under
section (a), the Secretary of Transportation shall fully
implement the plan within 1 year after the date on which the
period described in subsection (a) expires.

SEC. 109. REDEMPTION OF COMMON STOCK.

(a) Valuation.--The Secretary of Transportation shall
arrange, at the National Railroad Passenger Corporation's
expense, for a valuation of all Amtrak assets and liabilities
with an estimated value in excess of $1,000,000 as of the
date of enactment of this Act by the Secretary of the
Treasury, or by a contractor selected by the Secretary of the
Treasury. The valuation shall be conducted in accordance with
the Uniform Standards of Professional Appraisal Practice of
the Appraisal Foundation's Appraisal Standards Board and
shall be completed within 1 year after the date of enactment
of this Act.
(b) Redemption.--
(1) Prior to the transfer of assets to the Secretary
directed by section 110 of this Act, and within 3 months
after the completion of the valuation under subsection (a),
the National Railroad Passenger Corporation shall redeem all
common stock in Amtrak issued prior to the date of enactment
of this Act at the fair market value of such stock, based on
the valuation performed under subsection (a).
(2) No provision of this Act, or amendments made by this
Act, provide to the owners of the common stock a priority
over holders of indebtedness or other stock of Amtrak.
(c) Acquisition through Eminent Domain.--In the event that
the National Railroad Passenger Corporation and the owners of
the Amtrak common stock have not completed the redemption of
such stock within 3 months after the completion of the
valuation under subsection (a), the National Railroad
Passenger Corporation shall exercise its right of eminent
domain under section 24311 of title 49, United States Code,
to acquire that stock. The value assigned to the common stock
under subsection (a) shall be deemed to constitute just
compensation except to the extent that the owners of the
common stock demonstrate that the valuation is less than the
constitutional minimum value of the stock.
(d) Amendment of section 24311.--Section 24311(a)(1) is
amended--
(1) by striking ``or'' at the end of subparagraph (A);

[[Page S4035]]

(2) by striking ``Amtrak.'' in subparagraph (B) and
inserting ``Amtrak; or''; and
(3) by adding at the end the following:
``(C) necessary to redeem Amtrak's common stock from any
holder thereof, including a rail carrier.''.
(e) Conversion of Preferred Stock to Common.--
(1) Subsequent to the redemption of the common stock in the
corporation issued prior to the date of enactment of this
Act, the Secretary of Transportation shall convert the one
share of the preferred stock of the corporation retained
under section 110 of this Act for 10 shares of common stock
in the National Railroad Passenger Corporation.
(2) The National Railroad Passenger Corporation may not
issue any other common stock, and may not issued preferred
stock, without the express written consent of the Secretary.
(f) Termination of Section 24907 Note and Mortgage
Authority.--Section 24907 is amended by adding at the end the
following:
``(d) Termination of Authority.--The authority of the
Secretary to obtain a note of indebtedness from, and make a
mortgage agreement with, the American Passenger Railway
Corporation under subsection (a) is terminated as of the date
of the transfer of assets under section 110 of the Rail
Passenger Service Restructuring, Reauthorization, and
Development Act.''.

SEC. 110. RETIREMENT OF PREFERRED STOCK; TRANSFER OF ASSETS.

(a) Transfer.--Not later than 30 days after the redemption
or acquisition of stock under section 109 of this Act, the
National Railroad Passenger Corporation shall, in return for
the consideration specified in subsection (c), transfer to
the Secretary of Transportation title to--
(1) the portions of the Northeast Corridor currently owned
or leased by the Corporation as well as any improvements made
to these assets, including the rail right-of-way, stations,
track, signal equipment, electric traction facilities,
bridges, tunnels, repair facilities, and all other
improvements owned by the Corporation between Boston,
Massachusetts, and Washington, District of Columbia
(including the route through Springfield, Massachusetts, and
the routes to Harrisburg, Pennsylvania, and Albany, New York,
from the Northeast Corridor mainline);
(2) Chicago Union Station and rail-related assets in the
Chicago Metropolitan area; and
(3) all other track and right-of-way, stations, repair
facilities, and other real property owned or leased by the
Corporation.
(b) Existing Encumbrances.--
(1) Assumption by Federal Government.--Any outstanding debt
on the mainline of the Northeast Corridor (other than debt
associated with rolling stock) shall become a debt obligation
of the United States as of the date of transfer of title
under subsection (a)(1).
(2) Restructuring.--Except as provided in paragraph (1),
the obligation of the American Passenger Railway Corporation
or its successors or assigns to repay in full any
indebtedness to the United States incurred since January,
1990, is not affected by this Act or an amendment made by
this Act.
(c) Consideration.--In consideration for the assets
transferred to the United States under subsection (a), the
Secretary shall--
(1) deliver to the National Passenger Railroad Corporation
all but one share of the preferred stock of the corporation
held by the Secretary and forgive the corporation's legal
obligation to pay any dividends, including accrued but unpaid
dividends as of the date of transfer, evidenced by the
preferred stock certificates; and
(2) release the National Railroad Passenger Corporation
from all mortgages and liens held by the Secretary that were
in existence on January 1, 1990.
(d) Agreement.--Prior to accepting title to the assets
transferred under this section, the Secretary shall enter
into a contract with American Passenger Railway Corporation
under which American Passenger Railway Corporation will
exercise care, custody, maintenance, and operational control
of the assets to be transferred. The term of the contract
shall be for 1 year, which shall be renewed annually without
action on the part of either party unless canceled by either
party with 90 days notice.
(e) Further Transfers.--
(1) The Secretary may, for appropriate consideration,
transfer title to all or part of Chicago Union Station and
rail-related assets in the Chicago metropolitan area acquired
under this section to a regional public transportation agency
that has significant operations in Chicago Union Station on
the date of enactment of this Act.
(2) The Secretary may, for appropriate consideration,
transfer to the underlying States title to real estate
properties owned by the Corporation between Boston,
Massachusetts, and Washington, District of Columbia, that
constitute the route through Springfield, Massachusetts, and
the routes to Harrisburg, Pennsylvania, and Albany, New York,
from the Northeast Corridor mainline.
(3) The Secretary may, for appropriate consideration,
transfer title to all or part of the assets acquired under
subsection (a)(3) to a State, a public agency, a railroad, or
other entity deemed appropriate by the Secretary.
(f) Use of Proceeds.--Notwithstanding section 3302 of title
31, United States Code, any proceeds from the transfer of the
assets described subsection (e) shall be credited as off-
setting collections to the account that finances debt and
interest payments to the American Passenger Railway
Corporation. Funds available for corridor development under
chapter 244 of title 49, United States Code, shall be
increased by an amount equal to the amounts credited under
the preceding sentence.

SEC. 111. REAL ESTATE AND ASSET SALES; OTHER.

(a) In General.--Within 3 years after the date of enactment
of this Act, the Secretary of Transportation shall transfer
all stations, track, and other fixed facilities outside the
Northeast Corridor mainline to which the Secretary has
assumed title under section 110 of this Act, other than
equipment repair facilities, to States, municipalities,
railroads, or other entities for maximum consideration.
(b) Use of Proceeds.--Notwithstanding section 3302 of title
31, United States Code, any proceeds from the transfer of
assets under this section shall be credited as off-setting
collections to the account that finances debt and interest
payments to the American Passenger Railway Corporation. Funds
available for corridor development under chapter 244 of title
49, United States Code, shall be increased by an amount equal
to the amounts credited under the preceding sentence.

Subtitle B--Northeast Corridor

SEC. 131. INTERSTATE COMPACT FOR THE NORTHEAST CORRIDOR.

(a) Consent to Compact.--
(1) In general.--The States and the District of Columbia
that constitute the Northeast Corridor, as defined in section
24102 of title 49, United States Code, may enter into a
multistate compact, not in conflict with any other law of the
United States, to be known as the Northeast Corridor Compact,
to manage railroad operations and rail service and conduct
related activities on the Northeast Corridor mainline between
Boston, Massachusetts, and Washington, District of Columbia.
(2) Congressional approval required.--The Northeast
Corridor Compact shall be submitted to Congress for its
consent. It is the sense of the Congress that rapid consent
to the Compact is a priority matter for the Congress.
(b) Compact Commission.--
(1) In general.--There is hereby established a commission
to be known as the Northeast Corridor Compact Commission. The
Commission shall be composed of--
(A) 2 members (or their designees), to be selected by the
Secretary of Transportation;
(B) 2 members (or their designees), to be selected by
agreement of--
(i) the governors of Maryland, Delaware, Pennsylvania, New
Jersey, New York, Connecticut, Rhode Island, and
Massachusetts (hereinafter referred to as the ``participating
States''); and
(ii) the mayor of the District of Columbia; and
(C) 1 member to be selected by the 4 members selected under
subparagraphs (A) and (B).
(2) Administrative provisions.--
(A) Members of the Commission shall be appointed for the
life of the Commission.
(B) A vacancy in the Commission shall be filled in the
manner in which the original appointment was made.
(C) Members shall serve without pay but shall receive
travel expenses, including per diem in lieu of subsistence,
in accordance with sections 5702 and 5703 of title 5, United
States Code.
(D) The Chairman of the Commission shall be elected by the
members.
(E) The Commission may appoint and fix the pay of such
personnel as it considers appropriate.
(F) Upon the request of the Commission, the head of any
department or agency of the United States may detail, on a
reimbursable basis, any of the personnel of that department
or agency to the Commission to assist it in carrying out its
duties under this section.
(G) Upon the request of the Commission, the Administrator
of General Services shall provide to the Commission, on a
reimbursable basis, the administrative support services
necessary for the Commission to carry out its
responsibilities under this section.
(c) Functions.--The Commission shall prepare for the
consideration of and adoption by participating States, the
District of Columbia, and the Secretary of Transportation an
interstate compact that provides for--
(1) full authority for 99 years to succeed to the
responsibilities of the National Railroad Passenger
Corporation as manager of the Northeast Corridor, subject to
the provisions of a lease from the Department of
Transportation, including responsibility for--
(A) Corridor maintenance and improvement;
(B) the operation of intercity passenger rail service;
(C) making arrangements for operation of freight railroad
operations and commuter operations;
(D) the use of the Corridor for non-rail purposes; and
(E) the Northeast Corridor financial operations;
(2) execution of a lease of the Northeast Corridor from the
Department of Transportation, for a period of 99 years,
subject to appropriate provisions protecting the lessor's
interests, including reversion of all lease interests to the
lessor in the event the lessee fails to meet its financial
obligations or otherwise assume financial responsibility for
Northeast Corridor functions; and

[[Page S4036]]

(C) participation by the Department of Transportation, as
the non-voting representative of the United States.
(d) Final Compact Proposal.--
(1) The Commission shall submit a final compact proposal to
participating States, the District of Columbia, and the
Federal Government not later than 18 months after the date of
enactment of this Act.
(2) The Commission shall terminate on the 180th day
following the date of transmittal of the final compact
proposal under this subsection.
(e) Governance and Funding Requirements for Compact.--
(1) The governance provisions of the compact shall provide
a mechanism to ensure voting representation for the
participating States and the District of Columbia and for
non-voting representation for the Secretary of Transportation
and a freight railroad that conducts operations on the
Northeast Corridor as ex officio members participating in all
Compact affairs.
(2) The provisions of the compact shall establish the
financial obligations of each compact member and shall
provide for each member's management of rail services in the
Northeast Corridor.
(f) Federal Interest Requirements for Compact.--The
provisions of the Compact shall hold the United States
Government harmless as to the actions of the Compact under
the lease of rights to the Northeast Corridor by the United
States Government.
(g) Compact Borrowing Authority.--
(1) The borrowing authority provisions of the Compact may
authorize it to issue bonds or other debt instruments from
time to time at its discretion for purposes that include
paying any part of the cost of rail service improvements,
construction, and rehabilitation and the acquisition of real
and personal property, including operating equipment, except
that debt issued by the Compact may be secured only by
revenues to the Compact and may not be a debt of a
participating State, the District of Columbia, or the Federal
Government.
(2) The debt authorized by this subsection shall under no
circumstances be backed by the full faith and credit of the
United States, and a grant made under the authority of this
Act or under the authority of part C of subtitle V of title
49, United States Code, shall include an express
acknowledgement by the grantee that the debt does not
constitute an obligation of the United States.
(h) Adoption of Compact; Turnover.--
(1) In general.--The participating States and the District
of Columbia shall adopt a final compact agreement within 5
years after the date of enactment of this Act, and the
Compact shall thereafter assume responsibility for the
Northeast Corridor operations on a date that is not later
than 6 months after adoption of the Compact.
(2) Operations.--Upon leasing the Northeast Corridor to the
Compact, the Secretary shall assign to the Compact and the
Compact shall assume the then-current contract for operation
of the Northeast Corridor. Upon the termination of that
contract, the Compact may make such arrangements for
operation of the Northeast Corridor as it sees fit consistent
with its lease and this Act. If the Compact chooses to use a
contractor other than the American Passenger Railway
Corporation to operate trains on the Northeast Corridor, the
contract shall be awarded competitively.
(3) Maintenance.--Upon leasing the Northeast Corridor to
the Compact, the Secretary shall assign to the Compact and
the Compact shall assume the then-current contract for
maintenance of the Northeast Corridor. Upon the termination
of that contract, the Compact may make such arrangements for
maintenance of the Northeast Corridor as it sees fit
consistent with its lease and this Act. If the Compact
chooses to use a contractor other than the American Passenger
Railway Corporation to maintain the Northeast Corridor and
provide related services, the contract shall be awarded
competitively.
(4) Non-compact alternative.--If the participating States
and the District of Columbia do not adopt the final compact
agreement and make it operational under the schedule set
forth in this section, the Secretary of Transportation,
through a competitive bidding process, shall contract with
another public or private entity to manage the Northeast
Corridor, with a goal of maximizing the return to the Federal
government from such operations.
(i) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary of Transportation to
carry out this section--
(1) $3,000,000 for fiscal year 2005, and
(2) $2,000,000 for fiscal year 2006,
such sums to remain available until expended.

SEC. 132. SHUT-DOWN OF COMMUTER OR FREIGHT OPERATIONS.

(a) In General.--Section 11123 is amended by striking
``National Railroad Passenger Corporation'' each place it
appears and inserting ``American Passenger Railway
Corporation''.
(b) Authorization of Appropriations.--From the funds made
available for the American Passenger Railway Corporation for
fiscal years 2005 through 2010, the Secretary of
Transportation shall in each fiscal year hold in reserve from
the amounts authorized by section 24402(g) of title 49,
United States Code, such sums as may be necessary to carry
out directed service orders issued under section 1123 of
title 49, United States Code, to respond to the shut-down of
commuter rail operations or freight operations due to a shut-
down of operations by the American Passenger Railway
Corporation. The Secretary shall make the reserved funds
available through an appropriate grant instrument during the
fourth quarter of each fiscal year to the extent that no
grant orders have been issued by the Surface Transportation
Board during that fiscal year prior to the date of transfer
of the reserved funds or there is a balance of reserved funds
not needed by the Board to pay for any directed service order
in that fiscal year.
(c) Effective Date for Subsection (a).--The amendment made
by subsection (a) shall take effect on the date, determined
by the Secretary of Transportation, on which the
restructuring required by sections 24300 of title 49, United
States Code, is completed.

SEC. 133. CAPITAL GRANTS FOR NORTHEAST CORRIDOR.

(a) In General.--Chapter 243, as amended by section 105, is
amended by adding at the end the following:

``Sec. 24318. Capital authorizations for the Northeast
Corridor

``(a) In General.--The Secretary of Transportation, in
consultation with the American Passenger Railway Corporation,
shall develop and implement a capital program to restore the
mainline of the Northeast Corridor between Boston,
Massachusetts, and Washington, District of Columbia, to a
state of good repair, as defined by the Secretary.
``(b) Authorization of Appropriations for Capital Projects
on the Northeast Corridor.--There are authorized to be
appropriated to the Secretary of Transportation to make
capital grants under this section $200,000,000 for fiscal
year 2005 and $300,000,000 for each of fiscal years 2006
through 2010.
``(c) Achievement of State-of-good-repair on Northeast
Corridor.--
``(1) Use of funds.--Sums authorized for the Northeast
Corridor under subsection (b) may be used solely for the
purpose of funding deferred maintenance and safety projects,
including the negotiated Federal share for life-safety
improvements in the New York Penn Station tunnels.
``(2) State of good repair.--The Northeast Corridor shall
be considered to be in a state of good repair upon the
completion of the capital program developed under subsection
(a).''.
(b) Conforming Amendment.--The chapter analysis for chapter
243, as amended by section 105, is amended by adding at the
end thereof the following:

``24318. Capital authorizations for the Northeast Corridor''.

Subtitle C--Related Matters

SEC. 151. FAIR AND OPEN COMPETITION.

(a) In General.--The Secretary of Transportation shall
consult with States that competitively bid intercity
passenger rail services to ensure their bidding practices
provide for fair and open competition for all bidders,
including the American Passenger Railway Corporation. The
Secretary may withhold all or a portion of a grant under this
Act if the Secretary determines that the State's bidding
processes do not treat all competitors fairly.
(b) Use of Federal or State Funds.--The Secretary shall
ensure that the American Passenger Railway Corporation may
not use Federal or State financial support for a passenger
rail route to subsidize a competitive bid to operate
intercity passenger rail service on another route.

SEC. 152. ACCESS TO OTHER RAILROADS.

(a) Terms and Conditions for Access to Other Railroads.--
(1) Existing routes and frequencies.--
(A) In general.--The National Railroad Passenger
Corporation shall be responsible for negotiating the terms
and conditions under which--
(i) the American Passenger Railway Corporation, a State, or
other entity may access the property of a rail carrier to
provide intercity passenger rail service over routes operated
by Amtrak on the day before the date, determined by the
Secretary of Transportation, on which the restructuring
required by sections 24300 of title 49, United States Code,
is completed at the frequencies in effect on that day; and
(ii) the American Passenger Railway Corporation, freight
railroads, commuter authorities, and other entities may
obtain access to property owned by the United States
Government to provide intercity, commuter, freight rail and
other services, except that the National Railroad Passenger
Corporation shall delegate its authority under this clause to
the interstate compact authorized by section 131 after that
compact has been adopted.
(B) Preservation of railroad benefits.--The access and
liability terms and conditions of the contracts between the
National Railroad Passenger Corporation and other rail
carriers following the restructuring required by section
24300 of title 49, United States Code, shall be no less
favorable to the railroads than the access and liability
terms and conditions under contracts in effect on the day
before the date, as so determined by the Secretary, on which
the restructuring is completed.
(C) Incentive payments; penalties.--The National Railroad
Passenger Corporation shall retain a system of incentive
payments and performance penalties in negotiating
compensation payments to other rail carriers under
subparagraph (A) that encourages on-time performance.
(3) Conditions for new routes and train frequencies.--

[[Page S4037]]

(A) In general.--The terms and conditions for the operation
of a new intercity passenger rail route or frequency added
after the date of enactment of this Act shall, except for the
rental charge compensation to another rail carrier, be
determined by negotiation and mutual agreement between the
host railroad and the operator or sponsor of the route or
frequency to be added.
(B) Standard of compensation.--The standard of compensation
for the rental change shall be fully allocated costs,
excluding capital investments associated with an added route
or frequency, when the on-time performance of the new route
or train frequency meets or exceeds 95 percent of the goal
set by the parties, net of delays not within the host
railroad's control.
(C) Failure of negotiation.--If the parties cannot agree on
the terms of the rental charge, either party may petition the
Surface Transportation Board to prescribe the terms under
section 24308 of title 49, United States Code.
(b) Fitness Qualifications for Passenger Rail.--
(1) In general.--No person may operate intercity passenger
rail service unless that person demonstrates to the
satisfaction of the Secretary of Transportation that--
``(A) its intercity passenger rail operations will meet all
applicable Federal safety rules and regulations;
``(B) it will operate the service on a sound financial
basis; and
``(C) it has the technical expertise to operate intercity
passenger rail service.''.
(2) Minimum standards.--Within 6 months after the date of
enactment of this Act, the Secretary of Transportation shall
by regulation establish minimum safety and financial
qualifications for operators of intercity passenger rail
service.

SEC. 153. LIMITATIONS ON RAIL PASSENGER TRANSPORTATION
LIABILITY.

Section 28103 is amended by striking ``Amtrak shall
maintain a total'' in subsection (c) and inserting ``each
operator of intercity passenger rail service shall
maintain''.

SEC. 154. TRAIN OPERATIONS INSURANCE POOL.

(a) In General.--Chapter 281 is amended by adding at the
end the following:

``Sec. 28104. Train operations insurance pool

``(a) In General.--The Secretary of Transportation is
authorized to encourage and otherwise assist insurance
companies and other insurers that meet the requirements
prescribed under subsection (b) of this section to form,
associate, or otherwise join together in a pool--
``(1) to provide the insurance coverage required by section
28103; and
``(2) for the purpose of assuming, on such terms and
conditions as may be agreed upon, such financial
responsibility as will enable such companies and other
insurers to assume a reasonable proportion of responsibility
for the adjustment and payment of claims under section 28103.
``(b) Regulations To Establish Insurer Qualification
Requirements.--In order to promote the effective
administration of the intercity rail passenger program, and
to assure that the objectives of this chapter are furthered,
the Secretary is authorized to prescribe requirements for
insurance companies and other insurers participating in an
insurance pool under subsection (a), including minimum
requirements for capital or surplus or assets.
``(c) Authority To Collect and Pay Premiums and Other
Costs.--In order to provide adequate insurance coverage at
affordable cost to operators of intercity passenger rail
service at no cost to the United States, the Secretary is
authorized to divide the insurance premiums and all other
costs of forming and operating the insurance pool created
pursuant to this section, including the costs of any
contractors or consultants the Secretary may hire, among all
the operators of intercity passenger rail service (including
the American Passenger Railway Corporation) and collect from
each operator of intercity passenger rail service the
insurance premiums and other costs the Secretary has
allocated to it. Notwithstanding any other provision of law,
the Secretary may receive funds collected under this section
directly from each operator of intercity passenger rail
service, credit the appropriation charged for the insurance
premiums and other costs of forming and operating the
insurance pool, and use those funds to pay insurance premiums
and other costs of forming and operating the insurance pool,
including the costs of any contractors or consultants the
Secretary may hire. The Secretary may advance such sums as
may be necessary to pay insurance premiums and other costs of
forming and operating the insurance pool from unobligated
balances available to the Federal Railroad Administration for
intercity passenger rail service, to be reimbursed from
payments received from operators of intercity passenger rail
service. Where the Secretary is making a grant of operating
funds for a route, the Secretary may collect the insurance
premiums and other costs the Secretary has allocated to it by
withholding those funds from the grant and crediting them to
the appropriation charged for the insurance premiums and
other costs of forming and operating the insurance pool.

``Sec. 28105. Use of insurance pool, companies, or other
private organizations for certain payments

``(a) Authorization To Enter into Contracts for Certain
Responsibilities.--The Secretary of Transportation may enter
into contracts with the pool formed or otherwise created
under section 28104, or any insurance company or other
private organizations, for the purpose of securing
performance by such pool, company, or organization of any or
all of the following responsibilities:
``(1) Estimating and later determining any amounts of
payments to be made from the pool.
``(2) Receiving from the Secretary, disbursing, and
accounting for payments of insurance premiums.
``(3) Making such audits of the records of any insurance
company or other insurer, insurance agent or broker, or
insurance adjustment organization as may be necessary to
assure that proper payments are made.
``(4) Otherwise assisting in such manner as the contract
may provide to further the purposes of this chapter.
``(b) Terms and Conditions of Contract.--Any contract with
the pool or an insurance company or other private
organization under this section may contain such terms and
conditions as the Secretary finds necessary or appropriate
for carrying out responsibilities under subsection (a) of
this section, and may provide for payment of any costs which
the Secretary determines are incidental to carrying out such
responsibilities which are covered by the contract.
``(c) Competitive Bidding.--Any contract entered into under
subsection (a) of this section may be entered into without
regard to section 5 of title 41 or any other provision of law
requiring competitive bidding.
``(d) Findings of Secretary.--No contract may be entered
into under this section unless the Secretary finds that the
pool, company, or organization will perform its obligations
under the contract efficiently and effectively, and will meet
such requirements as to financial responsibility, legal
authority, and other matters as the Secretary finds
pertinent.
``(e) Term of Contract; Renewals; Termination.--Any
contract entered into under this section shall be for a term
of 1 year, and may be made automatically renewable from term
to term in the absence of notice by either party of an
intention to terminate at the end of the current term; except
that the Secretary may terminate any such contract at any
time (after reasonable notice to the pool, company, or
organization involved) if the Secretary finds that the pool,
company, or organization has failed substantially to carry
out the contract, or is carrying out the contract in a manner
inconsistent with the efficient and effective administration
of the intercity rail passenger program.''.
(b) Conforming Amendments.--
(1) Chapter 281 is amended by striking ``LAW ENFORCEMENT''
in the chapter heading and inserting ``LAW ENFORCEMENT;
LIABILITY; INSURANCE''.
(2) The part analysis of subtitle V is amended by striking
the item relating to chapter 281 and inserting the following:

``281. Law enforcement; liability; insurance...................28101''.

(3) The table of contents of the title is amended by
striking the item relating to chapter 281 and inserting the
following:

``281. Law enforcement; liability; insurance...................28101''.

(4) The chapter analysis for chapter 281 is amended by
adding at the end the following:

``28104. Train operations insurance pool
``28105. Use of insurance pool, companies, or other private
organizations for certain payments''.

SEC. 155. COLLECTIVE BARGAINING ARRANGEMENTS.

(a) Status as Employer or Carrier.--
(1) In general.--Any entity providing intercity passenger
railroad transportation (within the meaning of section 20102
of title 49, United States Code) that begins operations after
the date of enactment of this Act 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.).
(2) Collective bargaining agreement.--Any entity providing
intercity passenger railroad transportation (within the
meaning of section 20102 of title 49, United States Code)
that begins operations after the date of enactment of this
Act and replaces intercity rail passenger service that was
provided by another entity as of the date of enactment of
this Act, shall enter into an agreement with the authorized
bargaining agent or agents for employees of the predecessor
provider that--
(A) gives each 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 three 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.
(3) Replacement of existing rail passenger service.--
(A) Negotiations.--An entity providing replacement
intercity rail passenger service under paragraph (2) 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 prior to the date it plans to commence
service. Within 5 days after the date of receipt of

[[Page S4038]]

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 (2). 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 set forth in subparagraphs (A)
through (D) of paragraph (2) as provided 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 7
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 one 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 set forth in subparagraphs (A) through (D)
of paragraph (2). 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, but all
other expenses shall be paid by the party incurring them.
(C) Service commencement.--An entity providing replacement
intercity rail passenger service under paragraph (2) shall
commence service only after an agreement is entered into with
respect to the matters set forth in subparagraphs (A) through
(D) of paragraph (2) or the decision of the arbitrator has
been rendered.
(b) Regulations.--Not later than 6 months after the date of
the enactment of this Act, the Secretary of Transportation
shall issue regulations for carrying out this section.

TITLE II--RAIL DEVELOPMENT

SEC. 201. CAPITAL ASSISTANCE FOR INTERCITY PASSENGER RAIL
SERVICE.

(a) In General.--Part C of subtitle V is amended by
inserting after chapter 243 the following:

``CHAPTER 244--INTERCITY PASSENGER RAIL SERVICE CORRIDOR CAPITAL
ASSISTANCE

``Sec.
``24401. Definitions
``24402. Capital investment grants to support intercity passenger rail
service
``24403. Project management oversight
``24404. Inclusion of projects in Budget
``24405. Local share and maintenance of effort
``24406. Grants for maintenance and modernization

``Sec. 24401. Definitions

``In this chapter:
``(1) Applicant.--The term `applicant' means a State, a
group of States, including an interstate compact formed under
section 410 of the Amtrak Reform and Accountability Act of
1997 (49 U.S.C. 24101 note) or section 131 of the Rail
Passenger Service Restructuring, Reauthorization, and
Development Act, or a public corporation, board, commission,
or agency established by one or more States designated as the
lead agency of a State for providing intercity passenger rail
service.
``(2) Capital project.--The term `capital project' means a
project for--
``(A) acquiring or constructing equipment or a facility for
use in intercity passenger rail service, expenses incidental
to the acquisition or construction (including designing,
inspecting, supervising, engineering, location surveying,
mapping, environmental studies, and acquiring rights-of-way),
alternatives analysis related to the development of such
train services, capacity improvements on the property over
which the service will be conducted, passenger rail-related
intelligent transportation systems, highway-rail grade
crossing improvements or closures on routes used for
intercity passenger rail service, relocation assistance,
acquiring replacement housing sites, and acquiring,
constructing, relocating, and rehabilitating replacement
housing;
``(B) rehabilitating or remanufacturing rail rolling stock
and associated facilities used primarily in intercity
passenger rail service;
``(C) leasing equipment or a facility for use in intercity
passenger rail service, subject to regulations (to be
prescribed by the Secretary of Transportation) limiting such
leasing arrangements to arrangements that are more cost-
effective than purchase or construction;
``(D) modernizing existing intercity passenger rail service
facilities and information systems;
``(E) the introduction of new technology, through
innovative and improved products, other than magnetic
levitation; or
``(F) defraying, with respect to new service established
under section 24402, the cost of rental charges to freight
railroads.
``(3) Intercity corridor passenger rail service.--The term
`intercity corridor passenger rail service' means the
transportation of passengers between major metropolitan areas
by rail, including high-speed rail (as defined in section
26105(2) of this title), at multiple daily frequencies in
corridors of 300 miles or less in length or with trip times
of 4 hours or less.
``(4) Net project cost.--The term `net project cost' means
that portion of the cost of a project than cannot be financed
from revenues reasonably expected to be generated by the
project.

``Sec. 24402. Capital investment grants to support new
intercity passenger rail service

``(a) General Authority.--
``(1) Grants.--The Secretary of Transportation may make
grants under this section to an applicant to assist in
financing capital investments to establish or add additional
train frequencies for new intercity corridor passenger rail
service.
``(2) Terms and conditions.--The Secretary shall require
that a grant under this section be subject to the terms,
conditions, requirements, and provisions the Secretary
decides are necessary or appropriate for the purposes of this
section, including requirements for the disposition of net
increases in value of real property resulting from the
project assisted under this section.
``(3) Application with chapter 53.--A grant under this
section may not be made for a project or program of projects
that qualifies for financial assistance under chapter 53 of
this title.
``(b) Project as Part of Approved Program.--
``(1) In general.--The Secretary may not approve a grant
for a project under this section unless the Secretary finds
that the project is part of an approved corridor plan and
program developed under section 135 of title 23 and that the
applicant or recipient has or will have the legal, financial,
and technical capacity to carry out the project (including
safety and security aspects of the project), satisfactory
continuing control over the use of the equipment or
facilities, and the capability and willingness to maintain
the equipment or facilities.
``(2) Eligibility information.--An applicant shall provide
sufficient information upon which the Secretary can make the
findings required by this subsection.
``(3) Proposed operator justification.--If an applicant has
not selected the proposed operator of its service
competitively, the applicant shall provide written
justification to the Secretary showing why the proposed
operator is preferred, taking into account price and other
factors, and that use of the proposed operator will not
increase the capital cost of the project.
``(4) Rail agreement.--The Secretary of Transportation may
not approve a grant under this section unless the applicant
demonstrates that the railroad over which the intercity
passenger rail service will operate concurs with the
applicant's operating plans and infrastructure improvement
requirements.
``(c) Criteria for Grants for Intercity Corridor Passenger
Rail Projects.--
``(1) In general.--The Secretary may approve a grant under
this section for a capital project only if the Secretary
determines that the proposed project is--
``(A) justified, based on--
``(i) the results of an alternatives analysis and
preliminary engineering; and
``(ii) a comprehensive review of its mobility improvements,
environmental benefits, cost effectiveness, and operating
efficiencies; and
``(B) supported by an acceptable degree of State and local
financial commitment, including evidence of stable and
dependable financing sources to construct, maintain, and
operate the system or extension.
``(2) Alternatives analysis and preliminary engineering.--
In evaluating a project under paragraph (1)(A), the Secretary
shall analyze and consider the results of the alternatives
analysis and preliminary engineering for the project.
``(3) Project justification.--In evaluating a project under
paragraph (1)(B), the Secretary shall consider--
``(A) the direct and indirect benefits and costs of
relevant alternatives;
``(B) the ability of the service to compete with other
modes of transportation;
``(C) the extent to which the project fills an unmet
transportation need;
``(D) the ability of the service to fund its operating
expenses from fare revenues;
``(E) population density in the corridor;
``(F) the technical capability of the grant recipient to
construct the project;
``(G) factors such as congestion relief, improved mobility,
air pollution, noise pollution, energy consumption, and all
associated ancillary and mitigating cost increases necessary
to carry out each alternative analyzed;
``(H) the level of private sector financial participation
and risk sharing in the project;
``(I) differences in local land, construction, and
operating costs in evaluating project justification; and
``(J) other factors that the Secretary determines
appropriate to carry out this chapter.
``(4) Local financial commitment.--
``(A) Evaluation of project.--In evaluating a project under
paragraph (1)(C), the Secretary shall require that--
``(i) the proposed project plan provides for the
availability of contingency amounts that the Secretary
determines to be reasonable to cover unanticipated cost
increases;
``(ii) each proposed State or local source of capital and
operating financing is stable, reliable, and available within
the proposed project timetable; and
``(iii) State or local resources are available to operate
the proposed service.

[[Page S4039]]

``(B) Considerations.--In assessing the stability,
reliability, and availability of proposed sources of local
financing under subparagraph (A), the Secretary shall
consider--
``(i) existing grant commitments;
``(ii) the degree to which financing sources are dedicated
to the purposes proposed;
``(iii) any debt obligation that exists or is proposed by
the applicant for the proposed project or other intercity
passenger rail service purpose; and
``(iv) the extent to which the project has a local
financial commitment that exceeds the required non-Federal
share of the cost of the project.
``(5) Project evaluation and rating.--A proposed project
may advance from alternatives analysis to preliminary
engineering, and may advance from preliminary engineering to
final design and construction, only if the Secretary finds
that the project meets the requirements of this section and
there is a reasonable likelihood that the project will
continue to meet such requirements. In making such findings,
the Secretary shall evaluate and rate the project as `highly
recommended', `recommended', or `not recommended', based on
the results of alternatives analysis, the project
justification criteria, and the degree of local financial
commitment, as required under this subsection. In rating the
projects, the Secretary shall provide, in addition to the
overall project rating, individual ratings for each of the
criteria established under the regulations issued under
paragraph (5).
``(6) Full funding grant agreement.--A project financed
under this subsection shall be carried out through a full
funding grant agreement. The Secretary shall enter into a
full funding grant agreement based on the evaluations and
ratings required under this subsection. The Secretary shall
not enter into a full funding grant agreement for a project
unless that project is authorized for final design and
construction.
``(d) Letters of Intent, Full Funding Grant Agreements, and
Early Systems Work Agreements.--
``(1) Letter of intent.--
``(A) The Secretary may issue a letter of intent to an
applicant announcing an intention to obligate, for a project
under this section, an amount from future available budget
authority specified in law that is not more than the amount
stipulated as the financial participation of the Secretary in
the project.
``(B) At least 60 days before issuing a letter under
subparagraph (A) of this paragraph or entering into a full
funding grant agreement, the Secretary shall notify in
writing the Senate Committee on Commerce, Science, and
Transportation and the House of Representatives Committee on
Transportation and Infrastructure, and the House of
Representatives and Senate Committees on Appropriations of
the proposed letter or agreement. The Secretary shall include
with the notification a copy of the proposed letter or
agreement as well as the evaluations and ratings for the
project.
``(C) The issuance of a letter is deemed not to be an
obligation under sections 1108(c) and (d), 1501, and 1502(a)
of title 31, or an administrative commitment.
``(D) An obligation or administrative commitment may be
made only when amounts are appropriated.
``(2) Full funding agreement.--
``(A) The Secretary may make a full funding grant agreement
with an applicant. The agreement shall--
``(i) establish the terms of participation by the United
States Government in a project under this section;
``(ii) establish the maximum amount of Government financial
assistance for the project, which, with respect to a high-
speed rail project, shall be sufficient to complete at least
an operable segment;
``(iii) cover the period of time for completing the
project, including a period extending beyond the period of an
authorization; and
``(iv) make timely and efficient management of the project
easier according to the law of the United States.
``(B) An agreement under this paragraph obligates an amount
of available budget authority specified in law and may
include a commitment, contingent on amounts to be specified
in law in advance for commitments under this paragraph, to
obligate an additional amount from future available budget
authority specified in law. The agreement shall state that
the contingent commitment is not an obligation of the Federal
Government and is subject to subject to the availability of
appropriations made by Federal law and to Federal laws in
force on or enacted after the date of the contingent
commitment. Interest and other financing costs of efficiently
carrying out a part of the project within a reasonable time
are a cost of carrying out the project under a full funding
grant agreement, except that eligible costs may not be more
than the cost of the most favorable financing terms
reasonably available for the project at the time of
borrowing. The applicant shall certify, in a way satisfactory
to the Secretary, that the applicant has shown reasonable
diligence in seeking the most favorable financing terms.
``(3) Early systems work agreement.--
``(A) The Secretary may make an early systems work
agreement with an applicant if a record of decision under the
National Environmental Policy Act of 1969 (42 U.S.C. 4321 et
seq.) has been issued on the project and the Secretary finds
there is reason to believe--
``(i) a full funding grant agreement for the project will
be made; and
``(ii) the terms of the work agreement will promote
ultimate completion of the project more rapidly and at less
cost.
``(B) A work agreement under this paragraph obligates an
amount of available budget authority specified in law and
shall provide for reimbursement of preliminary costs of
carrying out the project, including land acquisition, timely
procurement of system elements for which specifications are
decided, and other activities the Secretary decides are
appropriate to make efficient, long-term project management
easier. A work agreement shall cover the period of time the
Secretary considers appropriate. The period may extend beyond
the period of current authorization. Interest and other
financing costs of efficiently carrying out the work
agreement within a reasonable time are a cost of carrying out
the agreement, except that eligible costs may not be more
than the cost of the most favorable financing terms
reasonably available for the project at the time of
borrowing. The applicant shall certify, in a way satisfactory
to the Secretary, that the applicant has shown reasonable
diligence in seeking the most favorable financing terms. If
an applicant does not carry out the project for reasons
within the control of the applicant, the applicant shall
repay all Government payments made under the work agreement
plus reasonable interest and penalty charges the Secretary
establishes in the agreement.
``(4) Limit on total obligations and commitments.--The
total estimated amount of future obligations of the
Government and contingent commitments to incur obligations
covered by all outstanding letters of intent, full funding
grant agreements, and early systems work agreements under
this section, when combined with obligations under section
5309 of this title, may be not more than the amount
authorized under section 5338(b) of this title, less an
amount the Secretary reasonably estimates is necessary for
grants under this section not covered by a letter. The total
amount covered by new letters and contingent commitments
included in full funding grant agreements and early systems
work agreements may be not more than a limitation specified
in law.
``(e) Federal Share of Net Project Cost.--
``(1) In general.--
``(A) Based on engineering studies, studies of economic
feasibility, and information on the expected use of equipment
or facilities, the Secretary shall estimate the net project
cost.
``(B) A grant for the project may be for up to 50 percent
of the net project cost. The remainder shall be provided in
cash from non-Federal sources.
``(f) Undertaking Projects in Advance.--
``(1) In general.--The Secretary may pay the Federal share
of the net capital project cost to an applicant that carries
out any part of a project described in this section according
to all applicable procedures and requirements if--
``(A) the applicant applies for the payment;
``(B) the Secretary approves the payment; and
``(C) before carrying out a part of the project, the
Secretary approves the plans and specifications for the part
in the same way as other projects under this section.
``(2) Interest costs.--The cost of carrying out part of a
project includes the amount of interest earned and payable on
bonds issued by the applicant to the extent proceeds of the
bonds are expended in carrying out the part. The amount of
interest includable as cost under this paragraph may not be
more than the most favorable interest terms reasonably
available for the project at the time of borrowing. The
applicant shall certify, in a manner satisfactory to the
Secretary, that the applicant has shown reasonable diligence
in seeking the most favorable financial terms.
``(3) Use of cost indices.--The Secretary shall consider
changes in capital project cost indices when determining the
estimated cost under paragraph (2) of this subsection.
``(g) Funding.--There are authorized to be appropriated to
the Secretary of Transportation for purposes of this
section--
``(1) $525,000,000 for fiscal year 2006,
``(2) $525,000,000 for fiscal year 2007,
``(3) $650,000,000 for fiscal year 2008,
``(4) $750,000,000 for fiscal year 2009, and
``(5) $800,000,000 for fiscal year 2010,
such sums to remain available until expended.

``Sec. 24403. Project management oversight

``(a) Project Management Plan Requirements.--To receive
Federal financial assistance for a major capital project
under this chapter, an applicant shall prepare and carry out
a project management plan approved by the Secretary of
Transportation. The plan shall provide for--
``(1) adequate recipient staff organization with well-
defined reporting relationships, statements of functional
responsibilities, job descriptions, and job qualifications;
``(2) a budget for the project, including the project
management organization, appropriate consultants, property
acquisition, utility relocation, systems demonstration staff,
audits, and miscellaneous payments the recipient may be
prepared to justify;
``(3) a construction schedule for the project;
``(4) a document control procedure and recordkeeping
system;

[[Page S4040]]

``(5) a change order procedure that includes a documented,
systematic approach to handling the construction change
orders;
``(6) organizational structures, management skills, and
staffing levels required throughout the construction phase;
``(7) quality control and quality assurance functions,
procedures, and responsibilities for construction, system
installation, and integration of system components;
``(8) material testing policies and procedures;
``(9) internal plan implementation and reporting
requirements;
``(10) criteria and procedures to be used for testing the
operational system or its major components;
``(11) annual updates of the plan, especially related to
project budget and project schedule, financing, and ridership
estimates; and
``(12) the recipient's commitment to submit a project
budget and project schedule to the Secretary each month.
``(b) Plan Approval.--
``(1) 60-day decision.--The Secretary shall approve or
disapprove a plan not later than 60 days after it is
submitted. If the approval process cannot be completed within
60 days, the Secretary shall notify the recipient, explain
the reasons for the delay, and estimate the additional time
that will be required.
``(2) Explanation of disapproval.--If the Secretary
disapproves a plan, the Secretary shall inform the applicant
of the reasons for disapproval of the plan.
``(c) Secretarial Oversight.--
``(1) In general.--The Secretary may use no more than 0.5
percent of amounts made available in a fiscal year for
capital projects under this chapter to enter into contracts
to oversee the construction of such projects.
``(2) Use of funds.--The Secretary may use amounts
available under paragraph (1) of this subsection to make
contracts for safety, procurement, management, and financial
compliance reviews and audits of a recipient of amounts under
paragraph (1).
``(3) Federal share.--The Federal Government may pay the
entire cost of carrying out a contract under this subsection.
``(d) Access to Sites and Records.--Each recipient of
assistance under this chapter shall provide the Secretary and
a contractor the Secretary chooses under subsection (b) of
this section with access to the construction sites and
records of the recipient when reasonably necessary.

``Sec. 24404. Inclusion of projects in Budget

``Beginning with fiscal year 2005, the Secretary of
Transportation shall transmit to the Office of Management and
Budget for inclusion in the President's budget submission for
the fiscal year a list of projects recommended for funding
under section 24402 for the fiscal year.

``Sec. 24405. Local share and maintenance of effort

``(a) In General.--Notwithstanding any other provision of
law, a recipient of assistance under section 24402 may use,
as part of the local matching funds for a capital project,
the proceeds from the issuance of revenue bonds.
``(b) Maintenance of Effort.--The Secretary of
Transportation shall approve the use of proceeds from the
issuance of revenue bonds for the non-Federal share of the
net project cost only if the aggregate amount of financial
support for intercity passenger rail service from the State
is not less than the average annual amount provided by the
State during the preceding 3 years.

``Sec. 24406. Grants for maintenance and modernization

``(a) In General.--The Secretary of Transportation may make
capital grants for renewal and modernization of intercity
passenger rail services to--
``(1) the American Passenger Railway Corporation for
services it operates under contract with the Secretary of
Transportation; or
``(2) to States for intercity passenger rail services
operated under a contract with the American Passenger Railway
Corporation or another train operator.
``(b) Use of Funds.--Grants under this section may be
used--
``(1) to purchase, lease, rehabilitate, or remanufacture
rolling stock and associated facilities used primarily in
intercity passenger rail service;
``(2) to modernize existing intercity passenger rail
service facilities and information systems; or
``(3) to defray the cost of rental charges to freight
railroads for the addition of train frequencies.
``(c) Federal Share.--For fiscal years 2005 through 2010,
the Federal share for a capital grant under this section may
be 100 percent, except that the Federal share for a grant
made under subsection (b)(3) may not exceed 50 percent. After
fiscal year 2010, the Federal share for a capital grant under
this section may not exceed 80 percent.
``(d) Allocation Formula.--Funds made available by this
section shall be allocated equitably among the States based
on a formula to be determined by the Secretary.
``(e) Sleeping and Dining Cars.--Pending the restructuring
of long distance routes under sections 106 through 108 of the
Rail Passenger Service Restructuring, Reauthorization, and
Development Act, capital grants may be made to the American
Passenger Railway Corporation for sleeping and dining cars
only to the extent necessary to maintain the equipment in
working order and not for the purpose of refurbishing,
rebuilding, or renewing such equipment to extend the
equipment's useful life.
``(f) Long Distance Restructuring Plan.--Unless the
restructuring plan submitted by the Long Distance Route
Restructuring Commission under section 106 of the Rail
Passenger Service Restructuring, Reauthorization, and
Development Act is disapproved by Congress, from the sums
authorized for capital projects outside of the Northeast
Corridor, the Secretary may reserve up to $20,000,000 in each
of fiscal years 2007 through 2010 to assist in the
restructuring of long distance routes as linked corridors,
and the Federal share of such assistance shall be 100
percent.
``(g) Authorization of Appropriations.--There are
authorized to be appropriated to the Secretary of
Transportation $200,000,000 for each of fiscal years 2005
through 2010 to carry out this section.''.

SEC. 202. REGULATIONS IMPLEMENTING CHAPTER 244.

(a) In General.--Not later than 1 year after the date of
enactment of this Act, the Secretary of Transportation shall
issue final regulations under chapter 244 of title 49, United
States Code.
``(b) Specific Requirements.--The regulations under chapter
244 of title 49, United States Code, shall include--
``(1) the manner in which the Secretary will evaluate and
rate projects based on the results of alternatives analysis,
project justification, and the degree of local financial
commitment, as required by section 24402 of that title;
``(2) a definition of `major capital project' for purposes
of section 24403;
``(3) a requirement that project oversight begin during the
preliminary engineering stage of a project, unless the
Secretary finds it more appropriate to begin oversight during
another stage of a project, to maximize the transportation
benefits and cost savings associated with project management
oversight;
``(4) a deadline by which all grant applications for a
fiscal year shall be submitted that is early enough to permit
the Secretary to evaluate all timely applications thoroughly
before making grants;
``(5) a formula based on infrastructure ownership,
boardings, and passenger-miles traveled in the prior fiscal
year by which the funds authorized for modernization of
existing services will be allocated among the States; and
``(6) a requirement that, if a State does not apply for its
share of formula grant funds under paragraph (5) of this
subsection in a timely manner, those funds will be made
available to other States.

TITLE III--REFORMS

SEC. 301. MANAGEMENT OF SECURED DEBT.

Except as approved by the Secretary of Transportation to
refinance existing secured debt, Amtrak (until the American
Passenger Railway Corporation is established) and the
American Passenger Railway Corporation thereafter, may not
enter into any obligation secured by assets after the date of
enactment of this Act. This section does not prohibit
unsecured lines of credit used for working capital purposes.

SEC. 302. EMPLOYEE ASSISTANCE.

(a) Transition Financial Incentives.--
(1) In general.--To reduce operating expenses in
preparation for competition from other rail carriers, the
American Passenger Railway Corporation may institute a
program under which it may, at its discretion, provide
financial incentives to employees who voluntarily terminate
their employment with the Corporation and relinquish any
legal rights to receive termination-related payments under
any contractual agreement with the Corporation.
(2) Conditions for financial incentives.--As a condition
for receiving financial assistance grants under this section,
the American Passenger Railway Corporation shall certify to
the Secretary of Transportation that--
(A) the financial assistance results in a net reduction in
the total number of employees equal to the number receiving
financial incentives;
(B) the financial assistance results in a net reduction in
total employment expense equivalent to the total employment
expenses associated with the employees receiving financial
incentives; and
(C) the total number of employees eligible for termination-
related payments will not be increased without the express
written consent of the Secretary.
(3) Amount of financial incentives.--The financial
incentives authorized under this section may not exceed 1
year's base pay.
(4) Authorization of appropriations.--There are authorized
to be appropriated to the Secretary of Transportation
$25,000,000 for each of fiscal years 2005, 2006, and 2007 to
make grants to the American Passenger Railway Corporation to
fund financial incentive payments to employees under this
subsection.
(b) Labor Protection for Employees of the American
Passenger Railway Corporation.--
(1) In general.--The American Passenger Railway Corporation
shall be responsible for obligations imposed by law or
collective bargaining agreement for compensation and benefits
payable to its employees terminated in connection with the
restructuring of passenger rail service under this Act and
the amendments made by this Act. The responsibility of the
American Passenger Railway Corporation under the preceding
sentence,

[[Page S4041]]

and the obligations for which it is responsible under that
sentence, may not be transferred to any other entity in
connection with such restructuring by contract or otherwise.
(2) Authorization of appropriations.--There are authorized
to be appropriated to the Secretary of Transportation for the
use of the American Passenger Railway Corporation in meeting
its responsibility under paragraph (1) $75,000,000 for each
of fiscal years 2007 through 2010.
(3) Not an obligation of the united states.--
Notwithstanding paragraph (2), nothing in paragraph (1) shall
be construed to mean that any labor protection obligation of
the American Passenger Railway Corporation under that
paragraph is an obligation of the United States Government.

SEC. 303. TERMINATION OF AUTHORITY FOR GSA TO PROVIDE
SERVICES TO AMTRAK.

Section 1110 of division A of H.R. 5666 (114 Stat. 2763A-
202), as enacted by section 1(a)(4) of the Consolidated
Appropriations Act, 2001, is repealed.

SEC. 304. AMTRAK REFORM BOARD OF DIRECTORS.

Section 24302 is amended by adding at the end the
following:
``(d) Asset Transition Committee.--
``(1) In general.--The Reform Board shall form an asset
transition committee comprised of the Secretary or the
Secretary's designee, and 2 other members, or 1 other member
if 2 other members are not lawfully appointed.
``(2) Powers and duties.--In addition to other powers and
duties assigned by the board, the Asset Transition Committee
has the duty to ensure that the public interest is served in
board decisions and Amtrak management actions that change the
use of or status of--
``(A) the contractual right of access of Amtrak to rail
lines of other railroads;
``(B) Amtrak's secured debt;
``(C) Northeast Corridor real property and assets; and
``(D) rolling stock.
``(3) Approval required.--The board may not take an action
with regard to the assets or secured debt specified in
paragraph (2), or permit Amtrak management action with regard
to those assets, that is not approved by the asset transition
committee.''.

SEC. 305. LIMITATIONS ON AVAILABILITY OF GRANTS.

(a) In General.--Chapter 243, as amended by section 136 of
this Act is amended by inserting after section 24318 the
following:

``Sec. 24319. Limitations on availability of grants

``(a) In General.--In addition to any other requirement
imposed under this title, grants under this subtitle are
subject to the following conditions:
``(1) The Secretary of Transportation may approve funding
to cover operating losses or operating expenses (including
advance purchase orders) only after receiving and approving a
grant request for each specific train route to which the
grant relates.
``(2) Each such grant request shall be accompanied by a
detailed financial analysis, revenue projection, and capital
expenditure program justifying the Federal support to the
Secretary's satisfaction.
``(3) Not later than December 31st prior to each fiscal
year in which a grant under this subtitle is to be made, the
grant recipient shall transmit a business plan for operating
and capital improvements to be funded in the fiscal year
under section 24104(a) to the Secretary of Transportation,
the Committee on Commerce, Science, and Transportation of the
Senate, the Committee on Transportation and Infrastructure of
the House of Representatives, and the House of
Representatives and Senate Committees on Appropriations.
``(4) The business plan shall include--
``(A) targets, as applicable, for ridership, revenues, and
capital and operating expenses;
``(B) a separate accounting for such targets--
``(i) on the Northeast Corridor;
``(ii) each intercity train route;
``(iii) as a group for long distance trains and corridor
services; and
``(iv) commercial activities, including contract operations
and mail and express; and
``(C) a description of the work to be funded, along with
cost estimates and an estimated timetable for completion of
the projects covered by the business plan.
``(5) Each month of each fiscal year in which grants are
made under this subtitle, the grant recipient shall submit a
supplemental report in electronic format regarding the
business plan, which shall describe the work completed to
date, any changes to the business plan, and the reasons for
such changes, to the Secretary of Transportation, the
Committee on Commerce, Science, and Transportation of the
Senate, the Committee on Transportation and Infrastructure of
the House of Representatives, and the House of
Representatives and Senate Committees on Appropriations.
``(6) None of the funds authorized by this subtitle or the
Rail Passenger Service Restructuring, Reauthorization, and
Development Act may be disbursed for operating expenses,
including advance purchase orders and capital projects not
approved by the Secretary nor in the business plan submitted
by the grant recipient under paragraph (3).
``(7) The grant recipient shall display the business plan
required by paragraph (3) and all subsequent supplemental
plans required by paragraph (5) on its website within a
reasonable time after they are submitted to the Secretary and
the Congress under this section.
``(8) The Secretary may not make any grant under this
subtitle, until the grant recipient agrees to continue
abiding by the provisions of paragraphs (1), (2), (5), (9),
and (11) of the summary of conditions on the direct loan
agreement of June 28, 2002, until the loan is repaid.
``(9) With respect to any route on which intercity
passenger rail service is provided on the day before the date
on which the restructuring required by section 24300 is
completed (as determined by the Secretary), the American
Passenger Railway Corporation shall make available to any
replacement operator the legacy equipment that is associated
with the service on the route. The equipment shall be made
available on such terms as the National Railroad Passenger
Corporation determines are fair, reasonable, and in the
public interest.
``(10) The American Passenger Railway Corporation shall
provide interline reservations services to any other provider
of intercity passenger rail transportation on the same basis
and at the same rates as those services were provided to the
operating entities that provide passenger rail service within
Amtrak as of the date of enactment of the Rail Passenger
Service Restructuring, Reauthorization, and Development Act.
``(b) Grant Recipient.--In this section, the term `grant
recipient' means--
``(1) Amtrak, until the date on which the American
Passenger Railway Corporation is established; and
``(2) the American Passenger Railway Corporation, after it
is established.''.
(b) Conforming Amendment.--The chapter analysis for chapter
243 is amended by inserting after the item relating to
section 24318 the following:

``24319. Limitations on availability of grants''.

SEC. 306. REPEAL OF OBSOLETE AND EXECUTED PROVISIONS OF LAW.

(a) In General.--The following sections are repealed:
(1) Section 24701.
(2) Section 24706.
(3) Section 24901.
(4) Section 24902.
(5) Section 24904.
(6) Section 24906.
(7) Section 24909.
(b) Amendment of Section 24305.--Section 24305 is amended--
(1) by striking paragraph (2) of subsection (a) and
redesignating paragraph (3) as paragraph (2); and
(2) by inserting ``With regard to items acquired with funds
provided by the Federal Government,'' before ``Amtrak'' in
subsection (f)(2).
(c) Conforming Amendments.--The chapter analyses for
chapters 243, 247, and 249 are amended, as appropriate, by
striking the items relating to sections 24307, 24701, 24706,
24901, 24902, 24904, 24906, 24908, and 24909.

SEC. 307. ESTABLISHMENT OF FINANCIAL ACCOUNTING SYSTEM.

(a) In General.--The Inspector General of the Department of
Transportation shall employ an independent financial
consultant--
(1) to assess Amtrak's financial accounting and reporting
system and practices as of the date of enactment of this Act;
(2) to design and assist the American Passenger Railway
Corporation 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 the American Passenger Railway Corporation 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 House of Representatives Committee on Transportation and
Infrastructure.
(c) Separate Financial Statements for Northeast Corridor
Infrastructure.--Beginning with fiscal year 2006, the
American Passenger Railway Corporation shall issue separate
financial statements for activities related to the
infrastructure of the Northeast Corridor.
(d) Authorization of Appropriations.--There are authorized
to be appropriated to the Secretary of Transportation
$2,500,000 for fiscal year 2005 to carry out subsection (a),
such sums to remain available until expended.

SEC. 308. RESTRUCTURING OF LONG-TERM DEBT AND CAPITAL LEASES.

(a) In General.--The Secretary of the Treasury, in
consultation with the Secretary of Transportation and Amtrak,
shall restructure Amtrak's indebtedness as of the date of
enactment of this Act.
(b) Debt Redemption.--The Secretary of Transportation, in
consultation with the Secretary of the Treasury, shall enter
into negotiations with the holders of Amtrak

[[Page S4042]]

debt, including leases, that is outstanding on the date of
enactment of this Act for the purpose of 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.
(c) 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.
(d) Early Redemption Plan.--Within 1 year after the date of
enactment of this Act, the Secretary of Transportation and
the Secretary of the Treasury shall transmit to the
Congress--
(1) a plan for the early redemption of Amtrak debt; and
(2) a proposal for covering the costs associated with the
early redemption.
(e) 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
(before the date, determined by the Secretary of
Transportation, on which the restructuring required by
section 24300 of title 49, United States Code, is completed)
and the American Passenger Railway Corporation (after that
date) for retirement of principal on loans for capital
equipment, or capital leases, not more than the following
amounts:
(A) For fiscal year 2005, $110,000,000.
(B) For fiscal year 2006, $115,000,000.
(C) For fiscal year 2007, $205,000,000.
(D) For fiscal year 2008, $165,000,000.
(E) For fiscal year 2009, $155,000,000.
(F) For fiscal year 2010, $150,000,000.
(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
(before the date, determined by the Secretary of
Transportation, on which the restructuring required by
section 24300 of title 49, United States Code, is completed)
and the American Passenger Railway Corporation (after that
date) for the payment of interest on loans for capital
equipment, or capital leases, the following amounts:
(A) For fiscal year 2005, $155,000,000.
(B) For fiscal year 2006, $150,000,000.
(C) For fiscal year 2007, $140,000,000.
(D) For fiscal year 2008, $130,000,000.
(E) For fiscal year 2009, $125,000,000.
(F) For fiscal year 2010, $115,000,000.
(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 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.
(g) Legal Effect of Payments under this Section.--The
payment of principal and interest secured debt with the
proceeds of grants under subsection (f) shall not--
(1) modify the extent or nature of any indebtedness of the
National Railroad Passenger Corporation to the United States
in existence of the date of enactment of this Act;
(2) change the private nature of Amtrak's or its
successors' liabilities; or
(3) imply any Federal guarantee or commitment to amortize
Amtrak's outstanding indebtedness.

SEC. 309. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated to the Secretary of
Transportation for the benefit of Amtrak for fiscal year 2005
$750,000,000 for operating expenses.
______

By Mr. GRASSLEY:
S. 2307. A bill to amend the Federal Food, Drug, and Cosmetic Act
with respect to the importation of prescription drugs by importers, and
by individuals for personal use, and for other purposes; to the
Committee on Finance.
Mr. GRASSLEY. Mr. President, I would like to pose a question to the
Chamber today.
What would you call it if Americans were paying up to 300 percent
more for the same product as consumers from other countries were
paying? Back in Iowa, we would call that ``highway robbery.'' Yet,
highway robbery is what is happening every day in this country, and it
is happening over prescription drugs.
Yes, prescription drugs are being sold at prices that are 30 to 300
percent higher in the United States than in places like Canada or
Europe.
Here are some examples.
The price in Canada of Nexium which is for heart burn and ulcers, is
about 40 percent of the price in the U.S. Nexium would cost about $120
for 28 20-milligram capsules if you bought it here in the States. If
you order the same Nexium from Canada, you'd pay about $51.
Here is another example: The price in Canada for Vioxx which is for
arthritis pain, is also about 40 percent of the price in the U.S. If
you purchased 30 12.5-milligram tablets in Canada, you would pay about
$36 and here in a U.S. pharmacy, you would pay about $86.
And why is that, Mr. President? The reason is the importation of
prescription drugs, those very same drugs that patients are using in
Canada, and Australia, and Japan, is illegal in this country. So
consumers in other countries get price breaks from the drug
manufacturers and the American public doesn't.
One way to look at this is that by paying those higher prices, the
American public is paying more than its fair share for the cost of
research and development for future new drugs. That is not fair.
This means when a new drug comes on the market, the American consumer
has paid for the research but consumers in other countries benefit from
the new therapy.
I have supported amendments to permit Canadian drug purchases before.
We have had numerous votes in this Chamber on legalizing importation.
We had a vote most recently during the Medicare debate.
Last year, the House overwhelmingly passed a drug reimportation bill
by a vote of 243 to 186. But, in the end, the conference report for the
Medicare bill watered down the possibility of legal importation such
that it was meaningless.
I was very disappointed about that. I think it was victory by
subterfuge for the pharmaceutical industry.
So, I decided to roll up my sleeves and go to work on drafting my own
bill that would address the problems surrounding importation. In fact,
I was working very closely since the beginning of the year with my
friend and colleague from Massachusetts, Senator Kennedy. We were
working together until 3 weeks ago to create a bipartisan piece of
legislation. We made a lot of progress. We still had some issues to
work out but we were very close to having a final agreement.
With my leadership on the Finance Committee, and Senator Kennedy's
leadership on the HELP Committee, let alone his expertise on the Food,
Drug, and Cosmetics Act, I figured we had a good shot at getting
something done.
Our discussions certainly created a lot of buzz around town. I had
reporters and all manner of interest groups asking me and my staff
about the bill and when we would introduce it. But those discussions
have since evaporated. Apparently, the Democratic caucus was concerned
that things were moving too quickly or that too much momentum was
building behind a bipartisan effort. What I do know is that our
bipartisan product was no longer the priority.
I was disappointed about that too. Senator Kennedy and I work well
together. In fact, we are joining forces even now to get the Family
Opportunity Act to the floor and passed out of the Senate.
You can understand why I was discouraged to learn that Senator
Daschle had determined lowering the costs of prescription drugs through
importation was going to be a partisan issue.
Members can understand why I was discouraged to learn that Senator
Daschle determined lowering the cost of prescription drugs through
importation was going to be a partisan issue. This reminded me of what
happened in the year 2002 with the Medicare prescription drug debate.
There, too, Senator Daschle became concerned that the Finance
Committee--then chaired by my friend, Senator Baucus--would report a
bipartisan prescription drug benefit for seniors.
Senator Daschle, in 2002, as the majority leader, bypassed the
Finance Committee and took the prescription drug bill straight to the
floor. That is not how we get legislation passed in the Senate, and
everyone around here knows it. As I say so often to my colleagues,
nothing gets done in the Senate if it is not bipartisan or at least
somewhat bipartisan.
In the year 2002, it resulted in a very partisan debate in the Senate
over

[[Page S4043]]

competing Medicare drug benefit proposals. There were multiple partisan
proposals by the Senator from Florida, Mr. Graham. I had a proposal
supported by both Republicans and Democrats. The Democratic caucus
fought our bill, which was dubbed the tripartisan bill because one of
the key authors, Senator Jeffords from Vermont, sits in the body as an
Independent.
What happened in the final analysis in 2002? The Senate did not pass
a Medicare drug benefit proposal that year. The debate fell apart in
partisan bickering in the Senate. That happened because partisan
politics intervened to prevent a bipartisan compromise.
It looks to me that this is what is happening now on the issue of the
importation of drugs into the United States to help our seniors. When
we go to the pharmacist to pick up a prescription, I don't remember the
pharmacist asking if you are a Republican or a Democrat. When you pay
your health insurance premium, I don't think the insurance company
looks for an ``R'' or a ``D'' by your name before they accept your
payment.
No, I don't see the importation of drugs as a partisan issue. Being
forced to pay higher prescription prices because there is a lack of
competition in the global pharmaceutical industry is not a partisan
issue. That is why I decided to move ahead and introduce the bill I am
introducing today.
This bill I am introducing today in a large degree is the bill on
which I worked very closely with Senator Kennedy when our efforts got
superseded by the Democratic caucus. I made a few changes, but this
bill is basically what Senator Kennedy and I were working on together
before partisan politics got in the way. I thought what we had was a
good proposal. We were close to having all the details worked out. I am
going ahead and introducing that bill today by myself.
Let me explain the bill. Quite simply, it would legalize immediately
the importation of prescription drugs from Canada. After 2 years,
consumers would be able to order their drugs from other countries, as
well. It creates a practical and safe system to do it.
Today the law prohibits the importation of prescription drugs until
the Secretary of Health and Human Services certifies that importation
can be done safely. Under current resources and under current
authority, the Food and Drug Administration has not been able to
provide such assurance on the safety of drugs coming in from other
countries. We have had Health and Human Service Secretaries in both the
Clinton administration and the Bush administration. This is not
Republicans protecting pharmaceuticals, if you want to look at it this
way. It is both Democrat Presidents and Republican Presidents making a
decision that the certification and safety of drug importation was not
legally permitted.
Even though the law says you can import drugs, because of the lack of
certification, they cannot come into the country. More and more people
have been getting prescriptions filled in Canada, regardless of what
the law says. Technically, that is illegal today.
The Food and Drug Administration and our customs officials have been
looking the other way. The Food and Drug Administration has said there
are serious safety issues with drug importation from other countries.
They say this because no public health authority is overseeing many of
the prescriptions coming in from other countries. In fact, the Canadian
Government has said it will not take responsibility for assuring the
safety of drugs being shipped to the United States from Canada. They
have basically told the U.S. consumer: You are on your own from the
standpoint of safety--I suppose, as far as the Food and Drug
Administration, efficacy as well as safety.
Today, importation is no longer limited to organized bus trips across
the border to pharmacies in Canada. Instead, it is becoming a booming
mail-order pharmacy operation with customers all over the United
States. We see press accounts on a regular basis describing Americans
who log on to the Internet to purchase drugs from Canada and elsewhere.

The Permanent Subcommittee on Investigations of the Senate Committee
on Governmental Affairs conducted an investigation into drug
importation. They found about 40,000 parcels containing prescription
drugs come through JFK Airport every day. JFK Airport houses the
largest international mail branch in the United States. From Miami,
30,000 packages of drugs come into the United States; 20,000 packages
come into Chicago each day of the year. About 28 percent of the drugs
coming in are controlled substances. These are addictive drugs that
require close supervision from physicians.
From where are most of these drugs coming? I was surprised to hear it
was not only Canada, but also Brazil, India, Pakistan, the Netherlands,
Spain, Portugal, Mexico, and Romania.
My bill immediately halts unsafe importation from rogue operators but
permits individuals to obtain prescriptions from licensed Canadian
pharmacies on an interim basis while the Food and Drug Administration
gets a new drug importation system up and it runs well.
The American public is tired of waiting for the Federal Government to
take action to legalize importation and to assure the safety of
imported drugs. Under my bill, the Food and Drug Administration is
required to issue final regulations for the new drug importation system
within 90 days of enactment. Under the new importation system,
individuals and pharmacies could purchase qualified drugs for import
into the United States from foreign exporters that register with the
Food and Drug Administration. To be registered, the foreign exporters
must demonstrate compliance with safety measures, must submit to the
jurisdiction of U.S. courts, and take other steps to assure the safety
of imported drugs.
A user fee charged to registered exporters would provide the
financing needed for the Food and Drug Administration to register and
oversee foreign drug exporters and assure the state of imported drugs.
The drugmakers do not want to see their lower priced products from
other countries coming into the United States. That is certain because
the present laws do not permit this competition to them. They would say
it undermines their profits here. They will want to do everything they
can to stop drug importation.
Even though this bill might pass, these companies will find some way
to keep these drugs out of the country. So I have to deal with that
fact in this legislation.
So under my bill, drugmakers that take steps to prevent importation
of their products from these registered drug importers will lose their
tax deduction for their advertising costs.
Now, that is going to upset the trade associations that deal with
advertising. That is going to upset TV and newspapers and magazines
that get a lot of money from advertising. I have had a long history of
supporting the deductibility of advertising expenses as a legitimate
business expense. I have not changed my mind in regard to that, not at
all. In fact, I have a history of voting against amendments that are
offered on the floor of the Senate that would make advertising not
deductible.
But we are not talking about not allowing the deductibility of
advertising costs. Only if a company tries to do something illegal and
keep drugs from coming in from out of this country, then they will pay
the penalty of not having their advertising costs deducted. But I
assume, when we pass this bill, these drug companies are going to abide
by this law. There will not be one cent of advertising that cannot be
deducted as a legitimate expense, so I do not want the advertising
fraternity to get upset with this legislation, when I have been a
backer of the legitimate writeoff of advertising expenses.
Now, this not only has the stick that I just described, but we have a
carrot as well, to encourage companies to abide by this law and not try
to keep imported drugs from coming into this country by some sort of
requirement they would put on supplies outside the country not to ship
drugs into this country; and that is, they will get a 20-percent
benefit--a 20-percent benefit--by having an increase in their R&D tax
credit.

I am going to discuss that further, but going back to the advertising
costs, I do sense, from my people in Iowa--at every town meeting some
person complains about the advertising of

[[Page S4044]]

drugs on TV. I defend the advertising of drugs on TV because that is
commercial free speech. I think our citizenry ought to be as educated
about drugs as they can be, so they are not beholden to their own
doctor or doctors for what might be applied. I think we ought to have
an educated patient group, so this advertising is very good. But I
still have to say that my Iowa constituents are pretty fed up with all
those drug ads they see on TV, and how they are probably adding to the
cost of prescription drugs.
I am fully in favor of this free speech, and I do not, in any way,
want to prohibit companies from running the ads they want to run. But
if drug companies are not going to allow U.S. consumers to have access
to these lower prices in other countries, then, under this legislation,
they would lose the tax deduction for the cost of those advertisements.
Now, on the other hand, I said there is a carrot out there. The
drugmakers complain to us that these lower prices might take money from
research and development. They would rightly say: Where are we going to
get the money to have the next generation of ``magic'' drugs that we
have? We want that to happen, because when I buy a drug today, my
mother or grandmother, when they bought pills, paid for that research
for the generation of drugs I take. I want my children and
grandchildren to have a new generation of drugs for the future. So we
do not want to hurt research and development.
So my bill, then, creates an incentive for drug companies that do not
fight this importation of drugs. Companies that do not prevent
importation from registered exporters will get a 20-percent increase in
their R&D tax credit. I hope everybody will think that is very fair.
I have a more detailed summary of this bill that I am going to put in
the Record. I ask unanimous consent that this summary and a question
and answer document be printed in the Record following my statement.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. GRASSLEY. I believe that free trade principles argue in favor of
permitting the importation from Canada and perhaps from other developed
countries as long as we can implement a system for safe importation.
Today, there is no assurance of safety--no one is watching the
store--and products are coming in from all over the world.
My legislation has two objectives. First, it will put an immediate
end to the unregulated and unsafe situations of drug imports that we
have today by default. This is key because the situation today
threatens the safety of our Nation's drug supply and puts patients who
obtain these drugs at risk of harm.
Second, the legislation will provide the Food and Drug Administration
with the resources and authority to ensure the safety of imported
drugs, and importation will only be permitted by registered exporters
who submit to the Food and Drug Administration authority.
Now, this bill will get referred to the Finance Committee because it
has tax provisions in it, but the bulk of my bill falls under the
jurisdiction of the HELP Committee, and my friend, Senator Gregg, as
chairman of that committee, has announced he will hold a markup this
year on a drug importation bill.
I do not intend to assert jurisdiction over this proposal, and I
believe we should rely upon that regular committee process to work.
That is how we get legislation passed in the Senate. Because that is
where bipartisanship is formulated, at the committee level.
I hope my colleagues will look at this bill. I wanted to get these
ideas out here for discussion. I hope some of my colleagues will want
to cosponsor this bill. It is time we got this done, and this is the
year to get it done, particularly following upon the vote that was in
the House of Representatives last year.
We must not let partisan politics get in the way, and I think it is
getting a little bit in the way right now. I hope we overcome that. I
hope I am able to develop a relationship with Democrats, once again, to
work on this bill in a bipartisan way. If we do not do this, I think
there is going to be a penalty paid at the ballot box in November.
The American consumers are waiting. Let's get the job done.
I ask unanimous consent that a summary be printed in the Record.
There being no objection, the summary was ordered to be printed in
the Record, as follows:

Exhibit 1

Overview of Key Elements

Legalizes reimportation (or importation) of prescription
drugs from FDA approved exporters. To be approved, registered
exporters must agree to meet safety requirements and to
permit FDA inspectors on their premises full time to ensure
compliance.
Creates a ``fast-track'' regulatory process for FDA to
implement the importation system quickly.
Importation of qualified prescription drugs from Canada is
immediately legalized while the new importation system is
developed and implemented by FDA.
Under the new system, individuals, pharmacies, and drug
wholesalers are permitted to legally import prescription
drugs from registered foreign exporters:
Individuals may order drugs from a registered exporter
pursuant to a valid prescription issued by a U.S. doctor and
filled by a pharmacist whose licensing requirements are
equivalent to those required in the U.S. or by a dispensing
pharmacist duly licensed by a state.
Commercial shipments are permitted only to licensed
pharmacists for resale directly to consumers and by drug
wholesalers who can sell to pharmacies as they do today.
Drugs imported to U.S. pharmacies and drug wholesalers must
be FDA approved drugs produced in the United States or in FDA
inspected manufacturing facilities in other counties. FDA is
required to provide the proper labeling for drugs for
importation.
The FDA through its inspectors is responsible for tracing
all drugs exported to the U.S. back to their original
manufacturing plant and ensuring that they have been stored
and transported safely from that plant.
Individuals may also purchase drugs that are bioequivalent
to FDA-approved brand name drugs that are produced by the
same brand-name manufacturer.
These drugs are drugs not technically approved by the FDA
but the foreign government has approved the drug and that
drug has the same active ingredient or ingredients as the
FDA-approved drug and the same route of administration,
dosage form, and strength.
If a drug manufacturer believes, however, that the non-FDA
approved drug is not bioequivalent to the FDA approved drug,
then it must submit a petition to the FDA to show that (a)
the differences result in a product that is not bioequivalent
to the drug approved in the U.S., and (b) that such
differences are due to scientifically and legally valid
differences in the regulatory requirements of the U.S. and
the country(ies) in which the apparently similar drug is
marketed. The manufacturer is required to pay a user fee
sufficient to cover the cost of the FDA's review of the
petition and supporting documentation.
A User Fee charged to registered exporters provides the
financing to provide the resources to FDA to ensure the
safety of imported drugs.
User fees charged to registered exporters would be
sufficient to cover all costs including those incurred for
inspection and verification within the United States, at the
exporter's premises and any other location where the drugs
have been stored prior to entry into the U.S.
The FDA would be required to verify the source and inspect
the intermediate handlers of all drugs intended for export
into the United States.
FDA would also be required to determine by a statistically
significant sample that the recipients held valid
prescriptions (individuals ordering 90-day supply or less) or
verify that recipient was a licensed pharmacy that only
dispensed drugs to individuals.
The FDA would also be required to supply valid U.S.
labeling upon request of the registered exporter and affix or
supervise the affixing of seals, markings or tracking
technology that would inform border personnel that such
imports were lawful to be entered as labeled.
Drugs not permitted for importation include controlled
substances and certain other drugs not appropriate for
importation because of storage, significant safety concerns,
or drugs that are more likely to be counterfeited.
Provisions to Protect Safety of the Public
Unauthorized imports would be treated as contraband and
would be seized and destroyed upon entry without notice.
For the first two years, importation would be limited to
Canada. The Department of Health and Human Services would
submit a report to Congress in the second year, and unless
Congress changed the law, countries from which importation is
permitted would be expanded to include, the European Union,
the European Free Trade Association, Japan, Australia, and
New Zealand. Other countries meeting statutory criteria could
also be added to the list by the Secretary.
The legislation continues to prohibit the import or
reimport of drugs supplied free or at nominal cost to
charitable or humanitarian organizations including the United

[[Page S4045]]

Nations or a government of a foreign country.
Requires pedigrees from the manufacturer to the dispensing
pharmacist for all prescription drugs sold within the U.S. or
to an exporter authorized to export drugs into the U.S.
Requires the automatic suspension of an exporter's
registration for any attempted entry of non-qualified or
unsafe drugs with restricted ability to seek re-instatement
in the future.
Requires that registered exporters submit to the
jurisdiction of the U.S. federal court system and provides a
mechanism for civil actions against the property of persons
that import non-qualified drugs.
Repeals the provision in the Controlled Substances Act that
permits the personal import of scheduled drugs, which is a
significant source of illegal drug trade in the U.S.
Tax Incentives for Manufacturers to Facilitate Reimportation
Incentive To Not Prevent Reimportation: Manufacturers that
do not take any action, directly or indirectly, to prevent
reimportation receive a 20% increase in R&D tax credit for
that year.
Penalty For Preventing Reimportation: Manufacturers that
take any action, directly or indirectly, to prevent
authorized reimportation lose the business expense deduction
for advertising expenses.

Questions and Answers about the Bill

Question. What are the goals of the legislation?
Answer. The legislation has two objectives. First, it would
put an immediate end to the unregulated and unsafe situation
with drug imports that exists today. Second, the legislation
would provide the Food and Drug Administration (FDA) with the
resources and authority to ensure the safety of imported
drugs.
Question. How does the bill work?
Answer. Current law prohibits the importation of
prescription drugs until the Secretary of Health and Human
Services (HHS) certifies that importation can be done safely.
Using current resources and authority, the FDA has not been
able to provide an assurance of safety of imported drugs.
The bill immediately halts unsafe importation but permits
individuals to obtain prescriptions from Canadian pharmacies
on an interim basis while FDA gets the new drug importation
system up and running.
Under the bill, the FDA is required to issue final
regulations for the new system within 90 days of enactment.
Under the new importation system, individuals, pharmacies,
and drug wholesalers could purchase qualified drugs for
import into the U.S. from foreign exporters that register
with the FDA. To obtain a registration, a foreign exporter
must demonstrate compliance with safety measures, must submit
to jurisdiction of U.S. courts, and take others steps to
assure safety of imported drugs. A user fee charged to
registered exporters would provide the financing needed for
FDA to register and oversee foreign drug exporters and ensure
the safety of imported drugs.
Question. How will patients get their prescriptions filled
at an overseas drug exporter?
Answer. First of all, consumers that want to have their
prescriptions filled at an overseas prescription drug
exporter will be able to go to the FDA website and find a
list of companies that have passed FDA's requirements to
become a registered exporter. Just as for filling a
prescription in the U.S. today, the patient must have a valid
prescription written by a health care professional licensed
in a state to prescribe drugs. The patient will then compare
drug prices at the different registered exporters to find the
best price available. To get the prescription filled, the
patient will have to contact that exporter and either mail or
fax the prescription to them.
Alternatively, the registered exporter could call the
patient's prescriber and get the prescription over the phone.
This is the same process as mail order pharmacies in the U.S.
use today.
A pharmacist at the registered exporter would fill the
prescription according to the prescriber's instructions. The
registered exporter may only fill the prescription with
brand-name drugs, meaning these are the same drugs as those
approved by the FDA and manufactured by the same company as
approved by the FDA for sale in the U.S.
Individuals can also have a prescription filled that is
technically not an FDA-approved drug, but the drug has the
same active ingredients, dosage form, strength, and route of
administration as the FDA-approved drug and is made by the
same manufacturer as the FDA-approved drug. These drugs are
manufactured by the same brand-name manufacturer and are made
for sale in the market of the approved country.
The registered exporter is required to verify that the drug
can be traced back to the original manufacturer and the drug
must have been stored and handled properly. The FDA, through
its on-site inspectors, will also be verifying that the
prescription drugs being dispensed to patients meet FDA's
criteria.
Once the prescription is filled, the registered exporter
will place a label or other markings on the package for
shipping that identify the shipment as being in compliance
with FDA's safety requirements and all registration
conditions. These markings will be designed by FDA and may
include track-and-trace technologies and anti-counterfeiting
measures. When the package enters the U.S., that marking will
signify to Customs officials that the product was dispensed
from a registered exporter and can therefore be permitted to
enter the country. Packages with drugs that lack this marking
will be seized by Customs and destroyed.
Question. Can the importation of prescription drugs from
other countries be expanded?
Answer. Yes. In the second year of the importation program,
HHS would be required to submit a report to Congress on the
safety of the program and its impact on trade. Unless
Congress acted, the program would be expanded in year three
to include importation from the European Union, the European
Free Trade Association, Japan, Australia and New Zealand.
Other countries that meet specific statutory criteria may
also be added to the list.
Question. What is the complete list of countries that would
be permitted in the third year of the program?
Answer. There are currently 15 members of the European
Union: Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden,
The Netherlands, and the United Kingdom. Beginning on May 1,
2004, there will be 10 new member states in the European
Union: Cyprus, Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Malta, Poland, Slovakia, and Slovenia. There are 4
member countries in the European Free Trade Association:
Iceland, Liechtenstein, Norway, and Switzerland.
Question. How much does this program cost?
Answer. The infrastructure needed to guarantee the safety
of the imported prescriptions would be financed through user
fees. User fees would be paid by registered exporters, which
could be the overseas pharmacies or prescription drug
wholesalers, for example. Congressional Budget Office has not
yet officially scored the bill.
Question. Now that the bill is introduced, what comes next?
Answer. Because the bill contains tax provisions, it has
been referred to the Finance Committee. Senate leadership has
expressed an interest in developing legislation this year to
allow the importation of prescription drugs. Because the bulk
of the legislation falls within the jurisdiction of the
Health, Education, Labor & Pensions (HELP) Committee, it is
expected that HELP will take the lead in reporting any
legislation.
Question. How is this bill different than other legislation
on importation?
Answer. While the idea of importation of prescription drugs
from foreign countries enjoys broad bipartisan support, the
issue of safety continues to remain a major barrier to
allowing importation to move forward. Secretaries of HHS from
both the Clinton and Bush Administrations have determined
that safe importation of prescription drugs cannot be
guaranteed with the authority and resources the FDA has
today. Many bills presume that importation is safe and that
FDA and the public should not be overly alarmed. However,
there is a legitimate concern about unsafe pharmaceuticals
entering the U.S. every day. Hundreds of thousands of
packages enter our country on a daily basis, with little or
no ability for the U.S. Customs Service or the FDA to
guarantee these drugs are safe and effective. Rather than
ignore the safety issue, this bill responds to the concerns
raised by FDA and others and creates a way to ensure safe
access to lower cost prescriptions.
Question. How does this bill lower the costs of
prescription drugs Americans have to pay?
Answer. United States consumers pay 30 to 300 percent more
for their prescriptions drugs than those in other countries.
Drug manufacturers are forced to sell their products at lower
prices in other countries and try to re-coup their profits by
making Americans pay higher prices for the same products.
This bill recognizes that competition in the global
marketplace can work to lower prescription drug costs. If
lower cost pharmaceuticals are made available to Americans,
drug companies will be forced to re-think their pricing
strategy and won't be able to gouge consumers in the United
States.
Question. What mechanisms does the bill propose to
guarantee safety?
Answer. The bill would allow importation of qualified drugs
only from registered exporters, whose actions will be held
accountable in U.S. Federal courts.
Registered exporters must have an FDA-approved compliance
plan that demonstrates they are meeting the safety
requirements established in the bill or by FDA. Exporters
must permit FDA inspectors to be present onsite on a
continuous day-to-day basis and FDA is required to have
assigned inspectors to that exporter. FDA will conduct day-
to-day onsite monitoring of the exporter at the place of
business for the exporter including any warehouses owned or
operated by the exporter and FDA will have access to inspect
the exporters records to ensure compliance. Only where an
exporter has demonstrated a track record of compliance will
FDA be permitted to perform periodic inspections. The FDA
must verify the chain of custody for each qualifying drug
from the manufacturer of the drug to the exporter.
Only licensed pharmacists at the registered exporter will
be allowed to dispense prescriptions with a valid U.S.
prescription from a U.S. physician. Commercial shipments can
only be received and resold by licensed pharmacists.
Unauthorized imports

[[Page S4046]]

would be treated as contraband and would be seized and
destroyed upon entry without notice. Under the bill, an
exporter's registration would automatically be suspended for
any attempted entry of non-qualified or unsafe drugs and
these exporters can be barred from seeking re-instatement in
the future. The bill would allow for importation first from
Canada in order to test the safety of the system and
determine whether additional controls are needed before
expansion to additional counties.
Question. How does the bill prevent drug manufacturers from
gaming the system?
Answer. Drug manufacturers that take any action, directly
or indirectly, to prevent authorized importation will see a
loss of their tax deduction for advertising expenses. Drug
manufacturers that do NOT take action, directly or
indirectly, to prevent importation will see a 20 percent
increase in their research and development tax credit for
that year.
______

By Mr. CORZINE (for himself, Mr. Reed, Mr. Bingaman, Mr.
Lautenberg, and Ms. Cantwell):
S. 2308. A bill to provide for prompt payment and interest on late
payments of health care claims; to the Committee on Health, Education,
Labor, and Pensions.
Mr. CORZINE. Mr. President, I rise today to introduce legislation to
ensure that managed care plans and other private health insurers pay
health care claims in a timely fashion. I thank my colleagues Senators
Lautenberg, Reed, Bingaman and Cantwell for joining me in introducing
this bill.
This legislation seeks to address the very serious backlog of HMO
payments that hospitals and physicians are facing in my State of New
Jersey and across the country. Specifically, the legislation requires
private health plans to pay manually filed claims within 30 days and
electronically filed claims within 14 days. Insurers that fail to meet
these time frames would be required to pay interest for every day the
claims went unpaid. Insurers that knowingly violate these prompt
payment requirements would be subject to monetary penalties.
A Federal prompt pay law is critical to ensuring that our health care
providers maintain adequate cash flows and are able to continue
functioning. The need for such a law cannot be understated. In my State
of New Jersey, almost half of all hospitals are operating in the red,
and that number is growing. Physicians and hospitals are experiencing a
severe medical malpractice crisis, which is further limiting their
resources. Untimely payment of claims has only compounded this problem.
According to a survey of 50 New Jersey hospitals, only 39 percent of
manually-filed clean claims are paid within 40 days. These institutions
cannot afford to wait indefinitely for reimbursement for services they
have provided. Each year, hundreds of millions of dollars in HMO
payments to hospitals are held up for months at a time, worsening
provider fiscal woes.
The problem of late payments has reached such a crisis that 47
States, including New Jersey, have enacted ``prompt pay'' laws to
require insurers to pay their bills within a specific time frame.
Unfortunately, New Jersey's law, like most similar State laws, is
largely ineffective because it lacks strong enforcement provisions and
offers no incentives for private insurers to comply. Furthermore, State
prompt-pay laws only apply to non-ERISA regulated plans, which only
cover approximately 50 percent of New Jersey insureds.
Shouldn't we hold private insurers to the same standards that regular
citizens must adhere to? If you don't pay your health insurance premium
when it's due, the company will simply cancel your policy. If you're
late making your credit care payments, your credit care company charges
you interest. Why shouldn't private health insurers also be penalized
for making late payments?
In my view, it only makes sense to hold insurance companies to the
same type of standards to which we hold Medicare. Medicare must pay
claims within thirty days of receiving them. Why should private
insurers be immune from any such time limits?
The bottom line is that patients, hospitals and other health care
providers should not have to shoulder the burden of unpaid claims. My
legislation will ensure that private insurers assume the financial
responsibilities for the health coverage they are being paid to
provide.
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. 2308

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 ``Prompt Payment of Health
Benefits Claims Act of 2004''.

SEC. 2. AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974.

(a) In General.--Subpart B of part 7 of subtitle B of title
I of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1185 et seq.) is amended by adding at the end the
following:

``SEC. 714. PROMPT PAYMENT OF HEALTH BENEFITS CLAIMS.

``(a) Timeframe for Payment of Complete Claim.--A group
health plan, and a health insurance issuer offering group
health insurance coverage in connection with a group health
plan, shall pay all complete claims and uncontested claims--
``(1) in the case of a claim that is submitted
electronically, within 14 days of the date on which the claim
is submitted; or
``(2) in the case of a claim that is not submitted
electronically, within 30 days of the date on which the claim
is submitted.
``(b) Procedures Involving Submitted Claims.--
``(1) In general.--Not later than 10 days after the date on
which a complete claim is submitted, a group health plan, and
a health insurance issuer offering group health insurance
coverage in connection with a group health plan, shall
provide the claimant with a notice that acknowledges receipt
of the claim by the plan or issuer. Such notice shall be
considered to have been provided on the date on which the
notice is mailed or electronically transferred.
``(2) Claim deemed to be complete.--A claim is deemed to be
a complete claim under this section if the group health plan
or health insurance issuer involved does not provide notice
to the claimant of any deficiency in the claim within 10 days
of the date on which the claim is submitted.
``(3) Incomplete claims.--
``(A) In general.--If a group health plan or health
insurance issuer determines that a claim for health care
expenses is incomplete, the plan or issuer shall, not later
than the end of the period described in paragraph (2), notify
the claimant of such determination. Such notification shall
specify all deficiencies in the claim and shall list all
additional information or documents necessary for the proper
processing and payment of the claim.
``(B) Determination after submission of additional
information.--A claim is deemed to be a complete claim under
this paragraph if the group health plan or health insurance
issuer involved does not provide notice to the claimant of
any deficiency in the claim within 10 days of the date on
which additional information is received pursuant to
subparagraph (A).
``(C) Payment of uncontested portion of a claim.--A group
health plan or health insurance issuer shall pay any
uncontested portion of a claim in accordance with subsection
(a).
``(3) Obligation to pay.--A claim for health care expenses
that is not paid or contested by a group health plan or
health insurance issuer within the timeframes set forth in
this subsection shall be deemed to be a complete claim and
paid by the plan or issuer in accordance with subsection (a).
``(c) Date of payment of Claim.--Payment of a complete
claim under this section is considered to have been made on
the date on which full payment is received by the health care
provider.
``(d) Interest Schedule.--
``(1) In general.--With respect to a complete claim, a
group health plan or health insurance issuer that fails to
comply with subsection (a) shall pay the claimant interest on
the amount of such claim, from the date on which such payment
was due as provided in this section, at the following rates:
``(A) 1\1/2\ percent per month from the 1st day of
nonpayment after payment is due through the 15th day of such
nonpayment;
``(B) 2 percent per month from the 16th day of such
nonpayment through the 45th day of such nonpayment; and
``(C) 2\1/2\ percent per month after the 46th day of such
nonpayment.
``(2) Contested claims.--With respect to claims for health
care expenses that are contested by the plan or issuer, once
such claim is deemed complete under subsection (b), the
interest rate applicable for noncompliance under this
subsection shall apply consistent with paragraphs (1) and
(2).
``(e) Private Right of Action.--Nothing in this section
shall be construed to prohibit or limit a claim or action not
covered by the subject matter of this section that any
claimant has against a group health plan, or a health
insurance issuer.
``(f) Anti-Retaliation.--Consistent with applicable Federal
or State law, a group health plan or health insurance issuer
shall not retaliate against a claimant for exercising a right
of action under this section.
``(g) Fines and Penalties.--
``(1) Fines.--

[[Page S4047]]

``(A) In general.--If a group health plan or health
insurance issuer offering group health insurance coverage,
willfully and knowingly violates this section or has a
pattern of repeated violations of this section, the Secretary
shall impose a fine not to exceed $1,000 per claim for each
day a response is delinquent beyond the date on which such
response is required under this section.
``(B) Repeated violations.--If 3 separate fines under
subparagraph (A) are levied within a 5-year period, the
Secretary is authorized to impose a penalty in an amount not
to exceed $10,000 per claim.
``(2) Remedial Action Plan.--Where it is established that
the group health plan or health insurance issuer willfully
and knowingly violated this section or has a pattern of
repeated violations, the Secretary shall require the group
health plan or health insurance issuer to--
``(A) submit a remedial action plan to the Secretary; and
``(B) contact claimants regarding the delays in the
processing of claims and inform claimants of steps being
taken to improve such delays.
``(h) Definitions.--In this section:
``(1) Claimant.--The term `claimant' means a participant,
beneficiary or health care provider submitting a claim for
payment of health care expenses.
``(2) Complete claim.--The term `complete claim' is a claim
for payment of covered health care expenses that--
``(A) in the case of a claim involving a health care
provider that is an institution or other facility or agency
that provides health care services, is a properly completed
billing instrument that consists of--
``(i) the Health Care Financing Administration 1450 (UB-92)
paper form, or its successor, as adopted by the NUBC, with
data element usage consistent with the usage prescribed in
the UB-92 National Uniform Billing Data Elements
Specification Manual, and, for claims submitted before
October 1, 2002, any State-designated data requirements that
are determined and approved by the State uniform billing
committee of the State in which the health care service or
supply is furnished; or
``(ii) the electronic format for institutional claims (and
accompanying implementation guide) adopted as a standard by
the Secretary of Health and Human Services pursuant to
section 1173 of the Social Security Act (42 U.S.C. 1320d-2);
and
``(B) in the case of claim involving a health care provider
that is a physician or other individual who is licensed,
accredited, or certified under State law to provide specified
health care services, is a properly completed billing
instrument that--
``(i) the Health Care Financing Administration 1500 paper
form, or its successor, as adopted by the NUCC and further
defined by data element specifications contained in the NUCC
implementation guide or, if such specifications are not
issued by the NUCC, the data element specifications contained
in the Medicare Carriers Manual Part 4 (HCFA-Pub 14-4)
sections 2010.1 through 2010.4; or
``(ii) the electronic format for professional claims (and
accompanying implementation guide) adopted as a standard by
the Secretary of Health and Human Services pursuant to
section 1173 of the Social Security Act (42 U.S.C. 1320d-2).
``(3) Contested claim.--The term `contested claim' means a
claim for health care expenses that is denied by a group
health plan or health insurance issuer during or after the
benefit determination process.
``(4) Health care provider.--The term `health care
provider' includes a physician or other individual who is
licensed, accredited, or certified under State law to provide
specified health care services and who is operating with the
scope of such licensure, accreditation, or certification, as
well as an institution or other facility or agency that
provides health care services and is licensed, accredited, or
certified to provide health care items and services under
applicable State law.
``(5) Incomplete claim.--The term `incomplete claim' means
a claim for health care expenses that cannot be adjudicated
because it fails to include all of the required data elements
necessary for adjudication.
``(6) NUBC.--The term `NUBC' means the National Uniform
Billing Committee.
``(7) NUCC.--The term `NUCC' means the National Uniform
Claim Committee.''.

SEC. 3. AMENDMENTS TO THE PUBLIC HEALTH SERVICE ACT.

(a) Group Market.--Subpart 2 of part A of title XXVII of
the Public Health Service Act (42 U.S.C. 300gg-4 et seq.) is
amended by adding at the end the following:

``SEC. 2707. PROMPT PAYMENT OF HEALTH BENEFITS CLAIMS.

``(a) Timeframe for Payment of Complete Claim.--A group
health plan, and a health insurance issuer offering group
health insurance coverage in connection with a group health
plan, shall pay all complete claims and uncontested claims--
``(1) in the case of a claim that is submitted
electronically, within 14 days of the date on which the claim
is submitted; or
``(2) in the case of a claim that is not submitted
electronically, within 30 days of the date on which the claim
is submitted.
``(b) Procedures Involving Submitted Claims.--
``(1) In general.--Not later than 10 days after the date on
which a complete claim is submitted, a group health plan, and
a health insurance issuer offering group health insurance
coverage in connection with a group health plan, shall
provide the claimant with a notice that acknowledges receipt
of the claim by the plan or issuer. Such notice shall be
considered to have been provided on the date on which the
notice is mailed or electronically transferred.
``(2) Claim deemed to be complete.--A claim is deemed to be
a complete claim under this section if the group health plan
or health insurance issuer involved does not provide notice
to the claimant of any deficiency in the claim within 10 days
of the date on which the claim is submitted.
``(3) Incomplete claims.--
``(A) In general.--If a group health plan or health
insurance issuer determines that a claim for health care
expenses is incomplete, the plan or issuer shall, not later
than the end of the period described in paragraph (2), notify
the claimant of such determination. Such notification shall
specify all deficiencies in the claim and shall list all
additional information or documents necessary for the proper
processing and payment of the claim.
``(B) Determination after submission of additional
information.--A claim is deemed to be a complete claim under
this paragraph if the group health plan or health insurance
issuer involved does not provide notice to the claimant of
any deficiency in the claim within 10 days of the date on
which the additional information is received pursuant to
subparagraph (A).
``(C) Payment of uncontested portion of a claim.--A group
health plan or health insurance issuer shall pay any
uncontested portion of a claim in accordance with subsection
(a).
``(3) Obligation to pay.--A claim for health care expenses
that is not paid or contested by a group health plan or
health insurance issuer within the timeframes set forth in
this subsection shall be deemed to be a complete claim and
paid by the plan or issuer in accordance with subsection (a).
``(c) Date of payment of Claim.--Payment of a complete
claim under this section is considered to have been made on
the date on which full payment is received by the health care
provider.
``(d) Interest Schedule.--
``(1) In general.--With respect to a complete claim, a
group health plan or health insurance issuer that fails to
comply with subsection (a) shall pay the claimant interest on
the amount of such claim, from the date on which such payment
was due as provided in this section, at the following rates:
``(A) 1\1/2\ percent per month from the 1st day of
nonpayment after payment is due through the 15th day of such
nonpayment;
``(B) 2 percent per month from the 16th day of such
nonpayment through the 45th day of such nonpayment; and
``(C) 2\1/2\ percent per month after the 46th day of such
nonpayment.
``(2) Contested claims.--With respect to claims for health
care expenses that are contested by the plan or issuer, once
such claim is deemed complete under subsection (b), the
interest rate applicable for noncompliance under this
subsection shall apply consistent with paragraphs (1) and
(2).
``(e) Private Right of Action.--Nothing in this section
shall be construed to prohibit or limit a claim or action not
covered by the subject matter of this section that any
claimant has against a group health plan, or a health
insurance issuer.
``(f) Anti-Retaliation.--Consistent with applicable Federal
or State law, a group health plan or health insurance issuer
shall not retaliate against a claimant for exercising a right
of action under this section.
``(g) Fines and Penalties.--
``(1) Fines.--
``(A) In general.--If a group health plan or health
insurance issuer offering group health insurance coverage
willfully and knowingly violates this section or has a
pattern of repeated violations of this section, the Secretary
shall impose a fine not to exceed $1,000 per claim for each
day a response is delinquent beyond the date on which such
response is required under this section.
``(B) Repeated violations.--If 3 separate fines under
subparagraph (A) are levied within a 5-year period, the
Secretary is authorized to impose a penalty in an amount not
to exceed $10,000 per claim.
``(2) Remedial Action Plan.--Where it is established that
the group health plan or health insurance issuer willfully
and knowingly violated this section or has a pattern of
repeated violations, the Secretary shall require the health
plan or health insurance issuer to--
``(A) submit a remedial action plan to the Secretary; and
``(B) contact claimants regarding the delays in the
processing of claims and inform claimants of steps being
taken to improve such delays.
``(h) Definitions.--In this section:
``(1) Claimant.--The term `claimant' means an enrollee or
health care provider submitting a claim for payment of health
care expenses.
``(2) Complete claim.--The term `complete claim' is a claim
for payment of covered health care expenses that--
``(A) in the case of a claim involving a health care
provider that is an institution or other facility or agency
that provides health care services, is a properly completed
billing instrument that consists of--
``(i) the Health Care Financing Administration 1450 (UB-92)
paper form, or its successor, as adopted by the NUBC, with
data element usage consistent with the usage prescribed in

[[Page S4048]]

the UB-92 National Uniform Billing Data Elements
Specification Manual, and, for claims submitted before
October 1, 2002, any State-designated data requirements that
are determined and approved by the State uniform billing
committee of the State in which the health care service or
supply is furnished; or
``(ii) the electronic format for institutional claims (and
accompanying implementation guide) adopted as a standard by
the Secretary of Health and Human Services pursuant to
section 1173 of the Social Security Act (42 U.S.C. 1320d-2);
and
``(B) in the case of claim involving a health care provider
that is a physician or other individual who is licensed,
accredited, or certified under State law to provide specified
health care services, is a properly completed billing
instrument that--
``(i) the Health Care Financing Administration 1500 paper
form, or its successor, as adopted by the NUCC and further
defined by data element specifications contained in the NUCC
implementation guide or, if such specifications are not
issued by the NUCC, the data element specifications contained
in the Medicare Carriers Manual Part 4 (HCFA-Pub 14-4)
sections 2010.1 through 2010.4; or
``(ii) the electronic format for professional claims (and
accompanying implementation guide) adopted as a standard by
the Secretary of Health and Human Services pursuant to
section 1173 of the Social Security Act (42 U.S.C. 1320d-2).
``(3) Contested claim.--The term `contested claim' means a
claim for health care expenses that is denied by a group
health plan or health insurance issuer during or after the
benefit determination process.
``(4) Health care provider.--The term `health care
provider' includes a physician or other individual who is
licensed, accredited, or certified under State law to provide
specified health care services and who is operating with the
scope of such licensure, accreditation, or certification, as
well as an institution or other facility or agency that
provides health care services and is licensed, accredited, or
certified to provide health care items and services under
applicable State law.
``(5) Incomplete claim.--The term `incomplete claim' means
a claim for health care expenses that cannot be adjudicated
because it fails to include all of the required data elements
necessary for adjudication.
``(6) NUBC.--The term `NUBC' means the National Uniform
Billing Committee.
``(7) NUCC.--The term `NUCC' means the National Uniform
Claim Committee.''.
(b) Individual Market.--Part B of title XXVII of the Public
Health Service Act (42 U.S.C. 300gg-41 et seq.) is amended--
(1) by redesignating the first subpart 3 (relating to other
requirements) as subpart 2; and
(2) by adding at the end of subpart 2 the following:

``SEC. 2753. STANDARDS RELATING TO PROMPT PAYMENT OF HEALTH
BENEFITS CLAIMS.

``The provisions of section 2707 shall apply to health
insurance coverage offered by a health insurance issuer in
the individual market in the same manner as they apply to
health insurance coverage offered by a health insurance
issuer in connection with a group health plan in the small or
large group market.''.

SEC. 4. AMENDMENTS TO THE SOCIAL SECURITY ACT.

(a) Medicare.--
(1) Medicare advantage plans.--Section 1857(f) of the
Social Security Act (42 U.S.C. 1395w-27(f)) is amended--
(A) in paragraph (1), by striking ``consistent with the
provisions of sections 1816(c)(2) and 1842(c)(2)'' and
inserting ``consistent with the provisions of section 2707 of
the Public Health Service Act''; and
(B) in paragraph (2)--
(i) in the second sentence, by inserting ``and to reflect
the amount of any fines or penalties imposed pursuant to the
provisions of section 2707(g) of the Public Health Service
Act'' before the period at the end; and
(ii) by inserting before the second sentence the following
new sentence: ``Payment of such amounts shall include any
interest due pursuant to the provisions of section 2707(d) of
the Public Health Service Act.''.
(2) Prescription drug plans.--Section 1860D-12(b)(3) of the
Social Security Act (42 U.S.C.1395w-112(b)(3)) is amended--
(A) by redesignating subparagraphs (E) and (F) as
subparagraphs (F) and (G), respectively; and
(B) by inserting after subparagraph (D) the following new
subparagraph:
``(E) Prompt payment by medicare advantage organization.--
Section 1857(f).''.
(b) Medicaid.--Section 1932(f) of the Social Security Act
(42 U.S.C. 1396u-2(f)) is amended by striking ``the claims
payment procedures described in section 1902(a)(37)(A),
unless the health care provider and the organization agree to
an alternate payment schedule'' and inserting ``section 2707
of the Public Health Service Act''.
(c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2004.

SEC. 5. PREEMPTION.

The provisions of this Act shall not supersede any contrary
provision of State law if the provision of State law imposes
requirements, standards, or implementation specifications
that are equal to or more stringent than the requirements,
standards, or implementation specifications imposed under
this Act, and any such requirements, standards, or
implementation specifications under State law that are equal
to or more stringent than the requirements, standards, or
implementation specifications under this Act shall apply to
group health plans and health insurance issuers as provided
for under State law.

SEC. 7. EFFECTIVE DATE.

(a) In General.--Except as provided in this section, the
amendments made by this Act shall apply with respect to group
health plans and health insurance issuers for plan years
beginning after December 31, 2004.
(b) Special Rule for Collective Bargaining Agreements.--In
the case of a group health plan maintained pursuant to one or
more collective bargaining agreements between employee
representatives and one or more employers ratified before the
date of the enactment of this Act, the amendments made by
this Act shall not apply to plan years beginning before the
later of--
(1) the date on which the last of the collective bargaining
agreements relating to the plan terminates (determined
without regard to any extension thereof agreed to after the
date of the enactment of this Act), or
(2) January 1, 2005.
For purposes of paragraph (1), any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any
requirement of the amendments made by this section shall not
be treated as a termination of such collective bargaining
agreement.

SEC. 7. SEVERABILITY.

If any provision of this Act, or an amendment made by this
Act, is held by a court to be invalid, such invalidity shall
not affect the remaining provisions of this Act, or
amendments made by this Act.
______

By Mr. DORGAN:
S. 2309. A bill to amend the Internal Revenue Code of 1986 to provide
for a refundable wage differential credit for activated military
reservists; to the Committee on Finance.
Mr. DORGAN. Mr. President, I rise today to introduce legislation to
provide a financial safety net for the families of our young men and
women who proudly serve in the Nation's military Reserve and National
Guard.
Our country is demanding that our military reservists and members of
the National Guard play a more crucial and sustained role in
supplementing the activities of our traditional armed forces than at
any other time in our recent history. In response to the Iraq War and
homeland security needs, the country has called up hundreds of
thousands of our Reserve and National Guard members for extended tours
of duty of up to 18 months.
Today, roughly 175,000 members of the reserve components are on
active duty. About 40 percent of the troops now going into Iraq are
reservists. Reserve component leaders expect the total number of
guardsmen and reservists on active duty for the war on terrorism to
remain above 100,000 for the next two years.
Since September 11, 2001, more than 60 percent of North Dakota's
guardsmen and reservists have been called to duty. One of the issues I
hear most often about from those service members and their families is
how hard it is for them to make ends meet on their military incomes.
When Guard members or reservists are mobilized, it has an enormous
impact not only on their lives, but also on the lives of their loved
ones. In many cases when an individual is mobilized, his or her family
may experience a significant loss of income. This is because active
duty military compensation often falls below what reservists earn in
civilian income. These income losses are often exacerbated by the
additional family expenses that are associated with military
activation, such as the cost of long distance phone calls and the need
for extra day care.
Clearly this is a major financial problem for many reservists and
their families. The Pentagon's Reserve Forces Policy Board says that a
significant number of mobilized Reserve component members earn less
than their private sector and civilian salaries while on active duty.
The most recent information provided on mobilization income loss comes
from a Pentagon survey in the year 2000. Some 41 percent of guardsmen
and reservists who were mobilized that year reported income losses
ranging from $350 per month to more than $3,000 per month. Self-
employed reservists reported an average income loss of $1,800 per
month. Physicians and registered nurses in private practice reported an
average income loss of as much as $7,000 per month.
Those were big losses. But when that survey was conducted in 2000,
reservists were mobilized for an average of

[[Page S4049]]

only 3.6 months. Today mobilizations of 14 to 18 months are common. So
the annual losses in wages are much, much bigger.
The loss of income that reservists and guardsmen incur when they are
ordered to leave their good-paying private sector or civilian jobs to
serve their country often creates an unmanageable financial burden.
This further disrupts the lives of their families who are already
trying to cope with the emotional stress and hardship caused by the
departure of a beloved spouse, or parent who has been ordered to active
duty.
In the mid-1990s the Pentagon tried to address this problem by
offering members of the National Guard and Reserve the opportunity to
buy insurance to protect against income loss upon mobilization. The
program sold coverage for income losses of up to $5,000 per month.
Unfortunately, the program was poorly planned and executed, and
Congress had to appropriate substantial money to bail out the program
before it was terminated. Since then the private sector has shown
little interest in reviving the mobilization income insurance program.
We need to find another way to deal with the issue. I believe that
the federal government should try to help alleviate the financial havoc
created for activated reservists, guardsmen, and their families. The
bill I am introducing today will help in this endeavor.
Specifically, my legislation provides a fully refundable, 100-percent
income tax credit of up to $20,000 annually to a military reservist on
active duty based upon the difference in wages paid in his or her
private sector or civilian job and the military wages paid upon
mobilization. For this purpose, a qualified military reservist is a
member of the National Guard or Ready Reserve who is mobilized and
serving for more than 90 days. The benefit of this activated military
reservist tax credit is available for tax years beginning after
December 31, 2003.
We owe a great deal to those Americans who put on their uniforms and
serve in the military in the most difficult of circumstances. We can
never fully repay that debt. However, we can do much more to remove the
immediate financial burden that many National Guard and Reserve
families experience when a family member is ordered to active duty.
This legislation will provide those families with some much-needed
financial assistance. I urge my colleagues in the Senate to support my
efforts to get this tax relief measure enacted into law as soon as
possible.
______

By Mrs. FEINSTEIN (for herself, Mr. Nelson of Florida, and Mr.
Reed):
S. 2310. A bill to promote the national security of the United States
by facilitating the removal of potential nuclear weapons materials from
vulnerable sites around the world, and for other purposes; to the
Committee on Armed Services.
Mrs. FEINSTEIN. Mr. President, I rise today to introduce legislation
to address one of the critical security issues in the post 9/11 world:
the existence of hundreds of vulnerable facilities around the world
with nuclear materials. If keeping weapons of mass destruction, WMD,
out of the hands of terrorists is at the top of our foreign policy
agenda, then removing weapons-usable material from facilities where it
is susceptible to terrorist theft or should diversion be a top priority
for U.S. national security policy.
Yet, currently, there is no single, integrated U.S. government
program, with a defined budget and resources, to facilitate the removal
of these materials. The legislation I introduce today with Senators
Bill Nelson, and Reed will: establish a presidential task force in the
Department of Energy on nuclear removal; provide a specific mandate for
a program to remove nuclear materials from vulnerable sites around the
world as quickly as possible; provide specific direction to allow the
use of flexible incentives, tailored to each site, to secure host-
country cooperation in removing the nuclear materials, and; authorize
$40 million in Fiscal Year 2005 to carry out the functions of this
bill.
There are hundreds of facilities around the world that store from
kilograms to tons of plutonium or highly enriched uranium, HEU. The
State Department has identified 24 of these locations as high priority
sites.
President Bush singled out terrorist nuclear attacks on the United
States as the defining threat our nation will face in the future. In
making the case against Saddam Hussein, he argued: ``If the Iraqi
regime is able to produce, buy, or steal an amount of uranium a little
bigger than a softball, it could have a nuclear weapon in less than a
year.''
What he did not mention is that with the same amount of uranium, al
Qaeda, Hezbollah, Hamas, or any terrorist organization could do the
same and smuggle the weapon across U.S. borders. And the fact that AQ
Khan's network put actual bomb designs on the black market only
heightens the need to make sure the ingredients are not available.
In response to this threat, the Administration has focused its
efforts on removing vulnerable international nuclear materials through
four projects: the take-back to Russia of HEU fuels from Soviet-
supplied reactors; the on-going effort to convert Soviet-designed
research reactors from HEU to non-bomb-grade fuels; the decades-long
effort to convert U.S.-supplied research reactors from HEU to LEU, and;
the on-going effort to take back U.S.-supplied HEU.
This represents an important first step, but I am deeply concerned
that these efforts are not sufficient and do not adequately address the
seriousness of the issue.
The current approach will take 10-20 years to complete at the current
rate of about 1 facility per year. This is a time frame out of synch
with near-term dangers.
Under the current approach to the take-back of Soviet-supplied HEU,
there have been only two successful HEU removals in more than two
years, at Vinca and at Pitesti. But the Vinca operation also required
the contribution of $5 million from the Nuclear Threat Initiative to
complete, because of the administration's claim of inadequate authority
to pursue various activities to facilitate Serbian cooperation.
The U.S.-Russian bilateral agreement on a broader take-back effort
has taken years to complete--and even once final Russian government
approval is secured, there are a wide range of other issues delaying
progress within Russia, including the need to prepare environmental
assessments of types that have never before been done in Russia, that
will require sustained, high-level pressure to overcome.
U.S. efforts to convert HEU-fueled reactors within Russia are still
moving slowly on the technical front, in part because of insufficient
funding, and we are only now beginning to take the first steps toward
providing incentives directly to facilities to give up their HEU.
The scope of the HEU conversion effort in Russia is inadequate. It
covers only research reactors. Outside the scope of current efforts are
critical assemblies, pulsed powered reactors, and civilian and military
naval fuels. This leaves numerous vulnerable HEU stockpiles scattered
across the FSU.
Under the current U.S. HEU take-back effort, the return of U.S.-
origin HEU fuels, if no new incentives are offered, tons of U.S.-
supplied HEU will remain abroad when the program is complete, this is
DOE's official projection.
Under the current U.S. HEU reactor conversion effort, if no new
incentives are offered, scores of U.S.-supplied reactors may continue
to use HEU indefinitely.
A report released last year from the John F. Kennedy School of
Government at Harvard University described a scenario in which a 10
kiloton nuclear bomb is smuggled into Manhattan and detonated resulting
in the loss of 500,000 people and causing $1 trillion in direct
economic damage.
We must do everything in our power to prevent such an event from ever
occurring.
We need a presidential task force in the Department of Energy on
nuclear removal. We must provide a specific mandate for a program to
remove nuclear materials from vulnerable sites around the world as
quickly as possible and provide specific direction to allow the use of
flexible incentives, tailored to each site, to secure host-country
cooperation in removing the nuclear materials.

[[Page S4050]]

And, yes, we need additional funding to get the job done.
This legislation will give our government the direction, tools, and
resources necessary to remove nuclear materials from vulnerable sites
around the world in an expeditious manner. We have little time to
spare. I urge my colleagues to support this bill.
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. 2310

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

SECTION 1. REMOVAL OF POTENTIAL NUCLEAR WEAPONS MATERIALS
FROM VULNERABLE SITES WORLDWIDE.

(a) Sense of Congress.--It is the sense of Congress that
removing potential nuclear weapons materials from vulnerable
sites around the world would reduce the possibility that such
materials could fall into the hands of al Qaeda or other
groups and states hostile to the United States, and should be
a top priority for achieving the national security of the
United States.
(b) Task Force on Nuclear Material Removal.--(1) The
President shall establish in the Department of Energy a task
force to be known as the Task Force on Nuclear Material
Removal (in this section referred to as the ``Task Force'').
(2) The head of the Task Force shall be the Director of the
Task Force on Nuclear Material Removal, who shall be
appointed by the President for that purpose.
(3) The Director of the Task Force shall report directly to
the Deputy Administrator for Defense Nuclear Nonproliferation
of the National Nuclear Security Administration regarding the
activities of the Task Force under this section.
(4)(A) The Secretary of Energy, the Administrator for
Nuclear Security, and the Deputy Administrator for Defense
Nuclear Nonproliferation shall assign to the Task Force
personnel having such experience and expertise as is
necessary to permit the Task Force to carry out its mission
under this section.
(B) The Secretary of Energy and the Administrator for
Nuclear Security shall jointly consult with the Assistant to
the President for National Security Affairs, the Secretary of
State, the Secretary of Defense, the Chairman of the Nuclear
Regulatory Commission, the heads of other appropriate
departments and agencies of the Federal Government, and
appropriate international organizations in order to identify
and establish mechanisms and procedures to ensure that the
Task Force is able to draw quickly on the capabilities of the
departments and agencies of the Federal Government and such
international organizations to carry out its mission under
this section.
(C) Mechanisms under subparagraph (B) may include the
assignment to the Task Force of personnel of the Department
of Energy and of other departments and agencies of the
Federal Government.
(5) The President may establish within the Executive Office
of the President a mechanism for coordinating the activities
of the Task Force under this section.
(c) Mission.--The mission of the Task Force shall be to
ensure that potential nuclear weapons materials are entirely
removed from the most vulnerable sites around the world as
soon as practicable after the date of the enactment of this
Act.
(d) Assistance.--To assist the Task Force in carrying out
its mission under this section, the Secretary of Energy may--
(1) provide funds to remove potential nuclear weapons
materials from vulnerable sites, including funds to cover the
costs of--
(A) transporting such materials from such sites to secure
facilities;
(B) providing interim security upgrades for such materials
pending their removal from their current sites;
(C) managing such materials after their arrival at secure
facilities;
(D) purchasing such materials;
(E) converting such sites to the use of low-enriched
uranium fuels;
(F) assisting in the closure and decommissioning of such
sites; and
(G) providing incentives to facilitate the removal of such
materials from vulnerable facilities;
(2) arrange for the shipment of potential nuclear weapons
materials to the United States, or to other countries willing
to accept such materials and able to provide high levels of
security for such materials, and dispose of such materials,
in order to ensure that United States national security
objectives are accomplished as quickly and effectively as
possible; and
(3) provide funds to upgrade security and accounting at
sites where, as determined by the Secretary, potential
nuclear weapons materials will remain for an extended period
in order to ensure that such materials are secure against
plausible potential threats, and will remain so in the
future.
(e) Report.--(1) Not later than 30 days after the submittal
to Congress of the budget of the President for fiscal year
2006 pursuant to section 1105(a) of title 31, United States
Code, the Secretary of Energy, in coordination with other
relevant Federal Government and international agencies, shall
submit to Congress a report that includes the following:
(A) A list of the sites determined by the Task Force to be
of the highest priorities for removal of potential nuclear
weapons materials, based on the quantity and attractiveness
of such materials at such sites and the risk of theft or
diversion of such materials for weapons purposes.
(B) An inventory of all sites worldwide where highly-
enriched uranium or separated plutonium is located,
including, to the extent practicable, a prioritized
assessment of the terrorism and proliferation risk posed by
such materials at each such site, based on the quantity of
such materials, the attractiveness of such materials for use
in nuclear weapons, the current level of security and
accounting for such materials, and the level of threat
(including the effects of terrorist or criminal activity and
the pay and morale of personnel and guards) in the country or
region where such sites are located.
(C) A strategic plan, including measurable milestones and
metrics, for accomplishing the mission of the Task Force
under this section.
(D) An estimate of the funds required to complete the
mission of the Task Force under this section, set forth by
year until anticipated completion of the mission.
(E) The recommendations of the Secretary on whether any
further legislative actions or international agreements are
necessary to facilitate the accomplishment of the mission of
the Task Force.
(F) Such other information on the status of activities
under this section as the Secretary considers appropriate.
(2) The report shall be submitted in unclassified form, but
may include a classified annex.
(f) Potential Nuclear Weapons Material Defined.--In this
section, the term ``potential nuclear weapons material''
means plutonium, highly-enriched uranium, or other material
capable of sustaining an explosive nuclear chain reaction,
including irradiated materials if the radiation field from
such materials is not sufficient to prevent the theft and use
of such materials for an explosive nuclear chain reaction.
(g) Authorization of Appropriations.--There is authorized
to be appropriated to the Department of Energy for fiscal
year 2005 for activities of the National Nuclear Security
Administration in carrying out programs necessary for
national security for purposes of defense nuclear
nonproliferation activities, $40,000,000 to carry out this
section.
______

By Ms. SNOWE (for herself, Mrs. Feinstein, Mr. Bingaman, and Ms.
Cantwell):
S. 2311. A bill to provide for various energy efficiency programs and
tax incentives, and for other purposes; to the Committee on Finance.
Ms. SNOWE. Mr. President, I rise today, along with Senators
Feinstein, Bingaman, and Cantwell, to introduce the Efficient Energy
through Certified Technologies and Electricity Reliability Act, or
EFFECTER Act of 2004. This legislation is urgently needed to help
prevent the painful disruption of electric power blackouts, to save
American consumers billions of dollars in wasted energy costs, to
create jobs, and eventually, to avoid the needless emission of more
greenhouse gas pollution than comes from our Nation's entire automotive
fleet. According to a vast majority of the international scientific
community, these anthropogenic, or manmade gases, especially carbon
dioxide, are triggering dramatic changes in the Earth's climate system.
This legislation will increase the security and reliability of the
electric grid, while reducing natural gas and electricity prices though
a gradual reduction in demand. Targeted tax incentives and standards
for energy efficiency in commercial buildings, both new and
retrofitted, will support the reduction in demand, as will the
construction of new and retrofitted homes, including rental housing,
and the use of more energy efficient appliances.
Last March 4, 2003, I introduced, along with Senator Feinstein and
others, the EFFECT Act of 2003, legislation that provided tax
incentives for advanced levels of energy efficiency and peak power
savings technologies in the buildings in which we live, work, and
learn. Buildings consume some 35 percent of energy nationwide and are
responsible for the emissions of a comparable percentage of pollution;
very importantly, they account for more than one-half of the Nation's
energy cost. I am pleased that many of these provisions were
incorporated into the Senate energy bill that passed the Senate last
fall, as I believe incentives provided through the tax system are
necessary to complement existing energy efficiency policies at the
Federal and State levels.

[[Page S4051]]

The EFFECTER Act of 2004 that we are introducing today goes even
further to encourage the EFFECT Act's tax incentives provided in the
Senate's energy bill. It encourages administrative improvements, cost-
efficiencies, and it also reflects a number of consensus provisions
from H.R. 6, the Omnibus Energy Conference Report. These provisions
mirror simple, common sense solutions, such as the mandatory
electricity reliability provisions that have been held hostage to the
ineffective ideas in the energy bill for some 4 years. We provide
requirements for electric generating and transmission companies that
encourage them to cooperate with each other on a mandatory basis,
since--as we discovered last summer--relying on ``a gentleman's
agreement'' doesn't work.
The legislation also includes the Energy Savings Performance
Contracts program, whose authorization expired in October of 2003. The
ESPC program promotes consensus energy efficiency standards and reforms
in Government contracting that save the taxpayers money. This bill
requires the Federal Government, through its agencies, to acquire the
most cost-effective as well as energy efficient products and to design
buildings that can also save the Government money. Through what many
characterized as an arcane scoring method, the CBO had incorporated a
$3 billion cost increase into the program. However, in its wisdom, the
Senate, in the FY05 Budget Resolution, appropriately directed the ESPS
to score at zero. The result is a zero cost to this provision.
The EFFECTER Act of 2004 addresses some of our largest energy
problems head-on. Its incentives for energy efficiency are more
effective and expedient than those in the energy bills currently being
debated, yet they cost less to the Government. Indeed, over the long-
term, they save the Federal Government money.
Last August our country suffered a costly and harmful blackout that
affected some 40 million Americans. Now, more than 6 months later, we
have take little effective action to reduce the likelihood that
additional blackouts could threaten lives and damage our economy again
this year or any time in the near future. Our country currently has a
need for more electric power plants, but we also need to protect our
present electricity system from overload caused by wasted power use. By
not pulling power from the grid at peak times in the next 10 years, the
EFFECTER Act of 2004 will help America's building owners save more
electricity--electriicty equivalent to the amount that would be
produced by 350 new power plants of 400 MW capacity.
Since last summer, natural gas and oil prices have skyrocketed. These
high prices hurt Americans two ways: jobs are lost when high fuel
prices force industry to cut back on production, and high heating bills
strain family and business budgets. Saving wasted energy is one of the
easiest and least costly ways to save money and save jobs. This
legislation will save American families and business owners over $30
billion dollars annually by 2015, and prevent the waste of over 3.3
quads of natural gas annually--over 12 percent of total gas use.
We all recognize the importance of increasing employment. Energy
efficiency creates jobs both through manufacturing, designing and
installing efficiency measures and through additional consumer and
business spending--spending consumers can afford when their energy
bills are lower. The EFFECTER Act of 2004 will produce over a half
million new jobs in the American economy.
As a Nation, we are engaged in a difficult debate about reducing
greenhouse gas emissions, an effort we believe will protect the world's
climate while assuring continued productivity for our economy. By
reducing energy use that otherwise would be wasted in inefficient
buildings, this legislation will reduce greenhouse gas pollution in an
amount equivalent to the reduction that would occur if we took 25
percent of the cars off America's roads.
These energy, money, and pollution saving solutions focus first on
promoting fast acting energy efficiency both for natural gas and for
peak electricity, which in turn also contributes to natural gas demand.
Dramatic energy savings can be obtained by a carefully crafted package
of low cost market-based incentives and consensus efficiency standards.
I believe we have crafted just such a package and I urge my colleagues
to support this bipartisan bill that uses tested, performance-based and
cost-effective approaches that truly help solve our most immediate
energy problems.
______

By Mr. GRAHAM of Florida (for himself, Mrs. Clinton, Mrs. Boxer,
Mr. Nelson of Florida, Mr. Schumer, Mr. Lautenberg, Mr.
Hollings, and Mrs. Lincoln):
S. 2313. A bill to amend the Help America Vote Act of 2002 to require
a voter-verified permanent record or hardcopy under title III of such
Act, and for other purposes; to the Committee on Rules and
Administration.
Mr. GRAHAM of Florida. Mr. President, the people of the United States
learned many things from the election of 2000. I believe the most
important lesson was that voting equipment should produce a clear paper
record of each voter's intentions for use in a manual recount.
Americans remember well that the outcome of the 2000 presidential
election was determined by whether a ``chad'' was hanging, pregnant, or
dimpled.
More recently we have found that, despite the passage of election
reform legislation in 2002 called the Help America Vote Act, our
electoral system is still experiencing difficulties. The 2004
presidential primaries have produced accounts of voting irregularities.
This is especially distressing considering another national election is
just months away. Voters in several States, including California,
Maryland, Georgia and my own State of Florida have experienced problems
casting their votes and seeing them accurately counted.
On the Tuesday, March 9, 2004, presidential primary in Palm Beach
County, FL, the ``oops factor'' again reared its ugly head, casting
doubt in the minds of many Floridians about whether or not their votes
actually counted. An error on the part of poll workers--pressing the
wrong button to activate voting machines--prevented many from voting in
the Democratic primary. A technological error in the tabulation of
ballots in Bay County, FL showed Congressman Dick Gephardt winning the
primary by a 2-to-1 margin. Fortunately, Bay County uses a paper ballot
system so they could refer to their paper trail to rectify the error.
This is not the first election since 2000 where the value of a paper
record has been apparent. Just this past January, victory in a South
Florida Republican primary election for a vacant seat in the State
legislature was determined by just 12 votes. In that election, 137
blank ballots were cast on electronic voting machines that do not
produce a paper record. A candidate requested a manual recount, only to
find such a recount impossible without paper records verifying the
intent of those 137 voters.
In Georgia's Presidential Primary, ``smart cards'' containing ballot
information for electronic machines were left unprogrammed. Technical
irregularities in Maryland elections prevented at least one voter form
voting--and he wrote about it in the Washington Post.
These incidents and many others are clear evidence that we need
voting machines that produce an individual paper record for all votes
cast. While the Help America Vote Act (HAVA) included provisions
requiring paper records for manual audits, we have come to find out
that voting jurisdictions are not interpreting these provision the way
Congress intended.
I am pleased to join Senators Clinton and Boxer in introducing the
Restore Elector Confidence in Our Representative Democracy Act (RECORD
Act). This legislation will ensure that all voting jurisdictions will
have machines that produce voter-verifiable paper records, so that they
will be as prepared as they can be to count every vote come this
November. It is critical that Congress take every possible step to
prevent any resemblance between Election Day 2000 and Election Day
2004.
Once a month I spend a day working side-by-side with the people of
Florida. On Saturday, March 6, 2003, I spent my 399th Workday as an
elections worker for the Miami-Dade County Division of Elections.
Veteran Supervisor of Elections Connie Kaplan assured me that

[[Page S4052]]

electronic voting machines are accurate. The things I learned on the
job reinforced that assessment. But several voters expressed confusion
about the layout of the electronic ballots, and uncertainty about
whether or not their votes had been cast. It was clear to me that
voters would be more confident that their votes would be counted if
there were a paper record of those votes. In light of reported
irregularities and security concerns, this voter apprehension is
legitimate. In order to be certain about the accuracy and security of
computer voting systems we need a paper record to confirm every vote
cast.
Modern society is replete with electronic machines that provide the
most basic services: ATMs, train ticket vending machines, gasoline pay-
at-the-pump stations. All of these machines produce paper records. The
votes of America's citizens are at least as important as these
transactions. People do not and should not blindly trust the accuracy
of computer voting technologies. Congress must pass the RECORD Act so
that Americans can have confidence that their votes will be counted.
Mrs. CLINTON. Mr. President, I am pleased to join Senator Graham in
introducing the ``Restore Elector Confidence in Our Representative
Democracy Act of 2004'' (``RECORD'' Act) because there is no civic
action more important in a democracy than voting. Yet right now, many
Americans have concerns about the integrity of the electoral system. We
must restore trust in our voting, and we must do it now.
Electronic voting systems, specifically touch-screen voting machines,
are being increasingly used across the nation. Indeed, according to
Election Data Services, it is estimated that this November, at least 50
million voters this year will vote on touch-screen voting machines.
These machines have benefits but there are major concerns with the
security of these machines and the current ability of voters to verify
their votes through a paper record. This legislation effectively
addresses both of these vitally important issues.
In New York, electronic voting is on the horizon. Some machines will
be used next year in the New York City mayoral race. As New Yorkers
start to use this new technology, I want them to be absolutely certain
their right to elect the leaders of their choice won't be at risk for
want of a simple fix like this.
When you use an ATM, you get a paper receipt. Right now, when you
cast an electronic vote, you get nothing. You have no way of knowing
that the selections you've made on the touch screen will be recorded
and counted.
This legislation will ensure that voters will be able to verify a
paper ballot that accurately reflects their intentions and that will be
locked away and will be the official ballot in a recount. This
legislation will also address the security issues surrounding
electronic voting systems.
Why is this so critical? Because we know from computer experts that
these systems are vulnerable to hacking--and that with just a push of a
button, hackers could turn Kerry votes to Bush votes. Think about that.
Indeed, a number of recent studies, including the July 2001 study by
Caltech/MIT, the July 2003 study by Johns Hopkins and Rice
universities, the September 2003 study by Science Applications
International, and the two November 2003 studies conducted by Compuware
corporation and InfoSENTRY, pointed to significant and disturbing
security risks in electronic voting systems and related administrative
procedures and processes.
According to the Johns Hopkins study, these voting machines are
incapable of detecting their own mistakes. Specifically, as one of the
authors noted, there is no way to validate the outcome of an election
using the current crop of machines. Errors can't be detected and, in my
opinion, that is a threat to all of us.
There were also problems with these machines in the recent
presidential primaries. Counties in California, Georgia, and Maryland
reported problems with encoders, the devices that allow touch-screen
voting machines to display the candidate and ballot measures specific
to one county.
We already know of stories from Florida in which there was a special
election for one office, and the computer election system recorded 120
people as there but not voting.
These security concerns have only been inflamed by statements from
people like Walden O'Dell--the CEO of Diebold, a major electronic
voting machine manufacturer--who said he would do anything to ensure
that President Bush would be re-elected.
So we have a system that is vulnerable to attack, that provides no
real accountability to ensure accuracy and, to add to our concerns, an
e-voting manufacturer demonstrating his tremendous partisanship. This
should give us all pause.
This legislation will require the use of voter verifiable paper
ballots so that each and every voter will be able to confirm that his
or her vote was accurately cast and recorded. The verified paper ballot
will be deemed the official record for purposes of a recount and at
least 2 percent of all ballots in all jurisdictions in each State and 2
percent of the ballots of military and overseas voters will be counted
at random.
One hundred and fifty million will also be appropriated to the
Election Assistance Commission in order to help States implement the
paper ballot system.
To ensure greater security of electronic voting systems, the Act
authorizes the use of only open source software. Manufacturers will
also have to satisfy a number of security standards concerning the
development, maintenance, and transfer of software used in electronic
voting systems.
This legislation also provides $10 million to the Election Assistance
Commission to help it administer the implementation of verification
systems and improved security measures nationally, and $2 million to
the National Institute of Standards and Technology for consultation
services to State and local governments regarding voter verification
and the security of their electronic voting machines.
The Commission must receive this additional administrative funding
because unfortunately, even though the Help America Vote Act of 2002
authorized $10 million annually to help the Commission do its work,
Congress in the fiscal year 2004 omnibus appropriations legislation
appropriated less than $2 million to the Commission, making it that
much more difficult for the Commission to do its work.
Lastly, the Act requires the Election Assistance Commission to report
to Congress within 3 months of enactment on operational and management
systems that should be used in Federal elections and within 6 months of
enactment on a proposed security review and certification process for
all voting systems.
Our Nation is the greatest nation on earth and it is the leading
democracy in the world. In fact, the Bush Administration takes pride in
promoting democracy around the world--and they should. But we also have
to do everything in our power to ensure democracy here. Central to our
democracy is the ability of Americans to have confidence in the voting
system used to register and record their votes. This is a fundamental
standard that must be met. We are currently, however, falling short of
that standard.
And let me say one more thing. The election this November is going to
be one of the most important of my lifetime. And every pundit in
America says it will be close, because we are still so divided. If we
have huge problems again, if we have another debacle like Palm Beach
voting for Buchanan, people will fundamentally lose confidence in our
democracy and in their vote. We cannot let that happen.
This legislation is good insurance against that risk. For all of
those who believe that in a democracy, there is no more important task
than assuring the sanctity of votes, this should be an easy step to
take to assure it. I ask all of my colleagues to support this
legislation.
______

By Mr. BURNS:
S. 2315. A bill to amend the Communications Satellite Act of 1962 to
extend the deadline for the INTELSAT initial public offering; to the
Committee on Commerce, Science, and Transportation.
Mr. BURNS. Mr. President, I rise to introduce a bill that would make
a

[[Page S4053]]

technical change to the ORBIT Act's IPO provision.
As you may recall, I sponsored the ORBIT Act in 1999 with strong
bipartisan support. Since that time, I have worked with Senators
McCain, Hollings and others to pass technical amendments to the Act by
unanimous consent when needed. And it is my hope and expectation that
we can pass this small technical change as quickly as before.
Congress passed the ORBIT Act to enhance competition in the global
satellite communications market. I am proud to say that ORBIT has
achieved all of its objectives. Since its enactment, the FCC has found
that positive change has occurred in the satellite services market as a
result of the ORBIT Act. The FCC has declared that the pro-competitive
objectives of the ORBIT Act have been achieved--including the complete
transformation of Intelsat from what used to be a highly bureaucratic,
intergovernmental organization into a fully privatized, U.S. licensed
company that is headquartered and operates in the U.S., and is now
subject to U.S. laws and U.S. regulations.
Another important benefit produced by the ORBIT Act has been the
infusion of U.S. capital and other private investment into the former
intergovernmental organizations. American and other private investors
have made significant investments in Intelsat and Inmarsat following
enactment of the ORBIT Act. The only piece of unfinished business from
the ORBIT Act that remains is the requirement that an IPO occur by a
date certain.
I have always had serious reservations with the very idea that
Congress would impose a date certain for an IPO, rather than letting
market forces determine the appropriate time for such an event. If I
had my preference, we would get rid of the mandatory IPO requirement
altogether. But since the Intelsat IPO deadline is June 30, 2004, we
don't have a lot of time to get back into the substance of that issue.
The pressing matter at hand is that Intelsat's IPO deadline is fast
approaching, and the market is simply not conducive for a successful
IPO. This is the same situation we encountered in 2002 when my good
friend Senator Hollings and I worked together to provide a time
extension for conducting the IPO. I would say to my colleagues that the
telecom market isn't much better now than it was in 2002. So we again
need to provide Intelsat with an extension on its IPO deadline because
market conditions are not favorable at this time.
If Congress does not quickly pass legislation extending the June 30,
2004 IPO deadline, several U.S. entities who are major investors in
Intelsat stand to lose hundreds of millions of dollars because the
telecom market for IPOs is far from ideal. This will be extremely
harmful to U.S. interests and it will damage Intelsat, an important
communications asset for the U.S.
For these reasons, I urge my colleagues and the leadership to quickly
move the passage of this legislation. The bill would simply extend
Intelsat's IPO deadline for 12 months and give the FCC discretionary
authority to further extend this deadline another 6 months if market
conditions warrant.
I urge my colleagues to support quick passage of this legislation so
that it can be enacted into law well before June 30, 2004.
I ask by 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
Reord, as follows:

S. 2315

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

SECTION 1. EXTENSION OF IPO DEADLINE.

Section 621(5)(A)(i) of the Communications Satellite Act of
1962 (47 U.S.C. 763(5)(A)(i)) is amended--
(1) by striking ``December 31, 2003,'' and inserting ``June
30, 2005,''; and
(2) by striking ``June 30, 2004;'' and inserting ``December
31, 2005;''.
______

By Ms. MURKOWSKI (for herself and Ms. Landrieu):
S. 2316. A bill to amend the Internal Revenue Code of 1986 to allow
penalty-free withdrawals from individual retirement plans for adoption
expenses; to the Committee on Finance.
Ms. MURKOWSKI. Mr. President, today I am pleased to introduce
legislation along with Senator Landrieu to help bring adoption within
reach for more Americans. Today in the United States there are
literally thousands of children waiting to be adopted. The average
child has been waiting in foster care for about four years.
One of the major barriers to adoption for many Americans is cost. I'm
not sure that people understand that adopting a child can sometimes
cost more than $50,000. That's just the adoption process itself!
The $10,000 per child adoption tax credit does help some, but it
helps after the fact when you have the receipts. The problem is that
many times the money for adoption has to be given beforehand--it
requires up-front money. The tax credit doesn't help out there.
The legislation we are introducing today is one way the Federal
Government can help with the initial costs of adoption. Many Americans
place money for their retirement in IRA accounts, but you generally
can't touch this money until you're 59\1/2\ years old, and if you do,
you'll pay not only your marginal tax rate on the withdrawal, you'll
also be forced to pay an additional 10 percent penalty to the IRS.
There are exceptions to this, however. Under current law, you can
make penalty-free early withdrawals from your IRA to help you buy your
first home, pay for excessive medical costs, or for qualifying
education expenses. The idea is certainly to encourage savings for
retirement, but also to allow you to use your own money--penalty free--
if there's a compelling need.
I would make the case on behalf of the thousands of children who
desperately want a loving family, and on behalf of the thousands of
parents who dream of becoming parents, that adoption is a compelling
need. And, the majority of Americans agree. Fully 78 percent of
Americans said in a poll that they believe the government should be
doing more to promote adoption.
Our bill would prohibit the IRS from penalizing Americans who want to
use a portion of their retirement savings to adopt a child. It would
allow Americans to withdraw up to $10,000 penalty-free from their IRA
to help with adoption expenses. This is money that can be used up-front
to pay for travel, court costs, attorney fees and all of the little
surprises that add up to make adoption unaffordable for many.
We need to continue to promote adoption in America to the extent that
we can. We owe it to these children and to families across our country
to break down the barriers that keep kids from becoming a part of a
permanent loving family. I urge my colleagues' support.

____________________