[Congressional Record Volume 150, Number 72 (Thursday, May 20, 2004)]
[Senate]
[Pages S5951-S6010]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. DASCHLE (for himself, Mr. Johnson, Mr. Conrad, Mr. Wyden, and
Mr. Graham of Florida):
S. 2451. A bill to amend the agricultural Marketing Act of 1946 to
restore the application date for country of origin labeling; read the
first time.
Mr. DASCHLE. Mr. President, today the Washington Post reported that
the United States Department of Agriculture secretly allowed American
meatpackers to resume imports of ground and processed beef from Canada
last September, just weeks after Secretary Veneman publicly reaffirmed
the Department's ban on such importation as a result of mad cow disease
being found in Canadian-born cattle.
The article states that a total of 33 million pounds of Canadian
processed beef came into the United States and went straight to
American consumers under a series of undisclosed permits USDA issued to
the meatpackers.
This is how today's article describes Secretary Veneman's public
position last August:
She and her top deputies said ground beef imports would
resume only after the agency completed a formal rulemaking
process, with public debate.
There was no public debate. Instead, there were undisclosed permits
allowing banned Canadian beef in the United States.
Not only am I extremely concerned that the Department of Agriculture
deceived American consumers by allowing the import of Canadian beef
that was previously banned, but I am also disappointed that the Bush
administration is actually working to prevent American consumers from
knowing where the food they buy comes from.
That is why I am introducing a bill today that will require USDA to
implement country-of-origin labeling on schedule this September. That
was the date agreed upon in the Farm Bill which the President signed
into law in 2002.
Unfortunately, at the urging of the Bush administration and the
large meatpackers--most likely the same people who urged USDA to issue
permits to allow the importation of banned Canadian meat products--
Republican leaders in Congress inserted language into last year's
omnibus appropriations bill in the dead of night delaying
implementation of country-of-origin labeling for 2 years until
September 2006.
The bill I am introducing today is what the Senate has voted to do
several times: Inform consumers about the origin of their food.
Over 80 percent of American consumers have said they want to know
the country of origin of their food, and over 170 groups representing
over 50 million Americans support mandatory food labeling.
We must not allow anyone who may represent special interests, anyone
who now abrogates the spirit as well as the letter of the law to choose
big business interests over the interests of the average American
family. We must ensure consumer confidence, particularly now in light
of recent developments. We would have not had the situation of 33
million pounds of banned beef entering the United States if it couldn't
have been properly labeled.
This legislation is long overdue. It is time that it become the law
of the land.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2451
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
[[Page S5952]]
SECTION 1. COUNTRY OF ORIGIN LABELING.
Section 285 of the Agricultural Marketing Act of 1946 (7
U.S.C. 1638d) is amended by striking ``2006'' and all that
follows through ``2004'' and inserting ``2004''.
______
By Mr. FEINGOLD:
S. 2452. A bill to require labeling of raw agricultural of ginseng,
including the country of harvest, and for other purposes; to the
Committee on Agriculture, Nutrition, and Forestry.
Mr. FEINGOLD. Mr. President, I would like to discuss legislation I am
introducing that would protect ginseng farmers and consumers by
ensuring that ginseng sold at retail discloses where the root was
harvested. The ``Ginseng Harvest Labeling Act of 2004'' is similar to a
bill that I introduced in the last Congress, but it has been further
strengthened based on suggestions I received from ginseng growers and
the Ginseng Board of Wisconsin.
I would like to take the opportunity to discuss American ginseng and
the problems facing Wisconsin's ginseng growers so that my colleagues
recognize the need for this legislation. Chinese and Native American
cultures have used ginseng for thousands of years for herbal and
medicinal purposes. As a dietary supplement, American ginseng is widely
touted for its ability to improve energy and vitality, particularly in
fighting fatigue or stress.
In the U.S., ginseng is experiencing increasing popularity as a
dietary supplement, and I am proud to say that my home State of
Wisconsin is playing a central role in ginseng's resurgence. Wisconsin
produces 97 percent of the ginseng grown in the United States, and 85
percent of the country's ginseng is grown in just one Wisconsin county,
Marathon County. Ginseng is also grown in a number of other States such
as Maine, Maryland, New York, North Carolina, Oregon, South Carolina,
and West Virginia.
For Wisconsin, ginseng has been an economic boon. Wisconsin ginseng
commands a premium price in world markets because it is of the highest
quality and because it has a low pesticide and chemical content. In
2002, U.S. exports of ginseng totaled nearly $45 million, much of which
was grown in Wisconsin. With a huge market for this high-quality
ginseng overseas, and growing popularity for the ancient root here at
home, Wisconsin's ginseng industry should have a prosperous future
ahead.
Unfortunately, the outlook for ginseng farmers is marred by a serious
problem--smuggled and mislabeled ginseng. Wisconsin ginseng is
considered so superior to ginseng grown abroad that smugglers will go
to great lengths to label ginseng grown in Canada or Asia as
``Wisconsin-grown.''
Here's how the switch takes place: Wisconsin ginseng is shipped to
China to be sorted into various grades. While the sorting process is
itself a legitimate part of distributing ginseng, smugglers often use
it as a ruse to switch Wisconsin ginseng with Asian- or Canadian-grown
ginseng considered inferior by consumers. The lower quality ginseng is
then shipped back to the U.S. for sale to American consumers who think
they are buying the Wisconsin-grown product.
For consumers concerned with purchasing ginseng grown in the U.S.,
there is no accurate way of testing ginseng to determine where it was
grown, other than testing for pesticides that are banned in the United
States. The Ginseng Board of Wisconsin has been testing some ginseng
found on store shelves, and in many of the products, residues of
chemicals such as DDT, lead, arsenic, and quintozine (PCNB) have been
detected. Since the majority of ginseng sold in the U.S. originates
from countries with less stringent pesticide standards, it is vitally
important that consumers know which ginseng is really grown in the U.S.
To capitalize on their product's preeminence, the Ginseng Board of
Wisconsin has developed a voluntary labeling program, stating that the
ginseng is ``Grown in Wisconsin, U.S.A.'' However, Wisconsin ginseng is
so valuable that counterfeit labels and ginseng smuggling have become
widespread around the world. As a result, consumers have no way of
knowing the most basic information about the ginseng they purchase--
where it was grown, what quality or grade it is, or whether it contains
dangerous pesticides.
My legislation, the Ginseng Harvest Labeling Act of 2004, proposes
some common sense steps to address some of the challenges facing the
ginseng industry. My legislation requires that ginseng, as a raw
agricultural commodity, be sold at retail with a label clearly
indicating the country that the ginseng was harvested in. `Harvest' is
important because some Canadian and Chinese growers have ginseng plants
that originated in the U.S., but because these plants were cultivated
in the foreign country, they may have been treated with chemicals not
allowed for use in the U.S. This label would also allow buyers of
ginseng to more easily prevent foreign companies from mixing foreign-
produced ginseng with ginseng harvested in the U.S. The country of
harvest labeling is a simple but effective way to enable consumers to
make an informed decision.
We must give ginseng growers the support they deserve by implementing
these commonsense reforms that also help consumers make informed
choices about the ginseng that they consume. We must ensure that when
ginseng consumers reach for a high-quality ginseng product--such as
Wisconsin-grown ginseng--they are getting the real thing, not a knock-
off.
I ask unanimous consent that the full text of my bill, the Ginseng
Harvest Labeling Act of 2004, be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2452
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 ``Ginseng Harvest Labeling Act
of 2004''.
SEC. 2. DISCLOSURE OF COUNTRY OF HARVEST.
The Agricultural Marketing Act of 1946 (7 U.S.C. 1621 et
seq.) is amended by adding at the end the following:
``Subtitle E--Ginseng
``SEC. 291. DISCLOSURE OF COUNTRY OF HARVEST.
``(a) Definition of Ginseng.--In this section, the term
`ginseng' means an herb or herbal ingredient that--
``(1) is derived from a plant classified within the genus
Panax; and
``(2) is offered for sale as a raw agricultural commodity
in any form intended to be used in or as a food or dietary
supplement under the name of `ginseng'.
``(b) Disclosure.--
``(1) In general.--A person that offers ginseng for sale as
a raw agricultural commodity shall disclose to potential
purchasers the country of harvest of the ginseng.
``(2) Importation.--A person that imports ginseng into the
United States shall disclose the country of harvest of the
ginseng at the point of entry of the United States, in
accordance with section 304 of the Tariff Act of 1930 (19
U.S.C. 1304).
``(c) Manner of Disclosure.--
``(1) In general.--The disclosure required by subsection
(b) shall be provided to potential purchasers by means of a
label, stamp, mark, placard, or other clear and visible sign
on the ginseng or on the package, display, holding unit, or
bin containing the ginseng.
``(2) Retailers.--A retailer of ginseng shall--
``(A) retain disclosure provided under subsection (b); and
``(B) provide disclosure to a retail purchaser of the raw
agricultural commodity.
``(3) Regulations.--The Secretary of Agriculture shall by
regulation prescribe with specificity the manner in which
disclosure shall be made in transactions at wholesale or
retail (including transactions by mail, telephone, or
Internet or in retail stores).
``(d) Failure to Disclose.--The Secretary of Agriculture
may impose on a person that fails to comply with subsection
(b) a civil penalty of not more than--
``(1) $1,000 for the first day on which the failure to
disclose occurs; and
``(2) $250 for each day on which the failure to disclose
continues.''.
SEC. 3. EFFECTIVE DATE.
This Act and the amendment made by this Act take effect on
the date that is 180 days after the date of enactment of this
Act.
______
By Mr. DeWINE (for himself and Mr. Durbin):
S. 2454. A bill to amend the Peace Corps Act to establish an
Ombudsman of the Peace Corps and an Office of Safety and Security of
the Peace Corps, to establish an independent Inspector General of the
Peace Corps, and for other purposes; to the Committee on Foreign
Relations.
Mr. DeWINE. Mr. President, I ask unanimous consent that the Peace
Corps Volunteers Health, Safety, and Security Act of 2004 be printed in
the Record.
There being no objection, the bill was ordered to be printed in the
Record.
[[Page S5953]]
S. 2454
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 ``Peace Corps Volunteers
Health, Safety, and Security Act of 2004''.
SEC. 2. OMBUDSMAN OF THE PEACE CORPS.
The Peace Corps Act (22 U.S.C. 2501 et seq.) is amended by
inserting after section 4 the following new section:
``SEC. 4A. OMBUDSMAN OF THE PEACE CORPS.
``(a) Establishment.--There is established in the Peace
Corps the Office of the Ombudsman of the Peace Corps (in this
section referred to as the `Office'). The Office shall be
headed by the Ombudsman of the Peace Corps (in this section
referred to as the `Ombudsman'), who shall be appointed by
and report directly to the Director of the Peace Corps.
``(b) Volunteer Complaints and Other Matters.--The
Ombudsman shall receive and, as appropriate, inquire into
complaints, questions, or concerns submitted by current or
former volunteers regarding services or support provided by
the Peace Corps to its volunteers, including matters
pertaining to--
``(1) the safety and security of volunteers;
``(2) due process, including processes relating to
separation from the Peace Corps;
``(3) benefits and assistance that may be due to current or
former volunteers;
``(4) medical or other health-related assistance; and
``(5) access to files and records of current or former
volunteers.
``(c) Employee Complaints and Other Matters.--The Ombudsman
shall receive and, as appropriate, inquire into complaints,
questions, or concerns submitted by current or former
employees of the Peace Corps on any matters of grievance.
``(d) Additional Duties.--The Ombudsman shall--
``(1) recommend responses to individual matters received
under subsections (b) and (c);
``(2) make recommendations for legislative, administrative,
or regulatory adjustments to address recurring problems or
other difficulties of the Peace Corps;
``(3) identify systemic issues relating to the practices,
policies, and administrative procedures of the Peace Corps
that affect volunteers and employees; and
``(4) call attention to problems not yet adequately
considered by the Peace Corps.
``(e) Standards of Operation.--The Ombudsman shall carry
out the duties under this section in a manner that is--
``(1) independent, impartial in the conduct of inquiries,
and confidential; and
``(2) consistent with the revised Standards for the
Establishment and Operation of Ombudsman Offices (August
2003) as endorsed by the American Bar Association.
``(f) Involvement in Matters Subject to Ongoing
Adjudication, Litigation, or Investigation.--The Ombudsman
shall refrain from any involvement in the merits of
individual matters that are the subject of ongoing
adjudication or litigation, or investigations related to such
adjudication or litigation.
``(g) Reports.--
``(1) In general.--Not later than 180 days after the date
of the enactment of this section, and semiannually
thereafter, the Ombudsman shall submit to the Director of the
Peace Corps, the Chair of the Peace Corps National Advisory
Council, and Congress a report containing a summary of--
``(A) the complaints, questions, and concerns considered by
the Ombudsman;
``(B) the inquiries completed by the Ombudsman;
``(C) recommendations for action with respect to such
complaints, questions, concerns, or inquiries; and
``(D) any other matters that the Ombudsman considers
relevant.
``(2) Confidentiality.--Each report submitted under
paragraph (1) shall maintain confidentiality on any matter
that the Ombudsman considers appropriate in accordance with
subsection (e).
``(h) Employee Defined.--In this section, the term
`employee' means an employee of the Peace Corps, an employee
of the Office of Inspector General of the Peace Corps, an
individual appointed or assigned under the Foreign Service
Act of 1980 (22 U.S.C. 3901 et seq.) to carry out functions
under this Act, or an individual subject to a personal
services contract with the Peace Corps.''.
SEC. 3. OFFICE OF SAFETY AND SECURITY OF THE PEACE CORPS.
The Peace Corps Act (22 U.S.C. 2501 et seq.), as amended by
section 2 of this Act, is further amended by inserting after
section 4A the following new section:
``SEC. 4B. OFFICE OF SAFETY AND SECURITY OF THE PEACE CORPS.
``(a) Establishment.--There is established in the Peace
Corps the Office of Safety and Security of the Peace Corps
(in this section referred to as the `Office'). The Office
shall be headed by the Associate Director of the Peace Corps
for Safety and Security, who shall be appointed by and report
directly to the Director of the Peace Corps.
``(b) Responsibilities.--The Office established under
subsection (a) shall be responsible for all safety and
security activities of the Peace Corps, including background
checks of volunteers and staff, the safety and security of
volunteers and staff (including training), the safety and
security of facilities, the security of information
technology, and other responsibilities as required by the
Director.
``(c) Sense of Congress.--It is the sense of Congress
that--
``(1) the Associate Director of Safety and Security of the
Peace Corps, as appointed pursuant to subsection (a) of this
section, should assign a Peace Corps country security
coordinator for each country where the Peace Corps has a
program of volunteer service for the purposes of carrying out
the field responsibilities of the Office; and
``(2) each country security coordinator--
``(A) should be a United States citizen;
``(B) should be under the supervision of the Peace Corps
country director in such country;
``(C) should report directly to the Associate Director of
the Peace Corps for Safety and Security on all matters of
importance that the country security coordinator considers
necessary;
``(D) should be responsible for coordinating security
activities with the regional security officer of the Peace
Corps responsible for the country to which such country
security officer is assigned; and
``(E) should have access to information, including
classified information, relating to possible threats against
Peace Corps volunteers.''.
SEC. 4. INSPECTOR GENERAL OF THE PEACE CORPS.
(a) Establishment of Independent Inspector General.--
(1) In general.--The Inspector General Act of 1978 (5
U.S.C. App.) is amended--
(A) in section 8G(a)(2), by striking ``, the Peace Corps'';
(B) in section 9(a)(1), by adding at the end the following
new subparagraph:
``(X) of the Peace Corps, the office of that agency
referred to as the `Office of Inspector General'; and''; and
(C) in section 11--
(i) in paragraph (1), by striking ``or the Office of
Personnel Management'' and inserting ``the Office of
Personnel Management, or the Peace Corps''; and
(ii) in paragraph (2), by inserting ``, the Peace Corps''
after ``the Office of Personnel Management''.
(2) Technical amendment.--Section 9(a)(1)(U) of the
Inspector General Act of 1978 (5 U.S.C. App.) is amended by
striking ``and'' at the end.
(b) Temporary Appointment.--The Director of the Peace Corps
may appoint an individual to assume the powers and duties of
the Inspector General of the Peace Corps under the Inspector
General Act of 1978 (5 U.S.C. App.) on an interim basis until
such time as a person is appointed by the President, by and
with the advice and consent of the Senate, pursuant to the
amendments made in this section.
(c) Exemption From Employment Term Limits Under the Peace
Corps Act.--
(1) In general.--Section 7 of the Peace Corps Act (22
U.S.C. 2506) is amended--
(A) by redesignating subsection (c) as subsection (b); and
(B) by adding at the end the following new subsection:
``(c) The provisions of this section that limit the
duration of service, appointment, or assignment of
individuals shall not apply to--
``(1) the Inspector General of the Peace Corps;
``(2) officers of the Office of the Inspector General of
the Peace Corps;
``(3) any individual whose official duties primarily
include the safety and security of Peace Corps volunteers or
employees;
``(4) the head of the office responsible for medical
services of the Peace Corps; or
``(5) any health care professional within the office
responsible for medical services of the Peace Corps.''.
(2) Conforming amendment.--The first proviso of section
15(d)(4) of the Peace Corps Act (22 U.S.C. 2514(d)(4)) is
amended by striking ``7(c)'' and inserting ``7(b)''.
(d) Compensation.--Section 7 of the Peace Corps Act (22
U.S.C. 2506), as amended by subsection (c) of this section,
is further amended by adding at the end the following new
subsection:
``(d) The Inspector General of the Peace Corps shall be
compensated at the rate provided for level IV of the
Executive Schedule under section 5315 of title 5, United
States Code.''.
SEC. 5. OFFICE OF MEDICAL SERVICES OF THE PEACE CORPS.
(a) Report on Medical Screening and Placement
Coordination.--Not later than 120 days after the date of the
enactment of this Act, the Director of the Peace Corps shall
submit to the appropriate congressional committees a report
that--
(1) describes the medical screening procedures and
guidelines used by the office responsible for medical
services of the Peace Corps to determine whether an applicant
for Peace Corps service has worldwide clearance, limited
clearance, a deferral period, or is not medically, including
psychologically, qualified to serve in the Peace Corps as a
volunteer;
(2) describes the procedures and guidelines used by the
Peace Corps to ensure that applicants for Peace Corps service
are matched with a host country where the applicant can, with
reasonable accommodations, complete at least two years of
volunteer service without interruption due to foreseeable
medical conditions; and
(3) with respect to each of fiscal years 2000 through 2003
and the first six months of fiscal year 2004, states the
number of--
[[Page S5954]]
(A) medical screenings of applicants conducted;
(B) applicants who have received worldwide clearance,
limited clearance, deferral periods, and medical
disqualifications to serve;
(C) appeals to the Medical Screening Review Board of the
Peace Corps and the number of times that an initial screening
decision was upheld;
(D) requests that have been made to the head of the office
responsible for medical services of the Peace Corps for
reconsideration of a decision of the Medical Screening Review
Board and the number of times that such decisions were upheld
by the head of such office;
(E) Peace Corps volunteers who became medically qualified
to serve because of a decision of the Medical Screening
Review Board and who were later evacuated or terminated their
service early due to medical reasons;
(F) Peace Corps volunteers who became medically qualified
to serve because of a decision of the head of the office
responsible for medical services of the Peace Corps and who
were later evacuated or terminated their service early due to
medical reasons;
(G) Peace Corps volunteers who the agency has had to
separate from service due to the discovery of undisclosed
medical information; and
(H) Peace Corps volunteers who have terminated their
service early due to medical, including psychological,
reasons.
(b) Full Time Director of Medical Services.--Section 4(c)
of the Peace Corps Act (22 U.S.C. 2503(c)) is amended by
adding at the end the following new paragraph:
``(5) The Director of the Peace Corps shall ensure that the
head of the office responsible for medical services of the
Peace Corps does not occupy any other position in the Peace
Corps.''.
SEC. 6. REPORTS ON THE ``FIVE YEAR RULE'' AND ON WORK
ASSIGNMENTS OF VOLUNTEERS OF THE PEACE CORPS.
(a) Report by the Comptroller General.--
(1) In general.--Not later than one year after the date of
enactment of this Act, the Comptroller General shall submit
to the appropriate congressional committees a report on the
effects on the ability of the Peace Corps to effectively
manage Peace Corps operations of the limitations on the
duration of employment, appointment, or assignment of
officers and employees of the Peace Corps under section 7 of
the Peace Corps Act (22 U.S.C. 2506).
(2) Contents.--The report described in paragraph (1) shall
include--
(A) a description of such limitations;
(B) a description of the history of such limitations and
the purposes for which it was enacted and amended;
(C) an analysis of the impact of such limitations on the
ability of the Peace Corps to recruit capable volunteers,
establish productive and worthwhile assignments for
volunteers, provide for the health, safety, and security of
volunteers, and, as declared in section 2(a) of the Peace
Corps Act (22 U.S.C. 2501(a)), ``promote a better
understanding of the American people on the part of the
peoples served and a better understanding of other peoples on
the part of the American people'';
(D) an assessment of whether the application of such
limitations have accomplished the objectives for which they
were intended; and
(E) recommendations, if any, for legislation to amend
provisions of the Peace Corps Act that relate to such
limitations.
(b) Report on Work Assignments of Volunteers.--
(1) In general.--Not later than 180 days after the date of
the enactment of this Act, the Director of the Peace Corps
shall submit to the appropriate congressional committees a
report on the extent to which the work assignments of Peace
Corps volunteers fulfill the commitment of the Peace Corps to
ensuring that--
(A) such assignments are well developed, with clear roles
and expectations; and
(B) volunteers are well-suited for their assignments.
(2) Contents.--The report described in paragraph (1) shall
include--
(A) an assessment of the extent to which agreements between
the Peace Corps and host countries delineate clear roles for
volunteers in assisting host governments to advance their
national development strategies;
(B) an assessment of the extent to which the Peace Corps--
(i) recruits volunteers who have skills that correlate with
the expectations cited in the country agreements; and
(ii) assigns such volunteers to such posts;
(C) a description of the procedures in place for
determining volunteer work assignments and minimum standards
for such assignments;
(D) the results of a survey of volunteers on health,
safety, and security issues and of satisfaction surveys,
which are to be conducted after the date of the enactment of
this Act; and
(E) an assessment of the plan of the Peace Corps to
increase the number of volunteers who are assigned to
projects in sub-Saharan Africa, Asia, and the Western
Hemisphere, particularly among communities of African descent
within countries in the Western Hemisphere, that help combat
HIV/AIDS and other global infectious diseases.
SEC. 7. DEFINITION OF APPROPRIATE CONGRESSIONAL COMMITTEES.
In this Act, the term ``appropriate congressional
committees'' means the Committee on Foreign Relations of the
Senate and the Committee on International Relations of the
House of Representatives.
______
By Mrs. HUTCHISON:
S. 2455. A bill to amend title II of the Social security Act to
repeal the windfall elimination provision and protect the retirement of
public servants; to the Committee on Finance.
Mrs. HUTCHISON. Mr. President, I ask unanimous consent that the text
of the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2455
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 ``Public Servant Retirement
Protection Act''.
SEC. 2. REPEAL OF CURRENT WINDFALL ELIMINATION PROVISION.
Paragraph (7) of section 215(a) of the Social Security Act
(42 U.S.C. 415(a)(7)) is repealed.
SEC. 3. REPLACEMENT OF THE WINDFALL ELIMINATION PROVISION
WITH A FORMULA EQUALIZING BENEFITS FOR CERTAIN
INDIVIDUALS WITH NON-COVERED EMPLOYMENT.
(a) Substitution of Proportional Formula for Formula Based
on Covered Portion of Periodic Benefit.--
(1) In general.--Section 215(a) of the Social Security Act
(as amended by section 2 of this Act) is amended further by
inserting after paragraph (6) the following new paragraph:
``(7)(A) In the case of an individual whose primary
insurance amount would be computed under paragraph (1) of
this subsection, who--
``(i) attains age 62 after 1985 (except where he or she
became entitled to a disability insurance benefit before 1986
and remained so entitled in any of the 12 months immediately
preceding his or her attainment of age 62), or
``(ii) would attain age 62 after 1985 and becomes eligible
for a disability insurance benefit after 1985,
and who first becomes eligible after 1985 for a monthly
periodic payment (including a payment determined under
subparagraph (E), but excluding (I) a payment under the
Railroad Retirement Act of 1974 or 1937, (II) a payment by a
social security system of a foreign country based on an
agreement concluded between the United States and such
foreign country pursuant to section 233, and (III) a payment
based wholly on service as a member of a uniformed service
(as defined in section 210(m)) which is based in whole or in
part upon his or her earnings for service which did not
constitute `employment' as defined in section 210 for
purposes of this title (hereafter in this paragraph and in
subsection (d)(3) referred to as `noncovered service'), the
primary insurance amount of that individual during his or her
concurrent entitlement to such monthly periodic payment and
to old-age or disability insurance benefits shall be computed
or recomputed under subparagraph (B) or subparagraph (D) (as
applicable).
``(B) In the case of an individual who first performs
service described in subparagraph (A) after the 12th calendar
month following the date of the enactment of the Public
Servant Retirement Protection Act, if paragraph (1) of this
subsection would apply to such individual (except for
subparagraph (A) of this paragraph), the individual's primary
insurance amount shall be the product derived by
multiplying--
``(i) the individual's primary insurance amount, as
determined under paragraph (1) of this subsection and
subparagraph (C)(i) of this paragraph, by
``(ii) a fraction--
``(I) the numerator of which is the individual's average
indexed monthly earnings (determined without regard to
subparagraph (C)(i)), and
``(II) the denominator of which is an amount equal to the
individual's average indexed monthly earnings (as determined
under subparagraph (C)(i)),
rounded, if not a multiple of $0.10, to the next lower
multiple of $0.10.
``(C)(i) For purposes of determining an individual's
primary insurance amount pursuant to subparagraph (B)(i), the
individual's average indexed monthly earnings shall be
determined by treating all service performed after 1950 on
which the individual's monthly periodic payment referred to
in subparagraph (A) is based (other than noncovered service
as a member of a uniformed service (as defined in section
210(m))) as `employment' as defined in section 210 for
purposes of this title (together with all other service
performed by such individual consisting of `employment' as so
defined).
``(ii) For purposes of determining average indexed monthly
earnings as described in clause (i), the Commissioner of
Social Security shall provide by regulation for a method for
determining the amount of wages derived from service
performed after 1950 on which the individual's periodic
benefit is based and which is to be treated as `employment'
solely for purposes of clause (i). Such method shall provide
for reliance on employment records which are provided to the
Commissioner and which constitute a reasonable basis for
treatment of service as `employment' for
[[Page S5955]]
such purposes, together with such other information received
by the Commissioner as the Commissioner may consider
appropriate as a reasonable basis for treatment of service as
`employment' for such purposes.
``(D)(i) In the case of an individual who has performed
service described in subparagraph (A) during or before the
12th calendar month following the date of the enactment of
the Public Servant Retirement Protection Act, if paragraph
(1) of this subsection would apply to such individual (except
for subparagraph (A) of this paragraph), there shall first be
computed an amount equal to the individual's primary
insurance amount under paragraph (1) of this subsection,
except that for purposes of such computation the percentage
of the individual's average indexed monthly earnings
established by subparagraph (A)(i) of paragraph (1) shall be
the percent specified in clause (ii). There shall then be
computed (without regard to this paragraph) a second amount,
which shall be equal to the individual's primary insurance
amount under paragraph (1) of this subsection, except that
such second amount shall be reduced by an amount equal to
one-half of the portion of the monthly periodic payment which
is attributable to noncovered service performed after 1956
(with such attribution being based on the proportionate
number of years of such noncovered service) and to which the
individual is entitled (or is deemed to be entitled) for the
initial month of his or her concurrent entitlement to such
monthly periodic payment and old-age or disability insurance
benefits. There shall then be computed (without regard to
this paragraph) a third amount, which shall be equal to the
individual's primary insurance amount determined under
subparagraph (B) as if subparagraph (B) applied in the case
of such individual. The individual's primary insurance amount
shall be the largest of the three amounts computed under this
subparagraph (before the application of subsection (i)).
``(ii) For purposes of clause (i), the percent specified in
this clause is--
``(I) 80.0 percent with respect to individuals who become
eligible (as defined in paragraph (3)(B)) for old-age
insurance benefits (or became eligible as so defined for
disability insurance benefits before attaining age 62) in
1986;
``(II) 70.0 percent with respect to individuals who so
become eligible in 1987;
``(III) 60.0 percent with respect to individuals who so
become eligible in 1988;
``(IV) 50.0 percent with respect to individuals who so
become eligible in 1989; and
``(V) 40.0 percent with respect to individuals who so
become eligible in 1990 or thereafter.
``(E)(i) Any periodic payment which otherwise meets the
requirements of subparagraph (A), but which is paid on other
than a monthly basis, shall be allocated on a basis
equivalent to a monthly payment (as determined by the
Commissioner of Social Security), and such equivalent monthly
payment shall constitute a monthly periodic payment for
purposes of this paragraph.
``(ii) In the case of an individual who has elected to
receive a periodic payment that has been reduced so as to
provide a survivor's benefit to any other individual, the
payment shall be deemed to be increased (for purposes of any
computation under this paragraph or subsection (d)(3) by the
amount of such reduction.
``(iii) For purposes of this paragraph, the term `periodic
payment' includes a payment payable in a lump sum if it is a
commutation of, or a substitute for, periodic payments.
``(F)(i) Subparagraph (D) shall not apply in the case of an
individual who has 30 years or more of coverage. In the case
of an individual who has more than 20 years of coverage but
less than 30 years of coverage (as so defined), the percent
specified in the applicable subdivision of subparagraph
(D)(ii) shall (if such percent is smaller than the applicable
percent specified in the following table) be deemed to be the
applicable percent specified in the following table:
``If the number of such individual's years of coverage (as so defined)
is: The applicable percent is:
29...........................................................85 percent
28...........................................................80 percent
27...........................................................75 percent
26...........................................................70 percent
25...........................................................65 percent
24...........................................................60 percent
23...........................................................55 percent
22...........................................................50 percent
21...........................................................45 percent
``(ii) For purposes of clause (i), the term `year of
coverage' shall have the meaning provided in paragraph
(1)(C)(ii), except that the reference to `15 percent' therein
shall be deemed to be a reference to `25 percent'.
``(G) An individual's primary insurance amount determined
under this paragraph shall be deemed to be computed under
paragraph (1) of this subsection for the purpose of applying
other provisions of this title.
``(H) This paragraph shall not apply in the case of an
individual whose eligibility for old-age or disability
insurance benefits is based on an agreement concluded
pursuant to section 233 or an individual who on January 1,
1984--
``(i) is an employee performing service to which social
security coverage is extended on that date solely by reason
of the amendments made by section 101 of the Social Security
Amendments of 1983; or
``(ii) is an employee of a nonprofit organization which (on
December 31, 1983) did not have in effect a waiver
certificate under section 3121(k) of the Internal Revenue
Code of 1954 and to the employees of which social security
coverage is extended on that date solely by reason of the
amendments made by section 102 of that Act, unless social
security coverage had previously extended to service
performed by such individual as an employee of that
organization under a waiver certificate which was
subsequently (prior to December 31, 1983) terminated.''.
(2) Conforming amendments.----
(A) Section 215(d)(3) of such Act (42 U.S.C. 415(d)(3)) is
amended--
(i) by striking ``subsection (a)(7)(C)'' each place it
appears and inserting ``subsection (a)(7)(E)'';
(ii) by striking ``subparagraph (E)'' and inserting
``subparagraph (H)''; and
(iii) by striking ``subparagraph (D)'' and inserting
``subparagraph (F)(i)''.
(B) Section 215(f)(9)(A) of such Act (42 U.S.C.
415(f)(9)(A)) is amended by striking ``(a)(7)(C)'' and
inserting ``(a)(7)(E)''.
SEC. 4. EFFECTIVE DATE.
The amendments made by this Act shall apply with respect to
monthly insurance benefits for months commencing with or
after the 12th calendar month following the date of the
enactment of this Act. Notwithstanding section 215(f) of the
Social Security Act, the Commissioner of Social Security
shall recompute primary insurance amounts to the extent
necessary to carry out the amendments made by this Act.
______
By Mr. REID (for himself and Mr. Ensign):
S. 2458. A bill to provide for the conveyance of certain public lands
in and around historic mining townsites in Nevada, and for other
purposes; to the Committee on Energy and Natural Resources.
Mr. REID. Mr. President, I rise today on behalf of myself and Senator
Ensign to introduce the Nevada Mining Townsite Conveyance Act, which
will address an important public land issue in rural Nevada. As you may
know, the Federal Government controls over 87 percent of the State of
Nevada. That's more than 61 million acres of land. This fact makes it
necessary for our State and our communities to pursue Federal remedies
for problems that in other States can be handled in a much more
expeditious manner. With this in mind, Senator Ensign and I look
forward to working with our colleagues to pass this common-sense
legislation in a bipartisan and timely fashion.
Two rural counties in Nevada have asked for our help in settling
longstanding trespass issues that hurt 2 historic mining communities.
The towns of Ione and Gold Point have been continuously occupied for
over 100 years. Many residents live on land that their families have
ostensibly owned for many decades. These citizens have paid their
property taxes and made improvements to their properties, rehabilitated
historic structures and built new ones.
The documents by which many of these people claim possession of the
properties date back many years. In fact, some of the deeds are
historic documents themselves. Yet because many of these documents do
not satisfy modern requirements for demonstrating land title, they have
been deemed invalid. In other words, the Bureau of Land Management has
determined that some of the residents of Ione and Gold Point are
trespassing on Federal land. This unfortunate situation puts the BLM at
odds with the local residents and county governments.
Nye County, Esmeralda County, and the BLM have worked together for
almost 10 years to come up with a solution to this problem. All of
these parties support the legislation that we offer today as a solution
to these land ownerships conflicts, and as a means of promoting
responsible resource management. All of the land included in our bill
has been identified by the BLM for disposal.
Our legislation represents the first of a two-part solution. Under
this bill, specified lands within the historic mining townsites of Ione
and Gold Point would be conveyed to the respective counties. Under the
provisions of a State law passed several years ago in Nevada, the
counties will then re-convey the land to these people or entities who
can demonstrate ownership or longstanding occupancy of specific land
parcels.
The sum of our bill is that it conveys for no consideration
approximately 760 acres in Ione and Gold Point to the counties of Nye
and Esmeralda. As a condition of the conveyance, all historic and
cultural resources contained in the townsites shall be preserved and
protected under applicable Federal and State law. These conveyances
will benefit the agencies that manage Nevada's
[[Page S5956]]
vast Federal lands as well as the proud citizens of our rural
communities. We sincerely hope that our colleagues will support this
legislation. It is a practical solution that deserves swift passage. We
salute the Bureau of Land Management, the counties, and the local
residents for their cooperation and hard work in crafting this
excellent compromise.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
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 ``Nevada Mining Townsite
Conveyance Act''.
SEC. 2. DISPOSAL OF PUBLIC LANDS IN MINING TOWNSITES,
ESMERALDA AND NYE COUNTIES, NEVADA.
(a) Findings.-- Congress finds the following:
(1) The Federal Government owns real property in and around
historic mining townsites in the counties of Esmeralda and
Nye in the State of Nevada.
(2) While the real property is under the jurisdiction of
the Secretary of the Interior, acting through the Bureau of
Land Management, some of the real property land has been
occupied for decades by persons who took possession by
purchase or other documented and putatively legal
transactions, but whose continued occupation of the real
property constitutes a ``trespass'' upon the title held by
the Federal Government.
(3) As a result of the confused and conflicting ownership
claims, the real property is difficult to manage under
multiple use policies and creates a continuing source of
friction and unease between the Federal Government and local
residents.
(4) All of the real property is appropriate for disposal
for the purpose of promoting administrative efficiency and
effectiveness, and the Bureau of Land Management has already
identified certain parcels of the real property for disposal.
(5) Some of the real property contains historic and
cultural values that must be protected.
(6) To promote responsible resource management of the real
property, certain parcels should be conveyed to the county in
which the property is situated in accordance with land use
management plans of the Bureau of Land Management so that the
county can, among other things, dispose of the property to
persons residing on or otherwise occupying the property.
(b) Mining Townsite Defined.--In this section, the term
``mining townsite'' means real property in the counties of
Esmeralda and Nye, Nevada, that is owned by the Federal
Government, but upon which improvements were constructed
because of a mining operation on or near the property and
based upon the belief that--
(1) the property had been or would be acquired from the
Federal Government by the entity that operated the mine; or
(2) the person who made the improvement had a valid claim
for acquiring the property from the Federal Government.
(c) Conveyance Authority.--
(1) In general.--Notwithstanding sections 202 and 203 of
the Federal Land Policy and Management Act of 1976 (43 U.S.C.
1712, 1713), the Secretary of the Interior, acting through
the Bureau of Land Management, shall convey, without
consideration, all right, title, and interest of the United
States in and to mining townsites (including improvements
thereon) identified for conveyance on the maps entitled
``Original Mining Townsite Ione Land Disposal Map Nye
County'' and ``Original Mining Townsite Gold Point Land
Disposal Map Esmeralda County'' dated October 29, 2003.
(2) Availability of maps.--The maps referred to in
paragraph (1) shall be on file and available for public
inspection in the appropriate offices of the Secretary of the
Interior, including the office of the Bureau of Land
Management located in the State of Nevada.
(d) Recipients.--
(1) Original recipient.--Subject to paragraph (2), the
conveyance of a mining townsite under subsection (c) shall be
made to the county in which the mining townsite is situated.
(2) Reconveyance to occupants.--In the case of a mining
townsite conveyed under subsection (c) for which a valid
interest is proven by one or more persons, under the
provisions of Nevada Revised Statutes Chapter 244, the county
that received the mining townsite under paragraph (1) shall
reconvey the property to that person or persons by
appropriate deed or other legal conveyance as provided in
that State law. For purposes of proving a valid interest, the
person making the claim must have occupied the mining
townsite for at least 15 years immediately before the date of
the enactment of this Act. The county is not required to
recognize a claim under this paragraph submitted more than 10
years after the date of the enactment of this Act.
(e) Protection of Historic and Cultural Resources.--As a
condition on the conveyance or reconveyance of a mining
townsite under subsection (c), all historic and cultural
resources (including improvements) on the mining townsite
shall be preserved and protected in accordance with
applicable Federal and State law.
(f) Valid Existing Rights.--The conveyance of a mining
townsite under this section shall be subject to valid
existing rights, including any easement or other right-of-way
or lease in existence as of the date of the conveyance. All
valid existing rights and interests of mining claimants shall
be maintained, unless those rights or interests are deemed
abandoned and void or null and void under--
(1) section 2320 of the Revised Statutes (30 U.S.C. 21 et
seq);
(2) the Federal Land Policy and Management Act of 1976 (43
U.S.C. 1701 et seq); or
(3) subtitle B of title X of the Omnibus Budget
Reconciliation Act of 1993 (30 U.S.C. 28(f)-(k)), including
regulations promulgated under section 3833.1 of title 43,
Code of Federal Regulations or any successor regulation.
(g) Survey.--A mining townsite to be conveyed by the United
States under this section shall be sufficiently surveyed to
legally describe the land for patent conveyance.
(h) Release.--On completion of the conveyance of a mining
townsite under subsection (c), the United States shall be
relieved from liability for, and shall be held harmless from,
any and all claims arising from the presence of improvements
and materials on the conveyed property.
(i) Authorization of Appropriations.--There is authorized
to be appropriated to the Secretary of the Interior such
amounts as may be necessary to carry out the conveyances
required by this section, including funds to cover the costs
of cadastral and mineral surveys, mineral potential reports,
hazardous materials, biological, cultural and archaeological
clearances, validity examinations and other expenses
incidental to the conveyances.
______
By Mr. ROCKEFELLER:
S. 2459. A bill to authorize the Secretary of Homeland Security to
award research and equipment grants, to provide a tax credit for
employers who hire temporary workers to replace employees receiving
first responder training, to provide school-based mental health
training, and for other purposes; to the Committee on Finance.
Mr. ROCKEFELLER. Mr. President, I am proud today to introduce the
Community Security Act of 2004. This bill is intended to help prepare
our Nation to cope with future disasters, as well as help the daily
work of our first responders, by adequately training and equipping
them, and by increasing Federal investments in relevant research and
development. While much of the bill applies generally to all first
responders, this legislation gives special emphasis to the role of
volunteer first responders.
As my colleagues surely know, volunteers make up a very significant
portion of our Nation's fire service, as well as emergency medical
personnel and, to a somewhat lesser degree, law enforcement. The role
of volunteers is especially prominent in rural areas, such as in my
State of West Virginia. Making certain that local governments can
recruit and retain first responders, and that once serving, these
dedicated men and women have the necessary tools, are essential factors
in protecting our communities.
Inspiration for much of this bill came from the West Virginia Summit
on Homeland Security, which I hosted in November of last year, and from
the numerous roundtable discussions I have had with my State's first
responders since the terrorist attacks on our country on September 11,
2001. During the Summit and in the discussions that preceded it, first
responders, educators, health officials, and local elected officials
from around West Virginia provided me with thoughtful analysis of what
works in Federal assistance programs, what doesn't, and what has been
completely lacking.
Although the President and Congress have made great strides in
improving our homeland security, there are still gaping holes in our
level of preparedness that must be filled. For the most part, the
Federal Government is the only source of funding for this work; work
that must be done. This legislation is based on what first responders
have told me they need and is intended to address these needs.
What was reiterated in meeting after meeting was that the gaps were
many, and that additional State funding was unlikely. As almost every
State in the Union faces budget shortfalls, I expect my colleagues have
heard much the same thing. First responders and local politicians need
to recruit and train volunteers; they need the Federal Government to
help them supply these men and women with basic lifesaving and
interoperable communication equipment; and they need help in fostering
cooperation among not only the
[[Page S5957]]
different professions within the first responder community, but between
first responders and the education and social service communities.
Many areas of concern were discussed and it became clear to me that
no one program could address all of them. Instead of introducing a
number of small bills, I've put together a package of legislation that
contains several arguably unrelated provisions that have one thing in
common--each is designed to improve homeland security at the local
level.
In West Virginia and across the Nation, the numbers of volunteer
first responders have been dwindling due to a number of factors--
National Guard and Reserve call-ups and changing American lifestyles
that leave little time for the serious commitment necessary to be a
first responder. It is believed that many more people would volunteer,
or would continue in their service as volunteers, if there were a way
to carve out more time for the training involved. In addition to basic
training, West Virginia and other states require additional training
for first responders who choose to serve in units specializing in
Weapons of Mass Destruction (WMD) response, or mitigation of biohazards
and chemical releases. In fact, Secretary Ridge has cited West
Virginia's homeland security plan, including development of highly
trained Regional Response Teams, as an example for other States to
follow.
The problem is, earning the right to be part of one of these teams--
made up of the best of the best in their respective disciplines--
requires training that most volunteers, who are holding down full-time
jobs in addition to their public service and family responsibilities,
cannot find the time for, or in some cases, afford. For example, West
Virginia's Regional Response Team members are required, within the
first two years, to complete 200 hours of specialized training over and
above what is already required in their roles as firefighters or EMTs.
For many volunteer first responders, this time commitment is difficult
to meet but, for those whose jurisdictions do not pay training costs,
it is impossible to justify.
To remedy this situation, this bill creates two tax incentives: a
business credit to encourage small businesses to allow their volunteer
first responder employees to take time off for training, and a personal
deduction for the first responders themselves, when training and
related expenses are not reimbursed by their State or local government.
My conversations with West Virginia first responders and local
officials have also taught me that even when a State is well prepared
or, in the case of West Virginia, exceptionally prepared, gaps can
still exist at the local level which put citizens at risk. Some local
first responder units, especially those in rural areas, do not feel as
prepared as they know they should be. For example, a recent report
found that most fire departments across the country had only enough
radios for one-half of the firefighters on a shift and breathing
apparatuses for only one-third. Without these basics, these brave men
and women are not adequately equipped to respond to a house fire and
are at a serious disadvantage when responding to a critical incident.
Similarly, some firehouses and police stations lack basic
telecommunications equipment. I have been concerned for some time that
many of our police departments in rural areas were operating without
the crime-fighting tools at their disposal that computers and high-
speed Internet connections offer. So, while I was not necessarily
surprised, I was a little troubled that the lack of modern
telecommunications equipment--computer hardware, Internet service and
e-mail, and multiple phone and fax lines--was hampering the ability of
fire departments and EMS units to serve their communities. Given the
wealth of information available and the greater amounts of first
responder work conducted over the Internet, these basic office tools
are essential to guarantee the safety and protection of our citizens.
For instance, where this equipment is available, some first responder
training is now being done over the Internet, saving departments time
and money. Rural firehouses are probably the ones least likely to have
an Internet-accessible computer and are also the least likely to be
able to fund a longer trip to a fire school.
So, this legislation requires the Secretary of Homeland Security to
assess the critical needs of a first responder unit, from personal
safety equipment to office machines, and establishes a grant program to
provide the basic equipment essential for carrying out the constantly
expanding responsibilities of local first responders. The Secretary is
to give emphasis to those departments most in need. These departments
will often, but not always, be rural departments.
The other areas I cover in this bill are a bit of a departure from
standard measures to increase funding and provide better equipment for
first responders. They are, I believe, no less important to the goal of
improving the safety and security of our towns and cities. Again, my
conversations with people on the front lines--in this instance teachers
and academic experts on homeland security and mental health--inspired
these provisions.
Our communities have had to adjust to some new realities. Our schools
find themselves thrust into a role in disaster preparedness and
response that most educators never before considered. When I asked
school personnel what was needed to improve the circumstance of schools
in homeland security preparation, response, and mitigation efforts, I
was surprised to hear their answer--mental health professionals in the
schools and training for school staff in mental health issues. This
bill works to address these community needs in two ways. First, in the
unfortunate event that a school is the scene of a disaster, or is
called upon to assist a community in response to a disaster elsewhere,
this bill provides that community with a reimbursement mechanism for
related expenses. Second, the bill creates a sustainable program to
provide school-based mental health services to all students. I am
convinced that having mental health professionals in schools to train
students and faculty about disaster avoidance and preparation makes for
safer, healthier schools and more stable communities.
Our institutions of higher learning are already contributing to
homeland security. The Department of Homeland Security has a program of
university-based research, and this legislation proposes to expand it
with a new research grant program to supplement the surprising dearth
of research that has been conducted on human factors in homeland
security, including first responder group dynamics, citizens' response
to disasters, and the human factors behind preparation efforts. We know
that a primary goal of terrorists is to disrupt social systems, and
this social disruption is often more devastating to a community then
the attack itself. I have actively supported both basic and applied
scientific research throughout my Senate career, and I believe science
should guide policy. This research grant program will fund research on
how terrorism and the threat of terrorism impacts the average citizen,
how the inevitable societal disruption can be mitigated, and will help
guide disaster planning and optimize the performance of first responder
units and the systems designed to assist them.
Historically, some States have benefited more than others under
traditional grant systems and in response to that situation, our
leading science funding organizations have developed special programs
to encourage the growth of research in under represented states. For
example, the National Science Foundation designed the Experimental
Program to Stimulate Competitive Research to support academic research
and development across the nation and to counteract the trend that
concentrated research expertise in a few states. This bill allows for a
similar program to be developed within the Department of Homeland
Security. Homeland security is regional and research and personnel
expertise must be distributed around the country. Unfortunately,
terrorist threats against the United States are not restricted to a
single geographic area, terrorist group, or method of threat. Terrorism
is possible in many parts of our country that have never had to prepare
for, or respond to, such attacks. Addressing these threats requires
regional and local expertise; thus the homeland security- related
scientific and technological workforce and training must not be overly
centralized.
[[Page S5958]]
Our country has worked extraordinarily hard to prepare for disaster.
The Local Preparation Act is designed to assist these preparation
efforts by guaranteeing adequate numbers of first responders, providing
them with the training and protection they need, and improving the
safety and security of our communities. Local preparation is the
bedrock of our state-wide and national efforts. I firmly believe these
goals will be achieved through the innovative programs contained in
this bill. I want to thank Summit participants as well as the men and
women who have taken time out of their busy schedules to help work
through the best way to design these new programs. Also, I want to
thank first responders, both volunteer and career. After all, they are
the original inspiration for 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. 2459
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Community Security Act''.
SEC. 2. TAX INCENTIVES TO FACILITATE TRAINING OR DISASTER
RESPONSE BY INDIVIDUALS SERVING AS VOLUNTEER
FIRST RESPONDERS.
(a) Findings.--Congress makes the following findings:
(1) Seventy percent of our Nation's firefighters are
volunteers, as are many emergency medical service and police
personnel.
(2) States rely heavily on the services of these volunteer
first responders.
(3) Many career first responders begin as volunteers.
(4) Volunteer first responders need the same preparation
and training as career first responders. Advanced training is
frequently required before volunteer first responders can be
fully integrated in a State homeland security plan.
(5) The training and duties of volunteer first responders
sometimes conflict with their regular employment for
significant periods of time, such as in cases of out-of-State
training and disaster response. In these cases employers may
need to hire temporary replacement workers or incur other
related costs while the volunteer responders are away from
work. The burden of temporarily replacing these employees is
particularly great for small and single-employer businesses.
(b) Volunteer First Responder Credit.--
(1) In general.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business-related credits), as amended
by this Act, is amended by adding at the end the following:
``SEC. 45G. CREDIT TO EMPLOYERS OF VOLUNTEER FIRST
RESPONDERS.
``(a) General Rule.--For purposes of section 38, the
volunteer first responder employee credit is an amount equal
to 50 percent of the sum of--
``(1) the employment credit with respect to all qualified
volunteer first responder employees of the taxpayer,
``(2) in the case of a small business employer, the
replacement credit with respect to all qualified volunteer
first responder employees of the taxpayer, plus
``(3) the self-employment credit of a qualified volunteer
first responder self-employed taxpayer.
``(b) Employment Credit.--For purposes of this section--
``(1) In general.--The employment credit with respect to
any qualified volunteer first responder employee of the
taxpayer is an amount equal to the lesser of--
``(A) the actual compensation amount with respect to such
employee for such taxable year, or
``(B) $30,000.
``(2) Actual compensation amount.--
``(A) In general.--The term `actual compensation amount'
means the amount of compensation paid or incurred by the
taxpayer with respect to a qualified volunteer first
responder employee on any day when such employee was absent
from employment for the purpose of participating in a
qualified activity.
``(B) Compensation.--The term `compensation' means any
remuneration for employment, whether in cash or in kind,
which is paid or incurred by a taxpayer and which is
deductible from the taxpayer's gross income under section
162(a)(1).
``(3) Limitation.--No credit shall be allowed under this
subsection with respect to any day that a qualified volunteer
first responder employee who takes part in a qualified
activity was not scheduled to work (for reason other than to
participate in a qualified activity).
``(c) Replacement Credit.--For purposes of this section.--
``(1) In general.--The replacement credit with respect to
any qualified volunteer first responder employee of the
taxpayer is an amount equal to the sum of--
``(A) the qualified compensation with respect to each
qualified replacement employee of the taxpayer paid by the
taxpayer during the taxable year, and
``(B) the qualified overtime wages paid by the taxpayer
during the taxable year.
``(2) Limitation.--The amount of the credit allowed by
reason of this subsection shall not exceed $12,000 for any
taxable year.
``(3) Qualified compensation.--The term `qualified
compensation' means--
``(A) compensation which is normally contingent on the
qualified replacement employee's presence for work and which
is deductible from the taxpayer's gross income under section
162(a)(1),
``(B) compensation which is not characterized by the
taxpayer as vacation or holiday pay, or as sick leave or pay,
or as any other form of pay for a nonspecific leave of
absence, and
``(C) group health plan costs (if any) with respect to the
qualified replacement employee.
``(4) Qualified replacement employee.--The term `qualified
replacement employee' means an individual who is hired to
replace a qualified volunteer first responder employee, but
only with respect to the period during which such employee
participates in a qualified activity, including time spent in
travel status.
``(5) Qualified overtime wages.--For purposes of this
section, the term `qualified overtime wages' means overtime
wages paid to an employee of the taxpayer (other than a
qualified replacement employee) for duties normally performed
by a qualified volunteer first responder employee, but only
with respect to the period during which such qualified
volunteer first responder employee participates in a
qualified activity, including time spent in travel status.
``(6) Coordination with other credits.--The amount of
credit otherwise allowable under sections 51(a) and 1396(a)
with respect to any employee shall be reduced by the credit
allowed by reason of paragraph (1)(A) with respect to such
employee.
``(d) Self-Employment Credit.--For purposes of this
section--
``(1) In general.--The self-employment credit with respect
to a qualified volunteer first responder self-employed
taxpayer is an amount equal to the amount paid or incurred by
such taxpayer with respect to a qualified self-employment
replacement employee.
``(2) Qualified volunteer first responder self-employed
taxpayer.--The term `qualified volunteer first responder
self-employed taxpayer' means a taxpayer who--
``(A) has self-employment income (as defined in section
1402) for the taxable year, and
``(B) holds a volunteer position as a firefighter, law
enforcement official, or emergency medical service provider.
``(3) Qualified self-employment replacement employee.--The
term `qualified self-employment replacement employee' means
an individual who is hired to replace the qualified volunteer
first responder self-employed taxpayer, but only with respect
to the period during which such taxpayer participates in a
qualified activity, including time spent in travel status.
``(e) Definitions and Other Rules.--For purposes of this
section--
``(1) Qualified volunteer first responder employee.--The
term `qualified volunteer first responder employee' means an
individual who--
``(A) has been an employee of the taxpayer for the 91-day
period immediately preceding the period during which the
employee participates in a qualified activity, and
``(B) holds a volunteer position as a firefighter, law
enforcement official, or emergency medical service provider.
``(2) Qualified activity.--The term `qualified activity'
means--
``(A) training with respect to duties performed in
connection with the volunteer position of the qualified
volunteer first responder employee or qualified volunteer
first responder self-employed taxpayer, and
``(B) the performance of duties in connection with the
volunteer position of the qualified volunteer first responder
employee or qualified volunteer first responder self-employed
taxpayer, but only to the extent that such duties take not
less than 1 day to perform.
``(3) Small business employer.--
``(A) In general.--The term `small business employer'
means, with respect to any taxable year, any employer who
employed an average of 200 or fewer employees on business
days during such taxable year.
``(B) Controlled groups.--For purposes of subparagraph (A),
all persons treated as a single employer under subsection
(b), (c), (m), or (o) of section 414 shall be treated as a
single employer.''.
(2) Credit made part of general business credit.--Section
38(b) of the Internal Revenue Code of 1986 is amended by
striking ``plus'' at the end of paragraph (14), by striking
the period at the end of paragraph (15) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(16) the volunteer first responder employee credit
determined under section 45G.''.
(3) Transition rule.--Section 39(d) of the Internal Revenue
Code of 1986 is amended by adding at the end the following
new paragraph:
``(11) No carryback of volunteer first responder employee
credit before enactment.--No portion of the unused business
[[Page S5959]]
credit for any taxable year which is attributable to the
volunteer first responder employee credit determined under
section 45G may be carried back to a taxable year beginning
before January 1, 2004.''.
(4) Denial of double benefit.--Section 280C(a) of the
Internal Revenue Code of 1986 (relating to rule for
employment credits) is amended_
(A) by inserting ``or compensation'' after ``salaries'',
and
(B) by inserting ``45G,'', after ``45A(a),''.
(5) Conforming amendment.--The table of sections for
subpart D of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new item:
``Sec. 45G. Credit to employers of volunteer first responders.''.
(6) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31,
2003.
(c) Deduction for Certain Expenses of Volunteer First
Responders.--
(1) Deduction for travel expenses.--
(A) Deduction allowed.--Section 162 (relating to certain
trade or business expenses) is amended by redesignating
subsection (q) as subsection (r) and inserting after
subsection (p) the following new subsection:
``(q) Treatment of Expenses of Volunteer First
Responders.--For purposes of subsection (a)(2), in the case
of an individual who participates in a qualified activity
(within the meaning of section 45G(e)(2)) as a volunteer
first responder (within the meaning of section 224) at any
time during the taxable year, such individual shall be deemed
to be away from home in the pursuit of a trade or business
for any period during which such individual is away from home
in connection with such participation.''.
(B) Deduction allowed whether or not taxpayer elects to
itemize.--Section 62(a)(2) (relating to certain trade and
business deductions of employees) is amended by adding at the
end the following new subparagraph:
``(F) Certain expenses of volunteer first responders.--The
deductions allowed by section 162 which consist of expenses,
determined at a rate not in excess of the rates for travel
expenses (including per diem in lieu of subsistence)
authorized for employees of agencies under subchapter I of
chapter 57 of title 5, United States Code, paid or incurred
by the taxpayer in connection with participation in qualified
activities (as defined in section 45G(e)(2)) as a volunteer
first responder for any period during which such individual
is more than 100 miles away from home in connection with such
qualified activities.''.
(2) Deduction for training expenses.--
(A) In general.--Part VII of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 (relating to additional
itemized deduction for individuals) is amended by
redesignating section 224 as section 225 and by inserting
after section 223 the following new section:
``SEC. 224. CERTAIN EXPENSES OF VOLUNTEER FIRST RESPONDERS.
``(a) In General.--In the case of a volunteer first
responder, there shall be allowed as a deduction an amount
equal to the expenses paid or incurred by the volunteer first
responder necessary for training with respect to duties
performed in connection with the volunteer position of such
volunteer first responder.
``(b) Volunteer First Responder.--For purposes of this
section, the term `volunteer first responder' means an
individual who holds a volunteer position as a firefighter,
law enforcement official, or emergency medical service
provider.''.
(B) Deduction allowed whether or not taxpayer elects to
itemize.--Section 62(a) of such Code (relating to adjusted
gross income) is amended by adding at the end the following
new section:
``(20) Volunteer first responder training expenses.--The
deduction allowed by section 224.''.
(C) Conforming amendment.--The table of section for part
VII of subchapter B of chapter 1 of such Code is amended by
striking the item relating to section 224 and inserting the
following:
``Sec. 224. Certain expenses of volunteer first responders.
``Sec. 225. Cross reference.''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31,
2003.
SEC. 3. CRITICAL NEED GRANTS FOR FIRST RESPONDERS.
(a) Findings.--Congress finds the following:
(1) According to a report by the Council on Foreign
Relations Independent Task Force, first responders in the
United States are underfunded and unprepared for future
natural, technological, and human-caused disasters.
(2) Local firefighters, police officers, and emergency
medical personnel are responsible for disaster prevention,
mitigation, and response.
(3) It is essential that first responders have basic safety
equipment that is in good working order and customized, if
appropriate, to do their jobs as safely and effectively as
possible.
(4) All first responder operation centers need basic
communications equipment, including--
(A) multiple touch-tone phone lines;
(B) a fax machine with a dedicated phone line;
(C) a computer with a high-speed connection to the
Internet; and
(D) personal communication devices for shift supervisors,
their commanders, and all first responders in a work unit.
(b) Purpose.--The purpose of this section is to establish a
competitive grant program within the Department of Homeland
Security to provide first responders with the basic equipment
needed to accomplish their homeland security goals.
(c) Local Critical Need Homeland Security Grants for First
Responders.--Title V of the Homeland Security Act of 2002 (6
U.S.C. 311 et seq.) is amended by adding at the end the
following:
``SEC. 510. LOCAL CRITICAL NEED HOMELAND SECURITY GRANTS FOR
FIRST RESPONDERS.
``(a) Definitions.--As used in this section, the following
definitions shall apply:
``(1) Basic personal equipment.--The term `basic personal
equipment' means equipment necessary to achieve the standard
of basic preparedness established by the Under Secretary for
Emergency Preparedness and Response under subsection (d),
including--
``(A) personal breathing apparatus;
``(B) protective equipment; and
``(C) bulletproof vests.
``(2) Communications enhancement.--The term `communications
enhancement' means improvements to local first responder
communications systems that are necessary to achieve the
standard of basic preparedness established by the Under
Secretary for Emergency Preparedness and Response under
subsection (d), including the development or enhancement of--
``(A) emergency operations centers;
``(B) processes and facilities for information sharing
among different levels and first responder units; and
``(C) communications capabilities within individual
firehouses, police precincts, or other centers of emergency
operation.
``(b) Standard of Basic Preparedness.--Not later than
September 30, 2005, the Under Secretary for Emergency
Preparedness and Response shall establish a standard of basic
preparedness for local first responders, which shall provide
for maximum State flexibility.
``(c) Grants Authorized.--The Secretary may award need-
based, competitive grants to States and units of local
government to be used for basic personal equipment and
communications enhancement needed to perform their disaster
response, mitigation, and recovery missions.
``(d) Application.--
``(1) In general.--Each eligible entity desiring a grant
under this section shall submit an application to the Under
Secretary for Emergency Preparedness and Response at such
time, in such manner, and containing such information,
including the safety and communications equipment to be
purchased with grant funds, as the Under Secretary may
reasonably require.
``(2) Priority.--
``(A) In general.--The Under Secretary shall give the
highest priority to applicants demonstrating the greatest
need for basic personal equipment and communication
enhancements when compared to the standard of basic
preparedness established under subsection (d).
``(B) Interim priority.--Until a standard of basic
preparedness is established under subsection (d), the
Secretary shall give highest priority to applicants that
demonstrate the greatest need for basic personal equipment
and communication enhancements when compared to the standard
under consideration.
``(3) Evaluation plans.--The Secretary shall use evaluation
plans under consideration to help determine which applicants
will receive grants under this section.
``(e) Authorization of Appropriations.--There are
authorized to be appropriated, for each of fiscal years 2005
through 2007, such sums as may be necessary to carry out this
section, which shall remain available until expended.''.
SEC. 4. SAFE SCHOOLS THROUGH MENTAL HEALTH PROGRAM.
(a) Grants Authorized.--Subpart 2 of part A of title IV of
the Elementary and Secondary Education Act of 1965 (20 U.S.C.
7131 et seq.) is amended by adding at the end the following:
``SEC. 4131. MENTAL HEALTH PROGRAMS.
``(a) Purpose.--The purpose of this section is to provide
grants to States and local educational agencies--
``(1) to prepare for and respond to disasters or terrorism
in or impacting schools;
``(2) to prevent avoidable disasters, such as in-school or
school-related violence;
``(3) to establish community-sustainable mental health
programs in schools; and
``(4) to train school personnel on mental health issues,
including disaster and terrorism prevention, response, and
mitigation.
``(b) Findings.--Congress makes the following findings:
``(1) Schools occupy a unique place in the community. In
addition to their main mission of educating children, they
serve a public education role and a role in community
organization.
``(2) Schools have new responsibilities in the homeland
security era and in terms of disaster response. Schools often
serve as community meeting places, centers of operation for
disaster response, and shelters, and have a place in
preventing some disasters from happening. Schools may also be
called upon to fill novel roles in the case of a disaster,
such as keeping children safe after normal school hours.
[[Page S5960]]
``(3) Some disasters, such as in-school violence, are
largely preventable. Mental health professionals in schools
may be able to anticipate and prevent school-related
disasters and are better positioned to mitigate disaster
effects.
``(4) After any disaster, people benefit from returning to
their normal routine to whatever extent possible. Schools may
be in the position to mitigate disaster-related stress.
``(c) Definition.--In this section, the term `eligible
entity' means a public school or a local educational agency.
``(d) Safe Schools Through Mental Health Program.--
``(1) Grants authorized.--From funds made available to
carry out this subpart under section 4003(2), the Secretary
shall award grants to eligible entities to pay the Federal
share of the cost of carrying out the activities described in
paragraph (3).
``(2) Application.--An eligible entity that desires to
receive a grant under this subsection shall submit an
application to the Secretary at such time, in such manner,
and accompanied by such information as the Secretary may
require, including a certification that the eligible entity
will provide the necessary State or local funding to continue
the activities initiated with the grant during the 5-year
period beginning on the date on which such grant is awarded.
``(3) Uses of funds.--An eligible entity that receives a
grant under this subsection may use the grant funds to--
``(A) train elementary school and secondary school
teachers, administrators, and other professionals to--
``(i) identify and prevent avoidable disasters; and
``(ii) assist children in dealing with the aftermath of
terrorism and disasters or other mental health issues;
``(B) provide for school-based mental health professionals
to offer services in elementary and secondary schools;
``(C) provide mental health services to elementary and
secondary school students who face, or have faced,
disciplinary action, including students who have been
suspended or expelled from school.
``(4) Federal share.--The Federal share of the cost of
carrying out the activities under paragraph (3) shall be not
more than--
``(A) 80 percent of the total cost of such activities, in
the first year of the grant award;
``(B) 60 percent of the total cost of such activities, in
the second year of the grant award;
``(C) 40 percent of the total cost of such activities, in
the third year of the grant award;
``(D) 20 percent of the total cost of such activities, in
the fourth year of the grant award; and
``(E) 0 percent of the total cost of such activities, in
the fifth year of the grant award.
``(5) State and local funding.--If an eligible entity
receiving a grant under this subsection fails to provide
sufficient State or local funding, in accordance with
paragraph (4), the eligible entity shall be subject to a
penalty up to the amount received under this subsection, as
determined by the Secretary, which shall be payable to the
United States Treasury.
``(e) School-Based Disaster Mitigation Refund Program.--
``(1) Grants authorized.--From funds made available to
carry out this subpart under section 4003(2), the Secretary,
in an emergency declared by the President under title V of
the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 501 et seq.), shall award grants to
eligible entities to pay the Federal share of the cost of
carrying out the activities described in paragraph (3).
``(2) Application.--An eligible entity that desires to
receive a grant under this subsection shall submit an
application to the Secretary at such time, in such manner,
and accompanied by such information as the Secretary may
require.
``(3) Use of funds.--An eligible entity that receives a
grant under this subsection shall use the grant funds to
reimburse elementary and secondary schools for costs incurred
by such schools--
``(A) during a disaster response; and
``(B) for in-school mental health counseling for a period
of 13 months beginning on the date of the disaster.''.
(b) Federal Emergency Assistance.--Section 502(a) of the
Robert T. Stafford Disaster Relief and Emergency Assistance
Act (42 U.S.C. 5192(a)) is amended--
(1) in paragraph (6), by striking ``and'' at the end;
(2) in paragraph (7), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(8) provide financial assistance to affected State and
local governments for school-based community mental health
counseling.''.
SEC. 5. HOMELAND SECURITY RESEARCH AND DEVELOPMENT GRANT
PROGRAM.
(a) Findings.--Congress finds the following:
(1) The Department of Homeland Security is responsible for
funding the intramural and extramural research and
development to address the Department's scientific and
technological needs and requirements.
(2) Funding has been appropriated to the Department of
Homeland Security to carry out significant levels of
scientific development, and this funding will likely increase
in the future.
(3) Terrorist threats against the United States are not
restricted to a single geographic area, terrorist group, or
method of threat. Undefended borders make terrorist attacks
possible in places that have never had to prepare for, or
respond to, terrorism.
(4) Every State must be prepared for disasters and will
incur costs associated with homeland security.
(5) States experience varying levels of potential homeland
security threats and homeland security concerns vary
geographically. Addressing these threats requires regional
and local expertise, thus the scientific and technological
workforce and training should not be overly centralized.
(6) Academic research and development funding has not been
distributed equitably in the past. Congress has taken steps
to resolve this problem. Correcting this inequity will
provide beneficial results for science and technology
training and research.
(b) Purpose.--The purpose of this section is to establish a
competitive grant program for homeland security research and
development.
(c) Homeland Security Research and Development Grant
Program.--Title III of the Homeland Security Act of 2002 (6
U.S.C. 181 et seq.) is amended by adding at the end the
following:
``SEC. 314. COMPETITIVE RESEARCH GRANT PROGRAM.
``(a) Establishment.--The Secretary, in consultation with
the Under Secretary for Science and Technology, shall
establish a Homeland Security Competitive Research Grant
Program (referred to in this section as the `Program') to
more equitably distribute Federal research and development
funds by awarding competitive grants to universities and
colleges in eligible States to conduct research projects
relating to homeland security.
``(b) Eligible States.--During fiscal years 2005 and 2006,
colleges and universities located in States and territories
that qualify for the National Science Foundation's EPSCoR
program or the National Institutes of Health IDeA program
shall be eligible for funding under the Program.
``(c) Responsibilities.--The Under Secretary for Science
and Technology shall--
``(1) ensure that not less than 15 percent of the
Department's overall academic research funding is allocated
to universities and colleges in eligible States;
``(2) establish a cofunding mechanism for States with
academic facilities that have not fully developed security-
related science and technology to support burgeoning research
efforts by the faculty or link them to established
investigators;
``(3) provide for conferences, workshops, outreach, and
technical assistance to researchers and academic institutions
in eligible States on topics related to developing science
and technology expertise in areas of high interest and
relevance to the Department;
``(4) monitor the efforts of States to develop programs
that support the Department's mission;
``(5) implement a merit review program, consistent with
program objectives, to ensure the quality of research
conducted with Program funding; and
``(6) provide annual reports on the progress and
achievements of the Program to the Secretary.
``(d) Annual Report.--Not later than March 15 of each year,
the Under Secretary for Science and Technology shall submit a
report to Congress on the implementation of the Program.
``(e) Authorization of Appropriations.--There are
authorized to be appropriated--
``(1) $5,000,000 for fiscal year 2005 to carry out
subsection (c)(3); and
``(2) such sums as may be necessary for fiscal year 2006 to
carry out this section.''.
SEC. 6. HOMELAND SECURITY RESEARCH EXPANSION GRANT PROGRAM.
(a) Findings.--Congress finds the following:
(1) The Department of Homeland Security should fund
research, which explores the innovative human dimensions of
homeland security.
(2) Infrastructure and transportation systems, and the
systems designed to protect them, are only as effective as
their operators and users.
(3) Because communication before, during, and after
disasters is critical, the understanding of behavioral,
psychological, and social sciences in promoting effective
communications with homeland security goals in mind is vital
to the department's mission.
(4) Several areas of social science are relevant to
homeland security, including--
(A) theories and data regarding threat communication and
the psychological impacts of such threats;
(B) citizen response to disaster;
(C) group behavior in response to a threat or actual
disaster;
(D) theories and data about the impact of sustained
attention and vigilance on reasoning; and
(E) risk analysis and decision-making and their application
to homeland security.
(5) Since the primary goal of terrorism is to disrupt
social systems, the Department of Homeland Security should
support research on how attitudes and beliefs about terrorism
impact--
(A) consumer confidence;
(B) population mobility;
(C) decisions about childcare;
(D) job behaviors; and
(E) attitudes toward immigrants, political institutions,
and leaders.
[[Page S5961]]
(6) Homeland security efforts would benefit from research
on--
(A) the selection, management, and training of security
personnel and first responders;
(B) the impact of stereotyping and marginalization of
groups;
(C) hate crimes;
(D) the emergence and maintenance of fundamentalist,
extremist, and antigovernment groups within the United
States; and
(E) protection against the acts inspired by the groups
described in subparagraph (D).
(b) Purpose.--The purpose of this section is to establish a
program to award research grants to examine the social
dimensions of terrorism.
(c) Research Expansion Grants.--Title III of the Homeland
Security Act of 2002 (6 U.S.C. 181 et seq.), as amended by
section 5, is further amended by adding at the end the
following:
``SEC. 315. RESEARCH EXPANSION GRANTS.
``(a) In General.--The Secretary shall award research
grants to colleges and universities to--
``(1) analyze group dynamics during periods of extreme
stress, including how first responders--
``(A) react during such periods;
``(B) can be inoculated to stress; and
``(C) can help mitigate the stress and social disruption
that often accompanies emergency situations;
``(2) analyze the social and cultural factors that may
affect the performance of first responder groups;
``(3) expand human factors research to all other modes of
transportation including the use of infrastructure and
transportation systems under evacuation circumstances;
``(4) develop and demonstrate compliance with operability
standards for new technologies designed by human factors
experts in conjunction with users;
``(5) examine the decision making of voluntary first
responders under extended periods of disaster, including
whether volunteer first responders would report to their
primary jobs or their first responder positions if
simultaneously called to both; and
``(6) understand how the Homeland Security Advisory System
operates as a useful communication tool for citizens.
``(b) Application.--Each college and university desiring a
grant under this section shall submit an application to the
Secretary at such time, in such manner, and containing such
information as the Secretary may reasonably require.
``(c) Annual Reports.--
``(1) Report to secretary.--Grant recipients shall submit
an annual report to the Secretary containing specific
research findings that may be used to improve emergency
preparedness and response efforts.
``(2) Report to congress.--The Secretary shall submit an
annual report to Congress on the grant program authorized by
this section.
``(d) Authorization of Appropriations.--There are
authorized to be appropriated $40,000,000 for each of the
fiscal years 2005 through 2007.''.
______
By Mr. DOMENICI:
S. 2460. A bill to provide assistance to the State of New Mexico for
the development of comprehensive State water plans, and for other
purposes; to the Committee on Energy and Natural Resources.
Mr. DOMENICI. Mr. President, water is the life's blood for New
Mexico. When the water dries up in New Mexico, so will many of its
communities. As such, the scarcity of water in New Mexico is a dire
situation. Unfortunately, the New Mexico Office of the State Engineer
(NM OSE) lacks the tools necessary to undertake the Herculean task of
effectively managing New Mexico's water resources.
Today, I introduce legislation that would allow New Mexico to make
informed decisions about its limited water resources.
In order to effectively perform water rights administration, as well
as comply with New Mexico's compact deliveries, the State Engineer is
statutorily required to perform assessments and investigations of the
numerous stream systems and ground water basins located within New
Mexico. However, the NM OSE is ill equipped to vigorously and
comprehensively undertake the daunting but critically important task of
water resource planning. At present, the NM OSE lacks adequate
resources to perform necessary hydrographic surveys and data
collection. As such, ensuring a future water supply for my home state
requires that Congress provide the NM OSE with the resources necessary
to fulfill its statutory mandate.
The bill I introduce today would create a standing authority for the
State of New Mexico to seek and receive technical assistance from the
Bureau of Reclamation and the United States Geological Survey. It would
also provide the NM OSE the sum of $12.5 million in federal assistance
to perform hydrologic models of New Mexico's most important water
systems. This bill would provide the NM OSE with the best resources
available when making crucial decisions about how best preserve our
limited water stores.
Ever decreasing water supplies in New Mexico have reached critical
levels and require immediate action. The Congress cannot sit idly by as
water shortages cause death to New Mexico's communities. I hope the
Senate will give this legislation its every consideration.
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. 2460
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 ``New Mexico Water Planning
Assistance Act''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Secretary.--The term ``Secretary'' means the Secretary
of the Interior, acting through the Bureau of Reclamation and
the United States Geological Survey.
(2) State.--The term ``State'' means the State of New
Mexico.
SEC. 3. COMPREHENSIVE WATER PLAN ASSISTANCE.
(a) In General.-- On the request of the Governor of the
State and subject to subsections (b) through (e), the
Secretary shall--
(1) provide to the State technical assistance and grants
for the development of comprehensive State water plans;
(2) conduct water resources mapping in the State; and
(3) conduct a comprehensive study of groundwater resources
(including potable, brackish, and saline water resources) in
the State to assess the quantity, quality, and interaction of
groundwater and surface water resources.
(b) Technical Assistance.--Technical assistance provided
under subsection (a) may include--
(1) acquisition of hydrologic data, groundwater
characterization, database development, and data
distribution;
(2) expansion of climate, surface water, and groundwater
monitoring networks;
(3) assessment of existing water resources, surface water
storage, and groundwater storage potential;
(4) numerical analysis and modeling necessary to provide an
integrated understanding of water resources and water
management options;
(5) participation in State planning forums and planning
groups;
(6) coordination of Federal water management planning
efforts;
(7) technical review of data, models, planning scenarios,
and water plans developed by the State; and
(8) provision of scientific and technical specialists to
support State and local activities.
(c) Allocation.--In providing grants under subsection (a),
the Secretary shall, subject to the availability of
appropriations, allocate--
(1) $5,000,000 to develop hydrologic models and acquire
associated equipment for the New Mexico Rio Grande main stem
sections and Rio Taos and Hondo, Rios Nambe, Pojoaque and
Teseque, Rio Chama, and Lower Rio Grande tributaries;
(2) $1,500,000 to complete the hydrographic survey
development of hydrologic models and acquire associated
equipment for the San Juan River and tributaries;
(3) $1,000,000 to complete the hydrographic survey
development of hydrologic models and acquire associated
equipment for Southwest New Mexico, including the Animas
Basin, the Gila River, and tributaries;
(4) $4,500,000 for statewide digital orthophotography
mapping; and
(5) such sums as are necessary to carry out additional
projects consistent with subsection (b).
(d) Non-Reimbursable and No Cost-sharing.--Any assistance
or grants provided to the State under this Act shall be made
on a non-reimbursable basis and without a cost-sharing
requirement.
(e) Authorized Transfers.--On request of the State, the
Secretary shall directly transfer to 1 or more Federal
agencies any amounts made available to the State to carry out
this Act.
SEC. 4. AUTHORIZATION OF APPROPRIATIONS.
There is authorized to be appropriated to carry out this
Act $2,500,000 for each of fiscal years 2005 through 2009.
______
By Mr. DeWINE (for himself and Mr. KENNEDY):
S. 2461. A bill to protect the public health by providing the Food
and Drug Administration with certain authority to regulate tobacco
products; to the Committee on Health, Education, Labor, and Pensions.
Mr. DeWINE. Mr. President, today I join our colleague from
Massachusetts, Senator Kennedy, to introduce a bill
[[Page S5962]]
designed to help protect consumers--especially children--from the
dangers of tobacco. Simply, our bill would finally give the Food and
Drug Administration (FDA) the authority it needs to effectively
regulate the manufacture and sale of tobacco products.
I say finally, because there are some tobacco proponents who would
have you believe that the Master Settlement Agreement, which was signed
in 1998 by 46 States, resolved the issue of youth tobacco use by
imposing advertising restrictions.
I say finally, because my colleagues--first Senator McCain, then
Senator Frist, then Senator Gregg, and then Senator Kennedy and I--have
been seeking FDA regulation of tobacco products since the mid to late
1990's.
And, I say finally, because the bill that we are introducing today is
the product of long and hard discussions and negotiations that I have
had with Senator Kennedy and public interest groups and industry. Our
bill has the support of Campaign for Tobacco Free Kids. Our bill has
the support of Philip Morris. Our bill has the support of the American
Heart Association, the American Lung Association, and the American
Cancer Association. It is a bill that I am proud of, that is worthy of
the Senate's consideration, and that will provide the FDA--finally--
with strong and effective authority over the regulation of tobacco
products.
I realize full well that tobacco users and non-users, alike,
recognize and understand that tobacco products are hazardous to their
health. We all know that smoking is not a healthy habit. But, that's an
obvious point in comparison to the fact that right now, many consumers,
including smokers, are surprised to learn that no Federal agency has
the authority to require tobacco companies to list the ingredients that
are in their products--things like trace amounts of arsenic,
formaldehyde, and ammonia. And, no Federal agency has the authority to
inspect tobacco manufacturers--how the cigarette and smokeless tobacco
products are made, whether the manufacturers' machines and equipment
are clean, etc.
While simply listing the ingredients, toxic as they may be, might not
seem like much to some, think of it this way: Current law makes sure we
know what's in products designed to help people quit smoking, like
``the patch'' or Nicorette gum, but not the very products that get
people addicted in the first place--the cigarettes. That is absolutely
absurd!
Think about this: Right now, the Food and Drug Administration (FDA)
requires Philip Morris/Altria to print the ingredients in its Kraft
``Macaroni and Cheese,'' but not the ingredients in its cigarettes--a
product that contributes to the deaths of more than 440,000 people a
year.
Right now, the FDA requires Philip Morris-owned Nabisco to print the
ingredients contained in ``Oreo Cookies'' and ``Ritz Crackers,'' but
not the ingredients in its cigarettes--even though cigarettes cause
one-third of all cancer deaths and 90 percent of lung cancer deaths. It
is unfathomable to me that we would require the listing of ingredients
on these products, yet not require the listing of ingredients for one
of the leading causes of death and disease.
Right now, the FDA requires the printed ingredients for chewing gum,
lipstick, bottled water, and ice cream, but not for cigarettes--a
product that causes 20% of all heart disease deaths and is the leading
cause of preventable death in the United States.
Think about this: If a company wants to market a food product as
``fat-free'' or ``reduced-fat'' or ``lite,'' that company is required
to meet certain standards regarding the number of calories or the
amount of fat grams in that product. Yet, cigarette companies can call
a cigarette a ``light'' or ``mild'' and not reveal a thing about the
amount of tar or nicotine or arsenic in that supposedly ``light''
cigarette.
Not having access to all the information about this deadly product
just makes no sense, and it is something that needs to change. By
introducing this bill, we are finally saying that we are not going to
let tobacco manufacturers have free reign over their markets and
consumers any more.
Today, we are taking a step toward making sure the public gets
adequate information about whether to continue to smoke or even to
start smoking in the first place. With this bill, we are not just
saying ``buyer beware.'' We are saying ``tobacco companies be honest.''
We are saying ``tobacco companies stop marketing to innocent
children.'' We are saying ``tobacco companies tell consumers about what
they are really buying.''
The legislation that Senator Kennedy and I are introducing would do
just that.
One of the most dramatic changes our bill makes is that tobacco
products will now have to be approved before they reach consumer hands.
It just makes sense that tobacco products should not be able to imply
that they may be safer or less harmful to consumers because they use
descriptors such as ``light'' or ``mild'' or ``low'' to characterize
the level of a substance in a product. The National Cancer Institute
has found that many smokers mistakenly believe that ``low tar'' and
``light'' cigarettes cause fewer health problems than other cigarettes.
Our bill would require specific approval by the FDA to use those words,
so that consumers could be informed.
For the first time ever, all new tobacco products entering the market
would have to be approved by the FDA. Obviously, we already know that
smoking is a health risk. But, what we don't know about is the harm
caused by or what adverse health effects are created by the other
ingredients in tobacco products or by how the tobacco is burned. There
are tobacco products on the market that are not conventional
cigarettes. They have carbon filters running down the center of them.
They are sophisticated products that burn tobacco differently, that
affect the body differently, and that may cause people to smoke them
differently.
According to the Department of Health and Human Services, in an
October article of the Journal of the National Cancer Institute, ``the
only proven method to reduce tobacco-related cancer risk is to stop
smoking.'' Yet, often times, people cannot quit. It is very difficult
to quit ingesting an addictive product. People are addicted to the
nicotine in the tobacco product and are just simply unable to quit
using it. So, tobacco companies have responded by developing and
marketing tobacco products that purport to be ``reduced-risk'' or
``safer.''
Take, for example, a person who smokes Marlboro cigarettes--just
plain Marlboro cigarettes, the ones in the red package. Let's say that
person would like to quit smoking, has tried to quit smoking a number
of times, but just hasn't been successful. So instead of quitting
outright, that person figures they will switch the type of cigarette
they smoke to a cigarette that has the implied claim of being
``safer''--like a ``light'' cigarette or a ``mild'' cigarette or a
``low tar'' cigarette. Those cigarettes have not been found to be any
safer? In fact, just the opposite has been discovered.
In a 2001 National Cancer Institute publication, they wrote the
following:
The tobacco companies set out to develop cigarette designs
that markedly lowered the tar and nicotine yield results as
measured by the Federal Trade Commission (FTC) testing
method. Yet, these cigarettes can be manipulated by the
smoker to increase the intake of tar and nicotine. The use of
these ``decreased risk'' cigarettes have not significantly
decreased the disease risk. In fact, the use of these
cigarettes may be partly responsible for the increase in lung
cancer for long-term smokers who have switched to the low-
tar/low-nicotine brands. Finally, switching to these
cigarettes may provide smokers with a false sense of reduced
risk, when the actual amount of tar and nicotine consumed may
be the same as, or more than, the previously used higher
yield brand.
So the products that tobacco companies develop and market as being
``safer'' are not safer. Rather than people quitting smoking entirely,
they are often misled into thinking that the ``light'' or ``mild''
cigarettes that they switch to are better for them. In addition, people
may begin to start smoking because they think some of these products
aren't so bad for them--that the products have been made safer or
better for them somehow and are okay to smoke.
Tobacco companies are able to make these implied health claims about
their products because they are not regulated. Consumers have no choice
but to trust the tobacco companies to reveal the ingredients and
marketing claims about their products. That is just absurd to me. These
are all things that should be examined, reviewed, and commented on by
the Food and Drug
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Administration to determine whether it is appropriate for these
products to be marketed as ``reduced-risk'' products, so the public
knows what they are choosing to consume.
Tobacco advertising is in magazines and on billboards along the
highway. Tobacco advertising is in convenience stores, along the aisles
and at the checkout counter right beside the candy where children are
likely to see it. Tobacco advertising is at sporting events, part of
promotional items, where consumers can ``buy 1 get 1 free.'' Tobacco
advertising is on the Internet and in the daily delivery of mail.
Our bill would make changes regarding tobacco advertising. It would
give the FDA authority to restrict tobacco industry marketing--
consistent with the First Amendment--that targets our children. Our
bill would require advertisements to be in black and white text only
and would define adult publication in terms of readership.
An issue that is related to advertising and marketing of tobacco
products has to do with the flavored tobacco products, which clearly
target our children. We have probably all seen the flavored
cigarettes--flavors like strawberry, chocolate, and wild rum. The scent
of strawberry filters through the unopened pack of cigarettes. And
guess what, the cigarettes smell like candy. A recent New York Times
article described the scent of chocolate flavored cigarettes as if
``someone had lifted the lid on a Whitman Sampler.''
I can't speak for every parent, but I know my 8 grandchildren like
candy, and they like the smell of chocolate, and they would be curious
to try something that smells or tastes like candy. Cigarettes shouldn't
be flavored and marketed in such a way to attract children and to
encourage children to smoke. Our bill bans the use of flavors such as
strawberry, grape, orange, clove, cinnamon, pineapple, vanilla,
coconut, coffee and other flavorings that would attract children to the
product.
Despite the fact that 40 million Americans use tobacco products, many
of them do not know what is inside the cigarette or the tobacco product
they ingest. They do not know the ingredients or the constituents, like
tar or nicotine, that are in the products they use. Consumers do not
know what additives are included in the product. Additives like ammonia
or urea, both of which may make the tobacco product more addictive
because they increase the delivery of nicotine. Tobacco companies do
not disclose the specific ingredients in their products because they
don't have to. Tobacco products are unregulated.
Our legislation would give consumers more information about what's in
tobacco products. Specifically, the bill would provide the FDA with the
ability to publish the ingredients of tobacco products.
It would require a listing of all ingredients, substances, and
compounds added by the manufacturer to the tobacco, paper, or filter.
It would require a description of the content, delivery, and form of
nicotine in each tobacco product.
It would require information on the health, behavioral, or
physiologic effects of the tobacco products.
I think it is equally important that I mention what our bill does not
do. Here are some of the areas where authority is not conferred to FDA:
Our bill does not allow FDA to ban tobacco products or to eliminate
nicotine from a tobacco product. The bill ensures that FDA will not
have the power to use its ``performance standard'' authority to ban
cigarettes, smokeless tobacco or any other category of tobacco
products, or to reduce their nicotine yields to zero.
Our bill does not allow FDA to establish a minimum smoking age higher
than 18. The bill explicitly forbids FDA from establishing a minimum
age higher than 18 years of age to purchase tobacco products.
Our bill treats all tobacco retailers equally. Our bill specifically
provides that FDA can't prohibit the sale of tobacco products in any
particular category of retail outlet. Our bill forbids FDA from
creating a more permissive set of advertising rules for adult-only
establishments. This provision protects retailers and convenience store
owners.
Finally, I would like to make a comment about the tobacco farmers.
There has been a lot of talk recently about the need for a buyout for
our Nation's tobacco farmers. My colleagues, Senator McConnell and
Senator Dole, have been working tirelessly to craft a buyout bill for
tobacco farmers. They need a buyout--and the Congress should give them
one. The Senate needs to pass the buyout, but the buyout needs to be
passed along with this FDA bill. I look forward to working with my
colleagues from the tobacco-growing states to make this happen.
The bill that Senator Kennedy and I introduce today gives the FDA the
authority to regulate a product that has gone unregulated for far too
long--a product that for the past century has not revealed its
ingredients to the consumer--a product whose manufacturing facilities
are not inspected or accountable for following good manufacturing
practices--a product that is never reviewed or approved before reaching
the hands of 40 million consumers, many of whom are just children.
Congress needs to put an end to this. Congress should put an end to the
marketing of tobacco products to our children. Congress should put an
end to the ability of tobacco companies to make claims, whether they
are implied claims or direct claims, about their products. Congress
should put an end to tobacco companies putting any ingredient they want
into their products without disclosing it to the consumer. It is time
Congress give the FDA authority to it needs to fix these problems.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2461
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Family
Smoking Prevention and Tobacco Control Act''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purpose.
Sec. 4. Scope and effect.
Sec. 5. Severability.
TITLE I--AUTHORITY OF THE FOOD AND DRUG ADMINISTRATION
Sec. 101. Amendment of Federal food, drug, and cosmetic act.
Sec. 102. Construction of current regulations.
Sec. 103. Conforming and other amendments to general provisions.
TITLE II--TOBACCO PRODUCT WARNINGS; CONSTITUENT AND SMOKE CONSTITUENT
DISCLOSURE
Sec. 201. Cigarette label and advertising warnings.
Sec. 202. Authority to revise cigarette warning label Statements.
Sec. 203. State regulation of cigarette advertising and promotion.
Sec. 204. Smokeless tobacco labels and advertising warnings.
Sec. 205. Authority to revise smokeless tobacco product warning label
Statements.
Sec. 206. Tar, nicotine, and other smoke constituent disclosure to the
public.
TITLE III--PREVENTION OF ILLICIT TRADE IN TOBACCO PRODUCTS
Sec. 301. Labeling, record keeping, records inspection.
Sec. 302. Study and report.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) The use of tobacco products by the Nation's children is
a pediatric disease of considerable proportions that results
in new generations of tobacco-dependent children and adults.
(2) A consensus exists within the scientific and medical
communities that tobacco products are inherently dangerous
and cause cancer, heart disease, and other serious adverse
health effects.
(3) Nicotine is an addictive drug.
(4) Virtually all new users of tobacco products are under
the minimum legal age to purchase such products.
(5) Tobacco advertising and marketing contribute
significantly to the use of nicotine-containing tobacco
products by adolescents.
(6) Because past efforts to restrict advertising and
marketing of tobacco products have failed adequately to curb
tobacco use by adolescents, comprehensive restrictions on the
sale, promotion, and distribution of such products are
needed.
(7) Federal and State governments have lacked the legal and
regulatory authority and resources they need to address
comprehensively the public health and societal problems
caused by the use of tobacco products.
(8) Federal and State public health officials, the public
health community, and the
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public at large recognize that the tobacco industry should be
subject to ongoing oversight.
(9) Under Article I, Section 8 of the Constitution, the
Congress is vested with the responsibility for regulating
interstate commerce and commerce with Indian tribes.
(10) The sale, distribution, marketing, advertising, and
use of tobacco products are activities in and substantially
affecting interstate commerce because they are sold,
marketed, advertised, and distributed in interstate commerce
on a nationwide basis, and have a substantial effect on the
Nation's economy.
(11) The sale, distribution, marketing, advertising, and
use of such products substantially affect interstate commerce
through the health care and other costs attributable to the
use of tobacco products.
(12) It is in the public interest for Congress to enact
legislation that provides the Food and Drug Administration
with the authority to regulate tobacco products and the
advertising and promotion of such products. The benefits to
the American people from enacting such legislation would be
significant in human and economic terms.
(13) Tobacco use is the foremost preventable cause of
premature death in America. It causes over 400,000 deaths in
the United States each year and approximately 8,600,000
Americans have chronic illnesses related to smoking.
(14) Reducing the use of tobacco by minors by 50 percent
would prevent well over 6,500,000 of today's children from
becoming regular, daily smokers, saving over 2,000,000 of
them from premature death due to tobacco induced disease.
Such a reduction in youth smoking would also result in
approximately $75,000,000,000 in savings attributable to
reduced health care costs.
(15) Advertising, marketing, and promotion of tobacco
products have been especially directed to attract young
persons to use tobacco products and these efforts have
resulted in increased use of such products by youth. Past
efforts to oversee these activities have not been successful
in adequately preventing such increased use.
(16) In 2001, the tobacco industry spent more than
$11,000,000,000 to attract new users, retain current users,
increase current consumption, and generate favorable long-
term attitudes toward smoking and tobacco use.
(17) Tobacco product advertising often misleadingly
portrays the use of tobacco as socially acceptable and
healthful to minors.
(18) Tobacco product advertising is regularly seen by
persons under the age of 18, and persons under the age of 18
are regularly exposed to tobacco product promotional efforts.
(19) Through advertisements during and sponsorship of
sporting events, tobacco has become strongly associated with
sports and has become portrayed as an integral part of sports
and the healthy lifestyle associated with rigorous sporting
activity.
(20) Children are exposed to substantial and unavoidable
tobacco advertising that leads to favorable beliefs about
tobacco use, plays a role in leading young people to
overestimate the prevalence of tobacco use, and increases the
number of young people who begin to use tobacco.
(21) The use of tobacco products in motion pictures and
other mass media glamorizes its use for young people and
encourages them to use tobacco products.
(22) Tobacco advertising expands the size of the tobacco
market by increasing consumption of tobacco products
including tobacco use by young people.
(23) Children are more influenced by tobacco advertising
than adults, they smoke the most advertised brands.
(24) Tobacco company documents indicate that young people
are an important and often crucial segment of the tobacco
market. Children, who tend to be more price-sensitive than
adults, are influenced by advertising and promotion practices
that result in drastically reduced cigarette prices.
(25) Comprehensive advertising restrictions will have a
positive effect on the smoking rates of young people.
(26) Restrictions on advertising are necessary to prevent
unrestricted tobacco advertising from undermining legislation
prohibiting access to young people and providing for
education about tobacco use.
(27) International experience shows that advertising
regulations that are stringent and comprehensive have a
greater impact on overall tobacco use and young people's use
than weaker or less comprehensive ones.
(28) Text only requirements, although not as stringent as a
ban, will help reduce underage use of tobacco products while
preserving the informational function of advertising.
(29) It is in the public interest for Congress to adopt
legislation to address the public health crisis created by
actions of the tobacco industry.
(30) The final regulations promulgated by the Secretary of
Health and Human Services in the August 28, 1996, issue of
the Federal Register (61 Fed. Reg. 44615-44618) for inclusion
as part 897 of title 21, Code of Federal Regulations, are
consistent with the First Amendment to the United States
Constitution and with the standards set forth in the
amendments made by this Act for the regulation of tobacco
products by the Food and Drug Administration and the
restriction on the sale and distribution, including access to
and the advertising and promotion of, tobacco products
contained in such regulations are substantially related to
accomplishing the public health goals of this Act.
(31) The regulations described in paragraph (30) will
directly and materially advance the Federal Government's
substantial interest in reducing the number of children and
adolescents who use cigarettes and smokeless tobacco and in
preventing the life-threatening health consequences
associated with tobacco use. An overwhelming majority of
Americans who use tobacco products begin using such products
while they are minors and become addicted to the nicotine in
those products before reaching the age of 18. Tobacco
advertising and promotion plays a crucial role in the
decision of these minors to begin using tobacco products.
Less restrictive and less comprehensive approaches have not
and will not be effective in reducing the problems addressed
by such regulations. The reasonable restrictions on the
advertising and promotion of tobacco products contained in
such regulations will lead to a significant decrease in the
number of minors using and becoming addicted to those
products.
(32) The regulations described in paragraph (30) impose no
more extensive restrictions on communication by tobacco
manufacturers and sellers than are necessary to reduce the
number of children and adolescents who use cigarettes and
smokeless tobacco and to prevent the life-threatening health
consequences associated with tobacco use. Such regulations
are narrowly tailored to restrict those advertising and
promotional practices which are most likely to be seen or
heard by youth and most likely to entice them into tobacco
use, while affording tobacco manufacturers and sellers ample
opportunity to convey information about their products to
adult consumers.
(33) Tobacco dependence is a chronic disease, one that
typically requires repeated interventions to achieve long-
term or permanent abstinence.
(34) Because the only known safe alternative to smoking is
cessation, interventions should target all smokers to help
them quit completely.
(35) Tobacco products have been used to facilitate and
finance criminal activities both domestically and
internationally. Illicit trade of tobacco products has been
linked to organized crime and terrorist groups.
(36) It is essential that the Food and Drug Administration
review products sold or distributed for use to reduce risks
or exposures associated with tobacco products and that it be
empowered to review any advertising and labeling for such
products. It is also essential that manufacturers, prior to
marketing such products, be required to demonstrate that such
products will meet a series of rigorous criteria, and will
benefit the health of the population as a whole, taking into
account both users of tobacco products and persons who do not
currently use tobacco products.
(37) Unless tobacco products that purport to reduce the
risks to the public of tobacco use actually reduce such
risks, those products can cause substantial harm to the
public health to the extent that the individuals, who would
otherwise not consume tobacco products or would consume such
products less, use tobacco products purporting to reduce
risk. Those who use products sold or distributed as modified
risk products that do not in fact reduce risk, rather than
quitting or reducing their use of tobacco products, have a
substantially increased likelihood of suffering disability
and premature death. The costs to society of the widespread
use of products sold or distributed as modified risk products
that do not in fact reduce risk or that increase risk include
thousands of unnecessary deaths and injuries and huge costs
to our health care system.
(38) As the National Cancer Institute has found, many
smokers mistakenly believe that ``low tar'' and ``light''
cigarettes cause fewer health problems than other cigarettes.
As the National Cancer Institute has also found, mistaken
beliefs about the health consequences of smoking ``low tar''
and ``light'' cigarettes can reduce the motivation to quit
smoking entirely and thereby lead to disease and death.
(39) Recent studies have demonstrated that there has been
no reduction in risk on a population-wide basis from ``low
tar'' and ``light'' cigarettes and such products may actually
increase the risk of tobacco use.
(40) The dangers of products sold or distributed as
modified risk tobacco products that do not in fact reduce
risk are so high that there is a compelling governmental
interest in insuring that statements about modified risk
tobacco products are complete, accurate, and relate to the
overall disease risk of the product.
(41) As the Federal Trade Commission has found, consumers
have misinterpreted advertisements in which one product is
claimed to be less harmful than a comparable product, even in
the presence of disclosures and advisories intended to
provide clarification.
(42) Permitting manufacturers to make unsubstantiated
statements concerning modified risk tobacco products, whether
express or implied, even if accompanied by disclaimers would
be detrimental to the public health.
(43) The only way to effectively protect the public health
from the dangers of unsubstantiated modified risk tobacco
products is to empower the Food and Drug Administration to
require that products that tobacco manufacturers sold or
distributed for risk reduction be approved in advance of
marketing, and to require that the evidence relied on to
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support approval of these products is rigorous.
SEC. 3. PURPOSE.
The purposes of this Act are--
(1) to provide authority to the Food and Drug
Administration to regulate tobacco products under the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), by
recognizing it as the primary Federal regulatory authority
with respect to the manufacture, marketing, and distribution
of tobacco products;
(2) to ensure that the Food and Drug Administration has the
authority to address issues of particular concern to public
health officials, especially the use of tobacco by young
people and dependence on tobacco;
(3) to authorize the Food and Drug Administration to set
national standards controlling the manufacture of tobacco
products and the identity, public disclosure, and amount of
ingredients used in such products;
(4) to provide new and flexible enforcement authority to
ensure that there is effective oversight of the tobacco
industry's efforts to develop, introduce, and promote less
harmful tobacco products;
(5) to vest the Food and Drug Administration with the
authority to regulate the levels of tar, nicotine, and other
harmful components of tobacco products;
(6) in order to ensure that consumers are better informed,
to require tobacco product manufacturers to disclose research
which has not previously been made available, as well as
research generated in the future, relating to the health and
dependency effects or safety of tobacco products;
(7) to continue to permit the sale of tobacco products to
adults in conjunction with measures to ensure that they are
not sold or accessible to underage purchasers;
(8) to impose appropriate regulatory controls on the
tobacco industry;
(9) to promote cessation to reduce disease risk and the
social costs associated with tobacco related diseases; and
(10) to strengthen legislation against illicit trade in
tobacco products.
SEC. 4. SCOPE AND EFFECT.
(a) Intended Effect.--Nothing in this Act (or an amendment
made by this Act) shall be construed to--
(1) establish a precedent with regard to any other
industry, situation, circumstance, or legal action; or
(2) affect any action pending in Federal, State, or Tribal
court, or any agreement, consent decree, or contract of any
kind.
(b) Agricultural Activities.--The provisions of this Act
(or an amendment made by this Act) which authorize the
Secretary to take certain actions with regard to tobacco and
tobacco products shall not be construed to affect any
authority of the Secretary of Agriculture under existing law
regarding the growing, cultivation, or curing of raw tobacco.
SEC. 5. SEVERABILITY.
If any provision of this Act, the amendments made by this
Act, or the application of any provision of this Act to any
person or circumstance is held to be invalid, the remainder
of this Act, the amendments made by this Act, and the
application of the provisions of this Act to any other person
or circumstance shall not be affected and shall continue to
be enforced to the fullest extent possible.
TITLE I--AUTHORITY OF THE FOOD AND DRUG ADMINISTRATION
SEC. 101. AMENDMENT OF FEDERAL FOOD, DRUG, AND COSMETIC ACT.
(a) Definition of Tobacco Products.--Section 201 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) is
amended by adding at the end the following:
``(nn)(1) The term `tobacco product' means any product made
or derived from tobacco that is intended for human
consumption, including any component, part, or accessory of a
tobacco product (except for raw materials other than tobacco
used in manufacturing a component, part, or accessory of a
tobacco product).
``(2) The term `tobacco product' does not mean--
``(A) a product in the form of conventional food (including
water and chewing gum), a product represented for use as or
for use in a conventional food, or a product that is intended
for ingestion in capsule, tablet, softgel, or liquid form; or
``(B) an article that is approved or is regulated as a drug
by the Food and Drug Administration.
``(3) The products described in paragraph (2)(A) shall be
subject to chapter IV or chapter V of this Act and the
articles described in paragraph (2)(B) shall be subject to
chapter V of this Act.
``(4) A tobacco product may not be marketed in combination
with any other article or product regulated under this Act
(including a drug, biologic, food, cosmetics, medical device,
or a dietary supplement).''.
(b) FDA Authority Over Tobacco Products.--The Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) is amended--
(1) by redesignating chapter IX as chapter X;
(2) by redesignating sections 901 through 907 as sections
1001 through 1007; and
(3) by inserting after section 803 the following:
``CHAPTER IX--TOBACCO PRODUCTS
``SEC. 900. DEFINITIONS.
``In this chapter:
``(1) Additive.--The term `additive' means any substance
the intended use of which results or may reasonably be
expected to result, directly or indirectly, in its becoming a
component or otherwise affecting the characteristic of any
tobacco product (including any substances intended for use as
a flavoring, coloring or in producing, manufacturing,
packing, processing, preparing, treating, packaging,
transporting, or holding), except that such term does not
include tobacco or a pesticide chemical residue in or on raw
tobacco or a pesticide chemical.
``(2) Brand.--The term `brand' means a variety of tobacco
product distinguished by the tobacco used, tar content,
nicotine content, flavoring used, size, filtration, or
packaging, logo, registered trademark or brand name,
identifiable pattern of colors, or any combination of such
attributes.
``(3) Cigarette.--The term `cigarette' has the meaning
given that term by section 3(1) of the Federal Cigarette
Labeling and Advertising Act (15 U.S.C. 1332(1)), but also
includes tobacco, in any form, that is functional in the
product, which, because of its appearance, the type of
tobacco used in the filler, or its packaging and labeling, is
likely to be offered to, or purchased by, consumers as a
cigarette or as roll-your-own tobacco.
``(4) Cigarette tobacco.--The term `cigarette tobacco'
means any product that consists of loose tobacco that is
intended for use by consumers in a cigarette. Unless
otherwise stated, the requirements for cigarettes shall also
apply to cigarette tobacco.
``(5) Commerce.--The term `commerce' has the meaning given
that term by section 3(2) of the Federal Cigarette Labeling
and Advertising Act (15 U.S.C. 1332(2)).
``(6) Counterfeit tobacco product.--The term `counterfeit
tobacco product' means a tobacco product (or the container or
labeling of such a product) that, without authorization,
bears the trademark, trade name, or other identifying mark,
imprint or device, or any likeness thereof, of a tobacco
product listed in a registration under section 905(i)(1).
``(7) Distributor.--The term `distributor' as regards a
tobacco product means any person who furthers the
distribution of a tobacco product, whether domestic or
imported, at any point from the original place of manufacture
to the person who sells or distributes the product to
individuals for personal consumption. Common carriers are not
considered distributors for purposes of this chapter.
``(8) Illicit trade.--The term `illicit trade' means any
practice or conduct prohibited by law which relates to
production, shipment, receipt, possession, distribution,
sale, or purchase of tobacco products including any practice
or conduct intended to facilitate such activity.
``(9) Indian tribe.--The term `Indian tribe' has the
meaning given such term in section 4(e) of the Indian Self
Determination and Education Assistance Act (25 U.S.C.
450b(e)).
``(10) Little cigar.--The term `little cigar' has the
meaning given that term by section 3(7) of the Federal
Cigarette Labeling and Advertising Act (15 U.S.C. 1332(7)).
``(11) Nicotine.--The term `nicotine' means the chemical
substance named 3-(1-Methyl-2-pyrrolidinyl) pyridine or
C[10]H[14]N[2], including any salt or complex of nicotine.
``(12) Package.--The term `package' means a pack, box,
carton, or container of any kind or, if no other container,
any wrapping (including cellophane), in which a tobacco
product is offered for sale, sold, or otherwise distributed
to consumers.
``(13) Retailer.--The term `retailer' means any person who
sells tobacco products to individuals for personal
consumption, or who operates a facility where self-service
displays of tobacco products are permitted.
``(14) Roll-your-own tobacco.--The term `roll-your-own
tobacco' means any tobacco which, because of its appearance,
type, packaging, or labeling, is suitable for use and likely
to be offered to, or purchased by, consumers as tobacco for
making cigarettes.
``(15) Smoke constituent.--The term `smoke constituent'
means any chemical or chemical compound in mainstream or
sidestream tobacco smoke that either transfers from any
component of the cigarette to the smoke or that is formed by
the combustion or heating of tobacco, additives, or other
component of the tobacco product.
``(16) Smokeless tobacco.--The term `smokeless tobacco'
means any tobacco product that consists of cut, ground,
powdered, or leaf tobacco and that is intended to be placed
in the oral or nasal cavity.
``(17) State.--The term `State' means any State of the
United States and, for purposes of this chapter, includes the
District of Columbia, the Commonwealth of Puerto Rico, Guam,
the Virgin Islands, American Samoa, Wake Island, Midway
Islands, Kingman Reef, Johnston Atoll, the Northern Mariana
Islands, and any other trust territory or possession of the
United States.
``(18) Tobacco product manufacturer.--Term `tobacco product
manufacturer' means any person, including any repacker or
relabeler, who--
``(A) manufactures, fabricates, assembles, processes, or
labels a tobacco product; or
``(B) imports a finished cigarette or smokeless tobacco
product for sale or distribution in the United States.
``(19) United states.--The term `United States' means the
50 States of the United States of America and the District of
Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin
Islands, American Samoa, Wake Island, Midway Islands, Kingman
Reef,
[[Page S5966]]
Johnston Atoll, the Northern Mariana Islands, and any other
trust territory or possession of the United States.
``SEC. 901. FDA AUTHORITY OVER TOBACCO PRODUCTS.
``(a) In General.--Tobacco products shall be regulated by
the Secretary under this chapter and shall not be subject to
the provisions of chapter V, unless--
``(1) such products are intended for use in the diagnosis,
cure, mitigation, treatment, or prevention of disease (within
the meaning of section 201(g)(1)(B) or section 201(h)(2)); or
``(2) a claim is made for such products under section
201(g)(1)(C) or 201(h)(3);
other than modified risk tobacco products approved in
accordance with section 911.
``(b) Applicability.--This chapter shall apply to all
tobacco products subject to the regulations referred to in
section 102 of the Family Smoking Prevention and Tobacco
Control Act, and to any other tobacco products that the
Secretary by regulation deems to be subject to this chapter.
``(c) Scope.--
``(1) In general.--Nothing in this chapter, or any policy
issued or regulation promulgated thereunder, or the Family
Smoking Prevention and Tobacco Control Act, shall be
construed to affect the Secretary's authority over, or the
regulation of, products under this Act that are not tobacco
products under chapter V or any other chapter.
``(2) Limitation of authority.--
``(A) In general.--The provisions of this chapter shall not
apply to tobacco leaf that is not in the possession of a
manufacturer of tobacco products, or to the producers of
tobacco leaf, including tobacco growers, tobacco warehouses,
and tobacco grower cooperatives, nor shall any employee of
the Food and Drug Administration have any authority to enter
onto a farm owned by a producer of tobacco leaf without the
written consent of such producer.
``(B) Exception.--Notwithstanding any other provision of
this subparagraph, if a producer of tobacco leaf is also a
tobacco product manufacturer or controlled by a tobacco
product manufacturer, the producer shall be subject to this
chapter in the producer's capacity as a manufacturer.
``(C) Rule of construction.--Nothing in this chapter shall
be construed to grant the Secretary authority to promulgate
regulations on any matter that involves the production of
tobacco leaf or a producer thereof, other than activities by
a manufacturer affecting production.
``SEC. 902. ADULTERATED TOBACCO PRODUCTS.
``A tobacco product shall be deemed to be adulterated if--
``(1) it consists in whole or in part of any filthy,
putrid, or decomposed substance, or is otherwise contaminated
by any added poisonous or added deleterious substance that
may render the product injurious to health;
``(2) it has been prepared, packed, or held under
insanitary conditions whereby it may have been contaminated
with filth, or whereby it may have been rendered injurious to
health;
``(3) its package is composed, in whole or in part, of any
poisonous or deleterious substance which may render the
contents injurious to health;
``(4) it is, or purports to be or is represented as, a
tobacco product which is subject to a tobacco product
standard established under section 907 unless such tobacco
product is in all respects in conformity with such standard;
``(5)(A) it is required by section 910(a) to have premarket
approval and does not have an approved application in effect;
``(B) it is in violation of the order approving such an
application; or
``(6) the methods used in, or the facilities or controls
used for, its manufacture, packing or storage are not in
conformity with applicable requirements under section
906(e)(1) or an applicable condition prescribed by an order
under section 906(e)(2); or
``(7) it is in violation of section 911.
``SEC. 903. MISBRANDED TOBACCO PRODUCTS.
``(a) In General.--A tobacco product shall be deemed to be
misbranded--
``(1) if its labeling is false or misleading in any
particular;
``(2) if in package form unless it bears a label
containing--
``(A) the name and place of business of the tobacco product
manufacturer, packer, or distributor;
``(B) an accurate statement of the quantity of the contents
in terms of weight, measure, or numerical count;
``(C) an accurate statement of the percentage of the
tobacco used in the product that is domestically grown
tobacco and the percentage that is foreign grown tobacco; and
``(D) the statement required under section 921(a),
except that under subparagraph (B) reasonable variations
shall be permitted, and exemptions as to small packages shall
be established, by regulations prescribed by the Secretary;
``(3) if any word, statement, or other information required
by or under authority of this chapter to appear on the label
or labeling is not prominently placed thereon with such
conspicuousness (as compared with other words, statements or
designs in the labeling) and in such terms as to render it
likely to be read and understood by the ordinary individual
under customary conditions of purchase and use;
``(4) if it has an established name, unless its label
bears, to the exclusion of any other nonproprietary name, its
established name prominently printed in type as required by
the Secretary by regulation;
``(5) if the Secretary has issued regulations requiring
that its labeling bear adequate directions for use, or
adequate warnings against use by children, that are necessary
for the protection of users unless its labeling conforms in
all respects to such regulations;
``(6) if it was manufactured, prepared, propagated,
compounded, or processed in any State in an establishment not
duly registered under section 905(b), 905(c), 905(d), or
905(h), if it was not included in a list required by section
905(i), if a notice or other information respecting it was
not provided as required by such section or section 905(j),
or if it does not bear such symbols from the uniform system
for identification of tobacco products prescribed under
section 905(e) as the Secretary by regulation requires;
``(7) if, in the case of any tobacco product distributed or
offered for sale in any State--
``(A) its advertising is false or misleading in any
particular; or
``(B) it is sold or distributed in violation of regulations
prescribed under section 906(d);
``(8) unless, in the case of any tobacco product
distributed or offered for sale in any State, the
manufacturer, packer, or distributor thereof includes in all
advertisements and other descriptive printed matter issued or
caused to be issued by the manufacturer, packer, or
distributor with respect to that tobacco product--
``(A) a true statement of the tobacco product's established
name as described in paragraph (4), printed prominently; and
``(B) a brief statement of--
``(i) the uses of the tobacco product and relevant
warnings, precautions, side effects, and contraindications;
and
``(ii) in the case of specific tobacco products made
subject to a finding by the Secretary after notice and
opportunity for comment that such action is appropriate to
protect the public health, a full description of the
components of such tobacco product or the formula showing
quantitatively each ingredient of such tobacco product to the
extent required in regulations which shall be issued by the
Secretary after an opportunity for a hearing;
``(9) if it is a tobacco product subject to a tobacco
product standard established under section 907, unless it
bears such labeling as may be prescribed in such tobacco
product standard; or
``(10) if there was a failure or refusal--
``(A) to comply with any requirement prescribed under
section 904 or 908; or
``(B) to furnish any material or information required under
section 909.
``(b) Prior Approval of Label Statements.--The Secretary
may, by regulation, require prior approval of statements made
on the label of a tobacco product. No regulation issued under
this subsection may require prior approval by the Secretary
of the content of any advertisement, except for modified risk
tobacco products as provided in section 911. No advertisement
of a tobacco product published after the date of enactment of
the Family Smoking Prevention and Tobacco Control Act shall,
with respect to the language of label statements as
prescribed under section 4 of the Cigarette Labeling and
Advertising Act and section 3 of the Comprehensive Smokeless
Tobacco Health Education Act of 1986 or the regulations
issued under such sections, be subject to the provisions of
sections 12 through 15 of the Federal Trade Commission Act
(15 U.S.C. 52 through 55).
``SEC. 904. SUBMISSION OF HEALTH INFORMATION TO THE
SECRETARY.
``(a) Requirement.--Not later than 6 months after the date
of enactment of the Family Smoking Prevention and Tobacco
Control Act, each tobacco product manufacturer or importer,
or agents thereof, shall submit to the Secretary the
following information:
``(1) A listing of all ingredients, including tobacco,
substances, compounds, and additives that are, as of such
date, added by the manufacturer to the tobacco, paper,
filter, or other part of each tobacco product by brand and by
quantity in each brand and subbrand.
``(2) A description of the content, delivery, and form of
nicotine in each tobacco product measured in milligrams of
nicotine in accordance with regulations promulgated by the
Secretary in accordance with section 4(a)(4) of the Federal
Cigarette Labeling and Advertising Act.
``(3) A listing of all constituents, including smoke
constituents as applicable, identified by the Secretary as
harmful or potentially harmful to health in each tobacco
product, and as applicable in the smoke of each tobacco
product, by brand and by quantity in each brand and subbrand.
Effective beginning 2 years after the date of enactment of
this chapter, the manufacturer, importer, or agent shall
comply with regulations promulgated under section 915 in
reporting information under this paragraph, where applicable.
``(4) All documents developed after the date of enactment
of the Family Smoking Prevention and Tobacco Control Act that
relate to health, toxicological, behavioral, or physiologic
effects of current or future tobacco products, their
constituents (including smoke constituents), ingredients,
components, and additives.
``(b) Data Submission.--At the request of the Secretary,
each tobacco product manufacturer or importer of tobacco
products, or agents thereof, shall submit the following:
``(1) Any or all documents (including underlying scientific
information) relating to
[[Page S5967]]
research activities, and research findings, conducted,
supported, or possessed by the manufacturer (or agents
thereof) on the health, toxicological, behavioral, or
physiologic effects of tobacco products and their
constituents (including smoke constituents), ingredients,
components, and additives.
``(2) Any or all documents (including underlying scientific
information) relating to research activities, and research
findings, conducted, supported, or possessed by the
manufacturer (or agents thereof) that relate to the issue of
whether a reduction in risk to health from tobacco products
can occur upon the employment of technology available or
known to the manufacturer.
``(3) Any or all documents (including underlying scientific
or financial information) relating to marketing research
involving the use of tobacco products or marketing practices
and the effectiveness of such practices used by tobacco
manufacturers and distributors.
An importer of a tobacco product not manufactured in the
United States shall supply the information required of a
tobacco product manufacturer under this subsection.
``(c) Time for Submission.--
``(1) In general.--At least 90 days prior to the delivery
for introduction into interstate commerce of a tobacco
product not on the market on the date of enactment of the
Family Smoking Prevention and Tobacco Control Act, the
manufacturer of such product shall provide the information
required under subsection (a).
``(2) Disclosure of additive.--If at any time a tobacco
product manufacturer adds to its tobacco products a new
tobacco additive or increases the quantity of an existing
tobacco additive, the manufacturer shall, except as provided
in paragraph (3), at least 90 days prior to such action so
advise the Secretary in writing.
``(3) Disclosure of other actions.--If at any time a
tobacco product manufacturer eliminates or decreases an
existing additive, or adds or increases an additive that has
by regulation been designated by the Secretary as an additive
that is not a human or animal carcinogen, or otherwise
harmful to health under intended conditions of use, the
manufacturer shall within 60 days of such action so advise
the Secretary in writing.
``(d) Data List.--
``(1) In general.--Not later than 3 years after the date of
enactment of the Family Smoking Prevention and Tobacco
Control Act, and annually thereafter, the Secretary shall
publish in a format that is understandable and not misleading
to a lay person, and place on public display (in a manner
determined by the Secretary) the list established under
subsection (e).
``(2) Consumer research.--The Secretary shall conduct
periodic consumer research to ensure that the list published
under paragraph (1) is not misleading to lay persons. Not
later than 5 years after the date of enactment of the Family
Smoking Prevention and Tobacco Control Act, the Secretary
shall submit to the appropriate committees of Congress a
report on the results of such research, together with
recommendations on whether such publication should be
continued or modified.
``(e) Data Collection.--Not later than 12 months after the
date of enactment of the Family Smoking Prevention and
Tobacco Control Act, the Secretary shall establish a list of
harmful and potentially harmful constituents, including smoke
constituents, to health in each tobacco product by brand and
by quantity in each brand and subbrand. The Secretary shall
publish a public notice requesting the submission by
interested persons of scientific and other information
concerning the harmful and potentially harmful constituents
in tobacco products and tobacco smoke.
``SEC. 905. ANNUAL REGISTRATION.
``(a) Definitions.--In this section:
``(1) Manufacture, preparation, compounding, or
processing.--The term `manufacture, preparation, compounding,
or processing' shall include repackaging or otherwise
changing the container, wrapper, or labeling of any tobacco
product package in furtherance of the distribution of the
tobacco product from the original place of manufacture to the
person who makes final delivery or sale to the ultimate
consumer or user.
``(2) Name.--The term `name' shall include in the case of a
partnership the name of each partner and, in the case of a
corporation, the name of each corporate officer and director,
and the State of incorporation.
``(b) Registration by Owners and Operators.--On or before
December 31 of each year every person who owns or operates
any establishment in any State engaged in the manufacture,
preparation, compounding, or processing of a tobacco product
or tobacco products shall register with the Secretary the
name, places of business, and all such establishments of that
person.
``(c) Registration of New Owners and Operators.--Every
person upon first engaging in the manufacture, preparation,
compounding, or processing of a tobacco product or tobacco
products in any establishment owned or operated in any State
by that person shall immediately register with the Secretary
that person's name, place of business, and such
establishment.
``(d) Registration of Added Establishments.--Every person
required to register under subsection (b) or (c) shall
immediately register with the Secretary any additional
establishment which that person owns or operates in any State
and in which that person begins the manufacture, preparation,
compounding, or processing of a tobacco product or tobacco
products.
``(e) Uniform Product Identification System.--The Secretary
may by regulation prescribe a uniform system for the
identification of tobacco products and may require that
persons who are required to list such tobacco products under
subsection (i) shall list such tobacco products in accordance
with such system.
``(f) Public Access to Registration Information.--The
Secretary shall make available for inspection, to any person
so requesting, any registration filed under this section.
``(g) Biennial Inspection of Registered Establishments.--
Every establishment in any State registered with the
Secretary under this section shall be subject to inspection
under section 704, and every such establishment engaged in
the manufacture, compounding, or processing of a tobacco
product or tobacco products shall be so inspected by 1 or
more officers or employees duly designated by the Secretary
at least once in the 2-year period beginning with the date of
registration of such establishment under this section and at
least once in every successive 2-year period thereafter.
``(h) Foreign Establishments Shall Register.--Any
establishment within any foreign country engaged in the
manufacture, preparation, compounding, or processing of a
tobacco product or tobacco products, shall register under
this section under regulations promulgated by the Secretary.
Such regulations shall require such establishment to provide
the information required by subsection (i) of this section
and shall include provisions for registration of any such
establishment upon condition that adequate and effective
means are available, by arrangement with the government of
such foreign country or otherwise, to enable the Secretary to
determine from time to time whether tobacco products
manufactured, prepared, compounded, or processed in such
establishment, if imported or offered for import into the
United States, shall be refused admission on any of the
grounds set forth in section 801(a).
``(i) Registration Information.--
``(1) Product list.--Every person who registers with the
Secretary under subsection (b), (c), (d), or (h) shall, at
the time of registration under any such subsection, file with
the Secretary a list of all tobacco products which are being
manufactured, prepared, compounded, or processed by that
person for commercial distribution and which has not been
included in any list of tobacco products filed by that person
with the Secretary under this paragraph or paragraph (2)
before such time of registration. Such list shall be prepared
in such form and manner as the Secretary may prescribe and
shall be accompanied by--
``(A) in the case of a tobacco product contained in the
applicable list with respect to which a tobacco product
standard has been established under section 907 or which is
subject to section 910, a reference to the authority for the
marketing of such tobacco product and a copy of all labeling
for such tobacco product;
``(B) in the case of any other tobacco product contained in
an applicable list, a copy of all consumer information and
other labeling for such tobacco product, a representative
sampling of advertisements for such tobacco product, and,
upon request made by the Secretary for good cause, a copy of
all advertisements for a particular tobacco product; and
``(C) if the registrant filing a list has determined that a
tobacco product contained in such list is not subject to a
tobacco product standard established under section 907, a
brief statement of the basis upon which the registrant made
such determination if the Secretary requests such a statement
with respect to that particular tobacco product.
``(2) Biannual report of any change in product list.--Each
person who registers with the Secretary under this section
shall report to the Secretary once during the month of June
of each year and once during the month of December of each
year the following:
``(A) A list of each tobacco product introduced by the
registrant for commercial distribution which has not been
included in any list previously filed by that person with the
Secretary under this subparagraph or paragraph (1). A list
under this subparagraph shall list a tobacco product by its
established name and shall be accompanied by the other
information required by paragraph (1).
``(B) If since the date the registrant last made a report
under this paragraph that person has discontinued the
manufacture, preparation, compounding, or processing for
commercial distribution of a tobacco product included in a
list filed under subparagraph (A) or paragraph (1), notice of
such discontinuance, the date of such discontinuance, and the
identity of its established name.
``(C) If since the date the registrant reported under
subparagraph (B) a notice of discontinuance that person has
resumed the manufacture, preparation, compounding, or
processing for commercial distribution of the tobacco product
with respect to which such notice of discontinuance was
reported, notice of such resumption, the date of such
resumption, the identity of such tobacco product by
established name, and other information required by paragraph
(1), unless the registrant has previously reported such
resumption to the Secretary under this subparagraph.
[[Page S5968]]
``(D) Any material change in any information previously
submitted under this paragraph or paragraph (1).
``(j) Report Preceding Introduction of Certain
Substantially-Equivalent Products Into Interstate Commerce.--
``(1) In general.--Each person who is required to register
under this section and who proposes to begin the introduction
or delivery for introduction into interstate commerce for
commercial distribution of a tobacco product intended for
human use that was not commercially marketed (other than for
test marketing) in the United States as of June 1, 2003,
shall, at least 90 days prior to making such introduction or
delivery, report to the Secretary (in such form and manner as
the Secretary shall prescribe)--
``(A) the basis for such person's determination that the
tobacco product is substantially equivalent, within the
meaning of section 910, to a tobacco product commercially
marketed (other than for test marketing) in the United States
as of June 1, 2003, that is in compliance with the
requirements of this Act; and
``(B) action taken by such person to comply with the
requirements under section 907 that are applicable to the
tobacco product.
``(2) Application to certain post june 1, 2003 products.--A
report under this subsection for a tobacco product that was
first introduced or delivered for introduction into
interstate commerce for commercial distribution in the United
States after June 1, 2003, and prior to the date that is 15
months after the date of enactment of the Family Smoking
Prevention and Tobacco Control Act shall be submitted to the
Secretary not later than 15 months after such date of
enactment.
``(3) Exemptions.--
``(A) In general.--The Secretary may by regulation, exempt
from the requirements of this subsection tobacco products
that are modified by adding or deleting a tobacco additive,
or increasing or decreasing the quantity of an existing
tobacco additive, if the Secretary determines that--
``(i) such modification would be a minor modification of a
tobacco product authorized for sale under this Act;
``(ii) a report under this subsection is not necessary to
ensure that permitting the tobacco product to be marketed
would be appropriate for protection of the public health; and
``(iii) an exemption is otherwise appropriate.
``(B) Regulations.--Not later than 9 months after the date
of enactment of the Family Smoking Prevention and Tobacco
Control Act, the Secretary shall issue regulations to
implement this paragraph.
``SEC. 906. GENERAL PROVISIONS RESPECTING CONTROL OF TOBACCO
PRODUCTS.
``(a) In General.--Any requirement established by or under
section 902, 903, 905, or 909 applicable to a tobacco product
shall apply to such tobacco product until the applicability
of the requirement to the tobacco product has been changed by
action taken under section 907, section 910, section 911, or
subsection (d) of this section, and any requirement
established by or under section 902, 903, 905, or 909 which
is inconsistent with a requirement imposed on such tobacco
product under section 907, section 910, section 911, or
subsection (d) of this section shall not apply to such
tobacco product.
``(b) Information on Public Access and Comment.--Each
notice of proposed rulemaking under section 907, 908, 909,
910, or 911 or under this section, any other notice which is
published in the Federal Register with respect to any other
action taken under any such section and which states the
reasons for such action, and each publication of findings
required to be made in connection with rulemaking under any
such section shall set forth--
``(1) the manner in which interested persons may examine
data and other information on which the notice or findings is
based; and
``(2) the period within which interested persons may
present their comments on the notice or findings (including
the need therefore) orally or in writing, which period shall
be at least 60 days but may not exceed 90 days unless the
time is extended by the Secretary by a notice published in
the Federal Register stating good cause therefore.
``(c) Limited Confidentiality of Information.--Any
information reported to or otherwise obtained by the
Secretary or the Secretary's representative under section
903, 904, 907, 908, 909, 910, 911, or 704, or under
subsection (e) or (f) of this section, which is exempt from
disclosure under subsection (a) of section 552 of title 5,
United States Code, by reason of subsection (b)(4) of that
section shall be considered confidential and shall not be
disclosed, except that the information may be disclosed to
other officers or employees concerned with carrying out this
chapter, or when relevant in any proceeding under this
chapter.
``(d) Restrictions.--
``(1) In general.--The Secretary may by regulation require
restrictions on the sale and distribution of a tobacco
product, including restrictions on the access to, and the
advertising and promotion of, the tobacco product, if the
Secretary determines that such regulation would be
appropriate for the protection of the public health. The
Secretary may by regulation impose restrictions on the
advertising and promotion of a tobacco product consistent
with and to full extent permitted by the first amendment to
the Constitution. The finding as to whether such regulation
would be appropriate for the protection of the public health
shall be determined with respect to the risks and benefits to
the population as a whole, including users and non-users of
the tobacco product, and taking into account--
``(A) the increased or decreased likelihood that existing
users of tobacco products will stop using such products; and
``(B) the increased or decreased likelihood that those who
do not use tobacco products will start using such products.
No such regulation may require that the sale or distribution
of a tobacco product be limited to the written or oral
authorization of a practitioner licensed by law to prescribe
medical products.
``(2) Label statements.--The label of a tobacco product
shall bear such appropriate statements of the restrictions
required by a regulation under subsection (a) as the
Secretary may in such regulation prescribe.
``(3) Limitations.--
``(A) In general.--No restrictions under paragraph (1)
may--
``(i) prohibit the sale of any tobacco product in face-to-
face transactions by a specific category of retail outlets;
or
``(ii) establish a minimum age of sale of tobacco products
to any person older than 18 years of age.
``(B) Matchbooks.--For purposes of any regulations issued
by the Secretary, matchbooks of conventional size containing
not more than 20 paper matches, and which are customarily
given away for free with the purchase of tobacco products
shall be considered as adult written publications which shall
be permitted to contain advertising. Notwithstanding the
preceding sentence, if the Secretary finds that such
treatment of matchbooks is not appropriate for the protection
of the public health, the Secretary may determine by
regulation that matchbooks shall not be considered adult
written publications.
``(e) Good Manufacturing Practice Requirements.--
``(1) Methods, facilities, and controls to conform.--
``(A) In general.--The Secretary may, in accordance with
subparagraph (B), prescribe regulations (which may differ
based on the type of tobacco product involved) requiring that
the methods used in, and the facilities and controls used
for, the manufacture, pre-production design validation
(including a process to assess the performance of a tobacco
product), packing and storage of a tobacco product, conform
to current good manufacturing practice, as prescribed in such
regulations, to assure that the public health is protected
and that the tobacco product is in compliance with this
chapter. Good manufacturing practices may include the testing
of raw tobacco for pesticide chemical residues regardless of
whether a tolerance for such chemical residues has been
established.
``(B) Requirements.--The Secretary shall--
``(i) before promulgating any regulation under subparagraph
(A), afford the Tobacco Products Scientific Advisory
Committee an opportunity to submit recommendations with
respect to the regulation proposed to be promulgated;
``(ii) before promulgating any regulation under
subparagraph (A), afford opportunity for an oral hearing;
``(iii) provide the advisory committee a reasonable time to
make its recommendation with respect to proposed regulations
under subparagraph (A); and
``(iv) in establishing the effective date of a regulation
promulgated under this subsection, take into account the
differences in the manner in which the different types of
tobacco products have historically been produced, the
financial resources of the different tobacco product
manufacturers, and the state of their existing manufacturing
facilities, and shall provide for a reasonable period of time
for such manufacturers to conform to good manufacturing
practices.
``(2) Exemptions; variances.--
``(A) Petition.--Any person subject to any requirement
prescribed under paragraph (1) may petition the Secretary for
a permanent or temporary exemption or variance from such
requirement. Such a petition shall be submitted to the
Secretary in such form and manner as the Secretary shall
prescribe and shall--
``(i) in the case of a petition for an exemption from a
requirement, set forth the basis for the petitioner's
determination that compliance with the requirement is not
required to assure that the tobacco product will be in
compliance with this chapter;
``(ii) in the case of a petition for a variance from a
requirement, set forth the methods proposed to be used in,
and the facilities and controls proposed to be used for, the
manufacture, packing, and storage of the tobacco product in
lieu of the methods, facilities, and controls prescribed by
the requirement; and
``(iii) contain such other information as the Secretary
shall prescribe.
``(B) Referral to the tobacco products scientific advisory
committee.--The Secretary may refer to the Tobacco Products
Scientific Advisory Committee any petition submitted under
subparagraph (A). The Tobacco Products Scientific Advisory
Committee shall report its recommendations to the Secretary
with respect to a petition referred to it within 60 days
after the date of the petition's referral. Within 60 days
after--
``(i) the date the petition was submitted to the Secretary
under subparagraph (A); or
[[Page S5969]]
``(ii) the day after the petition was referred to the
Tobacco Products Scientific Advisory Committee,
whichever occurs later, the Secretary shall by order either
deny the petition or approve it.
``(C) Approval.--The Secretary may approve--
``(i) a petition for an exemption for a tobacco product
from a requirement if the Secretary determines that
compliance with such requirement is not required to assure
that the tobacco product will be in compliance with this
chapter; and
``(ii) a petition for a variance for a tobacco product from
a requirement if the Secretary determines that the methods to
be used in, and the facilities and controls to be used for,
the manufacture, packing, and storage of the tobacco product
in lieu of the methods, controls, and facilities prescribed
by the requirement are sufficient to assure that the tobacco
product will be in compliance with this chapter.
``(D) Conditions.--An order of the Secretary approving a
petition for a variance shall prescribe such conditions
respecting the methods used in, and the facilities and
controls used for, the manufacture, packing, and storage of
the tobacco product to be granted the variance under the
petition as may be necessary to assure that the tobacco
product will be in compliance with this chapter.
``(E) Hearing.--After the issuance of an order under
subparagraph (B) respecting a petition, the petitioner shall
have an opportunity for an informal hearing on such order.
``(3) Compliance.--Compliance with requirements under this
subsection shall not be required before the period ending 3
years after the date of enactment of the Family Smoking
Prevention and Tobacco Control Act.
``(f) Research and Development.--The Secretary may enter
into contracts for research, testing, and demonstrations
respecting tobacco products and may obtain tobacco products
for research, testing, and demonstration purposes without
regard to section 3324(a) and (b) of title 31, United States
Code, and section 5 of title 41, United States Code.
``SEC. 907. TOBACCO PRODUCT STANDARDS.
``(a) In General.--
``(1) Special rule for cigarettes.--A cigarette or any of
its component parts (including the tobacco, filter, or paper)
shall not contain, as a constituent (including a smoke
constituent) or additive, an artificial or natural flavor
(other than tobacco or menthol) or an herb or spice,
including strawberry, grape, orange, clove, cinnamon,
pineapple, vanilla, coconut, licorice, cocoa, chocolate,
cherry, or coffee, that is a characterizing flavor of the
tobacco product or tobacco smoke. Nothing in this
subparagraph shall be construed to limit the Secretary's
authority to take action under this section or other sections
of this Act applicable to menthol or any artificial or
natural flavor, herb, or spice not specified in this
paragraph.
``(2) Revision of tobacco product standards.--The Secretary
may revise the tobacco product standards in paragraph (1) in
accordance with subsection (b).
``(3) Tobacco product standards.--The Secretary may adopt
tobacco product standards in addition to those in paragraph
(1) if the Secretary finds that a tobacco product standard is
appropriate for the protection of the public health. This
finding shall be determined with respect to the risks and
benefits to the population as a whole, including users and
non-users of the tobacco product, and taking into account--
``(A) the increased or decreased likelihood that existing
users of tobacco products will stop using such products; and
``(B) the increased or decreased likelihood that those who
do not use tobacco products will start using such products.
``(4) Content of tobacco product standards.--A tobacco
product standard established under this section for a tobacco
product--
``(A) shall include provisions that are appropriate for the
protection of the public health, including provisions, where
appropriate--
``(i) for the reduction of nicotine yields of the product;
``(ii) for the reduction or elimination of other
constituents, including smoke constituents, or harmful
components of the product; or
``(iii) relating to any other requirement under (B);
``(B) shall, where appropriate for the protection of the
public health, include--
``(i) provisions respecting the construction, components,
ingredients, additives, constituents, including smoke
constituents, and properties of the tobacco product;
``(ii) provisions for the testing (on a sample basis or, if
necessary, on an individual basis) of the tobacco product;
``(iii) provisions for the measurement of the tobacco
product characteristics of the tobacco product;
``(iv) provisions requiring that the results of each or of
certain of the tests of the tobacco product required to be
made under clause (ii) show that the tobacco product is in
conformity with the portions of the standard for which the
test or tests were required; and
``(v) a provision requiring that the sale and distribution
of the tobacco product be restricted but only to the extent
that the sale and distribution of a tobacco product may be
restricted under a regulation under section 906(d); and
``(C) shall, where appropriate, require the use and
prescribe the form and content of labeling for the proper use
of the tobacco product.
``(5) Periodic re-evaluation of tobacco product
standards.--The Secretary shall provide for periodic
evaluation of tobacco product standards established under
this section to determine whether such standards should be
changed to reflect new medical, scientific, or other
technological data. The Secretary may provide for testing
under paragraph (4)(B) by any person.
``(6) Involvement of other agencies; informed persons.--In
carrying out duties under this section, the Secretary shall
endeavor to--
``(A) use personnel, facilities, and other technical
support available in other Federal agencies;
``(B) consult with other Federal agencies concerned with
standard-setting and other nationally or internationally
recognized standard-setting entities; and
``(C) invite appropriate participation, through joint or
other conferences, workshops, or other means, by informed
persons representative of scientific, professional, industry,
agricultural, or consumer organizations who in the
Secretary's judgment can make a significant contribution.
``(b) Establishment of Standards.--
``(1) Notice.--
``(A) In general.--The Secretary shall publish in the
Federal Register a notice of proposed rulemaking for the
establishment, amendment, or revocation of any tobacco
product standard.
``(B) Requirements of notice.--A notice of proposed
rulemaking for the establishment or amendment of a tobacco
product standard for a tobacco product shall--
``(i) set forth a finding with supporting justification
that the tobacco product standard is appropriate for the
protection of the public health;
``(ii) set forth proposed findings with respect to the risk
of illness or injury that the tobacco product standard is
intended to reduce or eliminate; and
``(iii) invite interested persons to submit an existing
tobacco product standard for the tobacco product, including a
draft or proposed tobacco product standard, for consideration
by the Secretary.
``(C) Standard.--Upon a determination by the Secretary that
an additive, constituent (including smoke constituent), or
other component of the product that is the subject of the
proposed tobacco product standard is harmful, it shall be the
burden of any party challenging the proposed standard to
prove that the proposed standard will not reduce or eliminate
the risk of illness or injury.
``(D) Finding.--A notice of proposed rulemaking for the
revocation of a tobacco product standard shall set forth a
finding with supporting justification that the tobacco
product standard is no longer appropriate for the protection
of the public health.
``(E) Consideration by secretary.--The Secretary shall
consider all information submitted in connection with a
proposed standard, including information concerning the
countervailing effects of the tobacco product standard on the
health of adolescent tobacco users, adult tobacco users, or
non-tobacco users, such as the creation of a significant
demand for contraband or other tobacco products that do not
meet the requirements of this chapter and the significance of
such demand, and shall issue the standard if the Secretary
determines that the standard would be appropriate for the
protection of the public health.
``(F) Comment.--The Secretary shall provide for a comment
period of not less than 60 days.
``(2) Promulgation.--
``(A) In general.--After the expiration of the period for
comment on a notice of proposed rulemaking published under
paragraph (1) respecting a tobacco product standard and after
consideration of such comments and any report from the
Tobacco Products Scientific Advisory Committee, the Secretary
shall--
``(i) promulgate a regulation establishing a tobacco
product standard and publish in the Federal Register findings
on the matters referred to in paragraph (1); or
``(ii) publish a notice terminating the proceeding for the
development of the standard together with the reasons for
such termination.
``(B) Effective date.--A regulation establishing a tobacco
product standard shall set forth the date or dates upon which
the standard shall take effect, but no such regulation may
take effect before 1 year after the date of its publication
unless the Secretary determines that an earlier effective
date is necessary for the protection of the public health.
Such date or dates shall be established so as to minimize,
consistent with the public health, economic loss to, and
disruption or dislocation of, domestic and international
trade.
``(3) Power reserved to congress.--Because of the
importance of a decision of the Secretary to issue a
regulation establishing a tobacco product standard--
``(A) banning all cigarettes, all smokeless tobacco
products, all little cigars, all cigars other than little
cigars, all pipe tobacco, or all roll your own tobacco
products; or
``(B) requiring the reduction of nicotine yields of a
tobacco product to zero,
[[Page S5970]]
Congress expressly reserves to itself such power.
``(4) Amendment; revocation.--
``(A) Authority.--The Secretary, upon the Secretary's own
initiative or upon petition of an interested person may by a
regulation, promulgated in accordance with the requirements
of paragraphs (1) and (2)(B), amend or revoke a tobacco
product standard.
``(B) Effective date.--The Secretary may declare a proposed
amendment of a tobacco product standard to be effective on
and after its publication in the Federal Register and until
the effective date of any final action taken on such
amendment if the Secretary determines that making it so
effective is in the public interest.
``(5) Reference to advisory committee.--The Secretary may--
``(A) on the Secretary's own initiative, refer a proposed
regulation for the establishment, amendment, or revocation of
a tobacco product standard; or
``(B) upon the request of an interested person which
demonstrates good cause for referral and which is made before
the expiration of the period for submission of comments on
such proposed regulation,
refer such proposed regulation to the Tobacco Products
Scientific Advisory Committee, for a report and
recommendation with respect to any matter involved in the
proposed regulation which requires the exercise of scientific
judgment. If a proposed regulation is referred under this
paragraph to the Tobacco Products Scientific Advisory
Committee, the Secretary shall provide the advisory committee
with the data and information on which such proposed
regulation is based. The Tobacco Products Scientific Advisory
Committee shall, within 60 days after the referral of a
proposed regulation and after independent study of the data
and information furnished to it by the Secretary and other
data and information before it, submit to the Secretary a
report and recommendation respecting such regulation,
together with all underlying data and information and a
statement of the reason or basis for the recommendation. A
copy of such report and recommendation shall be made public
by the Secretary.
``SEC. 908. NOTIFICATION AND OTHER REMEDIES.
``(a) Notification.--If the Secretary determines that--
``(1) a tobacco product which is introduced or delivered
for introduction into interstate commerce for commercial
distribution presents an unreasonable risk of substantial
harm to the public health; and
``(2) notification under this subsection is necessary to
eliminate the unreasonable risk of such harm and no more
practicable means is available under the provisions of this
chapter (other than this section) to eliminate such risk,
the Secretary may issue such order as may be necessary to
assure that adequate notification is provided in an
appropriate form, by the persons and means best suited under
the circumstances involved, to all persons who should
properly receive such notification in order to eliminate such
risk. The Secretary may order notification by any appropriate
means, including public service announcements. Before issuing
an order under this subsection, the Secretary shall consult
with the persons who are to give notice under the order.
``(b) No Exemption From Other Liability.--Compliance with
an order issued under this section shall not relieve any
person from liability under Federal or State law. In awarding
damages for economic loss in an action brought for the
enforcement of any such liability, the value to the plaintiff
in such action of any remedy provided under such order shall
be taken into account.
``(c) Recall Authority.--
``(1) In general.--If the Secretary finds that there is a
reasonable probability that a tobacco product contains a
manufacturing or other defect not ordinarily contained in
tobacco products on the market that would cause serious,
adverse health consequences or death, the Secretary shall
issue an order requiring the appropriate person (including
the manufacturers, importers, distributors, or retailers of
the tobacco product) to immediately cease distribution of
such tobacco product. The order shall provide the person
subject to the order with an opportunity for an informal
hearing, to be held not later than 10 days after the date of
the issuance of the order, on the actions required by the
order and on whether the order should be amended to require a
recall of such tobacco product. If, after providing an
opportunity for such a hearing, the Secretary determines that
inadequate grounds exist to support the actions required by
the order, the Secretary shall vacate the order.
``(2) Amendment of order to require recall.--
``(A) In general.--If, after providing an opportunity for
an informal hearing under paragraph (1), the Secretary
determines that the order should be amended to include a
recall of the tobacco product with respect to which the order
was issued, the Secretary shall, except as provided in
subparagraph (B), amend the order to require a recall. The
Secretary shall specify a timetable in which the tobacco
product recall will occur and shall require periodic reports
to the Secretary describing the progress of the recall.
``(B) Notice.--An amended order under subparagraph (A)--
``(i) shall not include recall of a tobacco product from
individuals; and
``(ii) shall provide for notice to persons subject to the
risks associated with the use of such tobacco product.
In providing the notice required by clause (ii), the
Secretary may use the assistance of retailers and other
persons who distributed such tobacco product. If a
significant number of such persons cannot be identified, the
Secretary shall notify such persons under section 705(b).
``(3) Remedy not exclusive.--The remedy provided by this
subsection shall be in addition to remedies provided by
subsection (a) of this section.
``SEC. 909. RECORDS AND REPORTS ON TOBACCO PRODUCTS.
``(a) In General.--Every person who is a tobacco product
manufacturer or importer of a tobacco product shall establish
and maintain such records, make such reports, and provide
such information, as the Secretary may by regulation
reasonably require to assure that such tobacco product is not
adulterated or misbranded and to otherwise protect public
health. Regulations prescribed under the preceding sentence--
``(1) may require a tobacco product manufacturer or
importer to report to the Secretary whenever the manufacturer
or importer receives or otherwise becomes aware of
information that reasonably suggests that one of its marketed
tobacco products may have caused or contributed to a serious
unexpected adverse experience associated with the use of the
product or any significant increase in the frequency of a
serious, expected adverse product experience;
``(2) shall require reporting of other significant adverse
tobacco product experiences as determined by the Secretary to
be necessary to be reported;
``(3) shall not impose requirements unduly burdensome to a
tobacco product manufacturer or importer, taking into account
the cost of complying with such requirements and the need for
the protection of the public health and the implementation of
this chapter;
``(4) when prescribing the procedure for making requests
for reports or information, shall require that each request
made under such regulations for submission of a report or
information to the Secretary state the reason or purpose for
such request and identify to the fullest extent practicable
such report or information;
``(5) when requiring submission of a report or information
to the Secretary, shall state the reason or purpose for the
submission of such report or information and identify to the
fullest extent practicable such report or information; and
``(6) may not require that the identity of any patient or
user be disclosed in records, reports, or information
required under this subsection unless required for the
medical welfare of an individual, to determine risks to
public health of a tobacco product, or to verify a record,
report, or information submitted under this chapter.
In prescribing regulations under this subsection, the
Secretary shall have due regard for the professional ethics
of the medical profession and the interests of patients. The
prohibitions of paragraph (6) continue to apply to records,
reports, and information concerning any individual who has
been a patient, irrespective of whether or when he ceases to
be a patient.
``(b) Reports of Removals and Corrections.--
``(1) In general.--Except as provided in paragraph (2), the
Secretary shall by regulation require a tobacco product
manufacturer or importer of a tobacco product to report
promptly to the Secretary any corrective action taken or
removal from the market of a tobacco product undertaken by
such manufacturer or importer if the removal or correction
was undertaken--
``(A) to reduce a risk to health posed by the tobacco
product; or
``(B) to remedy a violation of this chapter caused by the
tobacco product which may present a risk to health.
A tobacco product manufacturer or importer of a tobacco
product who undertakes a corrective action or removal from
the market of a tobacco product which is not required to be
reported under this subsection shall keep a record of such
correction or removal.
``(2) Exception.--No report of the corrective action or
removal of a tobacco product may be required under paragraph
(1) if a report of the corrective action or removal is
required and has been submitted under subsection (a).
``SEC. 910. APPLICATION FOR REVIEW OF CERTAIN TOBACCO
PRODUCTS.
``(a) In General.--
``(1) New tobacco product defined.--For purposes of this
section the term `new tobacco product' means--
``(A) any tobacco product (including those products in test
markets) that was not commercially marketed in the United
States as of June 1, 2003; or
``(B) any modification (including a change in design, any
component, any part, or any constituent, including a smoke
constituent, or in the content, delivery or form of nicotine,
or any other additive or ingredient) of a tobacco product
where the modified product was commercially marketed in the
United States after June 1, 2003.
``(2) Premarket approval required.--
``(A) New products.--Approval under this section of an
application for premarket approval for any new tobacco
product is required unless--
``(i) the manufacturer has submitted a report under section
905(j); and
[[Page S5971]]
``(ii) the Secretary has issued an order that the tobacco
product--
``(I) is substantially equivalent to a tobacco product
commercially marketed (other than for test marketing) in the
United States as of June 1, 2003; and
``(II)(aa) is in compliance with the requirements of this
Act; or
``(bb) is exempt from the requirements of section 905(j)
pursuant to a regulation issued under section 905(j)(3).
``(B) Application to certain post june 1, 2003 products.--
Subparagraph (A) shall not apply to a tobacco product--
``(i) that was first introduced or delivered for
introduction into interstate commerce for commercial
distribution in the United States after June 1, 2003, and
prior to the date that is 15 months after the date of
enactment of the Family Smoking Prevention and Tobacco
Control Act; and
``(ii) for which a report was submitted under section
905(j) within such 15-month period, until the Secretary
issues an order that the tobacco product is not substantially
equivalent.
``(3) Substantially equivalent defined.--
``(A) In general.--In this section and section 905(j), the
terms `substantially equivalent' or `substantial equivalence'
mean, with respect to the tobacco product being compared to
the predicate tobacco product, that the Secretary by order
has found that the tobacco product--
``(i) has the same characteristics as the predicate tobacco
product; or
``(ii) has different characteristics and the information
submitted contains information, including clinical data if
deemed necessary by the Secretary, that demonstrates that it
is not appropriate to regulate the product under this section
because the product does not raise different questions of
public health.
``(B) Characteristics.--In subparagraph (A), the term
`characteristics' means the materials, ingredients, design,
composition, heating source, or other features of a tobacco
product.
``(C) Limitation.--A tobacco product may not be found to be
substantially equivalent to a predicate tobacco product that
has been removed from the market at the initiative of the
Secretary or that has been determined by a judicial order to
be misbranded or adulterated.
``(4) Health information.--
``(A) Summary.--As part of a submission under section
905(j) respecting a tobacco product, the person required to
file a premarket notification under such section shall
provide an adequate summary of any health information related
to the tobacco product or state that such information will be
made available upon request by any person.
``(B) Required information.--Any summary under subparagraph
(A) respecting a tobacco product shall contain detailed
information regarding data concerning adverse health effects
and shall be made available to the public by the Secretary
within 30 days of the issuance of a determination that such
tobacco product is substantially equivalent to another
tobacco product.
``(b) Application.--
``(1) Contents.--An application for premarket approval
shall contain--
``(A) full reports of all information, published or known
to, or which should reasonably be known to, the applicant,
concerning investigations which have been made to show the
health risks of such tobacco product and whether such tobacco
product presents less risk than other tobacco products;
``(B) a full statement of the components, ingredients,
additives, and properties, and of the principle or principles
of operation, of such tobacco product;
``(C) a full description of the methods used in, and the
facilities and controls used for, the manufacture,
processing, and, when relevant, packing and installation of,
such tobacco product;
``(D) an identifying reference to any tobacco product
standard under section 907 which would be applicable to any
aspect of such tobacco product, and either adequate
information to show that such aspect of such tobacco product
fully meets such tobacco product standard or adequate
information to justify any deviation from such standard;
``(E) such samples of such tobacco product and of
components thereof as the Secretary may reasonably require;
``(F) specimens of the labeling proposed to be used for
such tobacco product; and
``(G) such other information relevant to the subject matter
of the application as the Secretary may require.
``(2) Reference to tobacco products scientific advisory
committee.--Upon receipt of an application meeting the
requirements set forth in paragraph (1), the Secretary--
``(A) may, on the Secretary's own initiative; or
``(B) may, upon the request of an applicant,
refer such application to the Tobacco Products Scientific
Advisory Committee for reference and for submission (within
such period as the Secretary may establish) of a report and
recommendation respecting approval of the application,
together with all underlying data and the reasons or basis
for the recommendation.
``(c) Action on Application.--
``(1) Deadline.--
``(A) In general.--As promptly as possible, but in no event
later than 180 days after the receipt of an application under
subsection (b), the Secretary, after considering the report
and recommendation submitted under paragraph (2) of such
subsection, shall--
``(i) issue an order approving the application if the
Secretary finds that none of the grounds for denying approval
specified in paragraph (2) of this subsection applies; or
``(ii) deny approval of the application if the Secretary
finds (and sets forth the basis for such finding as part of
or accompanying such denial) that 1 or more grounds for
denial specified in paragraph (2) of this subsection apply.
``(B) Restrictions on sale and distribution.--An order
approving an application for a tobacco product may require as
a condition to such approval that the sale and distribution
of the tobacco product be restricted but only to the extent
that the sale and distribution of a tobacco product may be
restricted under a regulation under section 906(d).
``(2) Denial of approval.--The Secretary shall deny
approval of an application for a tobacco product if, upon the
basis of the information submitted to the Secretary as part
of the application and any other information before the
Secretary with respect to such tobacco product, the Secretary
finds that--
``(A) there is a lack of a showing that permitting such
tobacco product to be marketed would be appropriate for the
protection of the public health;
``(B) the methods used in, or the facilities or controls
used for, the manufacture, processing, or packing of such
tobacco product do not conform to the requirements of section
906(e);
``(C) based on a fair evaluation of all material facts, the
proposed labeling is false or misleading in any particular;
or
``(D) such tobacco product is not shown to conform in all
respects to a tobacco product standard in effect under
section 907, compliance with which is a condition to approval
of the application, and there is a lack of adequate
information to justify the deviation from such standard.
``(3) Denial information.--Any denial of an application
shall, insofar as the Secretary determines to be practicable,
be accompanied by a statement informing the applicant of the
measures required to place such application in approvable
form (which measures may include further research by the
applicant in accordance with 1 or more protocols prescribed
by the Secretary).
``(4) Basis for finding.--For purposes of this section, the
finding as to whether approval of a tobacco product is
appropriate for the protection of the public health shall be
determined with respect to the risks and benefits to the
population as a whole, including users and nonusers of the
tobacco product, and taking into account--
``(A) the increased or decreased likelihood that existing
users of tobacco products will stop using such products; and
``(B) the increased or decreased likelihood that those who
do not use tobacco products will start using such products.
``(5) Basis for action.--
``(A) Investigations.--For purposes of paragraph (2)(A),
whether permitting a tobacco product to be marketed would be
appropriate for the protection of the public health shall,
when appropriate, be determined on the basis of well-
controlled investigations, which may include 1 or more
clinical investigations by experts qualified by training and
experience to evaluate the tobacco product.
``(B) Other evidence.--If the Secretary determines that
there exists valid scientific evidence (other than evidence
derived from investigations described in subparagraph (A))
which is sufficient to evaluate the tobacco product the
Secretary may authorize that the determination for purposes
of paragraph (2)(A) be made on the basis of such evidence.
``(d) Withdrawal and Temporary Suspension.--
``(1) In general.--The Secretary shall, upon obtaining,
where appropriate, advice on scientific matters from an
advisory committee, and after due notice and opportunity for
informal hearing to the holder of an approved application for
a tobacco product, issue an order withdrawing approval of the
application if the Secretary finds--
``(A) that the continued marketing of such tobacco product
no longer is appropriate for the protection of the public
health;
``(B) that the application contained or was accompanied by
an untrue statement of a material fact;
``(C) that the applicant--
``(i) has failed to establish a system for maintaining
records, or has repeatedly or deliberately failed to maintain
records or to make reports, required by an applicable
regulation under section 909;
``(ii) has refused to permit access to, or copying or
verification of, such records as required by section 704; or
``(iii) has not complied with the requirements of section
905;
``(D) on the basis of new information before the Secretary
with respect to such tobacco product, evaluated together with
the evidence before the Secretary when the application was
approved, that the methods used in, or the facilities and
controls used for, the manufacture, processing, packing, or
installation of such tobacco product do not conform with the
requirements of section 906(e) and were not brought into
conformity with such requirements within a reasonable time
after receipt of written notice from the Secretary of
nonconformity;
``(E) on the basis of new information before the Secretary,
evaluated together with the
[[Page S5972]]
evidence before the Secretary when the application was
approved, that the labeling of such tobacco product, based on
a fair evaluation of all material facts, is false or
misleading in any particular and was not corrected within a
reasonable time after receipt of written notice from the
Secretary of such fact; or
``(F) on the basis of new information before the Secretary,
evaluated together with the evidence before the Secretary
when the application was approved, that such tobacco product
is not shown to conform in all respects to a tobacco product
standard which is in effect under section 907, compliance
with which was a condition to approval of the application,
and that there is a lack of adequate information to justify
the deviation from such standard.
``(2) Appeal.--The holder of an application subject to an
order issued under paragraph (1) withdrawing approval of the
application may, by petition filed on or before the 30th day
after the date upon which such holder receives notice of such
withdrawal, obtain review thereof in accordance with
subsection (e).
``(3) Temporary suspension.--If, after providing an
opportunity for an informal hearing, the Secretary determines
there is reasonable probability that the continuation of
distribution of a tobacco product under an approved
application would cause serious, adverse health consequences
or death, that is greater than ordinarily caused by tobacco
products on the market, the Secretary shall by order
temporarily suspend the approval of the application approved
under this section. If the Secretary issues such an order,
the Secretary shall proceed expeditiously under paragraph (1)
to withdraw such application.
``(e) Service of Order.--An order issued by the Secretary
under this section shall be served--
``(1) in person by any officer or employee of the
department designated by the Secretary; or
``(2) by mailing the order by registered mail or certified
mail addressed to the applicant at the applicant's last known
address in the records of the Secretary.
``(f) Records.--
``(1) Additional information.--In the case of any tobacco
product for which an approval of an application filed under
subsection (b) is in effect, the applicant shall establish
and maintain such records, and make such reports to the
Secretary, as the Secretary may by regulation, or by order
with respect to such application, prescribe on the basis of a
finding that such records and reports are necessary in order
to enable the Secretary to determine, or facilitate a
determination of, whether there is or may be grounds for
withdrawing or temporarily suspending such approval.
``(2) Access to records.--Each person required under this
section to maintain records, and each person in charge or
custody thereof, shall, upon request of an officer or
employee designated by the Secretary, permit such officer or
employee at all reasonable times to have access to and copy
and verify such records.
``(g) Investigational Tobacco Product Exemption for
Investigational Use.--The Secretary may exempt tobacco
products intended for investigational use from the provisions
of this chapter under such conditions as the Secretary may by
regulation prescribe.
``SEC. 911. MODIFIED RISK TOBACCO PRODUCTS.
``(a) In General.--No person may introduce or deliver for
introduction into interstate commerce any modified risk
tobacco product unless approval of an application filed
pursuant to subsection (d) is effective with respect to such
product.
``(b) Definitions.--In this section:
``(1) Modified risk tobacco product.--The term `modified
risk tobacco product' means any tobacco product that is sold
or distributed for use to reduce harm or the risk of tobacco-
related disease associated with commercially marketed tobacco
products.
``(2) Sold or distributed.--
``(A) In general.--With respect to a tobacco product, the
term `sold or distributed for use to reduce harm or the risk
of tobacco-related disease associated with commercially
marketed tobacco products' means a tobacco product--
``(A) the label, labeling, or advertising of which
represents explicitly or implicitly that--
``(I) the tobacco product presents a lower risk of tobacco-
related disease or is less harmful than one or more other
commercially marketed tobacco products;
``(II) the tobacco product or its smoke contains a reduced
level of a substance or presents a reduced exposure to a
substance; or
``(III) the tobacco product or its smoke does not contain
or is free of a substance;
``(ii) the label, labeling, or advertising of which uses
the descriptors `light', `mild', or `low' or similar
descriptors; or
``(iii) the tobacco product manufacturer of which has taken
any action directed to consumers through the media or
otherwise, other than by means of the tobacco product's
label, labeling or advertising, after the date of enactment
of the Family Smoking Prevention and Tobacco Control Act,
respecting the product that would be reasonably expected to
result in consumers believing that the tobacco product or its
smoke may present a lower risk of disease or is less harmful
than one or more commercially marketed tobacco products, or
presents a reduced exposure to, or does not contain or is
free of, a substance or substances.
``(B) Limitation.--No tobacco product shall be considered
to be `sold or distributed for use to reduce harm or the risk
of tobacco-related disease associated with commercially
marketed tobacco products', except as described in
subparagraph (A).
``(c) Tobacco Dependence Products.--A product that is
intended to be used for the treatment of tobacco dependence,
including smoking cessation, is not a modified risk tobacco
product under this section and is subject to the requirements
of chapter V.
``(d) Filing.--Any person may file with the Secretary an
application for a modified risk tobacco product. Such
application shall include--
``(1) a description of the proposed product and any
proposed advertising and labeling;
``(2) the conditions for using the product;
``(3) the formulation of the product;
``(4) sample product labels and labeling;
``(5) all documents (including underlying scientific
information) relating to research findings conducted,
supported, or possessed by the tobacco product manufacturer
relating to the effect of the product on tobacco related
diseases and health-related conditions, including information
both favorable and unfavorable to the ability of the product
to reduce risk or exposure and relating to human health;
``(6) data and information on how consumers actually use
the tobacco product; and
``(7) such other information as the Secretary may require.
``(e) Public Availability.--The Secretary shall make the
application described in subsection (d) publicly available
(except matters in the application which are trade secrets or
otherwise confidential, commercial information) and shall
request comments by interested persons on the information
contained in the application and on the label, labeling, and
advertising accompanying such application.
``(f) Advisory Committee.--
``(1) In general.--The Secretary shall refer to an advisory
committee any application submitted under this subsection.
``(2) Recommendations.--Not later than 60 days after the
date an application is referred to an advisory committee
under paragraph (1), the advisory committee shall report its
recommendations on the application to the Secretary.
``(g) Approval.--
``(1) Modified risk products.--Except as provided in
paragraph (2), the Secretary shall approve an application for
a modified risk tobacco product filed under this section only
if the Secretary determines that the applicant has
demonstrated that such product, as it is actually used by
consumers, will--
``(A) significantly reduce harm and the risk of tobacco-
related disease to individual tobacco users; and
``(B) benefit the health of the population as a whole
taking into account both users of tobacco products and
persons who do not currently use tobacco products.
``(2) Special rule for certain products.--
``(A) In general.--The Secretary may approve an application
for a tobacco product that has not been approved as a
modified risk tobacco product pursuant to paragraph (1) if
the Secretary makes the findings required under this
paragraph and determines that the applicant has demonstrated
that--
``(i) the approval of the application would be appropriate
to promote the public health;
``(ii) any aspect of the label, labeling, and advertising
for such product that would cause the tobacco product to be a
modified risk tobacco product under subsection (b)(2) is
limited to an explicit or implicit representation that such
tobacco product or its smoke contains or is free of a
substance or contains a reduced level of a substance, or
presents a reduced exposure to a substance in tobacco smoke.
``(iii) scientific evidence is not available and, using the
best available scientific methods, cannot be made available
without conducting long-term epidemiological studies for an
application to meet the standards set forth in paragraph (1);
and
``(iv) the scientific evidence that is available without
conducting long-term epidemiological studies demonstrates
that a measurable and substantial reduction in morbidity or
mortality among individual tobacco users is anticipated in
subsequent studies.
``(B) Additional findings required.--In order to approve an
application under subparagraph (A) the Secretary must also
find that the applicant has demonstrated that--
``(i) the magnitude of the overall reductions in exposure
to the substance or substances which are the subject of the
application is substantial, such substance or substances are
harmful, and the product as actually used exposes consumers
to the specified reduced level of the substance or
substances;
``(ii) the product as actually used by consumers will not
expose them to higher levels of other harmful substances
compared to the similar types of tobacco products then on the
market unless such increases are minimal and the anticipated
overall impact of use of the product remains a substantial
and measurable reduction in overall morbidity and mortality
among individual tobacco users;
``(iii) testing of actual consumer perception shows that,
as the applicant proposes to label and market the product,
consumers will not be misled into believing that the
product--
``(I) is or has been demonstrated to be less harmful; or
[[Page S5973]]
``(II) presents or has been demonstrated to present less of
a risk of disease than 1 or more other commercially marketed
tobacco products; and
``(iv) approval of the application is expected to benefit
the health of the population as a whole taking into account
both users of tobacco products and persons who do not
currently use tobacco products.
``(C) Conditions of approval.--
``(i) In general.--Applications approved under this
paragraph shall be limited to a term of not more than 5
years, but may be renewed upon a finding by the Secretary
that the requirements of this paragraph continue to be
satisfied based on the filing of a new application.
``(ii) Agreements by applicant.--Applications approved
under this paragraph shall be conditioned on the applicant's
agreement to conduct post-market surveillance and studies and
to submit to the Secretary the results of such surveillance
and studies to determine the impact of the application
approval on consumer perception, behavior, and health and to
enable the Secretary to review the accuracy of the
determinations upon which the approval was based in
accordance with a protocol approved by the Secretary.
``(iii) Annual submission.--The results of such post-market
surveillance and studies described in clause (ii) shall be
submitted annually.
``(3) Basis.--The determinations under paragraphs (1) and
(2) shall be based on--
``(A) the scientific evidence submitted by the applicant;
and
``(B) scientific evidence and other information that is
available to the Secretary.
``(4) Benefit to health of individuals and of population as
a whole.--In making the determinations under paragraphs (1)
and (2), the Secretary shall take into account--
``(A) the relative health risks to individuals of the
tobacco product that is the subject of the application;
``(B) the increased or decreased likelihood that existing
users of tobacco products who would otherwise stop using such
products will switch to the tobacco product that is the
subject of the application;
``(C) the increased or decreased likelihood that persons
who do not use tobacco products will start using the tobacco
product that is the subject of the application;
``(D) the risks and benefits to persons from the use of the
tobacco product that is the subject of the application as
compared to the use of products for smoking cessation
approved under chapter V to treat nicotine dependence; and
``(E) comments, data, and information submitted by
interested persons.
``(h) Additional Conditions for Approval.--
``(1) Modified risk products.--The Secretary shall require
for the approval of an application under this section that
any advertising or labeling concerning modified risk products
enable the public to comprehend the information concerning
modified risk and to understand the relative significance of
such information in the context of total health and in
relation to all of the diseases and health-related conditions
associated with the use of tobacco products.
``(2) Comparative claims.--
``(A) In general.--The Secretary may require for the
approval of an application under this subsection that a claim
comparing a tobacco product to 1 or more other commercially
marketed tobacco products shall compare the tobacco product
to a commercially marketed tobacco product that is
representative of that type of tobacco product on the market
(for example the average value of the top 3 brands of an
established regular tobacco product).
``(B) Quantitative comparisons.--The Secretary may also
require, for purposes of subparagraph (A), that the percent
(or fraction) of change and identity of the reference tobacco
product and a quantitative comparison of the amount of the
substance claimed to be reduced shall be stated in immediate
proximity to the most prominent claim.
``(3) Label disclosure.--
``(A) In general.--The Secretary may require the disclosure
on the label of other substances in the tobacco product, or
substances that may be produced by the consumption of that
tobacco product, that may affect a disease or health-related
condition or may increase the risk of other diseases or
health-related conditions associated with the use of tobacco
products.
``(B) Conditions of use.--If the conditions of use of the
tobacco product may affect the risk of the product to human
health, the Secretary may require the labeling of conditions
of use.
``(4) Time.--The Secretary shall limit an approval under
subsection (g)(1) for a specified period of time.
``(5) Advertising.--The Secretary may require that an
applicant, whose application has been approved under this
subsection, comply with requirements relating to advertising
and promotion of the tobacco product.
``(i) Postmarket Surveillance and Studies.--
``(1) In general.--The Secretary shall require that an
applicant under subsection (g)(1) conduct post market
surveillance and studies for a tobacco product for which an
application has been approved to determine the impact of the
application approval on consumer perception, behavior, and
health, to enable the Secretary to review the accuracy of the
determinations upon which the approval was based, and to
provide information that the Secretary determines is
otherwise necessary regarding the use or health risks
involving the tobacco product. The results of post-market
surveillance and studies shall be submitted to the Secretary
on an annual basis.
``(2) Surveillance protocol.--Each applicant required to
conduct a surveillance of a tobacco product under paragraph
(1) shall, within 30 days after receiving notice that the
applicant is required to conduct such surveillance, submit,
for the approval of the Secretary, a protocol for the
required surveillance. The Secretary, within 60 days of the
receipt of such protocol, shall determine if the principal
investigator proposed to be used in the surveillance has
sufficient qualifications and experience to conduct such
surveillance and if such protocol will result in collection
of the data or other information designated by the Secretary
as necessary to protect the public health.
``(j) Withdrawal of Approval.--The Secretary, after an
opportunity for an informal hearing, shall withdraw the
approval of an application under this section if the
Secretary determines that--
``(1) the applicant, based on new information, can no
longer make the demonstrations required under subsection (g),
or the Secretary can no longer make the determinations
required under subsection (g);
``(2) the application failed to include material
information or included any untrue statement of material
fact;
``(3) any explicit or implicit representation that the
product reduces risk or exposure is no longer valid,
including if--
``(A) a tobacco product standard is established pursuant to
section 907;
``(B) an action is taken that affects the risks presented
by other commercially marketed tobacco products that were
compared to the product that is the subject of the
application; or
``(C) any postmarket surveillance or studies reveal that
the approval of the application is no longer consistent with
the protection of the public health;
``(4) the applicant failed to conduct or submit the
postmarket surveillance and studies required under subsection
(g)(2)(C)(ii) or (i); or
``(5) the applicant failed to meet a condition imposed
under subsection (h).
``(k) Chapter IV or V.--A product approved in accordance
with this section shall not be subject to chapter IV or V.
``(l) Implementing Regulations or Guidance.--
``(1) Scientific evidence.--Not later than 2 years after
the date of enactment of the Family Smoking Prevention and
Tobacco Control Act, the Secretary shall issue regulations or
guidance (or any combination thereof) on the scientific
evidence required for assessment and ongoing review of
modified risk tobacco products. Such regulations or guidance
shall--
``(A) establish minimum standards for scientific studies
needed prior to approval to show that a substantial reduction
in morbidity or mortality among individual tobacco users is
likely;
``(B) include validated biomarkers, intermediate clinical
endpoints, and other feasible outcome measures, as
appropriate;
``(C) establish minimum standards for post market studies,
that shall include regular and long-term assessments of
health outcomes and mortality, intermediate clinical
endpoints, consumer perception of harm reduction, and the
impact on quitting behavior and new use of tobacco products,
as appropriate;
``(D) establish minimum standards for required postmarket
surveillance, including ongoing assessments of consumer
perception; and
``(E) require that data from the required studies and
surveillance be made available to the Secretary prior to the
decision on renewal of a modified risk tobacco product.
``(2) Consultation.--The regulations or guidance issued
under paragraph (1) shall be developed in consultation with
the Institute of Medicine, and with the input of other
appropriate scientific and medical experts, on the design and
conduct of such studies and surveillance.
``(3) Revision.--The regulations or guidance under
paragraph (1) shall be revised on a regular basis as new
scientific information becomes available.
``(4) New tobacco products.--Not later than 2 years after
the date of enactment of the Family Smoking Prevention and
Tobacco Control Act, the Secretary shall issue a regulation
or guidance that permits the filing of a single application
for any tobacco product that is a new tobacco product under
section 910 and for which the applicant seeks approval as
a modified risk tobacco product under this section.
``(m) Distributors.--No distributor may take any action,
after the date of enactment of the Family Smoking Prevention
and Tobacco Control Act, with respect to a tobacco product
that would reasonably be expected to result in consumers
believing that the tobacco product or its smoke may present a
lower risk of disease or is less harmful than one or more
commercially marketed tobacco products, or presents a reduced
exposure to, or does not contain or is free of, a substance
or substances.
``SEC. 912. JUDICIAL REVIEW.
``(a) Right To Review.--
``(1) In general.--Not later than 30 days after--
[[Page S5974]]
``(A) the promulgation of a regulation under section 907
establishing, amending, or revoking a tobacco product
standard; or
``(B) a denial of an application for approval under section
910(c),
any person adversely affected by such regulation or denial
may file a petition for judicial review of such regulation or
denial with the United States Court of Appeals for the
District of Columbia or for the circuit in which such person
resides or has their principal place of business.
``(2) Requirements.--
``(A) Copy of petition.--A copy of the petition filed under
paragraph (1) shall be transmitted by the clerk of the court
involved to the Secretary.
``(B) Record of proceedings.--On receipt of a petition
under subparagraph (A), the Secretary shall file in the court
in which such petition was filed--
``(i) the record of the proceedings on which the regulation
or order was based; and
``(ii) a statement of the reasons for the issuance of such
a regulation or order.
``(C) Definition of record.--In this section, the term
`record' means--
``(i) all notices and other matter published in the Federal
Register with respect to the regulation or order reviewed;
``(ii) all information submitted to the Secretary with
respect to such regulation or order;
``(iii) proceedings of any panel or advisory committee with
respect to such regulation or order;
``(iv) any hearing held with respect to such regulation or
order; and
``(v) any other information identified by the Secretary, in
the administrative proceeding held with respect to such
regulation or order, as being relevant to such regulation or
order.
``(b) Standard of Review.--Upon the filing of the petition
under subsection (a) for judicial review of a regulation or
order, the court shall have jurisdiction to review the
regulation or order in accordance with chapter 7 of title 5,
United States Code, and to grant appropriate relief,
including interim relief, as provided for in such chapter. A
regulation or denial described in subsection (a) shall be
reviewed in accordance with section 706(2)(A) of title 5,
United States Code.
``(c) Finality of Judgment.--The judgment of the court
affirming or setting aside, in whole or in part, any
regulation or order shall be final, subject to review by the
Supreme Court of the United States upon certiorari or
certification, as provided in section 1254 of title 28,
United States Code.
``(d) Other Remedies.--The remedies provided for in this
section shall be in addition to, and not in lieu of, any
other remedies provided by law.
``(e) Regulations and Orders Must Recite Basis in Record.--
To facilitate judicial review, a regulation or order issued
under section 906, 907, 908, 909, 910, or 916 shall contain a
statement of the reasons for the issuance of such regulation
or order in the record of the proceedings held in connection
with its issuance.
``SEC. 913. EQUAL TREATMENT OF RETAIL OUTLETS.
``The Secretary shall issue regulations to require that
retail establishments for which the predominant business is
the sale of tobacco products comply with any advertising
restrictions applicable to retail establishments accessible
to individuals under the age of 18.
``SEC. 914. JURISDICTION OF AND COORDINATION WITH THE FEDERAL
TRADE COMMISSION.
``(a) Jurisdiction.--
``(1) In general.--Except where expressly provided in this
chapter, nothing in this chapter shall be construed as
limiting or diminishing the authority of the Federal Trade
Commission to enforce the laws under its jurisdiction with
respect to the advertising, sale, or distribution of tobacco
products.
``(2) Enforcement.--Any advertising that violates this
chapter or a provision of the regulations referred to in
section 102 of the Family Smoking Prevention and Tobacco
Control Act, is an unfair or deceptive act or practice under
section 5(a) of the Federal Trade Commission Act (15 U.S.C.
45(a)) and shall be considered a violation of a rule
promulgated under section 18 of that Act (15 U.S.C. 57a).
``(b) Coordination.--With respect to the requirements of
section 4 of the Federal Cigarette Labeling and Advertising
Act (15 U.S.C. 1333) and section 3 of the Comprehensive
Smokeless Tobacco Health Education Act of 1986 (15 U.S.C.
4402)--
``(1) the Chairman of the Federal Trade Commission shall
coordinate with the Secretary concerning the enforcement of
such Act as such enforcement relates to unfair or deceptive
acts or practices in the advertising of cigarettes or
smokeless tobacco; and
``(2) the Secretary shall consult with the Chairman of such
Commission in revising the label statements and requirements
under such sections.
``SEC. 915. CONGRESSIONAL REVIEW PROVISIONS.
``In accordance with section 801 of title 5, United States
Code, Congress shall review, and may disapprove, any rule
under this chapter that is subject to section 801. This
section and section 801 do not apply to the regulations
referred to in section 102 of the Family Smoking Prevention
and Tobacco Control Act.
``SEC. 916. REGULATION REQUIREMENT.
``(a) Testing, Reporting, and Disclosure.--Not later than
24 months after the date of enactment of the Family Smoking
Prevention and Tobacco Control Act, the Secretary, acting
through the Commissioner of the Food and Drug Administration,
shall promulgate regulations under this Act that meet the
requirements of subsection (b).
``(b) Contents of Rules.--The regulations promulgated under
subsection (a) shall require testing and reporting of tobacco
product constituents, ingredients, and additives, including
smoke constituents, by brand and sub-brand that the Secretary
determines should be tested to protect the public health. The
regulations may require that tobacco product manufacturers,
packagers, or importers make disclosures relating to the
results of the testing of tar and nicotine through labels or
advertising or other appropriate means, and make disclosures
regarding the results of the testing of other constituents,
including smoke constituents, ingredients, or additives, that
the Secretary determines should be disclosed to the public to
protect the public health and will not mislead consumers
about the risk of tobacco related disease.
``(c) Authority.--The Food and Drug Administration shall
have the authority under this chapter to conduct or to
require the testing, reporting, or disclosure of tobacco
product constituents, including smoke constituents.
``SEC. 917. PRESERVATION OF STATE AND LOCAL AUTHORITY.
``(a) In General.--
``(1) Preservation.--Nothing in this chapter, or rules
promulgated under this chapter, shall be construed to limit
the authority of a Federal agency (including the Armed
Forces), a State or political subdivision of a State, or the
government of an Indian tribe to enact, adopt, promulgate,
and enforce any law, rule, regulation, or other measure with
respect to tobacco products that is in addition to, or more
stringent than, requirements established under this chapter,
including a law, rule, regulation, or other measure relating
to or prohibiting the sale, distribution, possession,
exposure to, access to, advertising and promotion of, or use
of tobacco products by individuals of any age, information
reporting to the State, or measures relating to fire safety
standards for tobacco products. No provision of this chapter
shall limit or otherwise affect any State, Tribal, or local
taxation of tobacco products.
``(2) Preemption of certain state and local requirements.--
``(A) In general.--Except as provided in paragraph (1) and
subparagraph (B), no State or political subdivision of a
State may establish or continue in effect with respect to a
tobacco product any requirement which is different from, or
in addition to, any requirement under the provisions of this
chapter relating to tobacco product standards, premarket
approval, adulteration, misbranding, labeling, registration,
good manufacturing standards, or reduced risk products.
``(B) Exception.--Subparagraph (A) does not apply to
requirements relating to the sale, distribution, possession,
information reporting to the State, exposure to, access to,
the advertising and promotion of, or use of, tobacco products
by individuals of any age, or relating to fire safety
standards for tobacco products. Information disclosed to a
State under subparagraph (A) that is exempt from disclosure
under section 554(b)(4) of title 5, United States Code, shall
be treated as trade secret and confidential information by
the State.
``(b) Rule of Construction Regarding Product Liability.--No
provision of this chapter relating to a tobacco product shall
be construed to modify or otherwise affect any action or the
liability of any person under the product liability law of
any State.
``SEC. 918. TOBACCO PRODUCTS SCIENTIFIC ADVISORY COMMITTEE.
``(a) Establishment.--Not later than 1 year after the date
of enactment of the Family Smoking Prevention and Tobacco
Control Act, the Secretary shall establish a 11-member
advisory committee, to be known as the `Tobacco Products
Scientific Advisory Committee'.
``(b) Membership.--
``(1) In general.--
``(A) Members.--The Secretary shall appoint as members of
the Tobacco Products Scientific Advisory Committee
individuals who are technically qualified by training and
experience in the medicine, medical ethics, science, or
technology involving the manufacture, evaluation, or use of
tobacco products, who are of appropriately diversified
professional backgrounds. The committee shall be composed
of--
``(i) 7 individuals who are physicians, dentists,
scientists, or health care professionals practicing in the
area of oncology, pulmonology, cardiology, toxicology,
pharmacology, addiction, or any other relevant specialty;
``(ii) 1 individual who is an officer or employee of a
State or local government or of the Federal Government;
``(iii) 1 individual as a representative of the general
public;
``(iv) 1 individual as a representative of the interests in
the tobacco manufacturing industry; and
``(v) 1 individual as a representative of the interests of
the tobacco growers.
``(B) Nonvoting members.--The members of the committee
appointed under clauses (iv) and (v) of subparagraph (A)
shall serve as consultants to those described in clauses (i)
through (iii) of subparagraph (A) and shall be nonvoting
representatives.
[[Page S5975]]
``(2) Limitation.--The Secretary may not appoint to the
Advisory Committee any individual who is in the regular full-
time employ of the Food and Drug Administration or any agency
responsible for the enforcement of this Act. The Secretary
may appoint Federal officials as ex officio members.
``(3) Chairperson.--The Secretary shall designate 1 of the
members of the Advisory Committee to serve as chairperson.
``(c) Duties.--The Tobacco Products Scientific Advisory
Committee shall provide advice, information, and
recommendations to the Secretary--
``(1) as provided in this chapter;
``(2) on the effects of the alteration of the nicotine
yields from tobacco products;
``(3) on whether there is a threshold level below which
nicotine yields do not produce dependence on the tobacco
product involved; and
``(4) on its review of other safety, dependence, or health
issues relating to tobacco products as requested by the
Secretary.
``(d) Compensation; Support; FACA.--
``(1) Compensation and travel.--Members of the Advisory
Committee who are not officers or employees of the United
States, while attending conferences or meetings of the
committee or otherwise engaged in its business, shall be
entitled to receive compensation at rates to be fixed by the
Secretary, which may not exceed the daily equivalent of the
rate in effect for level 4 of the Senior Executive Schedule
under section 5382 of title 5, United States Code, for each
day (including travel time) they are so engaged; and while so
serving away from their homes or regular places of business
each member may be allowed travel expenses, including per
diem in lieu of subsistence, as authorized by section 5703 of
title 5, United States Code, for persons in the Government
service employed intermittently.
``(2) Administrative support.--The Secretary shall furnish
the Advisory Committee clerical and other assistance.
``(3) Nonapplication of faca.--Section 14 of the Federal
Advisory Committee Act (5 U.S.C.
App.) does not apply to the Advisory Committee.
``(e) Proceedings of Advisory Panels and Committees.--The
Advisory Committee shall make and maintain a transcript of
any proceeding of the panel or committee. Each such panel and
committee shall delete from any transcript made under this
subsection information which is exempt from disclosure under
section 552(b) of title 5, United States Code.
``SEC. 919. DRUG PRODUCTS USED TO TREAT TOBACCO DEPENDENCE.
``The Secretary shall consider--
``(1) at the request of the applicant, designating nicotine
replacement products as fast track research and approval
products within the meaning of section 506;
``(2) direct the Commissioner to consider approving the
extended use of nicotine replacement products (such as
nicotine patches, nicotine gum, and nicotine lozenges) for
the treatment of tobacco dependence;
``(3) review and consider the evidence for additional
indications for nicotine replacement products, such as for
craving relief or relapse prevention; and
``(4) consider--
``(A) relieving companies of premarket burdens under
section 505 if the requirement is redundant considering other
nicotine replacement therapies already on the market; and
``(B) time and extent applications for nicotine replacement
therapies that have been approved by a regulatory body in a
foreign country and have marketing experience in such
country.
``SEC. 920. USER FEE.
``(a) Establishment of Quarterly User Fee.--The Secretary
shall assess a quarterly user fee with respect to every
quarter of each fiscal year commencing fiscal year 2004,
calculated in accordance with this section, upon each
manufacturer and importer of tobacco products subject to this
chapter.
``(b) Funding of FDA Regulation of Tobacco Products.--The
Secretary shall make user fees collected pursuant to this
section available to pay, in each fiscal year, for the costs
of the activities of the Food and Drug Administration related
to the regulation of tobacco products under this chapter.
``(c) Assessment of User Fee.--
``(1) Amount of assessment.--Except as provided in
paragraph (4), the total user fees assessed each year
pursuant to this section shall be sufficient, and shall not
exceed what is necessary, to pay for the costs of the
activities described in subsection (b) for each fiscal year.
``(2) Allocation of assessment by class of tobacco
products.--
``(A) In general.--Subject to paragraph (3), the total user
fees assessed each fiscal year with respect to each class of
importers and manufacturers shall be equal to an amount that
is the applicable percentage of the total costs of activities
of the Food and Drug Administration described in subsection
(b).
``(B) Applicable percentage.--For purposes of subparagraph
(A) the applicable percentage for a fiscal year shall be the
following:
``(i) 92.07 percent shall be assessed on manufacturers and
importers of cigarettes;
``(ii) 0.05 percent shall be assessed on manufacturers and
importers of little cigars;
``(iii) 7.15 percent shall be assessed on manufacturers and
importers of cigars other than little cigars;
``(iv) 0.43 percent shall be assessed on manufacturers and
importers of snuff;
``(v) 0.10 percent shall be assessed on manufacturers and
importers of chewing tobacco;
``(vi) 0.06 percent shall be assessed on manufacturers and
importers of pipe tobacco; and
``(vii) 0.14 percent shall be assessed on manufacturers and
importers of roll-your-own tobacco.
``(3) Distribution of fee shares of manufacturers and
importers exempt from user fee.--Where a class of tobacco
products is not subject to a user fee under this section, the
portion of the user fee assigned to such class under
subsection (d)(2) shall be allocated by the Secretary on a
pro rata basis among the classes of tobacco products that are
subject to a user fee under this section. Such pro rata
allocation for each class of tobacco products that are
subject to a user fee under this section shall be the
quotient of--
``(A) the sum of the percentages assigned to all classes of
tobacco products subject to this section; divided by
``(B) the percentage assigned to such class under paragraph
(2).
``(4) Annual limit on assessment.--The total assessment
under this section--
``(A) for fiscal year 2004 shall be $85,000,000;
``(B) for fiscal year 2005 shall be $175,000,000;
``(C) for fiscal year 2006 shall be $$300,000,000; and
``(D) for each subsequent fiscal year, shall not exceed the
limit on the assessment imposed during the previous fiscal
year, as adjusted by the Secretary (after notice, published
in the Federal Register) to reflect the greater of--
``(i) the total percentage change that occurred in the
Consumer Price Index for all urban consumers (all items;
United States city average) for the 12-month period ending on
June 30 of the preceding fiscal year for which fees are being
established; or
``(ii) the total percentage change for the previous fiscal
year in basic pay under the General Schedule in accordance
with section 5332 of title 5, United States Code, as adjusted
by any locality-based comparability payment pursuant to
section 5304 of such title for Federal employees stationed in
the District of Columbia.
``(5) Timing of user fee assessment.--The Secretary shall
notify each manufacturer and importer of tobacco products
subject to this section of the amount of the quarterly
assessment imposed on such manufacturer or importer under
subsection (f) during each quarter of each fiscal year. Such
notifications shall occur not earlier than 3 months prior to
the end of the quarter for which such assessment is made, and
payments of all assessments shall be made not later than 60
days after each such notification.
``(d) Determination of User Fee by Company Market Share.--
``(1) In general.--The user fee to be paid by each
manufacturer or importer of a given class of tobacco products
shall be determined in each quarter by multiplying--
``(A) such manufacturer's or importer's market share of
such class of tobacco products; by
``(B) the portion of the user fee amount for the current
quarter to be assessed on manufacturers and importers of such
class of tobacco products as determined under subsection (e).
``(2) No fee in excess of market share.--No manufacturer or
importer of tobacco products shall be required to pay a user
fee in excess of the market share of such manufacturer or
importer.
``(e) Determination of Volume of Domestic Sales.--
``(1) In general.--The calculation of gross domestic volume
of a class of tobacco product by a manufacturer or importer,
and by all manufacturers and importers as a group, shall be
made by the Secretary using information provided by
manufacturers and importers pursuant to subsection (f), as
well as any other relevant information provided to or
obtained by the Secretary.
``(2) Measurement.--For purposes of the calculations under
this subsection and the information provided under subsection
(f) by the Secretary, gross domestic volume shall be measured
by--
``(A) in the case of cigarettes, the number of cigarettes
sold;
``(B) in the case of little cigars, the number of little
cigars sold;
``(C) in the case of large cigars, the number of cigars
weighing more than 3 pounds per thousand sold; and
``(D) in the case of other classes of tobacco products, in
terms of number of pounds, or fraction thereof, of these
products sold.
``(f) Measurement of Gross Domestic Volume.--
``(1) In general.--Each manufacturer and importer of
tobacco products shall submit to the Secretary a certified
copy of each of the returns or forms described by this
paragraph that are required to be filed with a Government
agency on the same date that those returns or forms are
filed, or required to be filed, with such agency. The returns
and forms described by this paragraph are those returns and
forms related to the release of tobacco products into
domestic commerce, as defined by section 5702(k) of the
Internal Revenue Code of 1986, and the repayment of the taxes
imposed under chapter 52 of such Code (ATF Form 500.24 and
United States Customs Form 7501 under currently applicable
regulations).
``(2) Penalties.--Any person that knowingly fails to
provide information required
[[Page S5976]]
under this subsection or that provides false information
under this subsection shall be subject to the penalties
described in section 1003 of title 18, United States Code. In
addition, such person may be subject to a civil penalty in an
amount not to exceed 2 percent of the value of the kind of
tobacco products manufactured or imported by such person
during the applicable quarter, as determined by the
Secretary.
``(h) Effective Date.--The user fees prescribed by this
section shall be assessed in fiscal year 2004, based on
domestic sales of tobacco products during fiscal year 2003
and shall be assessed in each fiscal year thereafter.''.
SEC. 102. INTERIM FINAL RULE.
(a) Cigarettes and Smokeless Tobacco.--
(1) In general.--Not later than 30 days after the date of
enactment of this Act, the Secretary of Health and Human
Services shall publish in the Federal Register an interim
final rule regarding cigarettes and smokeless tobacco, which
is hereby deemed to be in compliance with the Administrative
Procedures Act and other applicable law.
(2) Contents of rule.--Except as provided in this
subsection, the interim final rule published under paragraph
(1), shall be identical in its provisions to part 897 of the
regulations promulgated by the Secretary of Health and Human
Services in the August 28, 1996, issue of the Federal
Register (61 Fed. Reg., 44615-44618). Such rule shall--
(A) provide for the designation of jurisdictional authority
that is in accordance with this subsection;
(B) strike Subpart C--Labeling and section 897.32(c); and
(C) become effective not later than 1 year after the date
of enactment of this Act.
(3) Amendments to rule.--Prior to making amendments to the
rule published under paragraph (1), the Secretary shall
promulgate a proposed rule in accordance with the
Administrative Procedures Act.
(4) Rule of construction.--Except as provided in paragraph
(3), nothing in this section shall be construed to limit the
authority of the Secretary to amend, in accordance with the
Administrative Procedures Act, the regulation promulgated
pursuant to this section.
(b) Limitation on Advisory Opinions.--As of the date of
enactment of this Act, the following documents issued by the
Food and Drug Administration shall not constitute advisory
opinions under section 10.85(d)(1) of title 21, Code of
Federal Regulations, except as they apply to tobacco
products, and shall not be cited by the Secretary of Health
and Human Services or the Food and Drug Administration as
binding precedent:
(1) The preamble to the proposed rule in the document
entitled ``Regulations Restricting the Sale and Distribution
of Cigarettes and Smokeless Tobacco Products to Protect
Children and Adolescents'' (60 Fed. Reg. 41314-41372 (August
11, 1995)).
(2) The document entitled ``Nicotine in Cigarettes and
Smokeless Tobacco Products is a Drug and These Products Are
Nicotine Delivery Devices Under the Federal Food, Drug, and
Cosmetic Act'' (60 Fed. Reg. 41453-41787 (August 11, 1995)).
(3) The preamble to the final rule in the document entitled
``Regulations Restricting the Sale and Distribution of
Cigarettes and Smokeless Tobacco to Protect Children and
Adolescents'' (61 Fed. Reg. 44396-44615 (August 28, 1996)).
(4) The document entitled ``Nicotine in Cigarettes and
Smokeless Tobacco is a Drug and These Products are Nicotine
Delivery Devices Under the Federal Food, Drug, and Cosmetic
Act; Jurisdictional Determination'' (61 Fed. Reg. 44619-45318
(August 28, 1996)).
SEC. 103. CONFORMING AND OTHER AMENDMENTS TO GENERAL
PROVISIONS.
(a) Amendment of Federal Food, Drug, and Cosmetic Act.--
Except as otherwise expressly provided, whenever in this
section an amendment is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
is to a section or other provision of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 301 et seq.).
(b) Section 301.--Section 301 (21 U.S.C. 331) is amended--
(1) in subsection (a), by inserting ``tobacco product,''
after ``device,'';
(2) in subsection (b), by inserting ``tobacco product,''
after ``device,'';
(3) in subsection (c), by inserting ``tobacco product,''
after ``device,'';
(4) in subsection (e), by striking ``515(f), or 519'' and
inserting ``515(f), 519, or 909'';
(5) in subsection (g), by inserting ``tobacco product,''
after ``device,'';
(6) in subsection (h), by inserting ``tobacco product,''
after ``device,'';
(7) in subsection (j), by striking ``708, or 721'' and
inserting ``708, 721, 904, 905, 906, 907, 908, 909, or
section 921(b)'';
(8) in subsection (k), by inserting ``tobacco product,''
after ``device,'';
(9) by striking subsection (p) and inserting the following:
``(p) The failure to register in accordance with section
510 or 905, the failure to provide any information required
by section 510(j), 510(k), 905(i), or 905(j), or the failure
to provide a notice required by section 510(j)(2) or
905(i)(2).'';
(10) by striking subsection (q)(1) and inserting the
following:
``(q)(1) The failure or refusal--
``(A) to comply with any requirement prescribed under
section 518, 520(g), 903(b)(8), or 908, or condition
prescribed under section 903(b)(6)(B)(ii)(II);
``(B) to furnish any notification or other material or
information required by or under section 519, 520(g), 904,
909, or section 921; or
``(C) to comply with a requirement under section 522 or
913.'';
(11) in subsection (q)(2), by striking ``device,'' and
inserting ``device or tobacco product,'';
(12) in subsection (r), by inserting ``or tobacco product''
after ``device'' each time that it appears; and
(13) by adding at the end the following:
``(aa) The sale of tobacco products in violation of a no-
tobacco-sale order issued under section 303(f).
``(bb) The introduction or delivery for introduction into
interstate commerce of a tobacco product in violation of
section 911.
``(cc)(1) Forging, counterfeiting, simulating, or falsely
representing, or without proper authority using any mark,
stamp (including tax stamp), tag, label, or other
identification device upon any tobacco product or container
or labeling thereof so as to render such tobacco product a
counterfeit tobacco product.
``(2) Making, selling, disposing of, or keeping in
possession, control, or custody, or concealing any punch,
die, plate, stone, or other item that is designed to print,
imprint, or reproduce the trademark, trade name, or other
identifying mark, imprint, or device of another or any
likeness of any of the foregoing upon any tobacco product or
container or labeling thereof so as to render such tobacco
product a counterfeit tobacco product.
``(3) The doing of any act that causes a tobacco product to
be a counterfeit tobacco product, or the sale or dispensing,
or the holding for sale or dispensing, of a counterfeit
tobacco product.
``(dd) The charitable distribution of tobacco products.
``(ee) The failure of a manufacturer or distributor to
notify the Attorney General of their knowledge of tobacco
products used in illicit trade.''.
(c) Section 303.--Section 303 (21 U.S.C. 333(f)) is amended
in subsection (f)--
(1) by striking the subsection heading and inserting the
following:
``(f) Civil Penalties; No-Tobacco-Sale Orders.--'';
(2) in paragraph (1)(A), by inserting ``or tobacco
products'' after ``devices'';
(3) by redesignating paragraphs (3), (4), and (5) as
paragraphs (4), (5), and (6), and inserting after paragraph
(2) the following:
``(3) If the Secretary finds that a person has committed
repeated violations of restrictions promulgated under section
906(d) at a particular retail outlet then the Secretary may
impose a no-tobacco-sale order on that person prohibiting the
sale of tobacco products in that outlet. A no-tobacco-sale
order may be imposed with a civil penalty under paragraph
(1).'';
(4) in paragraph (4) as so redesignated--
(A) in subparagraph (A)--
(i) by striking ``assessed'' the first time it appears and
inserting ``assessed, or a no-tobacco-sale order may be
imposed,''; and
(ii) by striking ``penalty'' and inserting ``penalty, or
upon whom a no-tobacco-order is to be imposed,'';
(B) in subparagraph (B)--
(i) by inserting after ``penalty,'' the following: ``or the
period to be covered by a no-tobacco-sale order,''; and
(ii) by adding at the end the following: ``A no-tobacco-
sale order permanently prohibiting an individual retail
outlet from selling tobacco products shall include provisions
that allow the outlet, after a specified period of time, to
request that the Secretary compromise, modify, or terminate
the order.''; and
(C) by adding at the end, the following:
``(D) The Secretary may compromise, modify, or terminate,
with or without conditions, any no-tobacco-sale order.'';
(5) in paragraph (5) as so redesignated--
(A) by striking ``(3)(A)'' as redesignated, and inserting
``(4)(A)'';
(B) by inserting ``or the imposition of a no-tobacco-sale
order'' after ``penalty'' the first 2 places it appears; and
(C) by striking ``issued.'' and inserting ``issued, or on
which the no-tobacco-sale order was imposed, as the case may
be.''; and
(6) in paragraph (6), as so redesignated, by striking
``paragraph (4)'' each place it appears and inserting
``paragraph (5)''.
(d) Section 304.--Section 304 (21 U.S.C. 334) is amended--
(1) in subsection (a)(2)--
(A) by striking ``and'' before ``(D)''; and
(B) by striking ``device.'' and inserting the following:
``, (E) Any adulterated or misbranded tobacco product.'';
(2) in subsection (d)(1), by inserting ``tobacco product,''
after ``device,'';
(3) in subsection (g)(1), by inserting ``or tobacco
product'' after ``device'' each place it appears; and
(4) in subsection (g)(2)(A), by inserting ``or tobacco
product'' after ``device'' each place it appears.
(e) Section 702.--Section 702(a) (21 U.S.C. 372(a)) is
amended--
(1) by inserting ``(1)'' after ``(a)''; and
(2) by adding at the end thereof the following:
``(2) For a tobacco product, to the extent feasible, the
Secretary shall contract with the States in accordance with
paragraph (1) to carry out inspections of retailers in
connection with the enforcement of this Act.''.
(f) Section 703.--Section 703 (21 U.S.C. 373) is amended--
[[Page S5977]]
(1) by inserting ``tobacco product,'' after ``device,''
each place it appears; and
(2) by inserting ``tobacco products,'' after ``devices,''
each place it appears.
(g) Section 704.--Section 704 (21 U.S.C. 374) is amended--
(1) in subsection (a)(1)(A), by inserting ``tobacco
products,'' after ``devices,'' each place it appears;
(2) in subsection (a)(1)(B), by inserting ``or tobacco
product'' after ``restricted devices'' each place it appears;
and
(3) in subsection (b), by inserting ``tobacco product,''
after ``device,''.
(h) Section 705.--Section 705(b) (21 U.S.C. 375(b)) is
amended by inserting ``tobacco products,'' after
``devices,''.
(i) Section 709.--Section 709 (21 U.S.C. 379) is amended by
inserting ``or tobacco product'' after ``device''.
(j) Section 801.--Section 801 (21 U.S.C. 381) is amended--
(1) in subsection (a)--
(A) by inserting ``tobacco products,'' after ``devices,''
the first time it appears;
(B) by inserting ``or section 905(j)'' after ``section
510''; and
(C) by striking ``drugs or devices'' each time it appears
and inserting ``drugs, devices, or tobacco products'';
(2) in subsection (e)(1), by inserting ``tobacco product,''
after ``device,''; and
(3) by adding at the end the following:
``(p)(1) Not later than 2 years after the date of enactment
of the Family Smoking Prevention and Tobacco Control Act, and
annually thereafter, the Secretary shall submit to the
Committee on Health, Education, Labor, and Pensions of the
Senate and the Committee on Energy and Commerce of the House
of Representatives, a report regarding--
``(A) the nature, extent, and destination of United States
tobacco product exports that do not conform to tobacco
product standards established pursuant to this Act;
``(B) the public health implications of such exports,
including any evidence of a negative public health impact;
and
``(C) recommendations or assessments of policy alternatives
available to Congress and the Executive Branch to reduce any
negative public health impact caused by such exports.
``(2) The Secretary is authorized to establish appropriate
information disclosure requirements to carry out this
subsection.''.
(k) Section 1003.--Section 1003(d)(2)(C) (as redesignated
by section 101(a)) is amended--
(1) by striking ``and'' after ``cosmetics,''; and
(2) inserting a comma and ``and tobacco products'' after
``devices''.
(l) Effective Date for No-Tobacco-Sale Order Amendments.--
The amendments made by subsection (c), other than the
amendment made by paragraph (2) of such subsection, shall
take effect upon the issuance of guidance by the Secretary of
Health and Human Services--
(1) defining the term ``repeated violation'', as used in
section 303(f) of the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 333(f)) as amended by subsection (c), by
identifying the number of violations of particular
requirements over a specified period of time at a particular
retail outlet that constitute a repeated violation;
(2) providing for timely and effective notice to the
retailer of each alleged violation at a particular retail
outlet and an expedited procedure for the administrative
appeal of an alleged violation;
(3) providing that a person may not be charged with a
violation at a particular retail outlet unless the Secretary
has provided notice to the retailer of all previous
violations at that outlet;
(4) establishing a period of time during which, if there
are no violations by a particular retail outlet, that outlet
will not considered to have been the site of repeated
violations when the next violation occurs; and
(5) providing that good faith reliance on the presentation
of a false government issued photographic identification that
contains the bearer's date of birth does not constitute a
violation of any minimum age requirement for the sale of
tobacco products if the retailer has taken effective steps to
prevent such violations, including--
(A) adopting and enforcing a written policy against sales
to minors;
(B) informing its employees of all applicable laws;
(C) establishing disciplinary sanctions for employee
noncompliance; and
(D) requiring its employees to verify age by way of
photographic identification or electronic scanning device.
TITLE II--TOBACCO PRODUCT WARNINGS; CONSTITUENT AND SMOKE CONSTITUENT
DISCLOSURE
SEC. 201. CIGARETTE LABEL AND ADVERTISING WARNINGS.
Section 4 of the Federal Cigarette Labeling and Advertising
Act (15 U.S.C. 1333) is amended to read as follows:
``SEC. 4. LABELING.
``(a) Label Requirements.--
``(1) In general.--It shall be unlawful for any person to
manufacture, package, sell, offer to sell, distribute, or
import for sale or distribution within the United States any
cigarettes the package of which fails to bear, in accordance
with the requirements of this section, one of the following
labels:
`WARNING: Cigarettes are addictive'.
`WARNING: Tobacco smoke can harm your children'.
`WARNING: Cigarettes cause fatal lung disease'.
`WARNING: Cigarettes cause cancer'.
`WARNING: Cigarettes cause strokes and heart disease'.
`WARNING: Smoking during pregnancy can harm your baby'.
`WARNING: Smoking can kill you'.
`WARNING: Tobacco smoke causes fatal lung disease in non-
smokers'.
`WARNING: Quitting smoking now greatly reduces serious risks
to your health'.
``(2) Placement; typography; etc.--
``(A) In general.--Each label statement required by
paragraph (1) shall be located in the upper portion of the
front and rear panels of the package, directly on the package
underneath the cellophane or other clear wrapping. Except as
provided in subparagraph (B), each label statement shall
comprise at least the top 30 percent of the front and rear
panels of the package. The word `WARNING' shall appear in
capital letters and all text shall be in conspicuous and
legible 17-point type, unless the text of the label statement
would occupy more than 70 percent of such area, in which case
the text may be in a smaller conspicuous and legible type
size, provided that at least 60 percent of such area is
occupied by required text. The text shall be black on a white
background, or white on a black background, in a manner that
contrasts, by typography, layout, or color, with all other
printed material on the package, in an alternating fashion
under the plan submitted under subsection (b)(4).
``(B) Flip-top boxes.--For any cigarette brand package
manufactured or distributed before January 1, 2000, which
employs a flip-top style (if such packaging was used for that
brand in commerce prior to June 21, 1997), the label
statement required by paragraph (1) shall be located on the
flip-top area of the package, even if such area is less than
25 percent of the area of the front panel. Except as provided
in this paragraph, the provisions of this subsection shall
apply to such packages.
``(3) Does not apply to foreign distribution.--The
provisions of this subsection do not apply to a tobacco
product manufacturer or distributor of cigarettes which does
not manufacture, package, or import cigarettes for sale or
distribution within the United States.
``(4) Applicability to retailers.--A retailer of cigarettes
shall not be in violation of this subsection for packaging
that is supplied to the retailer by a tobacco product
manufacturer, importer, or distributor and is not altered by
the retailer in a way that is material to the requirements of
this subsection except that this paragraph shall not relieve
a retailer of liability if the retailer sells or distributes
tobacco products that are not labeled in accordance with this
subsection.
``(b) Advertising Requirements.--
``(1) In general.--It shall be unlawful for any tobacco
product manufacturer, importer, distributor, or retailer of
cigarettes to advertise or cause to be advertised within the
United States any cigarette unless its advertising bears, in
accordance with the requirements of this section, one of the
labels specified in subsection (a) of this section.
``(2) Typography, etc.--Each label statement required by
subsection (a) of this section in cigarette advertising shall
comply with the standards set forth in this paragraph. For
press and poster advertisements, each such statement and
(where applicable) any required statement relating to tar,
nicotine, or other constituent (including a smoke
constituent) yield shall comprise at least 20 percent of the
area of the advertisement and shall appear in a conspicuous
and prominent format and location at the top of each
advertisement within the trim area. The Secretary may revise
the required type sizes in such area in such manner as the
Secretary determines appropriate. The word `WARNING' shall
appear in capital letters, and each label statement shall
appear in conspicuous and legible type. The text of the label
statement shall be black if the background is white and white
if the background is black, under the plan submitted under
paragraph (4) of this subsection. The label statements shall
be enclosed by a rectangular border that is the same color as
the letters of the statements and that is the width of the
first downstroke of the capital `W' of the word `WARNING' in
the label statements. The text of such label statements shall
be in a typeface pro rata to the following requirements: 45-
point type for a whole-page broadsheet newspaper
advertisement; 39-point type for a half-page broadsheet
newspaper advertisement; 39-point type for a whole-page
tabloid newspaper advertisement; 27-point type for a half-
page tabloid newspaper advertisement; 31.5-point type for a
double page spread magazine or whole-page magazine
advertisement; 22.5-point type for a 28 centimeter by 3
column advertisement; and 15-point type for a 20 centimeter
by 2 column advertisement. The label statements shall be in
English, except that in the case of--
``(A) an advertisement that appears in a newspaper,
magazine, periodical, or other publication that is not in
English, the statements shall appear in the predominant
language of the publication; and
``(B) in the case of any other advertisement that is not in
English, the statements shall appear in the same language as
that principally used in the advertisement.
[[Page S5978]]
``(3) Matchbooks.--Notwithstanding paragraph (2), for
matchbooks (defined as containing not more than 20 matches)
customarily given away with the purchase of tobacco products,
each label statement required by subsection (a) may be
printed on the inside cover of the matchbook.
``(4) Adjustment by secretary.--The Secretary may, through
a rulemaking under section 553 of title 5, United States
Code, adjust the format and type sizes for the label
statements required by this section or the text, format, and
type sizes of any required tar, nicotine yield, or other
constituent (including smoke constituent) disclosures, or to
establish the text, format, and type sizes for any other
disclosures required under the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 301 et. seq.). The text of any such
label statements or disclosures shall be required to appear
only within the 20 percent area of cigarette advertisements
provided by paragraph (2) of this subsection. The Secretary
shall promulgate regulations which provide for adjustments in
the format and type sizes of any text required to appear in
such area to ensure that the total text required to appear by
law will fit within such area.
``(5) Marketing requirements.--
``(A) The label statements specified in subsection (a)(1)
shall be randomly displayed in each 12-month period, in as
equal a number of times as is possible on each brand of the
product and be randomly distributed in all areas of the
United States in which the product is marketed in accordance
with a plan submitted by the tobacco product manufacturer,
importer, distributor, or retailer and approved by the
Secretary.
``(B) The label statements specified in subsection (a)(1)
shall be rotated quarterly in alternating sequence in
advertisements for each brand of cigarettes in accordance
with a plan submitted by the tobacco product manufacturer,
importer, distributor, or retailer to, and approved by, the
Secretary.
``(C) The Secretary shall review each plan submitted under
subparagraph (B) and approve it if the plan--
``(i) will provide for the equal distribution and display
on packaging and the rotation required in advertising under
this subsection; and
``(ii) assures that all of the labels required under this
section will be displayed by the tobacco product
manufacturer, importer, distributor, or retailer at the same
time.
``(6) Applicability to retailers.--This subsection applies
to a retailer only if that retailer is responsible for or
directs the label statements required under this section
except that this paragraph shall not relieve a retailer of
liability if the retailer displays, in a location open to the
public, an advertisement that is not labeled in accordance
with the requirements of this subsection.''.
SEC. 202. AUTHORITY TO REVISE CIGARETTE WARNING LABEL
STATEMENTS.
Section 4 of the Federal Cigarette Labeling and Advertising
Act (15 U.S.C. 1333), as amended by section 201, is further
amended by adding at the end the following:
``(c) Change in Required Statements.--The Secretary may, by
a rulemaking conducted under section 553 of title 5, United
States Code, adjust the format, type size, and text of any of
the label requirements, require color graphics to accompany
the text, increase the required label area from 30 percent up
to 50 percent of the front and rear panels of the package, or
establish the format, type size, and text of any other
disclosures required under the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 301 et seq.), if the Secretary finds
that such a change would promote greater public understanding
of the risks associated with the use of tobacco products.''.
SEC. 203. STATE REGULATION OF CIGARETTE ADVERTISING AND
PROMOTION.
Section 5 of the Federal Cigarette Labeling and Advertising
Act (15 U.S.C. 1334) is amended by adding a the end the
following:
``(c) Exception.--Notwithstanding subsection (b), a State
or locality may enact statutes and promulgate regulations,
based on smoking and health, that take effect after the
effective date of the Family Smoking Prevention and Tobacco
Control Act, imposing specific bans or restrictions on the
time, place, and manner, but not content, of the advertising
or promotion of any cigarettes.''.
SEC. 204. SMOKELESS TOBACCO LABELS AND ADVERTISING WARNINGS.
Section 3 of the Comprehensive Smokeless Tobacco Health
Education Act of 1986 (15 U.S.C. 4402) is amended to read as
follows:
``SEC. 3. SMOKELESS TOBACCO WARNING.
``(a) General Rule.--
``(1) It shall be unlawful for any person to manufacture,
package, sell, offer to sell, distribute, or import for sale
or distribution within the United States any smokeless
tobacco product unless the product package bears, in
accordance with the requirements of this Act, one of the
following labels:
`WARNING: This product can cause mouth cancer'.
`WARNING: This product can cause gum disease and tooth loss'.
`WARNING: This product is not a safe alternative to
cigarettes'.
`WARNING: Smokeless tobacco is addictive'.
``(2) Each label statement required by paragraph (1) shall
be--
``(A) located on the 2 principal display panels of the
package, and each label statement shall comprise at least 30
percent of each such display panel; and
``(B) in 17-point conspicuous and legible type and in black
text on a white background, or white text on a black
background, in a manner that contrasts by typography, layout,
or color, with all other printed material on the package, in
an alternating fashion under the plan submitted under
subsection (b)(3), except that if the text of a label
statement would occupy more than 70 percent of the area
specified by subparagraph (A), such text may appear in a
smaller type size, so long as at least 60 percent of such
warning area is occupied by the label statement.
``(3) The label statements required by paragraph (1) shall
be introduced by each tobacco product manufacturer, packager,
importer, distributor, or retailer of smokeless tobacco
products concurrently into the distribution chain of such
products.
``(4) The provisions of this subsection do not apply to a
tobacco product manufacturer or distributor of any smokeless
tobacco product that does not manufacture, package, or import
smokeless tobacco products for sale or distribution within
the United States.
``(5) A retailer of smokeless tobacco products shall not be
in violation of this subsection for packaging that is
supplied to the retailer by a tobacco products manufacturer,
importer, or distributor and that is not altered by the
retailer unless the retailer offers for sale, sells, or
distributes a smokeless tobacco product that is not labeled
in accordance with this subsection.
``(b) Required Labels.--
``(1) It shall be unlawful for any tobacco product
manufacturer, packager, importer, distributor, or retailer of
smokeless tobacco products to advertise or cause to be
advertised within the United States any smokeless tobacco
product unless its advertising bears, in accordance with the
requirements of this section, one of the labels specified in
subsection (a).
``(2) Each label statement required by subsection (a) in
smokeless tobacco advertising shall comply with the standards
set forth in this paragraph. For press and poster
advertisements, each such statement and (where applicable)
any required statement relating to tar, nicotine, or other
constituent yield shall--
``(A) comprise at least 20 percent of the area of the
advertisement, and the warning area shall be delineated by a
dividing line of contrasting color from the advertisement;
and
``(B) the word `WARNING' shall appear in capital letters
and each label statement shall appear in conspicuous and
legible type. The text of the label statement shall be black
on a white background, or white on a black background, in an
alternating fashion under the plan submitted under paragraph
(3).
``(3)(A) The label statements specified in subsection
(a)(1) shall be randomly displayed in each 12-month period,
in as equal a number of times as is possible on each brand of
the product and be randomly distributed in all areas of the
United States in which the product is marketed in accordance
with a plan submitted by the tobacco product manufacturer,
importer, distributor, or retailer and approved by the
Secretary.
``(B) The label statements specified in subsection (a)(1)
shall be rotated quarterly in alternating sequence in
advertisements for each brand of smokeless tobacco product in
accordance with a plan submitted by the tobacco product
manufacturer, importer, distributor, or retailer to, and
approved by, the Secretary.
``(C) The Secretary shall review each plan submitted under
subparagraph (B) and approve it if the plan--
``(i) will provide for the equal distribution and display
on packaging and the rotation required in advertising under
this subsection; and
``(ii) assures that all of the labels required under this
section will be displayed by the tobacco product
manufacturer, importer, distributor, or retailer at the same
time.
``(D) This paragraph applies to a retailer only if that
retailer is responsible for or directs the label statements
under this section, unless the retailer displays in a
location open to the public, an advertisement that is not
labeled in accordance with the requirements of this
subsection.
``(c) Television and Radio Advertising.--It is unlawful to
advertise smokeless tobacco on any medium of electronic
communications subject to the jurisdiction of the Federal
Communications Commission.''.
SEC. 205. AUTHORITY TO REVISE SMOKELESS TOBACCO PRODUCT
WARNING LABEL STATEMENTS.
Section 3 of the Comprehensive Smokeless Tobacco Health
Education Act of 1986 (15 U.S.C. 4402), as amended by section
203, is further amended by adding at the end the following:
``(d) Authority To Revise Warning Label Statements.--The
Secretary may, by a rulemaking conducted under section 553 of
title 5, United States Code, adjust the format, type size,
and text of any of the label requirements, require color
graphics to accompany the text, increase the required label
area from 30 percent up to 50 percent of the front and rear
panels of the package, or establish the format, type size,
and text of any other disclosures required under the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), if the
Secretary finds that such a change would promote greater
public understanding of the risks associated with the use of
smokeless tobacco products.''.
[[Page S5979]]
SEC. 206. TAR, NICOTINE, AND OTHER SMOKE CONSTITUENT
DISCLOSURE TO THE PUBLIC.
Section 4(a) of the Federal Cigarette Labeling and
Advertising Act (15 U.S.C. 1333 (a)), as amended by section
201, is further amended by adding at the end the following:
``(4)(A) The Secretary shall, by a rulemaking conducted
under section 553 of title 5, United States Code, determine
(in the Secretary's sole discretion) whether cigarette and
other tobacco product manufacturers shall be required to
include in the area of each cigarette advertisement specified
by subsection (b) of this section, or on the package label,
or both, the tar and nicotine yields of the advertised or
packaged brand. Any such disclosure shall be in accordance
with the methodology established under such regulations,
shall conform to the type size requirements of subsection (b)
of this section, and shall appear within the area specified
in subsection (b) of this section.
``(B) Any differences between the requirements established
by the Secretary under subparagraph (A) and tar and nicotine
yield reporting requirements established by the Federal Trade
Commission shall be resolved by a memorandum of understanding
between the Secretary and the Federal Trade Commission.
``(C) In addition to the disclosures required by
subparagraph (A) of this paragraph, the Secretary may, under
a rulemaking conducted under section 553 of title 5, United
States Code, prescribe disclosure requirements regarding the
level of any cigarette or other tobacco product constituent
including any smoke constituent. Any such disclosure may be
required if the Secretary determines that disclosure would be
of benefit to the public health, or otherwise would increase
consumer awareness of the health consequences of the use of
tobacco products, except that no such prescribed disclosure
shall be required on the face of any cigarette package or
advertisement. Nothing in this section shall prohibit the
Secretary from requiring such prescribed disclosure through a
cigarette or other tobacco product package or advertisement
insert, or by any other means under the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 301 et seq.).
``(D) This paragraph applies to a retailer only if that
retailer is responsible for or directs the label statements
required under this section, except that this paragraph shall
not relieve a retailer of liability if the retailer sells or
distributes tobacco products that are not labeled in
accordance with the requirements of this subsection.''.
TITLE III--PREVENTION OF ILLICIT TRADE IN TOBACCO PRODUCTS
SEC. 301. LABELING, RECORDKEEPING, RECORDS INSPECTION.
Chapter IX of the Federal Food, Drug, and Cosmetic Act, as
added by section 101, is further amended by adding at the end
the following:
``SEC. 921. LABELING, RECORDKEEPING, RECORDS INSPECTION.
``(a) Origin Labeling.--The label, packaging, and shipping
containers of tobacco products for introduction or delivery
for introduction into interstate commerce shall bear the
statement `sale only allowed in the United States.'
``(b) Regulations Concerning Recordkeeping for Tracking and
Tracing.--
``(1) In general.--Not later than 9 months after the date
of enactment of the Family Smoking Prevention and Tobacco
Control Act, the Secretary shall promulgate regulations
regarding the establishment and maintenance of records by any
person who manufactures, processes, transports, distributes,
receives, packages, holds, exports, or imports tobacco
products.
``(2) Inspection.--In promulgating the regulations
described in paragraph (1), the Secretary shall consider
which records are needed for inspection to monitor the
movement of tobacco products from the point of manufacture
through distribution to retail outlets to assist in
investigating potential illicit trade, smuggling or
counterfeiting of tobacco products.
``(3) Codes.--The Secretary may require codes on the labels
of tobacco products or other designs or devices for the
purpose of tracking or tracing the tobacco product through
the distribution system.
``(4) Size of business.--The Secretary shall take into
account the size of a business in promulgating regulations
under this section.
``(5) Recordkeeping by retailers.--The Secretary shall not
require any retailer to maintain records relating to
individual purchasers of tobacco products for personal
consumption.
``(c) Records Inspection.--If the Secretary has a
reasonable belief that a tobacco product is part of an
illicit trade or smuggling or is a counterfeit product, each
person who manufactures, processes, transports, distributes,
receives, holds, packages, exports, or imports tobacco
products shall, at the request of an officer or employee duly
designated by the Secretary, permit such officer or employee,
at reasonable times and within reasonable limits and in a
reasonable manner, upon the presentation of appropriate
credentials and a written notice to such person, to have
access to and copy all records (including financial records)
relating to such article that are needed to assist the
Secretary in investigating potential illicit trade, smuggling
or counterfeiting of tobacco products.
``(d) Knowledge of Illegal Transaction.--If the
manufacturer or distributor of a tobacco product has
knowledge which reasonably supports the conclusion that a
tobacco product manufactured or distributed by such
manufacturer or distributor that has left the control of such
person may be or has been--
``(A) imported, exported, distributed or offered for sale
in interstate commerce by a person without paying duties or
taxes required by law; or
``(B) imported, exported, distributed or diverted for
possible illicit marketing,
the manufacturer or distributor shall promptly notify the
Attorney General of such knowledge.
``(2) Knowledge defined.--For purposes of this subsection,
the term `knowledge' as applied to a manufacturer or
distributor means--
``(A) the actual knowledge that the manufacturer or
distributor had; or
``(B) the knowledge which a reasonable person would have
had under like circumstances or which would have been
obtained upon the exercise of due care.
SEC. 302. STUDY AND REPORT.
(a) Study.--The Comptroller General of the United States
shall conduct a study of cross-border trade in tobacco
products to--
(1) collect data on cross-border trade in tobacco products,
including illicit trade and trade of counterfeit tobacco
products and make recommendations on the monitoring of such
trade;
(2) collect data on cross-border advertising (any
advertising intended to be broadcast, transmitted, or
distributed from the United States to another country) of
tobacco products and make recommendations on how to prevent
or eliminate, and what technologies could help facilitate the
elimination of, cross-border advertising.
(b) Report.--Not later than 18 months after the date of
enactment of this Act, the Comptroller General of the United
States shall submit to the Committee on Health, Education,
Labor, and Pensions of the Senate and the Committee on Energy
and Commerce of the House of Representatives a report on the
study described in subsection (a).
Mr. KENNEDY. Mr. President, today, Senator DeWine and I are
introducing legislation to give the Food and Drug Administration broad
authority to regulate tobacco products for the protection of the public
health. We cannot in good conscience allow the Federal agency most
responsible for protecting the public health to remain powerless to
deal with the enormous risks of tobacco, the most deadly of all
consumer products.
This legislation is a fair and balanced approach to FDA regulation.
It creates a new section in FDA jurisdiction for the regulation of
tobacco products, with standards that allow for consideration of the
unique issues raised by tobacco use. It is sensitive to the concerns of
tobacco farmers, small businesses, and nicotine-dependent smokers. But,
it clearly gives FDA the authority it needs in order to prevent youth
smoking and to reduce addiction to this highly lethal product.
The stakes are vast. Five thousand children have their first
cigarette every day, and two thousand of them become daily smokers.
Nearly a thousand of them will die prematurely from tobacco-induced
diseases. Smoking is the number one preventable cause of death in the
Nation today. Cigarettes kill well over 400,000 Americans each year.
That is more lives lost than from automobile accidents, alcohol abuse,
illegal drugs, AIDS, murder, suicide, and fires combined. Our response
to a public health problem of this magnitude must consist of more than
half-way measures.
We must deal firmly with tobacco company marketing practices that
target children and mislead the public. The Food and Drug
Administration needs broad authority to regulate the sale,
distribution, and advertising of cigarettes and smokeless tobacco.
The tobacco industry currently spends over $9 billion a year to
promote its products. Much of that money is spent in ways designed to
tempt children to start smoking, before they are mature enough to
appreciate the enormity of the health risk. The industry knows that
more than 90 percent of smokers begin as children and are addicted by
the time they reach adulthood.
Documents obtained from tobacco companies prove, in the companies'
own words, the magnitude of the industry's efforts to trap children
into dependency on their deadly product. Recent studies by the
Institute of Medicine and the Centers for Disease Control show the
substantial role of industry advertising in decisions by young people
to use tobacco products.
If we are serious about reducing youth smoking, FDA must have the
power to prevent industry advertising
[[Page S5980]]
designed to appeal to children wherever it will be seen by children.
This legislation will give FDA the ability to stop tobacco advertising
which glamorizes smoking from appearing where it will be seen by
significant numbers of children. It grants FDA full authority to
regulate tobacco advertising ``consistent with and to the full extent
permitted by the First Amendment.''
FDA authority must also extend to the sale of tobacco products.
Nearly every State makes it illegal to sell cigarettes to children
under 18, but surveys show that those laws are rarely enforced and
frequently violated. FDA must have the power to limit the sale of
cigarettes to face-to-face transactions in which the age of the
purchaser can be verified by identification. This means an end to self-
service displays and vending machine sales. There must also be serious
enforcement efforts with real penalties for those caught selling
tobacco products to children. This is the only way to ensure that
children under 18 are not able to buy cigarettes.
The FDA conducted the longest rulemaking proceeding in its history,
studying which regulations would most effectively reduce the number of
children who smoke. Seven hundred thousand public comments were
received in the course of that rulemaking. At the conclusion of its
proceeding, the Agency promulgated rules on the manner in which
cigarettes are advertised and sold. Due to litigation, most of those
regulations were never implemented. If we are serious about curbing
youth smoking as much as possible, as soon as possible; it makes no
sense to require FDA to reinvent the wheel by conducting a new multi-
year rulemaking process on the same issues. This legislation will give
the youth access and advertising restrictions already developed by FDA
the immediate force of law, as if they had been issued under the new
statute.
The legislation also provides for stronger warnings on all cigarette
and smokeless tobacco packages, and in all print advertisements. These
warnings will be more explicit in their description of the medical
problems which can result from tobacco use. The FDA is given the
authority to change the text of these warning labels periodically, to
keep their impact strong.
Nicotine in cigarettes is highly addictive. Medical experts say that
it is as addictive as heroin or cocaine. Yet for decades, tobacco
companies have vehemently denied the addictiveness of their products.
No one can forget the parade of tobacco executives who testified under
oath before Congress that smoking cigarettes is not addictive.
Overwhelming evidence in industry documents obtained through the
discovery process proves that the companies not only knew of this
addictiveness for decades, but actually relied on it as the basis for
their marketing strategy. As we now know, cigarette manufacturers
chemically manipulated the nicotine in their products to make it even
more addictive.
The tobacco industry has a long, dishonorable history of providing
misleading information about the health consequences of smoking. These
companies have repeatedly sought to characterize their products as far
less hazardous than they are. They made minor innovations in product
design seem far more significant for the health of the user than they
actually were. It is essential that FDA have clear and unambiguous
authority to prevent such misrepresentations in the future. The largest
disinformation campaign in the history of the corporate world must end.
Given the addictiveness of tobacco products, it is essential that the
FDA regulate them for the protection of the public health. Over forty
million Americans are currently addicted to cigarettes. No responsible
public health official believes that cigarettes should be banned. A ban
would leave forty million people without a way to satisfy their drug
dependency. FDA should be able to take the necessary steps to help
addicted smokers overcome their addiction, and to make the product less
toxic for smokers who are unable or unwilling to stop. To do so, FDA
must have the authority to reduce or remove hazardous ingredients from
cigarettes, to the extent that it becomes scientifically feasible. The
inherent risk in smoking should not be unnecessarily compounded.
Recent statements by several tobacco companies make clear that they
plan to develop what they characterize as ``reduced risk'' cigarettes.
This legislation will require manufacturers to submit such ``reduced
risk'' products to the FDA for analysis before they can be marketed. No
health-related claims will be permitted until they have been verified
to the FDA's satisfaction. These safeguards are essential to prevent
deceptive industry marketing campaigns, which could lull the public
into a false sense of health safety.
Smoking is the number one preventable cause of death in America.
Congress must vest FDA not only with the responsibility for regulating
tobacco products, but with full authority to do the job effectively.
This legislation will give the FDA the legal authority it needs--to
reduce youth smoking by preventing tobacco advertising which targets
children--to prevent the sale of tobacco products to minors--to help
smokers overcome their addiction--to make tobacco products less toxic
for those who continue to use them--and to prevent the tobacco industry
from misleading the public about the dangers of smoking.
We believe that there is an excellent chance of enacting this bill
this year. The interest of tobacco-state members in passing a tobacco
farmers' quota buyout provides a golden opportunity. By joining a
strong FDA bill with relief for tobacco farmers, we can assemble a
broad, bipartisan coalition to accomplish both of these goals during
this session. This approach is supported by the public health community
and by farmers' organizations. Most importantly, it is the right thing
to do for America's children.
______
By Mr. WARNER (for himself, Mr. Lieberman, Mr. Roberts, and Mr.
Allen):
S. 2462. A bill to provide additional assistance to recipients of
Federal Pell Grants who are pursuing programs of study in engineering,
mathematics, science, or foreign languages; to the Committee on Health,
Education, Labor and Pensions.
Mr. WARNER. Mr. President, I rise today to introduce an important
bill related to education and our national, homeland, and economic
security. I am pleased to be joined in this bipartisan effort with
Senators Lieberman, Roberts, and Allen, and I am grateful to each of
them for working closely with me in crafting this legislation.
Some 50 plus years ago, I was a high school drop-out. I left school
at the age of 17 to enlist in the Navy to serve this country in World
War II. In the military, I earned the rank of Petty Officer 3rd Class,
electronic technician's mate. And, it was in this role that I earned my
first bit of technical education.
In return for my service, I was lucky enough to earn a GI Bill that
helped me go to college at Washington & Lee University where I earned a
degree in engineering. Subsequently, I joined the Marines and earned a
second GI Bill that allowed me to attend the University of Virginia
where I earned my law degree.
Without the GI bill, I certainly might not have earned the education
that I was fortunate enough to receive, and I certainly would not be
standing here today in the United States Senate. That is why I feel so
very strongly that we must support education in this country. Today's
generation of students should have at least the same opportunity to
earn their education that I had, if not more.
We are fortunate in America that we have several important Federal
programs to help make education more affordable for today's generation.
Whether it is the GI Bill, the Americorp stipend, subsidized and
unsubsidized Stafford loans, or any number of other Federal education
programs, many Americans today who wish to obtain higher education have
access to a variety of educational programs. I support strengthening
these programs to increase access to higher education.
Of all the educational grant programs, the Pell Grant program is the
largest source of grant aid to help students pay for the costs
associated with higher education. Eligibility for Pell Grants is based
on financial need, and this year alone, Pell Grants helped 5.3 million
undergraduate students attain higher education.
Now, I am a strong supporter of the Pell Grant program. The $13.1
billion
[[Page S5981]]
that is being spent by the Federal Government on Pell Grants in fiscal
year 2004 gives students access to higher education that otherwise
might not have such access. But, I also recognize that the Pell Grant
program was created in 1972 when the world was entirely different.
Our world today is much more dangerous than it was back then, and
much more dangerous than when I served this country with brief tours of
duty in World War II and the Korean War.
Today, while we're sleeping, people in other parts of the world are
contriving of every possible way to take our business, our economy, our
security, and our freedoms away from us. September 11, 2001, should
remind us of this.
Once, great oceans protected this Nation. But now, with the advent of
the Internet and other modern technologies, the world is more connected
than ever, and America is more vulnerable than ever in a lot of ways.
Computer hackers all over the world try on a daily basis to hack into
government computers. If successful, this could wreak havoc.
Furthermore, each day, for whatever reason, people create computer
viruses, and even the smallest virus can cost our economy billions of
dollars.
Simply put, in today's day and age, our country faces new challenges
like never before. I ask--are we prepared to meet these challenges?
Unfortunately, our institutions of higher learning are not producing
enough American graduates with certain majors to meet our new
challenges. In engineering, math, computer sciences, hard sciences, and
certain foreign languages--America is coming up short.
The statistics are alarming: the Third International Math and Science
Study reports that U.S. 12th graders scored in only the 7th percentile
in math worldwide, and only the 3rd percentile in science. This is near
the bottom among major industrialized nations. The National Science
Foundation reports that the fraction of U.S. Bachelor degrees in
science and engineering have been declining for nearly 2 decades when
compared to the rest of the world. While nearly two-thirds of Bachelor
degrees in China and Singapore are science or engineering, they account
for only about 17 percent in the United States. In fact, we currently
rank 61st out of the 63 countries surveyed. Similarly, the National
Science Board reports that the fraction of foreign born scientists and
engineers in the U.S. workforce rose to an all time high by 2000.
Amazingly, 38 percent of all people working in the United States with
doctorate degrees in science or engineering are now foreign born.
The effects of these educational trends are already being felt in
various important ways. For example: the American Physical Society
reports that the proportion of articles by American authors in the
Physical Review, one of the most important research journals in the
world, has hit an all time low of 29 percent, down from 61 percent in
1983. And the U.S. production of patents, probably the most direct link
between research and economic benefit, has declined steadily relative
to the rest of the world for decades, and now stands at only 52 percent
of the total.
Despite these statistics, up to now, this country has been able to
meet its new challenges by importing brain power from foreign
countries. We are fortunate to have so many smart minds from other
countries willing to come to the United States to fill critical science
and engineering positions. However, the need for home-grown talent is
becoming more and more apparent.
First, international competition for this foreign brain power has
become intense. As the National Science Board notes, ``Governments
throughout the world recognize that a high-skill S&E workforce is
essential for economic strength. Countries beyond the United States
have been taking action to . . . attract foreign students and workers,
and raise the attractiveness to their own citizenry of staying home or
returning from abroad to serve growing national economies and research
enterprises.'' This increased global competition for science and
engineering workers ``comes at a time when demand for their skills is
projected to rise significantly--both in the United States and
throughout the global economy.''
Without action on our part, though, America will lose out in the
competition for these technically talented workers. According to the
National Science Board, by 2010, if current trends continue,
significantly less than 10 percent of all physical scientists and
engineers in the world will be working in America.
Increased global competition is not the only reason, though, that we
have to promote a home-grown S&E workforce in America. In the post 9/11
era, it is more important than ever from a security perspective to have
American citizens performing certain tasks.
The National Science Board put it best when they said, ``The ready
availability of outstanding science and engineering talent from other
countries is no longer assured, as international competition for the
science and engineering workforce grows. Threats to world peace and
domestic security create additional constraints on employment of
foreign nationals in the United States.''
I think the message is clear: Our S&E workforce is in crisis. If we
do not act to encourage more American citizens to enter the high
shortage areas in engineering, math, and science, then America may lose
its historical advantage as the world's innovator.
The consequences of this trend are also significant from a national
security perspective. The defense-related research that goes into
giving our men and women in the Armed Forces the best technology and
equipment requires the special skills of engineers, scientists and
computer scientists. Our military has always recognized these facts,
and historically has been a tremendous supporter of science and
engineering on a broad scale, from applied research to the most pure
and esoteric of pursuits.
Let me quote some numbers which make clear what a huge investment our
defense community makes in science and engineering: According to the
National Science Foundation, the Defense Department is by far the
largest single supporter of science and technology in the Federal
Government, accounting for about half of the total research dollars
spent; the proportion of defense funding for University research in
critical disciplines is very significant. For example, 90 percent of
basic astronautical research is defense-funded. And, as you all must
realize, University research is vastly important for training
subsequent generations of high-quality researchers; and in terms of
technical manpower, defense-related scientists and engineers make up
nearly 46 percent of the total Federal workforce. And, this includes 28
percent of all physical scientists, 48 percent of computer scientists
and mathematicians, and 67 percent of all engineers.
For well over a century these investments have given us advantages in
technological fields that have provided our men and women of our Armed
Forces the most advanced and powerful tools in existence, from
submarines and airplanes to unmanned vehicles and the Internet. These
technologies not only give our military an overwhelming advantage on
the battlefield, they also save many lives.
Yet, alarmingly, it is in the precise disciplines that produce these
technologies and equipment where we see some of the greatest potential
shortages in our science and engineering workforce. Numerous studies
show that the number of domestic students in these critical fields has
been falling steadily for years. And, without major investments to
encourage more Americans to enter these critical fields, America is
going to lose its status as the world's innovator and be placed in the
precarious situation of having to rely on foreign countries to sell us
the best equipment and the best technology for our troops. That is why
it is paramount for America, from within, to produce the home-grown
technical talent it needs.
The consequences of inaction are enormous. And, while America's
challenge is substantial, it is not insurmountable. Fortunately, we
already have an existing Federal program up and running that, if
modified, can help.
Under current law, the $13.1 billion a year Pell Grant program awards
recipients grants regardless of the course of study that the recipient
chooses to pursue. So, under current law, 2 people
[[Page S5982]]
from the same financial background are eligible for the same grant even
though one chooses to major in the liberal arts while the other majors
in engineering or science.
While I believe studying the liberal arts is an important component
to having an enlightened citizenry, I also believe that given the
unique challenges we are facing in this country, it is appropriate for
us to add an incentive to the Pell Grant program to encourage
individuals to pursue courses of study where graduates are needed to
meet our national security, homeland security, and economic security
needs.
That is why today I am introducing this legislation. The legislation
is simple. It provides that at least every 2 years, our Secretary of
Education, in consultation with the Secretary of Defense, the Secretary
of Homeland Security, and others, should provide a list of courses of
study where America needs home-grown talent to meet our national,
homeland, and economic security needs. Those students who pursue
courses of study in these programs will be rewarded through a doubling
of their Pell Grant to help them with the costs associated with
obtaining their education.
We in the Congress have an obligation when expending taxpayer money,
to do so in a manner that meets our Nation's needs. Our Nation
desperately needs more highly trained domestic workers. That is an
indisputable fact. And, in the Pell Grant program, we have over $13
billion that is readily available to help meet this demand.
In closing, our world is vastly different today than it was when the
Pell Grant program was created in 1972. My legislation is a commonsense
modification of the Pell Grant program that will help America meet its
new challenges. I hope my colleagues will join me in this endeavor.
Mr. President, I ask unanimous consent that the text of the bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 2462
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 ``21st Century Federal Pell
Grant Plus Act''.
SEC. 2. RECIPIENTS OF FEDERAL PELL GRANTS WHO ARE PURSUING
PROGRAMS OF STUDY IN ENGINEERING, MATHEMATICS,
SCIENCE, OR FOREIGN LANGUAGES.
Section 401(b)(2) of the Higher Education Act of 1965 (20
U.S.C. 1070a(b)(2)) is amended by adding at the end the
following:
``(C)(i) Notwithstanding subparagraph (A) and subject to
clause (iii), in the case of a student who is eligible under
this part and who is pursuing a degree with a major in, or a
certificate or program of study relating to, engineering,
mathematics, science (such as physics, chemistry, or computer
science), or a foreign language, described in a list
developed or updated under clause (ii), the amount of the
Federal Pell Grant shall be the amount calculated for the
student under subparagraph (A) for the academic year
involved, multiplied by 2.
``(ii)(I) The Secretary, in consultation with the Secretary
of Defense, the Secretary of the Department of Homeland
Security, and the Director of the National Science
Foundation, shall develop, update not less than once every 2
years, and publish in the Federal Register, a list of
engineering, mathematics, and science degrees, majors,
certificates, or programs that if pursued by a student, may
enable the student to receive the increased Federal Pell
Grant amount under clause (i). In developing and updating the
list the Secretaries and Director shall consider the
following:
``(aa) The current engineering, mathematics, and science
needs of the United States with respect to national security,
homeland security, and economic security.
``(bb) Whether institutions of higher education in the
United States are currently producing enough graduates with
degrees to meet the national security, homeland security, and
economic security needs of the United States.
``(cc) The future expected workforce needs of the United
States required to help ensure the Nation's national
security, homeland security, and economic security.
``(dd) Whether institutions of higher education in the
United States are expected to produce enough graduates with
degrees to meet the future national security, homeland
security, and economic security needs of the United States.
``(II) The Secretary, in consultation with the Secretary of
Defense, the Secretary of the Department of Homeland
Security, and the Secretary of State, shall develop, update
not less than once every 2 years, and publish in the Federal
Register, a list of foreign language degrees, majors,
certificates, or programs that if pursued by a student, may
enable the student to receive the increased Federal Pell
Grant amount under clause (i). In developing and updating the
list the Secretaries shall consider the following:
``(aa) The foreign language needs of the United States with
respect to national security, homeland security, and economic
security.
``(bb) Whether institutions of higher education in the
United States are currently producing enough graduates with
degrees to meet the national security, homeland security, and
economic security needs of the United States.
``(cc) The future expected workforce needs of the United
States required to help ensure the Nation's national
security, homeland security, and economic security.
``(dd) Whether institutions of higher education in the
United States are expected to produce enough graduates with
degrees to meet the future national security, homeland
security, and economic security needs of the United States.
``(iii) Each student who received an increased Federal Pell
Grant amount under clause (i) to pursue a degree, major,
certificate, or program described in a list published under
subclause (I) or (II) of clause (ii) shall continue to be
eligible for the increased Federal Pell Grant amount in
subsequent academic years if the degree, major, certificate,
or program, respectively, is subsequently removed from the
list.
``(iv)(I) If a student who received an increased Federal
Pell Grant amount under clause (i) changes the student's
course of study to a degree, major, certificate, or program
that is not included in a list described in clause (ii), then
the Secretary shall reduce the amount of Federal Pell Grant
assistance the student is eligible to receive under this
section for subsequent academic years by an amount equal to
the difference between the total amount the student received
under this subparagraph and the total amount the student
would have received under this section if this subparagraph
had not been applied.
``(II) The Secretary shall reduce the amount of Federal
Pell Grant assistance the student is eligible to receive in
subsequent academic years by dividing the total amount to be
reduced under subclause (I) for the student by the number of
years the student received an increased Federal Pell Grant
amount under clause (i), and deducting the result from the
amount of Federal Pell Grant assistance the student is
eligible to receive under this section for a number of
subsequent academic years equal to the number of academic
years the student received an increased Federal Pell Grant
amount under clause (i).''.
Mr. LIEBERMAN. Mr. President, I rise today to join my esteemed
colleague from the State of Virginia, Senator Warner, in introducing
The 21st Century Pell Grant Plus Act. This bill is intended to provide
an immediate and direct response to the urgent need in this country to
encourage greater numbers of graduates in the critical areas of math
and science and foreign language. Specifically, our bill would provide
financial incentives to American college students, via enhanced Pell
grants, to pursue degrees in science, engineering, mathematics, and key
foreign languages. These subject areas are critical for meeting our
nation's economic and homeland security needs.
Although the number of jobs requiring scientific and technical skills
is projected to grow over the next decade, the last ten years have
witnessed a significant decline in the number of relevant baccalaureate
degrees awarded by U.S. institutions of higher education. Recent
reports have highlighted the decline in science and engineering
graduates in our country, which has threatened the United States'
worldwide dominance in science and innovation. Foreign advances in
basic science now often exceed those in the United States. To
exacerbate the matter, future demographics signal that many of the
presently employed engineers and scientists who entered the workforce
in the 1960s and 1970s will retire during the next decade.
Unfortunately, their children are not following them into the same
professions.
Many of our competitors in the world market are not experiencing
these same problems. The universities in some European and Asian
countries are attracting science and engineering majors at much higher
rates than the universities in the United States. For example, China
graduated three times as many engineering graduates than the United
States did in 1999. In 2000, there were 24 nations who awarded a higher
percentage of science and engineering degrees than the United States
did. In that same year, the percentage of students earning science
degrees in Finland was 2.5 times higher than in the United States.
Graduate education trends are no better. According to National Science
Foundation indicators,
[[Page S5983]]
between 1986 and 1999, China produced science and engineering
doctorates at an average annual growth rate of 36.5 percent. By
comparison, the United States had an average annual growth rate of just
2.2 percent during the same period. We must also keep in mind that of
all the science and engineering doctoral degrees earned in the United
States in 1999, 48.6 percent of them were earned by non-U.S. citizens.
I noted in my recent offshore outsourcing study, now posted on my
website, that as global competition for technical talent intensifies,
our economic security depends on producing U.S.-born science and
engineering graduates. Not being able to fill the jobs in this country
with U.S. citizens is also a threat to our national security. Thus, it
is imperative that our higher education system, which is the best in
the world, train more individuals in science and technology.
Our bill provides a simple and efficient solution to this problem.
Under our proposal, any student who qualifies for a Pell Grant and
majors in science, engineering, mathematics, or certain foreign
languages would be eligible to receive a grant that is double the size
of the original award. Every two years the Secretary of Education, in
consultation with the Secretaries of Defense and Homeland Security, and
the director of the National Science Foundation will develop a list of
engineering, mathematics, science, and foreign language majors,
degrees, certificates, or programs that if pursued by a student, may
enable that student to receive the increased Federal Pell Grant amount.
Science, engineering, technology, and innovation are key to our
economic growth, prosperity, and security. The 21st Century Federal
Pell Grant Plus Act aims to strengthen our technical workforce, and
thus our economic and homeland security, by encouraging more of our
college students to study science, engineering, mathematics, and
foreign languages. I urge my colleagues to act favorably on this
measure.
I would also like to take this opportunity to pay tribute to a man
who some have appropriately described as a true gentleman as well as an
outstanding leader in engineering and science. Dr. John H. Hopps died
on May 14, 2004 at 65 years of age. He has advised my office on our
nation's science talent issues for the past three years, and I want to
dedicate today's new bill to him. At the time of his death, he was
serving as Deputy Under Secretary of Defense for Research and National
Laboratories, and Deputy Director of Defense Research and Engineering.
He accepted this dual position out of a strong sense of national
service after the September 11 attack. The science community has lost a
member who has served as an inspiration to many, including members of
my staff, for his commitment to his profession and his unique
approaches to developing our technical workforce. Among his many
achievements, including many in University education and at NSF, I
would note that Dr. Hopps was the author of numerous scholarly and
scientific papers, and was recognized as one of the top African
Americans in Technology in 2004. I might also mention that in addition
to his intellectual prowess, he was passionate about athletics--a
winning combination. As we introduce this bill to highlight the
importance of this profession, I thought it was appropriate to
recognize Dr. Hopps, and thank my colleagues for this opportunity.
______
By Mr. COLEMAN (for himself and Mrs. Feinstein)
S. 2464. A bill to amend the Federal Food, Drug, and Cosmetic Act
with respect to the sale of prescription drugs through the Internet; to
the Committee on Health, Education, Labor, and Pensions.
____
By Mr. COLEMAN:
S. 2465. A bill to amend the Controlled Substances Act with respect
to the seizure of shipments of controlled substances, and for other
purposes; to the Committee on the Judiciary.
Mr. COLEMAN. Mr. President, I rise to introduce two bills that expand
Federal authority to prevent controlled substances from flooding into
the U.S., authorizing states to shut down illegitimate virtual
pharmacies, and bar Internet drug stores from dispensing drugs to
customers referred to on-line doctors for a prescription.
Americans are increasingly turning to the Internet for access to
affordable drugs. In 2003, consumer spending on drugs procured over the
Internet exceeded $3.2 billion. Unfortunately, rogue Internet sites
have proliferated and rake in millions of dollars by selling unproven,
counterfeit, defective or otherwise inappropriate medications to
unsuspecting consumers. Even more dangerously, these sites are
profiting by selling addictive and potentially deadly controlled
substances to consumers without a prescription or any physician
oversight. This must stop before more individuals die or become
addicted to easily obtainable narcotic drugs.
The first bill I am introducing was developed in close consultation
with Senator Feinstein, who is an original cosponsor. In appreciation
for her role in helping write this legislation it is named after a
young man from her state who died from an overdose of drugs purchased
over the Internet.
17-year old Ryan Haight of La Mesa, CA was an honor roll student, and
avid baseball card collector about to enter college. As his mom says,
``he was a good kid.'' But in May of 2000 Ryan started hanging out with
a different crowd of friends. He joined an online chat forum, which
advocates the safe use of drugs, and he began buying prescription drugs
from the Internet.
He used the family computer late at night and a debit card his
parents gave him to buy baseball cards on Ebay. You might ask, how did
a healthy 17-year old obtain prescriptions for painkillers without a
medical exam. He got them from Dr. Robert Ogle an ``online'' physician
based out of Texas. With the prescriptions from Dr. Ogle, Ryan was able
to order hydrocodone, morphine, Valium and Oxazepam and have them
shipped via US mail right to his front door.
In February 2001, Ryan overdosed on a combination of these
prescription drugs. His mother found him dead on his bedroom floor.
The Ryan Haight Internet Pharmacy Consumer Protection Act counters
the growing sale of prescription drugs over the Internet without a
valid prescription by 1. providing new disclosure standards for
Internet pharmacies; 2. barring Internet sites from selling or
dispensing prescription drugs to consumers who are provided a
prescription solely on the basis of an online questionnaire; and 3.
allowing State Attorneys General to go to Federal court to shut down
rogue sites.
The bill is geared to counter domestic Internet pharmacies that sell
drugs without a valid prescription, not international pharmacies that
sell drugs at a low cost to individuals who have a valid prescription
from their U.S. doctors.
Under current law, purchasing drugs online without a valid
prescription can be simple: a consumer just types the name of the drug
into a search engine, quickly identifies a site selling the medication,
fills in a brief questionnaire, and then clicks to purchase. The risks
of self-medicating, however, can include potential adverse reactions
from inappropriately prescribed medications, dangerous drug
interactions, use of counterfeit or tainted products, and addiction to
habit-forming substances. Several of these illegitimate sites fail to
provide information about contraindications, potential adverse effects,
and efficacy.
Regulating these Internet pharmacies is difficult for Federal and
State authorities. State medical and pharmacy boards have expressed the
concern that they do not have adequate enforcement tools to regulate
practice over the Internet. It can be virtually impossible for States
to identify, investigate, and prosecute these illegal pharmacies
because the consumer, prescriber, and seller of a drug may be located
in different States.
The Internet Pharmacy Consumer Protection Act amends the Federal
Food, Drug, and Cosmetic Act to address this problem in three steps.
First, it requires Internet pharmacy websites to display information
identifying the business, pharmacist, and physician associated with the
website.
Second, the bill bars the selling or dispensing of a prescription
drug via the Internet when the website has referred the customer to a
doctor who then writes a prescription without ever seeing the patient.
[[Page S5984]]
Third, the bill provides States with new enforcement authority
modeled on the Federal Telemarketing Sales Act that will allow a state
attorney general to shut down a rogue site across the country, rather
than only bar sales to consumers of his or her state.
I am proud to say that the Ryan Haight Internet Pharmacy Consumer
Protection Act is supported by the Federation of State Medical Boards,
the National Community Pharmacists Association, and the American
Pharmacists Association.
The second bill I am introducing enables Customs and Border
Protection to immediately seize and destroy any package containing a
controlled substance that is illegally imported into the U.S. without
having to fill out duplicative forms and other unnecessary
administrative paperwork. The Act will allow Customs to focus on
interdicting and destroying potentially addictive and deadly controlled
substances. The Act is dedicated to Todd Rode, a young man who died
after overdosing on imported drugs.
Todd Rode had the heart and soul of a musician. He graduated from
college magna cum laude with a major in psychology and a minor in
music. The faculty named him the outstanding senior in the Psychology
Department. He worked in this field for a number of years, but he
constantly fought bouts of depression and anxiety.
Unfortunately Todd ordered controlled drugs from a pharmacy and
doctor in another country. These drugs included Venlafaxine,
Propoxyphene, and Codeine. All were controlled substances and all were
obtained from overseas pharmacies without any safeguards. To obtain
these controlled substances all Todd had to do was to fill out an
online questionnaire and with the click of a mouse they were shipped
directly to his front door.
In October of 1999, Todd's family found him dead in his apartment.
A six-month investigation by the Permanent Subcommittee on
Investigations has revealed that tens of thousands of dangerous and
addictive controlled substances are streaming into the U.S. on a daily
basis from overseas Internet pharmacies. For example, on March 15 and
17, 2004, at JFK airport, home to the largest International Mail Branch
in the U.S., at least 3,000 boxes from a single vendor in
the Netherlands containing hydrocodone and Diazepam (Valium) were
seized by Customs and Border Protection (Customs).
In fact, senior Customs inspectors at JFK estimate that 40,000
parcels containing drugs are imported on a daily basis. During last
summer's FDA/Customs blitz, 28 percent of the drugs tested were
controlled substances. Extrapolating these figures, 11,200 drug parcels
containing controlled substances are imported through JFK daily, 78,400
weekly, 313,600 monthly and 3,763,200 annually. top countries of origin
include Brazil, India, Pakistan, Netherlands, Spain, Portugal, Canada,
Mexico, and Romania.
Likewise, as of March 2003, senior Customs officials at the Miami
International Airport indicated that as much as 30,000 packages
containing drugs were being imported on a daily basis. A large
percentage of these are controlled substances as well. Customs is
simply overwhelmed. At Mail facilities across the U.S., Customs
regularly seizes shipments of oxycodone, hydroquinone, tranquilizers,
steroids, codeine laced products, GHB, date rape drug, and morphine.
In order to comply with paperwork requirements, Customs is forced to
devote investigators solely to opening, counting, and analyzing drug
packages, filling out duplicative forms, and logging into a computer
all of the seized controlled substances. It takes Customs at least one
hour to process a single shipment of a controlled substance. This
minimizes the availability of inspectors to screen incoming drug
packages. In fact, currently at JFK, there are 20,000 packages of
seized controlled substances waiting processing. Customs acknowledges
that, because of the sheer volume of product, bureaucratic regulations,
and lack of manpower, the vast majority of controlled substances that
are illegally imported are simply missed and allowed into the U.S.
stream of commerce.
The Act to Prevent the Illegal Importation of Controlled Substances
is a simple bill to address this burgeoning and potentially lethal
problem.
I am confident that, if enacted as stand-alone measures, each of
these bills will make on-line drug purchasing safer. However, I am
working with Senator Gregg to ensure these safety features are included
in his comprehensive reimportation bill and urge my colleagues to help
make sure that this important piece of legislation becomes law this
year.
Mrs. FEINSTEIN. Mr. President, I rise today along with my colleague
Senator Coleman to introduce the Internet Pharmacy Consumer Protection
Act also called the ``Ryan Haight Act'', a bill which is vital to
protect the safety of Americans who choose to purchase their
prescription drugs legally over the Internet.
This legislation is necessary because of a growing problem of illegal
prescription drug diversion and abuse of prescription drugs. Coupled
with the ease of access to the Internet, it has led to an environment
where illegitimate pharmacy websites can bypass traditional regulations
and established safeguards for the sale of prescription drugs. Internet
websites that allow consumers to obtain prescription drugs without the
existence of a bona fide physician-patient relationship pose an
immediate threat to public health and safety.
To address this problem, the Internet Pharmacy Consumer Protection
Act makes several critical steps to ensure safety and to assist
regulatory authorities in shutting down ``rogue'' Internet pharmacies.
First, this bill establishes disclosure standards for Internet
pharmacies.
Second, this bill prohibits the dispensing or sale of a prescription
drug based solely on communications via the Internet such as the
completion of an online medical questionnaire.
Third, it allows a State Attorney General to bring a civil action in
a federal district court to enjoin a pharmacy operation and to enforce
compliance with the provisions of this law.
Under this bill, for a domestic website to sell prescription drugs
legally, the website would have to display identifying information such
as the names, addresses, and medical licensing information for
pharmacists and physicians associated with the website.
In addition, if a person wants to use the Internet to purchase their
prescription drugs he or she will not be prohibited from doing so under
this bill but, in order to do so, must already have a prescription for
the drug that is valid in the United States prior to making the
Internet purchase.
Reliance on the Internet for public health purposes and the expansion
of telemedicine, particularly in rural areas, make it essential that
there be at the very least a minimum standard for what qualifies as an
acceptable medical relationship between patients and their physicians.
According to the American Medical Association, a health care
practitioner who offers a prescription for a patient he or she has
never seen before, based solely on an online questionnaire, generally
does not meet the appropriate medical standard of care.
Let me illustrate the situation facing our country today. If a
physician's office prescribed and dispensed prescription drugs the same
way Internet pharmacies currently can and do, it would look something
like this: A physician opens a physical office, asks a patient to fill
out a medical history questionnaire in the lobby and give his or her
credit card information to the office manager. There is no nurse, and
therefore no one to take the patients' height, weight, blood pressure,
verify his or her medical history, and so forth and no one to answer
the patient's questions regarding their health.
The questionnaire is then slipped through a hole in the window; the
office manager takes it to the physician, or person acting as the
physician, who then writes the prescription and hands it to the
pharmacist, or person acting as the pharmacist, in the next room. Once
the patient signs his credit card, he is on his way out the door, drugs
in hand.
No examination is performed, no questions asked, and no verification
or clarification of the answers provided on the medical history
questionnaire.
This illustration is not an exaggeration. It occurs every day all
across the United States. The National Association of Boards of
Pharmacy estimates
[[Page S5985]]
that there are around 500 identifiable rogue pharmacy websites
operating on the Internet.
According to the Federation of State Medical Boards, approximately 29
states and the District of Columbia either have laws or medical board
initiatives addressing Internet medical practice. Of the other 21
States, 13 have medical or osteopathic medical boards that have taken
disciplinary action against a physician for prescribing medication
online.
Many States have already enacted laws defining acceptable practices
for qualifying medical relationships between doctors and patients and
this bill would not affect any existing State laws.
For example, California law was changed in 2000 to say:
No person or entity may prescribe, dispense, or furnish, or
cause to be prescribed, dispensed, or furnished dangerous
drugs or dangerous devices [defined as any drug or device
unsafe for self-use] on the Internet for delivery to any
person in this state, without a good faith prior examination
and medical indication . . .
I believe California's law is a perfect example of why this
legislation is needed. The law only applies to persons living in
California. As we all know, however, the Internet is not bound by State
or even country borders.
This legislation makes a critical step forward by providing
additional authority for State Attorneys General to file an injunction
in Federal court to shut down an Internet site operating in another
State that violates the provisions in the bill.
Under current law, in order to close down an Internet website selling
prescription drugs prosecutors must take enforcement actions in every
State where the Internet pharmacy operates, requiring a tremendous
amount of resources in an environment where the location of the website
is difficult, if not impossible, to determine or keep track of.
This bill will allow a State Attorney General to bring a civil action
in a Federal district court to enjoin a pharmacy operation and to
enforce compliance with the provisions of the law in every jurisdiction
where the pharmacy is operating.
While this legislation pertains to domestic Internet pharmacies, the
practice of international pharmacies selling low-cost drugs to U.S.
consumers who have valid prescriptions from their doctors deserves to
be discussed and debated on the Senate floor. It is my hope that the
Senate will act this year on prescription drug importation legislation.
In closing, I want to share with you the story of Ryan T. Haight of
La Mesa, CA in whose memory this bill is named.
Ryan was an 18-year old honor student from La Mesa, CA, when he died
in his home on February 12, 2001. His parents found a bottle of Vicodin
in his room with a label from an out-of-state pharmacy.
It turns out that Ryan had been ordering addictive drugs online and
paying with a debit card his parents gave him to buy baseball cards on
eBay.
Without a physical exam or his parents' consent, Ryan had been
obtaining controlled substances, some from an Internet site in
Oklahoma. It only took a few months before Ryan's life was ended by an
overdose on a cocktail of painkillers.
Ryan's story and others like it force us to ask why anyone in the
U.S. would be able to access such highly addictive and dangerous drugs
over the Internet with such ease?
Why was there no physician or pharmacist on the other end of this
teenager's computer verifying his age, his medical history and that
there was a valid prescription?
That is why I support this legislation. It makes sensible
requirements of Internet pharmacy websites that will not impact access
to convenient, oftentimes cost-saving drugs.
With simple disclosure requirements for Internet sites such as
names, addresses and medical or pharmacy licensing information,
patients will be better off and state medical and pharmacy boards can
ensure that pharmacists and doctors are properly licensed.
Lastly, this bill will give State Attorneys General the authority
they need to shut down rogue Internet pharmacies operating in other
States. I urge my colleagues to support this bill.
______
By Mr. BROWNBACK (for himself, Mr. Alexander, Mr. Bunning, Mr.
Burns, Mr. Coleman, Mr. Crapo, Mr. DeWine, Mr. Ensign, Mr.
Enzi, Mr. Fitzgerald, Mr. Graham of South Carolina, Mr.
Grassley, Mr. Hatch, Mr. Kyl, Mr. McConnell, Mr. Miller, Mr.
Nickles, Mr. Roberts, Mr. Santorum, Mr. Sessions, Mr. Shelby,
Mr. Talent, Mr. Chambliss, and Mr. Inhofe):
S. 2466. A bill to ensure that women seeking an abortion are fully
informed regarding the pain experienced by their unborn child; to the
Committee on Health, Education, Labor, and Pensions.
Mr. BROWNBACK. Mr. President, I rise today to introduce the
bipartisan Unborn Child Pain Awareness Act, and I am joined by 22
original cosponsors.
Unborn children can experience pain, and they can certainly respond
to touch from outside the womb. Any woman who has been blessed with
carrying a baby in the second trimester can tell you this.
I remember my own children kicking and squirming inside of my wife's
womb. And my wife certainly remembers feeling their kicks. That unborn
child is very much alive. All along, women have been able to feel the
child inside of them, but now, science is telling us what the child
inside of his or her mother can feel.
Many among us are unaware of the scientific, medical fact that unborn
children can feel, but it is true. Not only can they feel, but their
ability to experience pain is heightened. The highest density of pain
receptors per square inch of skin in human development occurs in utero
from 20 to 30 weeks gestation.
An expert report on fetal development, prepared for the Partial Birth
Abortion Ban trials, notes that while unborn children are obviously
incapable of verbal expressions, we know that they can experience pain
based upon anatomical, functional, physiological and behavioral
indicators that are correlated with pain in children and adults.
Unborn children can experience pain. This is why unborn children are
often administered anesthesia during in utero surgeries.
Think about the pain that unborn children can experience, and then
think about the more gruesome abortion procedures. Of course, we have
heard about Partial Birth Abortion, but also consider the D&E abortion.
During this procedure, commonly performed after 20-weeks--when there is
medical evidence that the child can experience severe pain--the child
is torn apart limb from limb. Think about how that must feel to a young
human.
We would never allow a dog to be treated this way. Yet, the creature
we are talking about is a young, unborn child.
Fortunately, the issue of pain experienced by unborn children has
been covered by the news media during the ongoing Partial Birth
Abortion Ban trials. Take for instance an April 7, 2004 Associated
Press news article covering the trials. And I quote: ``A type of
abortion banned under a new federal law would cause `severe and
excruciating' pain to 20-week-old fetuses, a medical expert testified
yesterday . . . `I believe the fetus is conscious,' said Dr. Kanwaljeet
`Sonny' Anand, a pediatrician at the University of Arkansas for Medical
Sciences . . . said yesterday that fetuses show increased heart rate,
blood flow, and hormone levels in response to pain. `The physiological
responses have been very clearly studied,' he said. `The fetus cannot
talk . . . so this is the best evidence we can get.''
Today I introduce a bill that would require those who perform
abortions on unborn children 20 weeks after fertilization to inform the
woman seeking an abortion of the medical evidence that the unborn child
feels pain: (a.) Through a verbal statement given by the abortion
provider, and also (b.) by providing a brochure--developed by the
Department of Health and Human Services--that goes into more detail
than the verbal statement on the medical evidence of pain experienced
by an unborn child 20 weeks after fertilization.
The bill would also ensure that the woman, if she chooses to continue
with
[[Page S5986]]
the abortion procedure after being given the medical information, has
the option of choosing anesthesia for the child, so that the unborn
child's pain is less severe.
Women should not be kept in the dark; women have the right to know
what their unborn child experiences during an abortion. After being
presented with the medical and scientific information on the
development of the unborn child 20 weeks after fertilization, the woman
is more aware of the pain experienced by the child during an abortion
procedure, and able--at the very least--to make an informed decision.
It is simply not fair to keep women in the dark.
Unborn children do not have a voice, but they are young members of
the human family. It is time to look at the unborn child, and recognize
that it is really a young human, who can feel pain and should be
treated with care.
I urge my colleagues to support and pass this important piece of
legislation.
______
By Ms. COLLINS (for herself, Mr. Carper, Mr. Stevens, Mr.
Voinovich, Mr. Sununu, Mr. Lieberman, Mr. Akaka, and Mr.
Durbin):
S. 2468. A bill to reform the postal laws of the United States; to
the Committee on Governmental Affairs.
Ms. COLLINS. Mr. President, I rise today with my friend and
colleague, Senator Carper, to introduce the Postal Accountability and
Enhancement Act of 2004, a bill designed to help the 225-year-old
Postal Service meet the challenges of the 21st Century. This
legislation represents the culmination of a process that began in the
summer of 2002 when I introduced a bill to establish a Presidential
Commission charged with examining the problems the Postal Service
faces, and developing specific recommendations and legislative
proposals that Congress and the Postal Service could implement.
It has long been acknowledged that the financial and operational
problems confronting the Postal Service are serious. At present, the
Postal Service has more than $90 billion in unfunded liabilities and
obligations, which include $6.5 billion in debt to the U.S. Treasury,
nearly $7 billion for Workers' Compensation claims, $5 billion for
retirement costs, and as much as $45 billion to cover retiree health
care costs. The General Accounting Office's Comptroller General, David
Walker, has pointed to the urgent need for ``fundamental reforms to
minimize the risk of a significant taxpayer bailout or dramatic postal
rate increases.'' The Postal Service has been on GAO's ``High-Risk''
List since April of 2001. The Postal Service is at risk of a ``death
spiral'' of decreasing volume and increasing rates that lead to further
decreases in volume.
In December of 2003, President Bush announced the creation of a
bipartisan commission charged with identifying the operational,
structural, and financial challenges facing the U.S. Postal Service.
The President charged this commission with examining all significant
aspects of the Postal Service with the goal of recommending legislative
and administrative reforms to ensure its long-term viability.
The President's Commission conducted seven public hearings across the
country at which they heard from numerous witnesses. On July 31, 2003,
the Commission released its final report, making 35 legislative and
administrative recommendations for the reform of the Postal Service.
As I read through the Commission's report, I was struck by what I
considered the Commission's wake up call to Congress: its statement
that ``an incremental approach to Postal Service reform will yield too
little, too late given the enterprise's bleak fiscal outlook, the depth
of current debt and unfunded obligations, the downward trend in First-
Class mail volumes and the limited potential of its legacy postal
network that was built for a bygone era.'' That is a very strong
statement, and one that challenged both the Postal Service and Congress
to embrace far-reaching reforms.
To the relief of many, including myself, the Commission did not
recommend privatization of the Postal Service. Instead, the Commission
sought to find a way for the Postal Service to do, as Co-Chair Jim
Johnson described to me, ``an overwhelmingly better job under the same
general structure.''
The Postal Service plays a vital role in our economy. The Service
itself employs more than 750,000 career employees. Less well known is
the fact that it is also the linchpin of a $900-billion mailing
industry that employs 9 million Americans in fields as diverse as
direct mailing, printing, catalog production, paper manufacturing, and
financial services. The health of the Postal Service is essential to
the vitality of thousands of companies and the millions that they
employ.
One of the greatest challenges for the Postal Service is the decrease
in mail volume as business communications, bills and payments move more
and more to the Internet. The Postal Service has experienced declining
volumes of First-Class mail for the past four years. This is highly
significant, given that First-Class mail accounts for 48 percent of
total mail volume, and the revenue it generates pays for more than two-
thirds of the Postal Service's institutional costs.
The Postal Service also faces the difficult task of trying to cut
costs from its nationwide infrastructure and transportation network.
These costs are difficult to cut. Even though volumes may be
decreasing, carriers must still deliver six days a week to more than
139 million addresses.
As Chairman of the Committee on Governmental Affairs, I held a series
of eight hearings, including a joint hearing with the House, during
which we reviewed the recommendations of the President's Commission.
The bill Senator Carper and I introduce today is the culmination of
everything the Committee learned from dozens of witnesses over the past
eight months.
First and foremost, the Collins-Carper bill preserves the basic
features of universal service-affordable rates, frequent delivery, and
convenient community access to retail postal services. As a Senator
representing a large, rural State, I want to ensure that my
constituents living in the northern woods, or on the islands, or in our
many rural small towns have the same access to postal services as the
people of our cities. If the Postal Service were no longer to provide
universal service and deliver mail to every customer, the affordable
communication link upon which many Americans rely would be jeopardized.
Most commercial enterprises would find it uneconomical, if not
impossible, to deliver mail and packages to rural Americans at rates
charged by the Postal Service.
The Collins-Carper bill allows the Postal Service to maintain its
current mail monopoly, and retain its sole access to customer
mailboxes. It grants the Postal Service Board of Governors the
authority to set rates for competitive products like Express Mail and
Parcel Post, as long as these prices do not result in cross subsidy
from market-dominant products. As a safeguard, our bill establishes a
30 day prior review period during which the proposed rate changes shall
be reviewed by the Postal Regulatory Commission.
It replaces the current lengthy and litigious rate-setting process
with a rate cap-based structure for market-dominant products such as
First-Class Mail, periodicals and library mail. This would allow the
Postal Service to react more quickly to changes in the mailing
industry. The rate caps would be linked to an inflation indicator
selected by the Postal Regulatory Commission. The goal would be to make
rate increases more predictable and less frequent and to provide
incentives for the Postal Service to operate efficiently. Price changes
for market-dominant products would be subject to a 45-day prior review
period by the Postal Regulatory Commission.
Our bill would introduce new safeguards against unfair competition by
the Postal Service in competitive markets. Subsidization of competitive
products by market-dominant products would be expressly forbidden, and
an equitable allocation of institutional costs to competitive products
would be required.
The President's Commission recommended that the regulator be granted
the authority to make changes to the Postal Service's universal service
obligation and monopoly. The vast majority of the postal community,
however, shared my belief that these are important policy
determinations that should be retained by Congress. The
[[Page S5987]]
Collins-Carper bill keeps those public policy decisions in
congressional hands.
The existing Postal Rate Commission would be transformed into the
Postal Regulatory Commission with greatly enhanced authority. Under
current law, the Rate Commission has very narrow authority. We wanted
to ensure that the Postal Service management has both greater latitude
and stronger oversight. Among other things, the Postal Regulatory
Commission will have the authority to regulate rates for non-
competitive products and services; ensure financial transparency;
establish limits on the accumulation of retained earnings by the Postal
Service; obtain information from the Postal Service, if need be,
through the use of new subpoena power; and review and act on complaints
filed by those who believe the Postal Service has exceeded its
authority. Members of the Postal Regulatory Board will be selected
solely on the basis of their demonstrated experience and professional
standing. Senate confirmation of all Board Members will be required.
The Governmental Affairs Committee dedicated two hearings to the
examination of the Commission's workforce-related recommendations. The
Postal Service is a highly labor intensive organization, using $3 out
of every $4 to pay the wages and benefits of its employees. Their
workforce is comprised of more than 700,000 dedicated letter carriers,
clerks, mail handlers, postmasters, and others, who place great value
on their right to collectively bargain. Our bill reaffirms that right.
This bill only makes changes to the bargaining process that have been
agreed to by both the Postal Service and the four major unions. We
replace the rarely used fact-finding process with mediation, and
shorten statutory deadlines for certain phases of the bargaining
process.
Additionally, the Collins-Carper bill corrects what I believe to be
an anomaly in the Federal workers' compensation law that results in
high costs for the Postal Service. Under the Federal Employees
Compensation Act (FECA), Federal employees with dependents are eligible
for 75 percent of their take-home pay, tax free, plus cost of living
allowances. In addition, there is no maximum dollar cap on FECA
payments. As a result, employees often opt not to retire, staying on
the more generous workers' compensation program permanently.
According to a March 2003 audit issued by the Postal Service's Office
of Inspector General, the Postal Service's workers' compensation rolls
include 81 cases that originated 40 to 50 years ago, with the oldest
recipient being 102 years old. The IG's office found 778 cases that
originated 30 to 40 years ago; and 1,189 cases that originated 20 to 29
years ago.
The Collins-Carper bill works to protect the financial resources of
the Postal Service by converting workers' compensation benefits for
total or partial disability to a retirement annuity when the affected
employee reaches 65 years of age. This change would reflect the fact
that disabled postal employees would likely retire at some point were
they not receiving workers' compensation. I would like to note that the
average postal employee retires far earlier than age 65, so this is
still a generous program. It is important to point out that the Postal
Service has reduced their workplace injury rate by twenty-eight percent
over the past three years.
The Collins--Carper bill also puts into place a three-day waiting
period before an employee is eligible to receive 45 days of
continuation of pay. This is consistent with every state's workers'
compensation program that requires a three- to seven-day waiting period
before benefits are paid.
Our bill has reached an important compromise on the issue of
workshare discounts. Some have raised concerns that the Postal Service
has set rates so that mailers get a discount greater than the cost
avoided by the Postal Service. While this may have occurred in a
handful of instances, those mailers are still covering their
attributable costs, as well as making a healthy contribution to
overhead. The language in our bill sets a policy that the Postal
Service shall not create new discounts greater than the cost avoided by
the Postal Service. The only exception is in those cases where the
Postal Regulatory Commission believes those rates are necessary.
The bill has also, for the first time, explicitly created the
authority for the Postal Service to enter into negotiated service
agreements with individual customers. This will allow the Postal
Service to create agreements with customers to increase its revenue. I
would point out that these agreements must cover all attributable
costs, and will likely result in greater contribution to overhead. In
addition, our bill requires that other similarly situated mailers will
be able to enter into such agreements with the Postal Service.
Finally, our bill would repeal a provision of Public Law 108-18 which
requires that money owed to the Postal Service due to an overpayment
into the Civil Service Retirement System Fund be held in an escrow
account. Repealing this provision would essentially ``free up'' $78
billion over a period of 60 years. These savings would be used to not
only pay off debt to the U.S. Treasury and to fund health care
liabilities, but to mitigate rate increases as well. In fact, failure
to release these escrow funds would mean, for mailers, a double-digit
rate increase in 2006--an expense most American businesses and many
consumers are ill-equipped to afford.
The bill would also return to the Department of Treasury the
responsibility for funding CSRS pension benefits relating to the
military service of postal retirees. No other agency is required to
make this payment. Ratepayers should not be held responsible for this
$27 billion obligation.
The Postal Service has reached a critical juncture. If we are to save
and strengthen this vital service upon which so many Americans rely for
communication and their livelihoods, the time to act is now.
Our bill has the strong endorsements of the National Rural Letter
Carriers Association, the National Association of Letter Carriers, the
National Association of Postmasters of the United States, and the
Coalition for a 21st Century Postal Service--which represents thousands
of the major mailers, employee groups, small businesses, and other
users of the mail. I am also very pleased to add Senators Ted Stevens,
George Voinovich and John Sununu as originated cosponsors of this bill.
I look forward to working with all of my colleagues in the Senate,
and House Government Reform and Oversight Committee Chairman Tom Davis,
who just last week passed a postal reform bill out of his committee by
a vote of 40-0.
I ask unanimous consent that the text of the bill be printed in the
Record, along with a letter sent to me from David Walker, Comptroller
General of the General Accounting Office, addressing the need for
comprehensive postal reform.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 2468
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Postal
Accountability and Enhancement Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--DEFINITIONS; POSTAL SERVICES
Sec. 101. Definitions.
Sec. 102. Postal services.
TITLE II--MODERN RATE REGULATION
Sec. 201. Provisions relating to market-dominant products.
Sec. 202. Provisions relating to competitive products.
Sec. 203. Provisions relating to experimental and new products.
Sec. 204. Reporting requirements and related provisions.
Sec. 205. Complaints; appellate review and enforcement.
Sec. 206. Clerical amendment.
TITLE III--MODERN SERVICE STANDARDS
Sec. 301. Establishment of modern service standards.
Sec. 302. Postal service plan.
TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION
Sec. 401. Postal Service Competitive Products Fund.
Sec. 402. Assumed Federal income tax on competitive products income.
Sec. 403. Unfair competition prohibited.
Sec. 404. Suits by and against the Postal Service.
TITLE V--GENERAL PROVISIONS
Sec. 501. Qualification and term requirements for Governors.
[[Page S5988]]
Sec. 502. Obligations.
Sec. 503. Private carriage of letters.
Sec. 504. Rulemaking authority.
Sec. 505. Noninterference with collective bargaining agreements.
TITLE VI--ENHANCED REGULATORY COMMISSION
Sec. 601. Reorganization and modification of certain provisions
relating to the Postal Regulatory Commission.
Sec. 602. Authority for Postal Regulatory Commission to issue
subpoenas.
Sec. 603. Appropriations for the Postal Regulatory Commission.
Sec. 604. Redesignation of the Postal Rate Commission.
Sec. 605. Financial transparency.
TITLE VII--EVALUATIONS
Sec. 701. Assessments of ratemaking, classification, and other
provisions.
Sec. 702. Report on universal postal service and the postal monopoly.
Sec. 703. Study on equal application of laws to competitive products.
TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING
Sec. 801. Short title.
Sec. 802. Civil Service Retirement System.
Sec. 803. Health insurance.
Sec. 804. Repeal of disposition of savings provision.
Sec. 805. Effective dates.
TITLE IX--COMPENSATION FOR WORK INJURIES
Sec. 901. Temporary disability; continuation of pay.
Sec. 902. Disability retirement for postal employees.
TITLE I--DEFINITIONS; POSTAL SERVICES
SEC. 101. DEFINITIONS.
Section 102 of title 39, United States Code, is amended by
striking ``and'' at the end of paragraph (3), by striking the
period at the end of paragraph (4) and inserting a semicolon,
and by adding at the end the following:
``(5) `postal service' refers to the physical delivery of
letters, printed matter, or packages weighing up to 70
pounds, including physical acceptance, collection, sorting,
transportation, or other services ancillary thereto;
``(6) `product' means a postal service with a distinct cost
or market characteristic for which a rate is applied;
``(7) `rates', as used with respect to products, includes
fees for postal services;
``(8) `market-dominant product' or `product in the market-
dominant category of mail' means a product subject to
subchapter I of chapter 36; and
``(9) `competitive product' or `product in the competitive
category of mail' means a product subject to subchapter II of
chapter 36; and
``(10) `year', as used in chapter 36 (other than
subchapters I and VI thereof), means a fiscal year.''.
SEC. 102. POSTAL SERVICES.
(a) In General.--Section 404 of title 39, United States
Code, is amended--
(1) in subsection (a), by striking paragraph (6) and by
redesignating paragraphs (7) through (9) as paragraphs (6)
through (8), respectively; and
(2) by adding at the end the following:
``(c) Nothing in this title shall be considered to permit
or require that the Postal Service provide any special
nonpostal or similar services.''.
(b) Conforming Amendments.--(1) Section 1402(b)(1)(B)(ii)
of the Victims of Crime Act of 1984 (98 Stat. 2170; 42 U.S.C.
10601(b)(1)(B)(ii)) is amended by striking ``404(a)(8)'' and
inserting ``404(a)(7)''.
(2) Section 2003(b)(1) of title 39, United States Code, is
amended by striking ``and nonpostal''.
TITLE II--MODERN RATE REGULATION
SEC. 201. PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS.
(a) In General.--Chapter 36 of title 39, United States
Code, is amended by striking sections 3621, 3622, and 3623
and inserting the following:
``Sec. 3621. Applicability; definitions
``(a) Applicability.--This subchapter shall apply with
respect to--
``(1) first-class mail letters;
``(2) first-class mail cards;
``(3) periodicals;
``(4) standard mail;
``(5) single-piece parcel post;
``(6) media mail;
``(7) bound printed matter;
``(8) library mail;
``(9) special services; and
``(10) single-piece international mail,
subject to any changes the Postal Regulatory Commission may
make under section 3642.
``(b) Rule of Construction.--Mail matter referred to in
subsection (a) shall, for purposes of this subchapter, be
considered to have the meaning given to such mail matter
under the mail classification schedule.
``Sec. 3622. Modern rate regulation
``(a) Authority Generally.--The Postal Regulatory
Commission shall, within 12 months after the date of the
enactment of this section, by regulation establish (and may
from time to time thereafter by regulation revise) a modern
system for regulating rates and classes for market-dominant
products.
``(b) Objectives.--Such system shall be designed to achieve
the following objectives:
``(1) To reduce the administrative burden and increase the
transparency of the ratemaking process.
``(2) To create predictability and stability in rates.
``(3) To maximize incentives to reduce costs and increase
efficiency.
``(4) To enhance mail security and deter terrorism by
promoting secure, sender-identified mail.
``(5) To allow the Postal Service pricing flexibility,
including the ability to use pricing to promote intelligent
mail and encourage increased mail volume during nonpeak
periods.
``(6) To assure adequate revenues, including retained
earnings, to maintain financial stability and meet the
service standards established under section 3691.
``(7) To allocate the total institutional costs of the
Postal Service equitably between market-dominant and
competitive products.
``(c) Factors.--In establishing or revising such system,
the Postal Regulatory Commission shall take into account--
``(1) the establishment and maintenance of a fair and
equitable schedule for rates and classification system;
``(2) the value of the mail service actually provided each
class or type of mail service to both the sender and the
recipient, including but not limited to the collection, mode
of transportation, and priority of delivery;
``(3) the direct and indirect postal costs attributable to
each class or type of mail service plus that portion of all
other costs of the Postal Service reasonably assignable to
such class or type;
``(4) the effect of rate increases upon the general public,
business mail users, and enterprises in the private sector of
the economy engaged in the delivery of mail matter other than
letters;
``(5) the available alternative means of sending and
receiving letters and other mail matter at reasonable costs;
``(6) the degree of preparation of mail for delivery into
the postal system performed by the mailer and its effect upon
reducing costs to the Postal Service;
``(7) simplicity of structure for the entire schedule and
simple, identifiable relationships between the rates or fees
charged the various classes of mail for postal services;
``(8) the relative value to the people of the kinds of mail
matter entered into the postal system and the desirability
and justification for special classifications and services of
mail;
``(9) the importance of providing classifications with
extremely high degrees of reliability and speed of delivery
and of providing those that do not require high degrees of
reliability and speed of delivery;
``(10) the desirability of special classifications from the
point of view of both the user and of the Postal Service;
``(11) the educational, cultural, scientific, and
informational value to the recipient of mail matter; and
``(12) the policies of this title as well as such other
factors as the Commission deems appropriate.
``(d) Requirements.--The system for regulating rates and
classes for market-dominant products shall--
``(1) require the Postal Rate Commission to set annual
limitations on the percentage changes in rates based on
inflation using indices, such as the Consumer Price Index,
the Employment Cost Index, the Gross Domestic Product Price
Index, or any similar measure as the Postal Rate Commission
may prescribe;
``(2) establish a schedule whereby rates, when necessary
and appropriate, would increase at regular intervals by
predictable amounts;
``(3) not later than 45 days before the implementation of
any adjustment in rates under this section--
``(A) require the Postal Service to provide public notice
of the adjustment;
``(B) provide an opportunity for review by the Postal Rate
Commission;
``(C) provide for the Postal Rate Commission to notify the
Postal Service of any noncompliance of the adjustment with
the limitation under paragraph (1); and
``(D) require the Postal Service to respond to the notice
provided under subparagraph (C) and describe the actions to
be taken to comply with the limitation under paragraph (1).
``(4) notwithstanding any limitation set under paragraphs
(1) and (3), establish procedures whereby rates may be
adjusted on an expedited basis due to unexpected and
extraordinary circumstances.
``(e) Workshare Discounts.--
``(1) Definition.--In this subsection, the term `workshare
discount' refers to rate discounts provided to mailers for
the presorting, prebarcoding, handling, or transportation of
mail, as further defined by the Postal Regulatory Commission
under subsection (a).
``(2) Regulations.--As part of the regulations established
under subsection (a), the Postal Regulatory Commission shall
establish rules for workshare discounts that ensure that such
discounts do not exceed the cost that the Postal Service
avoids as a result of workshare activity, unless--
``(A) the discount is--
``(i) associated with a new postal service or with a change
to an existing postal service; and
[[Page S5989]]
``(ii) necessary to induce mailer behavior that furthers
the economically efficient operation of the Postal Service;
``(B) a reduction in the discount would--
``(i) lead to a loss of volume in the affected category of
mail and reduce the aggregate contribution to institutional
costs of the Postal Service from the mail matter subject to
the discount below what it otherwise would have been if the
discount had not been reduced to costs avoided;
``(ii) result in a further increase in the rates paid by
mailers not able to take advantage of the discount; or
``(iii) impede the efficient operation of the Postal
Service;
``(C) the amount of the discount above costs avoided--
``(i) is necessary to mitigate rate shock; and
``(ii) will be phased out over time;
``(D) the workshare discount is provided in connection with
subclasses of mail consisting exclusively of mail matter of
educational, cultural, or scientific value; or
``(E) the Postal Regulatory Commission determines that such
discounts are reasonable and equitable and consistent with
the objectives and factors taken into account under
subsections (b) and (c).
``(3) Report.--Whenever the Postal Service establishes or
maintains a workshare discount, the Postal Service shall, at
the time it publishes the workshare discount rate, submit to
the Postal Regulatory Commission a detailed report and
explanation of the Postal Service's reasons for establishing
or maintaining the rate, setting forth the data, economic
analyses, and other information relied on by the Postal
Service to justify the rate.
``(f) Transition Rule.--Until regulations under this
section first take effect, rates and classes for market-
dominant products shall remain subject to modification in
accordance with the provisions of this chapter and section
407, as such provisions were last in effect before the date
of the enactment of this section.
``Sec. 3623. Service agreements for market-dominant products
``(a) In General.--
``(1) Authority.--The Postal Service may enter into service
agreements with a customer or group of customers that provide
for the provision of postal services under terms, conditions,
or service standards that differ from those that would apply
under the otherwise applicable classification of market-
dominant mail.
``(2) Agreements.--An agreement under this section may
involve--
``(A) performance by the contracting mail user of mail
preparation, processing, transportation, or other functions;
``(B) performance by the Postal Service of additional mail
preparation, processing, transportation, or other functions;
or
``(C) other terms and conditions that meet the requirements
of subsections (b) and (c).
``(b) Requirements.--A service agreement under this section
may be entered into only if each of the following conditions
is met:
``(1) The total revenue generated under the agreement--
``(A) will cover all Postal Service costs attributable to
the postal services covered by the agreement; and
``(B) will result in no less contribution to the
institutional costs of the Postal Service than would have
been generated had the agreement not been entered into.
``(2) Rates or fees for other mailers will not increase as
a result of the agreement.
``(3) The agreement pertains exclusively to products in the
market-dominant category of mail.
``(4) The agreement will not preclude or materially hinder
similarly situated mail users from entering into agreements
with the Postal Service on the same, or substantially the
same terms or conditions, and the Postal Service remains
willing and able to enter into such.
``(c) Limitations.--A service agreement under this section
shall--
``(1) be for a term not to exceed 3 years; and
``(2) provide that such agreement shall be subject to the
cancellation authority of the Commission under section 3662.
``(d) Notice Requirements.--
``(1) In general.--At least 30 days before a service
agreement under this section is to take effect, the Postal
Service shall file with the Postal Regulatory Commission and
publish in the Federal Register the following information
with respect to such agreement:
``(A) A description of the postal services the agreement
involves.
``(B) A description of the functions the customer is to
perform under the agreement.
``(C) A description of the functions the Postal Service is
to perform under the agreement.
``(D) The rates and fees payable by the customer during the
term of the agreement.
``(E) With respect to each condition under subsection (b),
information sufficient to demonstrate the bases for the view
of the Postal Service that such condition would be met.
``(2) Agreements less than national in scope.--In the case
of a service agreement under this section that is less than
national in scope, the information described under paragraph
(1) shall also be published by the Postal Service in a manner
designed to afford reasonable notice to persons within any
geographic area to which such agreement (or any amendment to
that agreement) pertains.
``(e) Equal Treatment Required.--If the Postal Service
enters into a service agreement with a mailer under this
section, the Postal Service shall make such agreement
available to similarly situated mailers on functionally
equivalent terms and conditions consistent with the
regulatory system established under section 3622 without
unreasonable distinctions based on mailer profiles, provided
that such distinctions, if ignored, would not render any
subsequent agreement uneconomic or impractical.
``(f) Complaints.--Any person who believes that a service
agreement under this section is not in conformance with the
requirements of this section, or who is aggrieved by a
decision of the Postal Service not to enter into an agreement
under this section, may file a complaint with the Postal
Regulatory Commission in accordance with section 3662.
``(g) Postal Regulatory Commission Role.--
``(1) Regulations.--The Postal Regulatory Commission may
promulgate such regulations regarding service agreements as
the Commission determines necessary to implement the
requirements of this section.
``(2) Review.--The Postal Regulatory Commission may review
any agreement or proposed agreement under this section and
may suspend, cancel, or prevent such agreement if the
Commission finds that the agreement does not meet the
requirements of this section.
``(h) Interpretation.--The determination of whether the
revenue generated under the agreement meets the requirements
of subsection (b)(1)(B) shall be based, to the extent
practicable, on the actual contribution of the mail involved,
not on the average contribution made by the mail
classification most similar to the services performed under
the agreement. If mailer-specific data is not available, the
bases for the determination used shall be provided and shall
include a discussion of the suitability of the data used, in
accordance with regulations established by the Postal
Regulatory Commission.''.
(b) Repealed Sections.--Sections 3624, 3625, and 3628 of
title 39, United States Code, are repealed.
(c) Redesignation.--Chapter 36 of title 39, United States
Code (as in effect after the amendment made by section 601,
but before the amendment made by section 202) is amended by
striking the heading for subchapter II and inserting the
following:
``SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS''.
SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.
Chapter 36 of title 39, United States Code, is amended by
inserting after section 3629 the following:
``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS
``Sec. 3631. Applicability; definitions and updates
``(a) Applicability.--This subchapter shall apply with
respect to--
``(1) priority mail;
``(2) expedited mail;
``(3) bulk parcel post;
``(4) bulk international mail; and
``(5) mailgrams;
subject to subsection (d) and any changes the Postal
Regulatory Commission may make under section 3642.
``(b) Definition.--For purposes of this subchapter, the
term `costs attributable', as used with respect to a product,
means the direct and indirect postal costs attributable to
such product.
``(c) Rule of Construction.--Mail matter referred to in
subsection (a) shall, for purposes of this subchapter, be
considered to have the meaning given to such mail matter
under the mail classification schedule.
``(d) Limitation.--Notwithstanding any other provision of
this section, nothing in this subchapter shall be considered
to apply with respect to any product then currently in the
market-dominant category of mail.
``Sec. 3632. Action of the Governors
``(a) Authority To Establish Rates and Classes.--The
Governors, with the written concurrence of a majority of all
of the Governors then holding office, shall establish rates
and classes for products in the competitive category of mail
in accordance with the requirements of this subchapter and
regulations promulgated under section 3633.
``(b) Procedures.--
``(1) In general.--Rates and classes shall be established
in writing, complete with a statement of explanation and
justification, and the date as of which each such rate or
class takes effect.
``(2) Public notice; review; and compliance.--Not later
than 30 days before the date of implementation of any
adjustment in rates under this section--
``(A) the Governors shall provide public notice of the
adjustment and an opportunity for review by the Postal
Regulatory Commission;
``(B) the Postal Rate Commission shall notify the Governors
of any noncompliance of the adjustment with section 3633; and
``(C) the Governors shall respond to the notice provided
under subparagraph (B) and describe the actions to be taken
to comply with section 3633.
``(c) Transition Rule.--Until regulations under section
3633 first take effect, rates and classes for competitive
products shall remain subject to modification in accordance
with the provisions of this chapter and section 407, as such
provisions were as last in effect before the date of the
enactment of this section.
[[Page S5990]]
``Sec. 3633. Provisions applicable to rates for competitive
products
``The Postal Regulatory Commission shall, within 180 days
after the date of the enactment of this section, promulgate
(and may from time to time thereafter revise) regulations
to--
``(1) prohibit the subsidization of competitive products by
market-dominant products;
``(2) ensure that each competitive product covers its costs
attributable; and
``(3) ensure that all competitive products collectively
cover their share of the institutional costs of the Postal
Service.''.
SEC. 203. PROVISIONS RELATING TO EXPERIMENTAL AND NEW
PRODUCTS.
Subchapter III of chapter 36 of title 39, United States
Code, is amended to read as follows:
``SUBCHAPTER III--PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS
``Sec. 3641. Market tests of experimental products
``(a) Authority.--
``(1) In general.--The Postal Service may conduct market
tests of experimental products in accordance with this
section.
``(2) Provisions waived.--A product shall not, while it is
being tested under this section, be subject to the
requirements of sections 3622, 3633, or 3642, or regulations
promulgated under those sections.
``(b) Conditions.--A product may not be tested under this
section unless it satisfies each of the following:
``(1) Significantly different product.--The product is,
from the viewpoint of the mail users, significantly different
from all products offered by the Postal Service within the 2-
year period preceding the start of the test.
``(2) Market disruption.--The introduction or continued
offering of the product will not create an unfair or
otherwise inappropriate competitive advantage for the Postal
Service or any mailer, particularly in regard to small
business concerns (as defined under subsection (h)).
``(3) Correct categorization.--The Postal Service
identifies the product, for the purpose of a test under this
section, as either market-dominant or competitive, consistent
with the criteria under section 3642(b)(1). Costs and
revenues attributable to a product identified as competitive
shall be included in any determination under section 3633(3)
(relating to provisions applicable to competitive products
collectively). Any test that solely affects products
currently classified as competitive, or which provides
services ancillary to only competitive products, shall be
presumed to be in the competitive product category without
regard to whether a similar ancillary product exists for
market-dominant products.
``(c) Notice.--
``(1) In general.--At least 30 days before initiating a
market test under this section, the Postal Service shall file
with the Postal Regulatory Commission and publish in the
Federal Register a notice--
``(A) setting out the basis for the Postal Service's
determination that the market test is covered by this
section; and
``(B) describing the nature and scope of the market test.
``(2) Safeguards.--For a competitive experimental product,
the provisions of section 504(g) shall be available with
respect to any information required to be filed under
paragraph (1) to the same extent and in the same manner as in
the case of any matter described in section 504(g)(1).
Nothing in paragraph (1) shall be considered to permit or
require the publication of any information as to which
confidential treatment is accorded under the preceding
sentence (subject to the same exception as set forth in
section 504(g)(3)).
``(d) Duration.--
``(1) In general.--A market test of a product under this
section may be conducted over a period of not to exceed 24
months.
``(2) Extension authority.--If necessary in order to
determine the feasibility or desirability of a product being
tested under this section, the Postal Regulatory
Commission may, upon written application of the Postal
Service (filed not later than 60 days before the date as
of which the testing of such product would otherwise be
scheduled to terminate under paragraph (1)), extend the
testing of such product for not to exceed an additional 12
months.
``(e) Dollar-Amount Limitation.--
``(1) In general.--A product may only be tested under this
section if the total revenues that are anticipated, or in
fact received, by the Postal Service from such product do not
exceed $10,000,000 in any year, subject to paragraph (2) and
subsection (g).
``(2) Exemption authority.--The Postal Regulatory
Commission may, upon written application of the Postal
Service, exempt the market test from the limit in paragraph
(1) if the total revenues that are anticipated, or in fact
received, by the Postal Service from such product do not
exceed $50,000,000 in any year, subject to subsection (g). In
reviewing an application under this paragraph, the Postal
Regulatory Commission shall approve such application if it
determines that--
``(A) the product is likely to benefit the public and meet
an expected demand;
``(B) the product is likely to contribute to the financial
stability of the Postal Service; and
``(C) the product is not likely to result in unfair or
otherwise inappropriate competition.
``(f) Cancellation.--If the Postal Regulatory Commission at
any time determines that a market test under this section
fails to meet 1 or more of the requirements of this section,
it may order the cancellation of the test involved or take
such other action as it considers appropriate. A
determination under this subsection shall be made in
accordance with such procedures as the Commission shall by
regulation prescribe.
``(g) Adjustment for Inflation.--For purposes of each year
following the year in which occurs the deadline for the
Postal Service's first report to the Postal Regulatory
Commission under section 3652(a), each dollar amount
contained in this section shall be adjusted by the change in
the Consumer Price Index for such year (as determined under
regulations of the Commission).
``(h) Definition of a Small Business Concern.--The criteria
used in defining small business concerns or otherwise
categorizing business concerns as small business concerns
shall, for purposes of this section, be established by the
Postal Regulatory Commission in conformance with the
requirements of section 3 of the Small Business Act.
``(i) Effective Date.--Market tests under this subchapter
may be conducted in any year beginning with the first year in
which occurs the deadline for the Postal Service's first
report to the Postal Regulatory Commission under section
3652(a).
``Sec. 3642. New products and transfers of products between
the market-dominant and competitive categories of mail
``(a) In General.--Upon request of the Postal Service or
users of the mails, or upon its own initiative, the Postal
Regulatory Commission may change the list of market-dominant
products under section 3621 and the list of competitive
products under section 3631 by adding new products to the
lists, removing products from the lists, or transferring
products between the lists.
``(b) Criteria.--All determinations by the Postal
Regulatory Commission under subsection (a) shall be made in
accordance with the following criteria:
``(1) The market-dominant category of products shall
consist of each product in the sale of which the Postal
Service exercises sufficient market power that it can
effectively set the price of such product substantially above
costs, raise prices significantly, decrease quality, or
decrease output, without risk of losing substantial business
to other firms offering similar products. The competitive
category of products shall consist of all other products.
``(2) Exclusion of products covered by postal monopoly.--A
product covered by the postal monopoly shall not be subject
to transfer under this section from the market-dominant
category of mail. For purposes of the preceding sentence, the
term `product covered by the postal monopoly' means any
product the conveyance or transmission of which is reserved
to the United States under section 1696 of title 18, subject
to the same exception as set forth in the last sentence of
section 409(e)(1).
``(3) Additional considerations.--In making any decision
under this section, due regard shall be given to--
``(A) the availability and nature of enterprises in the
private sector engaged in the delivery of the product
involved;
``(B) the views of those who use the product involved on
the appropriateness of the proposed action; and
``(C) the likely impact of the proposed action on small
business concerns (within the meaning of section 3641(h)).
``(c) Transfers of Subclasses and Other Subordinate Units
Allowable.--Nothing in this title shall be considered to
prevent transfers under this section from being made by
reason of the fact that they would involve only some (but not
all) of the subclasses or other subordinate units of the
class of mail or type of postal service involved (without
regard to satisfaction of minimum quantity requirements
standing alone).
``(d) Notification and Publication Requirements.--
``(1) Notification requirement.--The Postal Service shall,
whenever it requests to add a product or transfer a product
to a different category, file with the Postal Regulatory
Commission and publish in the Federal Register a notice
setting out the basis for its determination that the product
satisfies the criteria under subsection (b) and, in the case
of a request to add a product or transfer a product to the
competitive category of mail, that the product meets the
regulations promulgated by the Postal Regulatory Commission
under section 3633. The provisions of section 504(g) shall be
available with respect to any information required to be
filed.
``(2) Publication requirement.--The Postal Regulatory
Commission shall, whenever it changes the list of products in
the market-dominant or competitive category of mail,
prescribe new lists of products. The revised lists shall
indicate how and when any previous lists (including the lists
under sections 3621 and 3631) are superseded, and shall be
published in the Federal Register.
``(e) Prohibition.--Except as provided in section 3641, no
product that involves the physical delivery of letters,
printed matter, or packages may be offered by the Postal
Service unless it has been assigned to the market-dominant or
competitive category of mail (as appropriate) either--
``(1) under this subchapter; or
``(2) by or under any other provision of law.''.
[[Page S5991]]
SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.
(a) Redesignation.--Chapter 36 of title 39, United States
Code (as in effect before the amendment made by subsection
(b)) is amended--
(1) by striking the heading for subchapter IV and inserting
the following:
``SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW''; and
(2) by striking the heading for subchapter V and inserting
the following:
``SUBCHAPTER VI--GENERAL''.
(b) Reports and Compliance.--Chapter 36 of title 39, United
States Code, is amended by inserting after subchapter III the
following:
``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS
``Sec. 3651. Annual reports by the Commission
``(a) In General.--The Postal Regulatory Commission shall
submit an annual report to the President and the Congress
concerning the operations of the Commission under this title,
including the extent to which regulations are achieving the
objectives under sections 3622, 3633, and 3691.
``(b) Information From Postal Service.--The Postal Service
shall provide the Postal Regulatory Commission with such
information as may, in the judgment of the Commission, be
necessary in order for the Commission to prepare its reports
under this section.
``Sec. 3652. Annual reports to the Commission
``(a) Costs, Revenues, Rates, and Service.--Except as
provided in subsection (c), the Postal Service shall, no
later than 90 days after the end of each year, prepare and
submit to the Postal Regulatory Commission a report (together
with such nonpublic annex to the report as the Commission may
require under subsection (e))--
``(1) which shall analyze costs, revenues, rates, and
quality of service in sufficient detail to demonstrate that
all products during such year complied with all applicable
requirements of this title; and
``(2) which shall, for each market-dominant product
provided in such year, provide--
``(A) product information, including mail volumes; and
``(B) measures of the service afforded by the Postal
Service in connection with such product, including--
``(i) the level of service (described in terms of speed of
delivery and reliability) provided; and
``(ii) the degree of customer satisfaction with the service
provided.
Before submitting a report under this subsection (including
any annex to the report and the information required under
subsection (b)), the Postal Service shall have the
information contained in such report (and annex) audited by
the Inspector General. The results of any such audit shall be
submitted along with the report to which it pertains.
``(b) Information Relating to Workshare Discounts.--The
Postal Service shall include, in each report under subsection
(a), the following information with respect to each market-
dominant product for which a workshare discount was in effect
during the period covered by such report:
``(1) The per-item cost avoided by the Postal Service by
virtue of such discount.
``(2) The percentage of such per-item cost avoided that the
per-item workshare discount represents.
``(3) The per-item contribution made to institutional
costs.
``(c) Service Agreements and Market Tests.--In carrying out
subsections (a) and (b) with respect to service agreements
(including service agreements entered into under section
3623) and experimental products offered through market tests
under section 3641 in a year, the Postal Service--
``(1) may report summary data on the costs, revenues, and
quality of service by service agreement and market test; and
``(2) shall report such data as the Postal Regulatory
Commission requires.
``(d) Supporting Matter.--The Postal Regulatory Commission
shall have access, in accordance with such regulations as the
Commission shall prescribe, to the working papers and any
other supporting matter of the Postal Service and the
Inspector General in connection with any information
submitted under this section.
``(e) Content and Form of Reports.--
``(1) In general.--The Postal Regulatory Commission shall,
by regulation, prescribe the content and form of the public
reports (and any nonpublic annex and supporting matter
relating to the report) to be provided by the Postal Service
under this section. In carrying out this subsection, the
Commission shall give due consideration to--
``(A) providing the public with timely, adequate
information to assess the lawfulness of rates charged;
``(B) avoiding unnecessary or unwarranted administrative
effort and expense on the part of the Postal Service; and
``(C) protecting the confidentiality of commercially
sensitive information.
``(2) Revised requirements.--The Commission may, on its own
motion or on request of an interested party, initiate
proceedings (to be conducted in accordance with regulations
that the Commission shall prescribe) to improve the quality,
accuracy, or completeness of Postal Service data required by
the Commission under this subsection whenever it shall appear
that--
``(A) the attribution of costs or revenues to products has
become significantly inaccurate or can be significantly
improved;
``(B) the quality of service data has become significantly
inaccurate or can be significantly improved; or
``(C) such revisions are, in the judgment of the
Commission, otherwise necessitated by the public interest.
``(f) Confidential Information.--
``(1) In general.--If the Postal Service determines that
any document or portion of a document, or other matter, which
it provides to the Postal Regulatory Commission in a
nonpublic annex under this section or under subsection (d)
contains information which is described in section 410(c) of
this title, or exempt from public disclosure under section
552(b) of title 5, the Postal Service shall, at the time of
providing such matter to the Commission, notify the
Commission of its determination, in writing, and describe
with particularity the documents (or portions of documents)
or other matter for which confidentiality is sought and the
reasons therefor.
``(2) Treatment.--Any information or other matter described
in paragraph (1) to which the Commission gains access under
this section shall be subject to paragraphs (2) and (3) of
section 504(g) in the same way as if the Commission had
received notification with respect to such matter under
section 504(g)(1).
``(g) Other Reports.--The Postal Service shall submit to
the Postal Regulatory Commission, together with any other
submission that the Postal Service is required to make under
this section in a year, copies of its then most recent--
``(1) comprehensive statement under section 2401(e);
``(2) strategic plan under section 2802;
``(3) performance plan under section 2803; and
``(4) program performance reports under section 2804.
``Sec. 3653. Annual determination of compliance
``(a) Opportunity for Public Comment.--After receiving the
reports required under section 3652 for any year, the Postal
Regulatory Commission shall promptly provide an opportunity
for comment on such reports by users of the mails, affected
parties, and an officer of the Commission who shall be
required to represent the interests of the general public.
``(b) Determination of Compliance or Noncompliance.--Not
later than 90 days after receiving the submissions required
under section 3652 with respect to a year, the Postal
Regulatory Commission shall make a written determination as
to--
``(1) whether any rates or fees in effect during such year
(for products individually or collectively) were not in
compliance with applicable provisions of this chapter (or
regulations promulgated thereunder); or
``(2) whether any service standards in effect during such
year were not met.
If, with respect to a year, no instance of noncompliance is
found under this subsection to have occurred in such year,
the written determination shall be to that effect.
``(c) If Any Noncompliance Is Found.--If, for a year, a
timely written determination of noncompliance is made under
subsection (b), the Postal Regulatory Commission shall take
any appropriate remedial action authorized by section
3662(c).
``(d) Rebuttable Presumption.--A timely written
determination described in the last sentence of subsection
(b) shall, for purposes of any proceeding under section 3662,
create a rebuttable presumption of compliance by the Postal
Service (with regard to the matters described in paragraphs
(1) through (3) of subsection (b)) during the year to which
such determination relates.''.
SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.
Chapter 36 of title 39, United States Code, is amended by
striking sections 3662 and 3663 and inserting the following:
``Sec. 3662. Rate and service complaints
``(a) In General.--Interested persons (including an officer
of the Postal Regulatory Commission representing the
interests of the general public) who believe the Postal
Service is not operating in conformance with the requirements
of chapter 1, 4, or 6, or this chapter (or regulations
promulgated under any of those chapters) may lodge a
complaint with the Postal Regulatory Commission in such form
and manner as the Commission may prescribe.
``(b) Prompt Response Required.--
``(1) In general.--The Postal Regulatory Commission shall,
within 90 days after receiving a complaint under subsection
(a), either--
``(A) begin proceedings on such complaint; or
``(B) issue an order dismissing the complaint (together
with a statement of the reasons therefor).
``(2) Treatment of complaints not timely acted on.--For
purposes of section 3663, any complaint under subsection (a)
on which the Commission fails to act in the time and manner
required by paragraph (1) shall be treated in the same way as
if it had been dismissed under an order issued by the
Commission on the last day allowable for the issuance of such
order under paragraph (1).
``(c) Action Required If Complaint Found To Be Justified.--
If the Postal Regulatory Commission finds the complaint to be
justified, it shall order that the Postal Service
[[Page S5992]]
take such action as the Commission considers appropriate in
order to achieve compliance with the applicable requirements
and to remedy the effects of any noncompliance including
ordering unlawful rates to be adjusted to lawful levels,
ordering the cancellation of market tests, ordering the
Postal Service to discontinue providing loss-making products,
and requiring the Postal Service to make up for revenue
shortfalls in competitive products.
``(d) Authority To Order Fines in Cases of Deliberate
Noncompliance.--In addition, in cases of deliberate
noncompliance by the Postal Service with the requirements of
this title, the Postal Regulatory Commission may order, based
on the nature, circumstances, extent, and seriousness of the
noncompliance, a fine (in the amount specified by the
Commission in its order) for each incidence of noncompliance.
Fines resulting from the provision of competitive products
shall be paid out of the Competitive Products Fund
established in section 2011. All receipts from fines imposed
under this subsection shall be deposited in the general fund
of the Treasury of the United States.
``Sec. 3663. Appellate review
``A person, including the Postal Service, adversely
affected or aggrieved by a final order or decision of the
Postal Regulatory Commission may, within 30 days after such
order or decision becomes final, institute proceedings for
review thereof by filing a petition in the United States
Court of Appeals for the District of Columbia. The court
shall review the order or decision in accordance with
section 706 of title 5, and chapter 158 and section 2112
of title 28, on the basis of the record before the
Commission.
``Sec. 3664. Enforcement of orders
``The several district courts have jurisdiction
specifically to enforce, and to enjoin and restrain the
Postal Service from violating, any order issued by the Postal
Regulatory Commission.''.
SEC. 206. CLERICAL AMENDMENT.
Chapter 36 of title 39, United States Code, is amended by
striking the heading and analysis for such chapter and
inserting the following:
``CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES
``SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS
``Sec.
``3621. Applicability; definitions.
``3622. Modern rate regulation.
``3623. Service agreements for market-dominant products.
``[3624. Repealed.]
``[3625. Repealed.]
``3626. Reduced Rates.
``3627. Adjusting free rates.
``[3628. Repealed.]
``3629. Reduced rates for voter registration purposes.
``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS
``3631. Applicability; definitions and updates.
``3632. Action of the Governors.
``3633. Provisions applicable to rates for competitive products.
``3634. Assumed Federal income tax on competitive products.
``SUBCHAPTER III--PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS
``3641. Market tests of experimental products.
``3642. New products and transfers of products between the market-
dominant and competitive categories of mail.
``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS
``3651. Annual reports by the Commission.
``3652. Annual reports to the Commission.
``3653. Annual determination of compliance.
``SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW
``3661. Postal Services.
``3662. Rate and service complaints.
``3663. Appellate review.
``3664. Enforcement of orders.
``SUBCHAPTER VI--GENERAL
``3681. Reimbursement.
``3682. Size and weight limits.
``3683. Uniform rates for books; films, other materials.
``3684. Limitations.
``3685. Filing of information relating to periodical publications.
``3686. Bonus authority.
``SUBCHAPTER VII--MODERN SERVICE STANDARDS
``3691. Establishment of modern service standards.''.
TITLE III--MODERN SERVICE STANDARDS
SEC. 301. ESTABLISHMENT OF MODERN SERVICE STANDARDS.
Chapter 36 of title 39, United States Code, as amended by
this Act, is further amended by adding at the end the
following:
``SUBCHAPTER VII--MODERN SERVICE STANDARDS
``Sec. 3691. Establishment of modern service standards
``(a) Authority Generally.--The Postal Regulatory
Commission shall, within 12 months after the date of the
enactment of this section, by regulation establish (and may
from time to time thereafter by regulation revise) a set of
service standards for market-dominant products consistent
with sections 101 (a) and (b) and 403.
``(b) Objectives.--Such standards shall be designed to
achieve the following objectives:
``(1) To enhance and preserve the value of postal services
to both senders and recipients.
``(2) To provide a system of objective external performance
measurements for each market-dominant product as a basis for
measurement of Postal Service performance.
``(3) To guarantee Postal Service customers delivery
reliability, speed and frequency consistent with reasonable
rates and best business practices.
``(c) Factors.--In establishing or revising such standards,
the Postal Regulatory Commission shall take into account--
``(1) the actual level of service that Postal Service
customers receive under any service guidelines previously
established by the Postal Service or service standards
established under this section;
``(2) the degree of customer satisfaction with Postal
Service performance in the acceptance, processing and
delivery of mail;
``(3) mail volume and revenues projected for future years;
``(4) the projected growth in the number of addresses the
Postal Service will be required to serve in future years;
``(5) the current and projected future cost of serving
Postal Service customers;
``(6) the effect of changes in technology, demographics and
population distribution on the efficient and reliable
operation of the postal delivery system; and
``(7) the policies of this title as well as such other
factors as the Commission determines appropriate.''.
SEC. 302. POSTAL SERVICE PLAN.
(a) In General.--Within 6 months after the establishment of
the service standards under section 3691 of title 39, United
States Code, as added by this Act, the Postal Service shall,
in consultation with the Postal Regulatory Commission,
develop and submit to Congress a plan for meeting those
standards.
(b) Content.--The plan under this section shall--
(1) establish performance goals;
(2) describe any changes to the Postal Service's
processing, transportation, delivery, and retail networks
necessary to allow the Postal Service to meet the performance
goals; and
(3) describe any changes to planning and performance
management documents previously submitted to Congress to
reflect new performance goals.
(c) Postal Facilities.--The Postal Service plan shall
include a description of its long-term vision for
rationalizing its infrastructure and workforce and how it
intends to implement that vision, including--
(1) a strategy for how it intends to rationalize the postal
facilities network and remove excess processing capacity and
space from the network, including estimated timeframes,
criteria and processes to be used for making changes to the
facilities network, and the process for engaging policy
makers and the public in related decisions;
(2) an update on how postal decisions related to mail
changes, security, automation initiatives, worksharing,
information technology systems, and other areas will impact
network rationalization plans;
(3) a discussion of what impact any facility changes may
have on the postal workforce and whether the Postal Service
has sufficient flexibility to make needed workforce changes;
and
(4) an identification of anticipated costs, cost savings,
and other benefits associated with the infrastructure
rationalization alternatives discussed in the plan.
(d) Alternate Retail Options.--The Postal Service plan
shall include plans to expand and market retail access to
postal services, in addition to post offices, including--
(1) vending machines;
(2) the Internet;
(3) Postal Service employees on delivery routes; and
(4) retail facilities in which overhead costs are shared
with private businesses and other government agencies.
(e) Reemployment Assistance and Retirement Benefits.--The
Postal Service plan shall include--
(1) a plan under which reemployment assistance shall be
afforded to employees displaced as a result of the automation
or privatization of any of its functions or the closing and
consolidation of any of its facilities; and
(2) a plan, developed in consultation with the Office of
Personnel Management, to offer early retirement benefits.
(f) Inspector General Report.--
(1) In general.--Before submitting the plan under this
section to Congress, the Postal Service shall submit the plan
to the Inspector General of the United States Postal Service
in a timely manner to carry out this subsection.
(2) Report.--The Inspector General shall prepare a report
describing the extent to which the Postal Service plan--
(A) is consistent with the continuing obligations of the
Postal Service under title 39, United States Code; and
(B) provides for the Postal Service to meet the service
standards established under section 3691.
(3) Submission of report.--The Postal Service shall submit
the report of the Inspector General under this subsection
with the plan submitted to Congress under subsection (a).
[[Page S5993]]
TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION
SEC. 401. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.
(a) Provisions Relating to Postal Service Competitive
Products Fund and Related Matters.--
(1) In general.--Chapter 20 of title 39, United States
Code, is amended by adding at the end the following:
``Sec. 2011. Provisions relating to competitive products
``(a) There is established in the Treasury of the United
States a revolving fund, to be called the Postal Service
Competitive Products Fund, which shall be available to the
Postal Service without fiscal year limitation for the payment
of--
``(1) costs attributable to competitive products; and
``(2) all other costs incurred by the Postal Service, to
the extent allocable to competitive products.
For purposes of this subsection, the term `costs
attributable' has the meaning given such term by section
3631.
``(b) There shall be deposited in the Competitive Products
Fund, subject to withdrawal by the Postal Service--
``(1) revenues from competitive products;
``(2) amounts received from obligations issued by the
Postal Service under subsection (e);
``(3) interest and dividends earned on investments of the
Competitive Products Fund; and
``(4) any other receipts of the Postal Service (including
from the sale of assets), to the extent allocable to
competitive products.
``(c) If the Postal Service determines that the moneys of
the Competitive Products Fund are in excess of current needs,
it may invest such amounts as it considers appropriate in
accordance with regulations which the Secretary of the
Treasury shall prescribe within 12 months after the date of
enactment of the Postal Accountability and Enhancement Act.
``(d) The Postal Service may, in its sole discretion,
provide that moneys of the Competitive Products Fund be
deposited in a Federal Reserve bank or a depository for
public funds.
``(e)(1) Subject to the limitations specified in section
2005(a), the Postal Service is authorized to borrow money and
to issue and sell such obligations as it determines necessary
to provide for competitive products and deposit such amounts
in the Competitive Products Fund, except that the Postal
Service may pledge only assets related to the provision of
competitive products (as determined under subsection (h) or,
for purposes of any period before accounting practices and
principles under subsection (h) have been established and
applied, the best information available from the Postal
Service, including the audited statements required by section
2008(e)), and the revenues and receipts from such products,
for the payment of the principal of or interest on such
obligations, for the purchase or redemption thereof, and for
other purposes incidental thereto, including creation of
reserve, sinking, and other funds which may be similarly
pledged and used, to such extent and in such manner as the
Postal Service determines necessary or desirable.
``(2) The Postal Service may enter into binding covenants
with the holders of such obligations, and with the trustee,
if any, under any agreement entered into in connection with
the issuance thereof with respect to--
``(A) the establishment of reserve, sinking, and other
funds;
``(B) application and use of revenues and receipts of the
Competitive Products Fund;
``(C) stipulations concerning the subsequent issuance of
obligations or the execution of leases or lease purchases
relating to properties of the Postal Service; and
``(D) such other matters as the Postal Service considers
necessary or desirable to enhance the marketability of such
obligations.
``(3) Obligations issued by the Postal Service under this
subsection--
``(A) may not be purchased by the Secretary of the
Treasury;
``(B) shall not be exempt either as to principal or
interest from any taxation now or hereafter imposed by any
State or local taxing authority;
``(C) shall not be obligations of, nor shall payment of the
principal thereof or interest thereon be guaranteed by, the
Government of the United States, and the obligations shall so
plainly state; and
``(D) notwithstanding the provisions of the Federal
Financing Bank Act of 1973 or any other provision of law
(except as specifically provided by reference to this
subparagraph in a law enacted after this subparagraph takes
effect), shall not be eligible for purchase by, commitment to
purchase by, or sale or issuance to, the Federal Financing
Bank.
``(4)(A) This paragraph applies with respect to the period
beginning on the date of the enactment of this paragraph and
ending at the close of the 5-year period which begins on the
date on which the Postal Service makes its submission under
subsection (h)(1).
``(B) During the period described in subparagraph (A),
nothing in subparagraph (A) or (D) of paragraph (3) or the
last sentence of section 2006(b) shall, with respect to any
obligations sought to be issued by the Postal Service under
this subsection, be considered to affect such obligations'
eligibility for purchase by, commitment to purchase by, or
sale or issuance to, the Federal Financing Bank.
``(C) The Federal Financing Bank may elect to purchase such
obligations under such terms, including rates of interest, as
the Bank and the Postal Service may agree, but at a rate of
yield no less than the prevailing yield on outstanding
marketable securities of comparable maturity issued by
entities with the same credit rating as the rating then most
recently obtained by the Postal Service under subparagraph
(D), as determined by the Bank.
``(D) In order to be eligible to borrow under this
paragraph, the Postal Service shall first obtain a credit
rating from a nationally recognized credit rating
organization. Such rating--
``(i) shall be determined taking into account only those
assets and activities of the Postal Service which are
described in section 3634(a)(2) (relating to the Postal
Service's assumed taxable income from competitive products);
and
``(ii) may, before final rules of the Postal Regulatory
Commission under subsection (h) are issued (or deemed to have
been issued), be based on the best information available from
the Postal Service, including the audited statements required
by section 2008(e).
``(f) The receipts and disbursements of the Competitive
Products Fund shall be accorded the same budgetary treatment
as is accorded to receipts and disbursements of the Postal
Service Fund under section 2009a.
``(g) A judgment against the Postal Service or the
Government of the United States (or settlement of a claim)
shall, to the extent that it arises out of activities of the
Postal Service in the provision of competitive products, be
paid out of the Competitive Products Fund.
``(h)(1) The Postal Service, in consultation with an
independent, certified public accounting firm and such other
advisors as it considers appropriate, shall develop
recommendations regarding--
``(A) the accounting practices and principles that should
be followed by the Postal Service with the objectives of
identifying the capital and operating costs incurred by the
Postal Service in providing competitive products, and
preventing the cross-subsidization of such products by
market-dominant products; and
``(B) the substantive and procedural rules that should be
followed in determining the Postal Service's assumed Federal
income tax on competitive products income for any year
(within the meaning of section 3634).
Such recommendations shall be submitted to the Postal
Regulatory Commission no later than 12 months after the
effective date of this section.
``(2)(A) Upon receiving the recommendations of the Postal
Service under paragraph (1), the Commission shall give
interested parties, including the Postal Service, enterprises
in the private sector of the economy engaged in the delivery
of mail matter other than letters, users of the mails, and an
officer of the Commission who shall be required to represent
the interests of the general public, an opportunity to
present their views on those recommendations through
submission of written data, views, or arguments with or
without opportunity for oral presentation, or in such other
manner as the Commission considers appropriate.
``(B) After due consideration of the views and other
information received under subparagraph (A), the Commission
shall by rule--
``(i) provide for the establishment and application of the
accounting practices and principles which shall be followed
by the Postal Service;
``(ii) provide for the establishment and application of the
substantive and procedural rules described in paragraph
(1)(B); and
``(iii) provide for the submission by the Postal Service to
the Postal Regulatory Commission of annual and other periodic
reports setting forth such information as the Commission may
require.
Final rules under this subparagraph shall be issued not later
than 12 months after the date on which the Postal Service
makes its submission to the Commission under paragraph (1)
(or by such later date as the Commission and the Postal
Service may agree to). If final rules are not issued by the
Commission by the deadline under the preceding sentence, the
recommendations submitted by the Postal Service under
paragraph (1) shall be treated as the final rules. The
Commission is authorized to promulgate regulations
revising such rules.
``(C) Reports described in subparagraph (B)(iii) shall be
submitted at such time and in such form, and shall include
such information, as the Commission by rule requires. The
Commission may, on its own motion or on request of an
interested party, initiate proceedings (to be conducted in
accordance with such rules as the Commission shall prescribe)
to improve the quality, accuracy, or completeness of Postal
Service data under such subparagraph whenever it shall appear
that--
``(i) the quality of the information furnished in those
reports has become significantly inaccurate or can be
significantly improved; or
``(ii) such revisions are, in the judgment of the
Commission, otherwise necessitated by the public interest.
``(D) A copy of each report described in subparagraph
(B)(iii) shall also be transmitted by the Postal Service to
the Secretary of the Treasury and the Inspector General of
the United States Postal Service.
[[Page S5994]]
``(i) The Postal Service shall render an annual report to
the Secretary of the Treasury concerning the operation of the
Competitive Products Fund, in which it shall address such
matters as risk limitations, reserve balances, allocation or
distribution of moneys, liquidity requirements, and measures
to safeguard against losses. A copy of its then most recent
report under this subsection shall be included with any other
submission that it is required to make to the Postal
Regulatory Commission under section 3652(g).''.
(2) Clerical amendment.--The analysis for chapter 20 of
title 39, United States Code, is amended by adding after the
item relating to section 2010 the following:
``2011. Provisions relating to competitive products.''.
(b) Technical and Conforming Amendments.--
(1) Definition.--Section 2001 of title 39, United States
Code, is amended by striking ``and'' at the end of paragraph
(1), by redesignating paragraph (2) as paragraph (3), and by
inserting after paragraph (1) the following:
``(2) `Competitive Products Fund' means the Postal Service
Competitive Products Fund established by section 2011; and''.
(2) Capital of the postal service.--Section 2002(b) of
title 39, United States Code, is amended by striking
``Fund,'' and inserting ``Fund and the balance in the
Competitive Products Fund,''.
(3) Postal service fund.--
(A) Purposes for which available.--Section 2003(a) of title
39, United States Code, is amended by striking ``title.'' and
inserting ``title (other than any of the purposes, functions,
or powers for which the Competitive Products Fund is
available).''.
(B) Deposits.--Section 2003(b) of title 39, United States
Code, is amended by striking ``There'' and inserting ``Except
as otherwise provided in section 2011, there''.
(4) Relationship between the treasury and the postal
service.--Section 2006 of title 39, United States Code, is
amended--
(A) in subsection (b), by adding at the end the following:
``Nothing in this chapter shall be considered to permit or
require the Secretary of the Treasury to purchase any
obligations of the Postal Service other than those issued
under section 2005.''; and
(B) in subsection (c), by inserting ``under section 2005''
before ``shall be obligations''.
SEC. 402. ASSUMED FEDERAL INCOME TAX ON COMPETITIVE PRODUCTS
INCOME.
Subchapter II of chapter 36 of title 39, United States
Code, as amended by section 202, is amended by adding at the
end the following:
``Sec. 3634. Assumed Federal income tax on competitive
products income
``(a) Definitions.--For purposes of this section--
``(1) the term `assumed Federal income tax on competitive
products income' means the net income tax that would be
imposed by chapter 1 of the Internal Revenue Code of 1986 on
the Postal Service's assumed taxable income from competitive
products for the year; and
``(2) the term `assumed taxable income from competitive
products', with respect to a year, refers to the amount
representing what would be the taxable income of a
corporation under the Internal Revenue Code of 1986 for the
year, if--
``(A) the only activities of such corporation were the
activities of the Postal Service allocable under section
2011(h) to competitive products; and
``(B) the only assets held by such corporation were the
assets of the Postal Service allocable under section 2011(h)
to such activities.
``(b) Computation and Transfer Requirements.--The Postal
Service shall, for each year beginning with the year in which
occurs the deadline for the Postal Service's first report to
the Postal Regulatory Commission under section 3652(a)--
``(1) compute its assumed Federal income tax on competitive
products income for such year; and
``(2) transfer from the Competitive Products Fund to the
Postal Service Fund the amount of that assumed tax.
``(c) Deadline for Transfers.--Any transfer required to be
made under this section for a year shall be due on or before
the January 15th next occurring after the close of such
year.''.
SEC. 403. UNFAIR COMPETITION PROHIBITED.
(a) Specific Limitations.--Chapter 4 of title 39, United
States Code, is amended by adding after section 404 the
following:
``Sec. 404a. Specific limitations
``(a) Except as specifically authorized by law, the Postal
Service may not:
``(1) establish any rule or regulation (including any
standard) the effect of which is to preclude competition or
establish the terms of competition unless the Postal Service
demonstrates that the regulation does not create an unfair
competitive advantage for itself or any entity funded (in
whole or in part) by the Postal Service;
``(2) compel the disclosure, transfer, or licensing of
intellectual property to any third party (such as patents,
copyrights, trademarks, trade secrets, and proprietary
information); or
``(3) obtain information from a person that provides (or
seeks to provide) any product, and then offer any postal
service that uses or is based in whole or in part on such
information, without the consent of the person providing that
information, unless substantially the same information is
obtained (or obtainable) from an independent source or is
otherwise obtained (or obtainable).
``(b) The Postal Regulatory Commission shall prescribe
regulations to carry out this section.
``(c) Any party (including an officer of the Commission
representing the interests of the general public) who
believes that the Postal Service has violated this section
may bring a complaint in accordance with section 3662.''.
(b) Conforming Amendments.--
(1) General powers.--Section 401 of title 39, United States
Code, is amended by striking ``The'' and inserting ``Subject
to the provisions of section 404a, the''.
(2) Specific powers.--Section 404(a) of title 39, United
States Code, is amended by striking ``Without'' and inserting
``Subject to the provisions of section 404a, but otherwise
without''.
(c) Clerical Amendment.--The analysis for chapter 4 of
title 39, United States Code, is amended by inserting after
the item relating to section 404 the following:
``404a. Specific limitations.''.
SEC. 404. SUITS BY AND AGAINST THE POSTAL SERVICE.
(a) In General.--Section 409 of title 39, United States
Code, is amended by striking subsections (d) and (e) and
inserting the following:
``(d)(1) For purposes of the provisions of law cited in
paragraphs (2)(A) and (2)(B), respectively, the Postal
Service--
``(A) shall be considered to be a `person', as used in the
provisions of law involved; and
``(B) shall not be immune under any other doctrine of
sovereign immunity from suit in Federal court by any person
for any violation of any of those provisions of law by any
officer or employee of the Postal Service.
``(2) This subsection applies with respect to--
``(A) the Act of July 5, 1946 (commonly referred to as the
`Trademark Act of 1946' (15 U.S.C. 1051 and following)); and
``(B) the provisions of section 5 of the Federal Trade
Commission Act to the extent that such section 5 applies to
unfair or deceptive acts or practices.
``(e)(1) To the extent that the Postal Service, or other
Federal agency acting on behalf of or in concert with the
Postal Service, engages in conduct with respect to any
product which is not reserved to the United States under
section 1696 of title 18, the Postal Service or other Federal
agency (as the case may be)--
``(A) shall not be immune under any doctrine of sovereign
immunity from suit in Federal court by any person for any
violation of Federal law by such agency or any officer or
employee thereof; and
``(B) shall be considered to be a person (as defined in
subsection (a) of the first section of the Clayton Act) for
purposes of--
``(i) the antitrust laws (as defined in such subsection);
and
``(ii) section 5 of the Federal Trade Commission Act to the
extent that such section 5 applies to unfair methods of
competition.
For purposes of the preceding sentence, any private carriage
of mail allowable by virtue of section 601 shall not be
considered a service reserved to the United States under
section 1696 of title 18.
``(2) No damages, interest on damages, costs or attorney's
fees may be recovered under the antitrust laws (as so
defined) from the Postal Service or any officer or employee
thereof acting in an official capacity for any conduct with
respect to a product in the market-dominant category of mail.
``(3) This subsection shall not apply with respect to
conduct occurring before the date of the enactment of this
subsection.
``(f) To the extent that the Postal Service engages in
conduct with respect to the provision of competitive
products, it shall be considered a person for the purposes of
the Federal bankruptcy laws.
``(g)(1) Each building constructed or altered by the Postal
Service shall be constructed or altered, to the maximum
extent feasible as determined by the Postal Service, in
compliance with 1 of the nationally recognized model building
codes and with other applicable nationally recognized codes.
``(2) Each building constructed or altered by the Postal
Service shall be constructed or altered only after
consideration of all requirements (other than procedural
requirements) of zoning laws, land use laws, and applicable
environmental laws of a State or subdivision of a State which
would apply to the building if it were not a building
constructed or altered by an establishment of the Government
of the United States.
``(3) For purposes of meeting the requirements of
paragraphs (1) and (2) with respect to a building, the Postal
Service shall--
``(A) in preparing plans for the building, consult with
appropriate officials of the State or political subdivision,
or both, in which the building will be located;
``(B) upon request, submit such plans in a timely manner to
such officials for review by such officials for a reasonable
period of time not exceeding 30 days; and
``(C) permit inspection by such officials during
construction or alteration of the building, in accordance
with the customary schedule of inspections for construction
or alteration of buildings in the locality, if such officials
provide to the Postal Service--
``(i) a copy of such schedule before construction of the
building is begun; and
``(ii) reasonable notice of their intention to conduct any
inspection before conducting such inspection.
[[Page S5995]]
Nothing in this subsection shall impose an obligation on any
State or political subdivision to take any action under the
preceding sentence, nor shall anything in this subsection
require the Postal Service or any of its contractors to pay
for any action taken by a State or political subdivision to
carry out this subsection (including reviewing plans,
carrying out on-site inspections, issuing building permits,
and making recommendations).
``(4) Appropriate officials of a State or a political
subdivision of a State may make recommendations to the Postal
Service concerning measures necessary to meet the
requirements of paragraphs (1) and (2). Such officials may
also make recommendations to the Postal Service concerning
measures which should be taken in the construction or
alteration of the building to take into account local
conditions. The Postal Service shall give due consideration
to any such recommendations.
``(5) In addition to consulting with local and State
officials under paragraph (3), the Postal Service shall
establish procedures for soliciting, assessing, and
incorporating local community input on real property and land
use decisions.
``(6) For purposes of this subsection, the term `State'
includes the District of Columbia, the Commonwealth of Puerto
Rico, and a territory or possession of the United States.
``(h)(1) Notwithstanding any other provision of law, legal
representation may not be furnished by the Department of
Justice to the Postal Service in any action, suit, or
proceeding arising, in whole or in part, under any of the
following:
``(A) Subsection (d) or (e) of this section.
``(B) Subsection (f) or (g) of section 504 (relating to
administrative subpoenas by the Postal Regulatory
Commission).
``(C) Section 3663 (relating to appellate review).
The Postal Service may, by contract or otherwise, employ
attorneys to obtain any legal representation that it is
precluded from obtaining from the Department of Justice under
this paragraph.
``(2) In any circumstance not covered by paragraph (1), the
Department of Justice shall, under section 411, furnish the
Postal Service such legal representation as it may require,
except that, with the prior consent of the Attorney General,
the Postal Service may, in any such circumstance, employ
attorneys by contract or otherwise to conduct litigation
brought by or against the Postal Service or its officers or
employees in matters affecting the Postal Service.
``(3)(A) In any action, suit, or proceeding in a court of
the United States arising in whole or in part under any of
the provisions of law referred to in subparagraph (B) or (C)
of paragraph (1), and to which the Commission is not
otherwise a party, the Commission shall be permitted to
appear as a party on its own motion and as of right.
``(B) The Department of Justice shall, under such terms and
conditions as the Commission and the Attorney General shall
consider appropriate, furnish the Commission such legal
representation as it may require in connection with any such
action, suit, or proceeding, except that, with the prior
consent of the Attorney General, the Commission may employ
attorneys by contract or otherwise for that purpose.
``(i) A judgment against the Government of the United
States arising out of activities of the Postal Service shall
be paid by the Postal Service out of any funds available to
the Postal Service, subject to the restriction specified in
section 2011(g).''.
(b) Technical Amendment.--Section 409(a) of title 39,
United States Code, is amended by striking ``Except as
provided in section 3628 of this title,'' and inserting
``Except as otherwise provided in this title,''.
TITLE V--GENERAL PROVISIONS
SEC. 501. QUALIFICATION AND TERM REQUIREMENTS FOR GOVERNORS.
(a) Qualifications.--
(1) In general.--Section 202(a) of title 39, United States
Code, is amended by striking ``(a)'' and inserting ``(a)(1)''
and by striking the fourth sentence and inserting the
following: ``The Governors shall represent the public
interest generally, and shall be chosen solely on the basis
of their demonstrated ability in managing organizations or
corporations (in either the public or private sector) of
substantial size. The Governors shall not be representatives
of specific interests using the Postal Service, and may be
removed only for cause.''.
(2) Applicability.--The amendment made by paragraph (1)
shall not affect the appointment or tenure of any person
serving as a Governor of the United States Postal Service
under an appointment made before the date of the enactment of
this Act however, when any such office becomes vacant, the
appointment of any person to fill that office shall be made
in accordance with such amendment. The requirement set forth
in the fourth sentence of section 202(a)(1) of title 39,
United States Code (as amended by subsection (a)) shall be
met beginning not later than 9 years after the date of the
enactment of this Act.
(b) Consultation Requirement.--Section 202(a) of title 39,
United States Code, is amended by adding at the end the
following:
``(2) In selecting the individuals described in paragraph
(1) for nomination for appointment to the position of
Governor, the President should consult with the Speaker of
the House of Representatives, the minority leader of the
House of Representatives, the majority leader of the Senate,
and the minority leader of the Senate.''.
(c) 5-Year Terms.--
(1) In general.--Section 202(b) of title 39, United States
code, is amended in the first sentence by striking ``9
years'' and inserting ``5 years''.
(2) Applicability.--
(A) Continuation by incumbents.--The amendment made by
paragraph (1) shall not affect the tenure of any person
serving as a Governor of the United States Postal Service on
the date of enactment of this Act and such person may
continue to serve the remainder of the applicable term.
(B) Vacancy by incumbent before 5 years of service.--If a
person who is serving as a Governor of the United States
Postal Service on the date of enactment of this Act resigns,
is removed, or dies before the expiration of the 9-year term
of that Governor, and that Governor has served less than 5
years of that term, the resulting vacancy in office shall be
treated as a vacancy in a 5-year term.
(C) Vacancy by incumbent after 5 years of service.--If a
person who is serving as a Governor of the United States
Postal Service on the date of enactment of this Act resigns,
is removed, or dies before the expiration of the 9-year term
of that Governor, and that Governor has served 5 years or
more of that term, that term shall be deemed to have been a
5-year term beginning on its commencement date for purposes
of determining vacancies in office. Any appointment to the
vacant office shall be for a 5-year term beginning at the end
of the original 9-year term determined without regard to the
deeming under the preceding sentence. Nothing in this
subparagraph shall be construed to affect any action or
authority of any Governor or the Board of Governors during
any portion of a 9-year term deemed to be 5-year term under
this subparagraph.
(d) Term Limitation.--
(1) In general.--Section 202(b) of title 39, United States
Code, is amended--
(A) by inserting ``(1)'' after ``(b)''; and
(B) by adding at the end the following:
``(2) No person may serve more than 3 terms as a
Governor.''.
(2) Applicability.--The amendments made by paragraph (1)
shall not affect the tenure of any person serving as a
Governor of the United States Postal Service on the date of
enactment of this Act with respect to the term which that
person is serving on that date. Such person may continue to
serve the remainder of the applicable term, after which the
amendments made by paragraph (1) shall apply.
SEC. 502. OBLIGATIONS.
(a) Purposes for Which Obligations May Be Issued.--The
first sentence of section 2005(a)(1) of title 39, United
States Code, is amended by striking ``title.'' and inserting
``title, other than any of the purposes for which the
corresponding authority is available to the Postal Service
under section 2011.''.
(b) Increase Relating to Obligations Issued for Capital
Improvements.--Section 2005(a)(1) of title 39, United States
Code, is amended by striking the third sentence.
(c) Amounts Which May Be Pledged.--
(1) Obligations to which provisions apply.--The first
sentence of section 2005(b) of title 39, United States Code,
is amended by striking ``such obligations,'' and inserting
``obligations issued by the Postal Service under this
section,''.
(2) Assets, revenues, and receipts to which provisions
apply.--Subsection (b) of section 2005 of title 39, United
States Code, is amended by striking ``(b)'' and inserting
``(b)(1)'', and by adding at the end the following:
``(2) Notwithstanding any other provision of this section--
``(A) the authority to pledge assets of the Postal Service
under this subsection shall be available only to the extent
that such assets are not related to the provision of
competitive products (as determined under section 2011(h) or,
for purposes of any period before accounting practices and
principles under section 2011(h) have been established and
applied, the best information available from the Postal
Service, including the audited statements required by section
2008(e)); and
``(B) any authority under this subsection relating to the
pledging or other use of revenues or receipts of the Postal
Service shall be available only to the extent that they are
not revenues or receipts of the Competitive Products Fund.''.
SEC. 503. PRIVATE CARRIAGE OF LETTERS.
(a) In General.--Section 601 of title 39, United States
Code, is amended by striking subsection (b) and inserting the
following:
``(b) A letter may also be carried out of the mails when--
``(1) the amount paid for the private carriage of the
letter is at least the amount equal to 6 times the rate then
currently charged for the 1st ounce of a single-piece first
class letter;
``(2) the letter weighs at least 12\1/2\ ounces; or
``(3) such carriage is within the scope of services
described by regulations of the United States Postal Service
(as in effect on July 1, 2001) that purport to permit private
carriage by suspension of the operation of this section (as
then in effect).
``(c) Any regulations necessary to carry out this section
shall be promulgated by the Postal Regulatory Commission.''.
(b) Effective Date.--This section shall take effect on the
date as of which the regulations promulgated under section
3633 of
[[Page S5996]]
title 39, United States Code (as amended by section 202) take
effect.
SEC. 504. RULEMAKING AUTHORITY.
Paragraph (2) of section 401 of title 39, United States
Code, is amended to read as follows:
``(2) to adopt, amend, and repeal such rules and
regulations, not inconsistent with this title, as may be
necessary in the execution of its functions under this title
and such other functions as may be assigned to the Postal
Service under any provisions of law outside of this title;''.
SEC. 505. NONINTERFERENCE WITH COLLECTIVE BARGAINING
AGREEMENTS.
(a) Labor Disputes.--Section 1207 of title 39, United
States Code, is amended to read as follows:
``Sec. 1207. Labor disputes
``(a) If there is a collective-bargaining agreement in
effect, no party to such agreement shall terminate or modify
such agreement unless the party desiring such termination or
modification serves written notice upon the other party to
the agreement of the proposed termination or modification not
less than 90 days prior to the expiration date thereof, or
not less than 90 days prior to the time it is proposed to
make such termination or modification. The party serving such
notice shall notify the Federal Mediation and Conciliation
Service of the existence of a dispute within 45 days of such
notice, if no agreement has been reached by that time.
``(b) If the parties fail to reach agreement or to adopt a
procedure providing for a binding resolution of a dispute by
the expiration date of the agreement in effect, or the date
of the proposed termination or modification, the Director of
the Federal Mediation and Conciliation Service shall within
10 days appoint a mediator of nationwide reputation and
professional stature, and who is also a member of the
National Academy of Arbitrators. The parties shall cooperate
with the mediator in an effort to reach an agreement and
shall meet and negotiate in good faith at such times and
places that the mediator, in consultation with the parties,
shall direct.
``(c)(1) If no agreement is reached within 60 days after
the expiration or termination of the agreement or the date on
which the agreement became subject to modification under
subsection (a) of this section, or if the parties decide upon
arbitration but do not agree upon the procedures therefore,
an arbitration board shall be established consisting of 3
members, 1 of whom shall be selected by the Postal Service, 1
by the bargaining representative of the employees, and the
third by the 2 thus selected. If either of the parties fails
to select a member, or if the members chosen by the parties
fail to agree on the third person within 5 days after their
first meeting, the selection shall be made from a list of
names provided by the Director. This list shall consist of
not less then 9 names of arbitrators of nationwide reputation
and professional nature, who are also members of the National
Academy of Arbitrators, and whom the Director has determined
are available and willing to serve.
``(2) The arbitration board shall give the parties a full
and fair hearing, including an opportunity to present
evidence in support of their claims, and an opportunity to
present their case in person, by counsel or by other
representative as they may elect. Decisions of the
arbitration board shall be conclusive and binding upon the
parties. The arbitration board shall render its decision
within 45 days after its appointment.
``(3) Costs of the arbitration board and mediation shall be
shared equally by the Postal Service and the bargaining
representative.
``(d) In the case of a bargaining unit whose recognized
collective-bargaining representative does not have an
agreement with the Postal Service, if the parties fail to
reach the agreement within 90 days of the commencement of
collective bargaining, a mediator shall be appointed in
accordance with the terms in subsection (b) of this section,
unless the parties have previously agreed to another
procedure for a binding resolution of their differences. If
the parties fail to reach agreement within 180 days of the
commencement of collective bargaining, and if they have not
agreed to another procedure for binding resolution, an
arbitration board shall be established to provide conclusive
and binding arbitration in accordance with the terms of
subsection (c) of this section.''.
(b) Noninterference With Collective Bargaining
Agreements.--Except as otherwise provided by the amendment
made by subsection (a), nothing in this Act shall restrict,
expand, or otherwise affect any of the rights, privileges, or
benefits of either employees of or labor organizations
representing employees of the United States Postal Service
under chapter 12 of title 39, United States Code, the
National Labor Relations Act, any handbook or manual
affecting employee labor relations within the United States
Postal Service, or any collective bargaining agreement.
(c) Free Mailing Privileges Continue Unchanged.--Nothing in
this Act or any amendment made by this Act shall affect any
free mailing privileges accorded under section 3217 or
sections 3403 through 3406 of title 39, United States Code.
TITLE VI--ENHANCED REGULATORY COMMISSION
SEC. 601. REORGANIZATION AND MODIFICATION OF CERTAIN
PROVISIONS RELATING TO THE POSTAL REGULATORY
COMMISSION.
(a) Transfer and Redesignation.--Title 39, United States
Code, is amended--
(1) by inserting after chapter 4 the following:
``CHAPTER 5--POSTAL REGULATORY COMMISSION
``Sec.
``501. Establishment.
``502. Commissioners.
``503. Rules; regulations; procedures.
``504. Administration.
``Sec. 501. Establishment
``The Postal Regulatory Commission is an independent
establishment of the executive branch of the Government of
the United States.
``Sec. 502. Commissioners
``(a) The Postal Regulatory Commission is composed of 5
Commissioners, appointed by the President, by and with the
advice and consent of the Senate. The Commissioners shall be
chosen solely on the basis of their technical qualifications,
professional standing, and demonstrated expertise in
economics, accounting, law, or public administration, and may
be removed by the President only for cause. Each individual
appointed to the Commission shall have the qualifications
and expertise necessary to carry out the enhanced
responsibilities accorded Commissioners under the Postal
Accountability and Enhancement Act. Not more than 3 of the
Commissioners may be adherents of the same political
party.
``(b) No Commissioner shall be financially interested in
any enterprise in the private sector of the economy engaged
in the delivery of mail matter.
``(c) A Commissioner may continue to serve after the
expiration of his term until his successor has qualified,
except that a Commissioner may not so continue to serve for
more than 1 year after the date upon which his term otherwise
would expire under subsection (f).
``(d) One of the Commissioners shall be designated as
Chairman by, and shall serve in the position of Chairman at
the pleasure of, the President.
``(e) The Commissioners shall by majority vote designate a
Vice Chairman of the Commission. The Vice Chairman shall act
as Chairman of the Commission in the absence of the Chairman.
``(f) The Commissioners shall serve for terms of 6
years.'';
(2) by striking, in subchapter I of chapter 36 (as in
effect before the amendment made by section 201(c)), the
heading for such subchapter I and all that follows through
section 3602; and
(3) by redesignating sections 3603 and 3604 as sections 503
and 504, respectively, and transferring such sections to the
end of chapter 5 (as inserted by paragraph (1)).
(b) Applicability.--The amendment made by subsection (a)(1)
shall not affect the appointment or tenure of any person
serving as a Commissioner on the Postal Regulatory Commission
(as so redesignated by section 604) under an appointment made
before the date of the enactment of this Act or any
nomination made before that date, but, when any such office
becomes vacant, the appointment of any person to fill that
office shall be made in accordance with such amendment.
(c) Clerical Amendment.--The analysis for part I of title
39, United States Code, is amended by inserting after the
item relating to chapter 4 the following:
``5. Postal Regulatory Commission...........................501''....
SEC. 602. AUTHORITY FOR POSTAL REGULATORY COMMISSION TO ISSUE
SUBPOENAS.
Section 504 of title 39, United States Code (as so
redesignated by section 601) is amended by adding at the end
the following:
``(f)(1) Any Commissioner of the Postal Regulatory
Commission, any administrative law judge appointed by the
Commission under section 3105 of title 5, and any employee of
the Commission designated by the Commission may administer
oaths, examine witnesses, take depositions, and receive
evidence.
``(2) The Chairman of the Commission, any Commissioner
designated by the Chairman, and any administrative law judge
appointed by the Commission under section 3105 of title 5
may, with respect to any proceeding conducted by the
Commission under this title--
``(A) issue subpoenas requiring the attendance and
presentation of testimony by, or the production of
documentary or other evidence in the possession of, any
covered person; and
``(B) order the taking of depositions and responses to
written interrogatories by a covered person.
The written concurrence of a majority of the Commissioners
then holding office shall, with respect to each subpoena
under subparagraph (A), be required in advance of its
issuance.
``(3) In the case of contumacy or failure to obey a
subpoena issued under this subsection, upon application by
the Commission, the district court of the United States for
the district in which the person to whom the subpoena is
addressed resides or is served may issue an order requiring
such person to appear at any designated place to testify or
produce documentary or other evidence. Any failure to obey
the order of the court may be punished by the court as a
contempt thereof.
``(4) For purposes of this subsection, the term `covered
person' means an officer, employee, agent, or contractor of
the Postal Service.
``(g)(1) If the Postal Service determines that any document
or other matter it provides to the Postal Regulatory
Commission under a subpoena issued under subsection (f),
[[Page S5997]]
or otherwise at the request of the Commission in connection
with any proceeding or other purpose under this title,
contains information which is described in section 410(c) of
this title, or exempt from public disclosure under section
552(b) of title 5, the Postal Service shall, at the time of
providing such matter to the Commission, notify the
Commission, in writing, of its determination (and the reasons
therefor).
``(2) Except as provided in paragraph (3), no officer or
employee of the Commission may, with respect to any
information as to which the Commission has been notified
under paragraph (1)--
``(A) use such information for purposes other than the
purposes for which it is supplied; or
``(B) permit anyone who is not an officer or employee of
the Commission to have access to any such information.
``(3)(A) Paragraph (2) shall not prohibit the Commission
from publicly disclosing relevant information in furtherance
of its duties under this title, provided that the Commission
has adopted regulations under section 553 of title 5, that
establish a procedure for according appropriate
confidentiality to information identified by the Postal
Service under paragraph (1). In determining the appropriate
degree of confidentiality to be accorded information
identified by the Postal Service under paragraph (1), the
Commission shall balance the nature and extent of the likely
commercial injury to the Postal Service against the public
interest in maintaining the financial transparency of a
government establishment competing in commercial markets.
``(B) Paragraph (2) shall not prevent the Commission from
requiring production of information in the course of any
discovery procedure established in connection with a
proceeding under this title. The Commission shall, by
regulations based on rule 26(c) of the Federal Rules of Civil
Procedure, establish procedures for ensuring appropriate
confidentiality for information furnished to any party.''.
SEC. 603. APPROPRIATIONS FOR THE POSTAL REGULATORY
COMMISSION.
(a) Authorization of Appropriations.--Subsection (d) of
section 504 of title 39, United States Code (as so
redesignated by section 601) is amended to read as follows:
``(d) There are authorized to be appropriated, out of the
Postal Service Fund, such sums as may be necessary for the
Postal Regulatory Commission. In requesting an appropriation
under this subsection for a fiscal year, the Commission shall
prepare and submit to the Congress under section 2009 a
budget of the Commission's expenses, including expenses for
facilities, supplies, compensation, and employee benefits.''.
(b) Budget Program.--
(1) In general.--The next to last sentence of section 2009
of title 39, United States Code, is amended to read as
follows: ``The budget program shall also include separate
statements of the amounts which (1) the Postal Service
requests to be appropriated under subsections (b) and (c) of
section 2401, (2) the Office of Inspector General of the
United States Postal Service requests to be appropriated, out
of the Postal Service Fund, under section 8G(f) of the
Inspector General Act of 1978, and (3) the Postal Regulatory
Commission requests to be appropriated, out of the Postal
Service Fund, under section 504(d) of this title.''.
(2) Conforming amendment.--Section 2003(e)(1) of title 39,
United States Code, is amended by striking the first sentence
and inserting the following: ``The Fund shall be available
for the payment of (A) all expenses incurred by the Postal
Service in carrying out its functions as provided by law,
subject to the same limitation as set forth in the
parenthetical matter under subsection (a); (B) all expenses
of the Postal Regulatory Commission, subject to the
availability of amounts appropriated under section 504(d);
and (C) all expenses of the Office of Inspector General,
subject to the availability of amounts appropriated under
section 8G(f) of the Inspector General Act of 1978.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply with respect to fiscal years beginning on or after
October 1, 2002.
(2) Savings provision.--The provisions of title 39, United
States Code, that are amended by this section shall, for
purposes of any fiscal year before the first fiscal year to
which the amendments made by this section apply, continue to
apply in the same way as if this section had never been
enacted.
SEC. 604. REDESIGNATION OF THE POSTAL RATE COMMISSION.
(a) Amendments to Title 39, United States Code.--Title 39,
United States Code, is amended in sections 404, 503 and 504
(as so redesignated by section 601), 1001 and 1002, by
striking ``Postal Rate Commission'' each place it appears and
inserting ``Postal Regulatory Commission'';
(b) Amendments to Title 5, United States Code.--Title 5,
United States Code, is amended in sections 104(1), 306(f),
2104(b), 3371(3), 5314 (in the item relating to Chairman,
Postal Rate Commission), 5315 (in the item relating to
Members, Postal Rate Commission), 5514(a)(5)(B),
7342(a)(1)(A), 7511(a)(1)(B)(ii), 8402(c)(1), 8423(b)(1)(B),
and 8474(c)(4) by striking ``Postal Rate Commission'' and
inserting ``Postal Regulatory Commission''.
(c) Amendment to the Ethics in Government Act of 1978.--
Section 101(f)(6) of the Ethics in Government Act of 1978 (5
U.S.C. App.) is amended by striking ``Postal Rate
Commission'' and inserting ``Postal Regulatory Commission''.
(d) Amendment to the Rehabilitation Act of 1973.--Section
501(b) of the Rehabilitation Act of 1973 (29 U.S.C. 791(b))
is amended by striking ``Postal Rate Office'' and inserting
``Postal Regulatory Commission''.
(e) Amendment to Title 44, United States Code.--Section
3502(5) of title 44, United States Code, is amended by
striking ``Postal Rate Commission'' and inserting ``Postal
Regulatory Commission''.
(f) Other References.--Whenever a reference is made in any
provision of law (other than this Act or a provision of law
amended by this Act), regulation, rule, document, or other
record of the United States to the Postal Rate Commission,
such reference shall be considered a reference to the Postal
Regulatory Commission.
SEC. 605. FINANCIAL TRANSPARENCY.
Section 101 of title 39, United States Code, is amended--
(1) by redesignating subsections (d) through (g) as
subsections (e) through (h), respectively; and
(2) by inserting after subsection (c) the following:
``(d) As an independent establishment of the executive
branch of the Government of the United States, the Postal
Service shall be subject to a high degree of transparency to
ensure fair treatment of customers of the Postal Service's
market-dominant products and companies competing with the
Postal Service's competitive products.''.
TITLE VII--EVALUATIONS
SEC. 701. ASSESSMENTS OF RATEMAKING, CLASSIFICATION, AND
OTHER PROVISIONS.
(a) In General.--The Postal Regulatory Commission shall, at
least every 3 years, submit a report to the President and
Congress concerning--
(1) the operation of the amendments made by this Act; and
(2) recommendations for any legislation or other measures
necessary to improve the effectiveness or efficiency of the
postal laws of the United States.
(b) Postal Service Views.--A report under this section
shall be submitted only after reasonable opportunity has been
afforded to the Postal Service to review the report and to
submit written comments on the report. Any comments timely
received from the Postal Service under the preceding sentence
shall be attached to the report submitted under subsection
(a).
SEC. 702. REPORT ON UNIVERSAL POSTAL SERVICE AND THE POSTAL
MONOPOLY.
(a) Report by the Postal Service.--
(1) In general.--Not later than 12 months after the date of
enactment of this Act, the Postal Regulatory Commission shall
submit a report to the President and Congress on universal
postal service and the postal monopoly in the United States
(in this section referred to as ``universal service and the
postal monopoly''), including the monopoly on the delivery of
mail and on access to mailboxes.
(2) Contents.--The report under this subsection shall
include--
(A) a comprehensive review of the history and development
of universal service and the postal monopoly, including how
the scope and standards of universal service and the postal
monopoly have evolved over time for the Nation and its urban
and rural areas;
(B) the scope and standards of universal service and the
postal monopoly provided under current law (including
sections 101 and 403 of title 39, United States Code), and
current rules, regulations, policy statements, and practices
of the Postal Service;
(C) a description of any geographic areas, populations,
communities (including both urban and rural communities),
organizations, or other groups or entities not currently
covered by universal service or that are covered but that are
receiving services deficient in scope or quality or both; and
(D) the scope and standards of universal service and the
postal monopoly likely to be required in the future in order
to meet the needs and expectations of the United States
public, including all types of mail users, based on
discussion of such assumptions, alternative sets of
assumptions, and analyses as the Postal Service considers
plausible.
(b) Recommended Changes to Universal Service and the
Monopoly.--The Postal Regulatory Commission shall include in
the report under subsection (a), and in all reports submitted
under section 701 of this Act--
(1) any recommended changes to universal service and the
postal monopoly as the Commission considers appropriate,
including changes that the Commission may implement under
current law and changes that would require changes to current
law, with estimated effects of the recommendations on the
service, financial condition, rates, and security of mail
provided by the Postal Service;
(2) with respect to each recommended change described under
paragraph (1)--
(A) an estimate of the costs of the Postal Service
attributable to the obligation to provide universal service
under current law; and
(B) an analysis of the likely benefit of the current postal
monopoly to the ability of the Postal Service to sustain the
current scope and standards of universal service, including
estimates of the financial benefit of the postal monopoly to
the extent practicable, under current law; and
[[Page S5998]]
(3) such additional topics and recommendations as the
Commission considers appropriate, with estimated effects of
the recommendations on the service, financial condition,
rates, and the security of mail provided by the Postal
Service.
SEC. 703. STUDY ON EQUAL APPLICATION OF LAWS TO COMPETITIVE
PRODUCTS.
(a) In General.--The Federal Trade Commission shall prepare
and submit to the President and Congress, and to the Postal
Regulatory Commission, within 1 year after the date of the
enactment of this Act, a comprehensive report identifying
Federal and State laws that apply differently to the United
States Postal Service with respect to the competitive
category of mail (within the meaning of section 102 of title
39, United States Code, as amended by section 101) and
similar products provided by private companies.
(b) Recommendations.--The Federal Trade Commission shall
include such recommendations as it considers appropriate for
bringing such legal discrimination to an end, and in the
interim, to account under section 3633 of title 39, United
States Code (as added by this Act), for the net economic
advantages provided by those laws.
(c) Consultation.--In preparing its report, the Federal
Trade Commission shall consult with the United States Postal
Service, the Postal Regulatory Commission, other Federal
agencies, mailers, private companies that provide delivery
services, and the general public, and shall append to such
report any written comments received under this subsection.
(d) Competitive Product Regulation.--The Postal Regulatory
Commission shall take into account the recommendations of the
Federal Trade Commission in promulgating or revising the
regulations required under section 3633 of title 39, United
States Code.
TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING
SEC. 801. SHORT TITLE.
This title may be cited as the ``Postal Civil Service
Retirement and Health Benefits Funding Amendments of 2004''.
SEC. 802. CIVIL SERVICE RETIREMENT SYSTEM.
(a) In General.--Chapter 83 of title 5, United States Code,
is amended--
(1) in section 8334(a)(1)(B), by striking clause (ii) and
inserting the following:
``(ii) In the case of an employee of the United States
Postal Service, no amount shall be contributed under this
subparagraph.''; and
(2) by amending section 8348(h) to read as follows:
``(h)(1) In this subsection, the term `Postal surplus or
supplemental liability' means the estimated difference, as
determined by the Office, between--
``(A) the actuarial present value of all future benefits
payable from the Fund under this subchapter to current or
former employees of the United States Postal Service and
attributable to civilian employment with the United States
Postal Service; and
``(B) the sum of--
``(i) the actuarial present value of deductions to be
withheld from the future basic pay of employees of the United
States Postal Service currently subject to this subchapter
under section 8334;
``(ii) that portion of the Fund balance, as of the date the
Postal surplus or supplemental liability is determined,
attributable to payments to the Fund by the United States
Postal Service and its employees, minus benefit payments
attributable to civilian employment with the United States
Postal Service, plus the earnings on such amounts while in
the Fund; and
``(iii) any other appropriate amount, as determined by the
Office in accordance with generally accepted actuarial
practices and principles.
``(2)(A) Not later than June 30, 2006, the Office shall
determine the Postal surplus or supplemental liability, as of
September 30, 2005. If that result is a surplus, the amount
of the surplus shall be transferred to the Postal Service
Retiree Health Benefits Fund established under section 8909a.
If the result is a supplemental liability, the Office shall
establish an amortization schedule, including a series of
annual installments commencing September 30, 2006, which
provides for the liquidation of such liability by September
30, 2043.
``(B) The Office shall redetermine the Postal surplus or
supplemental liability as of the close of the fiscal year,
for each fiscal year beginning after September 30, 2006,
through the fiscal year ending September 30, 2038. If the
result is a surplus, that amount shall remain in the Fund
until distribution is authorized under subparagraph (C), and
any prior amortization schedule for payments shall be
terminated. If the result is a supplemental liability, the
Office shall establish a new amortization schedule, including
a series of annual installments commencing on September 30 of
the subsequent fiscal year, which provides for the
liquidation of such liability by September 30, 2043.
``(C) As of the close of the fiscal years ending September
30, 2015, 2025, 2035, and 2039, if the result is a surplus,
that amount shall be transferred to the Postal Service
Retiree Health Benefits Fund, and any prior amortization
schedule for payments shall be terminated.
``(D) Amortization schedules established under this
paragraph shall be set in accordance with generally accepted
actuarial practices and principles, with interest computed at
the rate used in the most recent valuation of the Civil
Service Retirement System.
``(E) The United States Postal Service shall pay the
amounts so determined to the Office, with payments due not
later than the date scheduled by the Office.
``(3) Notwithstanding any other provision of law, in
computing the amount of any payment under any other
subsection of this section that is based upon the amount of
the unfunded liability, such payment shall be computed
disregarding that portion of the unfunded liability that the
Office determines will be liquidated by payments under this
subsection.''.
(b) Credit Allowed for Military Service.--In the
application of section 8348(g)(2) of title 5, United States
Code, for the fiscal year 2006, the Office of Personnel
Management shall include, in addition to the amount otherwise
computed under that paragraph, the amounts that would have
been included for the fiscal years 2003 through 2005 with
respect to credit for military service of former employees of
the United States Postal Service as though the Postal Civil
Service Retirement System Funding Reform Act of 2003 (Public
Law 108-18) had not been enacted, and the Secretary of the
Treasury shall make the required transfer to the Civil
Service Retirement and Disability Fund based on that amount.
SEC. 803. HEALTH INSURANCE.
(a) In General.--Chapter 89 of title 5, United States Code,
is amended--
(1) in section 8906(g)(2)(A), by striking ``shall be paid
by the United States Postal Service.'' and inserting ``shall
be paid first from the Postal Service Retiree Health Benefits
Fund up to the amount contained in the Fund, with any
remaining amount paid by the United States Postal Service.'';
and
(2) by inserting after section 8909 the following:
``Sec. 8909a. Postal Service Retiree Health Benefit Fund
``(a) There is in the Treasury of the United States a
Postal Service Retiree Health Benefits Fund which is
administered by the Office of Personnel Management.
``(b) The Fund is available without fiscal year limitation
for payments required under section 8906(g)(2)(A).
``(c) The Secretary of the Treasury shall immediately
invest, in interest-bearing securities of the United States
such currently available portions of the Fund as are not
immediately required for payments from the Fund. Such
investments shall be made in the same manner as investments
for the Civil Service Retirement and Disability Fund under
section 8348.
``(d)(1) Not later than December 31, 2006, and by December
31 of each succeeding year, the Office shall compute the net
present value of the future payments required under section
8906(g)(2)(A) and attributable to the service of Postal
Service employees during the most recently ended fiscal year.
``(2)(A) Not later than December 31, 2006, the Office shall
compute, and by December 31 of each succeeding year, the
Office shall recompute the difference between--
``(i) the net present value of the excess of future
payments required under section 8906(g)(2)(A) for current and
future United States Postal Service annuitants as of the end
of the fiscal year ending on September 30 of that year; and
``(ii)(I) the value of the assets of the Postal Retiree
Health Benefits Fund as of the end of the fiscal year ending
on September 30 of that year; and
``(II) the net present value computed under paragraph (1).
``(B) Not later than December 31, 2006, the Office shall
compute, and by December 31 of each succeeding year shall
recompute, an amortization schedule including a series of
annual installments which provide for the liquidation by
January 31, 2046, or within 15 years, whichever is later, of
the net present value determined under subparagraph (A),
including interest at the rate used in that computation.
``(3) Not later than January 31, 2007, and by January 31 of
each succeeding year, the United States Postal Service shall
pay into such Fund--
``(A) the net present value computed under paragraph (1);
and
``(B) the annual installment computed under paragraph
(2)(B).
``(4) Computations under this subsection shall be made
consistent with the assumptions and methodology used by the
Office for financial reporting under subchapter II of chapter
35 of title 31.
``(5) After consultation with the United States Postal
Service, the Office shall promulgate any regulations the
Office determines necessary under this subsection.''.
(b) Technical and Conforming Amendment.--The table of
sections for chapter 89 of title 5, United States Code, is
amended by inserting after the item relating to section 8909
the following:
``8909a. Postal Service Retiree Health Benefits Fund.''.
SEC. 804. REPEAL OF DISPOSITION OF SAVINGS PROVISION.
Section 3 of the Postal Civil Service Retirement System
Funding Reform Act of 2003 (Public Law 108-18) is repealed.
SEC. 805. EFFECTIVE DATES.
(a) In General.--Except as provided under subsection (b),
this title shall take effect on October 1, 2005.
(b) Termination of Employer Contribution.--The amendment
made by paragraph (1) of section 802(a) shall take effect on
the
[[Page S5999]]
first day of the first pay period beginning on or after
October 1, 2005.
TITLE IX--COMPENSATION FOR WORK INJURIES
SEC. 901. TEMPORARY DISABILITY; CONTINUATION OF PAY.
(a) Time of Accrual of Right.--Section 8117 of title 5,
United States Code, is amended--
(1) by striking ``An employee'' and inserting ``(a) An
employee other than a Postal Service employee''; and
(2) by adding at the end the following:
``(b) A Postal Service employee is not entitled to
compensation or continuation of pay for the first 3 days of
temporary disability. A Postal Service employee may use
annual leave, sick leave, or leave without pay during that 3-
day period.''.
(b) Technical and Conforming Amendment.--Section 8118(b)(1)
of title 5, United States Code, is amended to read as
follows:
``(1) without a break in time, except as provided under
section 8117;''.
SEC. 902. DISABILITY RETIREMENT FOR POSTAL EMPLOYEES.
(a) Total Disability.--Section 8105 of title 5, United
States Code, is amended--
(1) in subsection (a), by adding at the end the following:
``This section applies to a Postal Service employee, except
as provided under subsection (c).''; and
(2) by adding at the end the following:
``(c)(1) In this subsection, the term `retirement age' has
the meaning given under section 216(l)(1) of the Social
Security Act (42 U.S.C. 416(l)(1)).
``(2) Notwithstanding any other provision of law, for any
injury occurring on or after the date of enactment of the
Postal Accountability and Enhancement Act, and for any new
claim for a period of disability commencing on or after that
date, the compensation entitlement for total disability is
converted to 50 percent of the monthly pay of the employee on
the later of--
``(A) the date on which the injured employee reaches
retirement age; or
``(B) 1 year after the employee begins receiving
compensation.''.
(b) Partial Disability.--Section 8106 of title 5, United
States Code, is amended--
(1) in subsection (a), by adding at the end the following:
``This section applies to a Postal Service employee, except
as provided under subsection (d).''; and
(2) by adding at the end the following:
``(d)(1) In this subsection, the term `retirement age' has
the meaning given under section 216(l)(1) of the Social
Security Act (42 U.S.C. 416(l)(1)).
``(2) Notwithstanding any other provision of law, for any
injury occurring on or after the date of enactment of this
subsection, and for any new claim for a period of disability
commencing on or after that date, the compensation
entitlement for partial disability is converted to 50 percent
of the difference between the monthly pay of an employee and
the monthly wage earning capacity of the employee after the
beginning of partial disability on the later of--
``(A) the date on which the injured employee reaches
retirement age; or
``(B) 1 year after the employee begins receiving
compensation.''.
____
United States General
Accounting Office,
Washington, DC, February 6, 2004.
Hon. Susan M. Collins,
Chairman, Committee on Governmental Affairs, United States
Senate.
Need for Comprehensive Postal Reform
Dear Chairman Collins: This letter responds to your request
for our views on the need for postal reform and is based upon
our prior testimonies related to this issue. In summary, we
believe that comprehensive postal reform is urgently needed.
The ability of the Service to remain financially viable is at
risk because its current business model--which relies on mail
volume growth to cover the costs of its expanding delivery
network--is not well aligned with 21st century realities.
Since we placed the Postal Service's transformation efforts
and financial outlook on our High-Risk List in April 2001, I
have testified on several occasions about the governance,
financial, operational, and human capital challenges that
threaten the Service's ability to carry out its mission. If
not effectively addressed in a timely manner, these
challenges serve to threaten the Service's ability to remain
self-supporting while providing affordable, high-quality and
universal postal services to all Americans.
The following key trends serve to reinforce our view that
enactment of postal reform legislation is needed:
Declining mail volume: Total mail volume declined in fiscal
year 2003 for the third year in a row--a historical first for
the Service, which has depended on rising mail volume to help
cover rising costs and mitigate rate increases. First-Class
Mail volume declined by a record 3.2 percent in fiscal year
2003 and is projected to decline annually for the foreseeable
future. Some of this decline is due to technology advances
(e.g. E-mail, digital phones, faxes, and electronic bill
payments) that are likely to increase in the future. This
trend is particularly significant because First-Class Mail
covers more than two-thirds of the Service's institutional
costs.
Changes in the mail mix: The Service's mail mix is changing
with declining volume for high-margin products, such as
First-Class Mail, and increasing volume of lower-margin
products, such as some types of Standard Mail. These changes
reduce revenues available to cover the Service's
institutional costs.
Increased competition from private delivery companies:
Private delivery companies dominate the market for parcels
greater than 2 pounds and appear to be making inroads into
the market for small parcels. Priority Mail volume fell 13.9
percent in fiscal year 2003 and over the last 3 years has
declined nearly 30 percent. Once a highly profitable growth
product for the Service, Priority Mail volume is declining as
the highly competitive parcel market turns to lower-priced
ground shipment alternatives. Express Mail volume is
declining for the same reason. In addition, United Parcel
Service (UPS) and FedEx have established national retail
networks through UPS's acquisition of MailBoxes Etc., now
called UPS Stores, and FedEx's recent acquisition of Kinko's.
Subpar revenue growth: The Service's revenues are budgeted
for zero growth in fiscal year 2004, which would be the first
year since postal reorganization that postal revenues have
failed to increase. However, as the Service has recognized,
even the zero-growth target will be challenging. In the
absence of revenue growth generated by increasing volume, the
Service must rely more heavily on rate increases to cover
rising costs and help finance capital investment needs.
Declining capital investment: The Service's capital cash
outlays declined from $3.3 billion in fiscal year 2000 to
$1.3 billion in fiscal year 2003, which was the lowest level
since fiscal year 1986, and far below the level of the late
1990s, when the Service spent more than $3 billion annually.
Capital cash outlays are budgeted to increase to $2.4 billion
in fiscal year 2004, but this level may not be sufficient to
enable the Service to fully fund its capital investment
needs. In the longer term, it is unclear what the Service's
needs will be to maintain and modernize its physical
infrastructure, as well as how these needs will be funded.
Renewed difficulties in substantially improving postal
productivity: The Service's productivity increased by 1.8
percent in fiscal year 2003 but is estimated to increase by
only 0.4 percent in fiscal year 2004. In the absence of mail
volume growth, substantial productivity increases will be
required to help cover cost increases generated by rising
wages and benefit costs and to mitigate rate increases.
Significant financial liabilities and obligations: Despite
the passage of legislation that reduced the Service's pension
obligations, the Service has about $88 billion to $98 billion
in liabilities and obligations that include $47 billion to
$57 billion in unfunded retiree health benefits. Under the
current pay-as-you-go system, the Service may have difficulty
financing its retiree health benefits obligation in the
future if mail volume trends continue to impact revenues
while costs in this area continue to rise. The Service has
recently proposed two options to Congress, so the Service
could prefund this obligation to the extent that it is
financially able.
Uncertain funding for emergency preparedness: The Service
requested $350 million for emergency preparedness for fiscal
year 2004, which it did not receive, and $779 million for
fiscal year 2005. If the money is not appropriated, funding
for this purpose may have to be built into postal rates.
Challenges to achieve sufficient cost cutting: The Service
achieved additional cost cutting to compensate for below-
budget revenues in fiscal year 2003. Despite this progress,
in the longer term it is unclear whether continued cost-
cutting efforts can offset declines in First-Class Mail
volume without impacting the quality of service.
Although we have discussed numerous actions that the Postal
Service can take within its existing authority to improve its
overall efficiency and effectiveness, we do not believe that
incremental steps toward postal transformation can resolve
the fundamental and systemic issues associated with the
Service's current business model. To avoid the risk of a
significant taxpayer bailout or dramatic postal rate
increases, we believe that Congress should enact
comprehensive postal reform legislation that includes the
Service's overall statutory framework, resolution of issues
regarding the Service's pension and retiree health benefits
obligations, and whether there is a continued need for an
escrow account.
The key areas of the Service's statutory framework that
need to be addressed include:
Clarifying the Service's mission and role by defining the
scope of universal service and the postal monopoly and by
clarifying the role of the Service in regard to competition
and its regulatory functions.
Enhancing governance, transparency, and accountability by
delineating public policy, operational, and regulatory
responsibilities; by ensuring managerial accountability
through a strong, well-qualified corporate-style board that
holds its officers responsible and accountable for achieving
real results; and by defining appropriate reporting
mechanisms to enhance the Service's transparency and
accountability for financial and performance results.
Improving flexibilities and oversight by balancing
increased flexibility for the Service--through streamlining
the rate-setting process and allowing a certain amount of
retained earnings--with appropriate oversight by a
independent regulatory body to protect postal customers
against undue discrimination, to restrict cross-subsidies,
and to ensure due process. In addition, the Service
[[Page S6000]]
needs additional flexibility to rationalize its
infrastructure and reshape its workforce. Any such additional
flexibility should be accompanied by appropriate safeguards
to prevent abuse along with enhanced transparency and
accountability mechanisms.
Making needed human capital reforms such as (1) determining
the Service's responsibility for pension costs related to
military service, funding retiree health benefits, and
determining what action to take on the escrow account
established in recent pension legislation; (2) deciding
whether postal workers' compensation benefits should be on
par with those in the private sector; and (3) clarifying pay
comparability standards.
We believe that Congress now has a rare opportunity to
assure the Service's long-term financial viability through
comprehensive postal reform legislation that addresses the
Service's key structural and systemic deficiencies, its
unfunded obligations, including its retiree health benefits
obligation, and the escrow requirement. Key legislative and
administrative actions in connection with transforming the
Postal Service can also serve as positive examples for other
key government transformation efforts.
As agreed with your office, unless you publicly announce
the contents of this report earlier, we plan no further
distribution until 30 days from the date of this letter. At
that time, we will provide copies to interested congressional
committees. We will also make copies available to others on
request. In addition, the report will be available at no
charge on the GAO Web site at http://www.gao.gov.
For additional information about this report, please
contact Mark L. Goldstein, Director, Physical Infrastructure
Issues at (202) 512-2834 or at [email protected]. Please
contact me if I can be of any further assistance to help make
comprehensive postal reform a reality.
Sincerely yours,
David M. Walker,
Comptroller General of the United States.
Mr. CARPER. Mr. President, I rise today to join Senator Collins in
introducing the Postal Accountability and Enhancement Act of 2004,
legislation that makes the reforms necessary for the Postal Service to
thrive in the 21st Century and to better serve the American people.
This bill is based in part on S. 1285, the comprehensive postal
reform legislation I introduced nearly a year ago. S. 1285 was itself
based on ten years of work on postal reform in the House of
Representatives, led by Congressman, John McHugh from New York. It is
also inspired by the work of the postal commission formed by President
Bush last year, called the President's Commission on the United States
Postal Service, which studied all aspects of the Postal Service and
made recommendations on how it could be modernized.
When I rose to introduce S. 1285 last June, the House Government
Reform Committee had only recently failed to report out the latest
version of the McHugh reform bill and the President's Commission was
only weeks away from issuing its final recommendations. Along with a
number of other observers, I feared that the McHugh bill's fate might
have spelled the end of postal reform for some time. I also feared that
the Commission's recommendations would focus on some of the more
extreme reform proposals floated in the past, such as postal
privatization. While the Commission did make a handful of
recommendations that I believe go too far, I was pleased to see that
its work largely mirrored the provisions in S. 1285 and the various
House reform bills we have seen in recent years.
I'd like to begin, then, by thanking Congressman McHugh and his
colleagues on the House Government Reform Committee for its visionary
leadership on postal reform over the years. I'd also like to thank the
members of the President's Commission, especially co-chairs James A.
Johnson and Harry J. Pearce, for their service. Postal reform is a
difficult issue. It is also a vitally important issue for every
American who depends on the Postal Service every day. Their willingness
to listen to all sides of the debate and to craft what is, for the most
part, a set of balanced reform recommendations is admired and
appreciated. The work they have done has brought to light a number of
the key issues facing the Postal Service and has made it possible to
get a bipartisan postal reform bill signed into law this year.
Senator Collins also deserves our thanks and applause for her hard
work on this issue. Under her leadership, the Governmental Affairs
Committee held a series of eight excellent hearings on postal reform
over the past few months. She and I and our staffs have also held
countless meetings with the various stakeholders for more than a year
now. Everyone with an interest in the Postal Service was given an
opportunity to have their say, and I think that's reflected in the
balanced bill we're introducing today.
It's always a pleasure working with Senator Collins. We've worked
together on a number of issues over the years--from welfare reform to
homeland security and the future of passenger rail in our country. Her
dedication to bipartisanship, and simply doing the right thing, is rare
these days. It's a honor to be introducing this historic bill with her
today.
Let me also express to Senator Lieberman, our Committee's Ranking
Member, my appreciation for giving me the opportunity as a freshman
Senator to work so closely on one of the most important issues to come
before Governmental Affairs. The support he and his staff have offered
us throughout this process has been invaluable.
Some of our colleagues may wonder why we need postal reform. They
probably receive few complaints about the service their constituents
get from the Postal Service and its employees. In fact, a survey
conducted by the President's Commission indicated that the American
people like the Postal Service just the way it is. We must keep in
mind, however, that, despite the fact that the mailing industry, and
the economy as a whole, have changed radically over the years, the
Postal Service has, for the most part, remained unchanged for more than
three decades now.
In the early 1970s, Senator Stevens and others led the effort in the
Senate to create the Postal Service out of the failing Post Office
Department. At the time, the Post Office Department received about 20
percent of its revenue from taxpayer subsidies. Service was suffering
and there was little money available to expand.
By all accounts, the product of Senator Stevens' labors, the Postal
Reorganization Act signed into law by President Nixon in 1971, has been
a phenomenal success. The Postal Service today receives virtually no
taxpayer support and the service its hundreds of thousands of employees
provide to every American, every day is second to none. More than
thirty years after its birth, the Postal Service now delivers to 141
million addresses each day and is the anchor of a $900 billion per year
mailing industry.
As we celebrate the Postal Service's successes, however, we need to
be thinking about what needs to be done to make them just as successful
in the years to come. When the Postal Service started out in 1971, no
one had access to fax machines, cell phones and pagers. No one imagined
that we would ever enjoy conveniences like e-mail and electronic bill
payment. Most of the mail I receive from my constituents these days
arrives via fax and e-mail instead of hard copy mail, a marked change
from my days in the House and even from my more recent days as Governor
of Delaware.
This continuing electronic diversion of mail, coupled with economic
recession and terrorism, has made for some rough going at the Postal
Service in recent years. In 2001, as Postmaster General Potter came
onboard, the Postal Service was projecting its third consecutive year
of deficits. They lost $199 million in fiscal year 2000 and $1.68
billion in fiscal year 2001. They were projecting losses of up to $4
billion in fiscal year 2002. Mail volume was falling, revenues were
below projections and the Postal Service was estimating that it needed
to spend $4 billion on security enhancements in order to prevent a
repeat of the tragic anthrax attacks that took several lives. The
Postal Service was also perilously close to its $15 billion debt
ceiling and had been forced to raise rates three times in less than two
years in order to pay for its operations, further eroding mail volume.
Good things have happened since 2001, though. First, General Potter
has led a commendable effort to make the Postal Service more efficient.
Billions of dollars in costs and have been taken out of the system.
Thousands of positions have been eliminated through attrition.
Successful automation programs have yielded great benefits. Perhaps
more dramatically, the Postal Service also learned that an unfunded
pension liability they once believed was an high as $32 billion was
actually
[[Page S6001]]
$5 billion. Senator Collins and I responded with legislation, the
Postal Civil Service Retirement System Funding Reform Act, signed into
law by President Bush last year, which cuts the amount the Postal
Service must pay into the Civil Service Retirement System each year by
nearly $3 billion. This has freed up money for debt reduction and
prevented the need for another rate increase until at least 2006.
Aggressive cost cutting and a lower pension payment, then, have put
off the emergency that would have come if the Postal Service had
reached its debt limit. But cost cutting can only go so far and will
not solve the Postal Service's long-term challenges. These long-term
challenges were laid out in stark detail earlier this year when
Postmaster General Potter and Postal Board of Governors Chairman David
Fineman testified before the House Government Reform Committee's
Special Panel on Postal Reform. Chairman Fineman pointed out then that
the total volume of mail delivered by the Postal Service has declined
by more than 5 billion pieces since 2000. Over the same period, the
number of homes and businesses the Postal Service delivers to have
increased by more than 5 million. First Class mail, the largest
contributor to the Postal Service's bottom line, is leading the decline
in volume. Some of those disappearing First Class letters are being
replaced by advertising mail, which earns significantly less. Many
First Class letters have likely been lost for good to the fax machine,
e-mail and electronic bill pay.
Despite electronic diversion, the Postal Service continues to add
about 1.7 million new delivery points each year, creating the need for
thousands of new routes and thousands of new letter carriers to work
them. In addition, faster-growing parts of the country will need new or
expanded postal facilities in the coming years. As more and more
customers turn to electronic forms of communication, letter carriers
are bringing fewer and fewer pieces of mail to each address they serve.
The rate increases that will be needed to maintain the Postal Service's
current infrastructure, finance retirement obligations to its current
employees, pay for new letter carriers and build facilities in growing
part of the country will only further erode mail volume.
As I've mentioned, the Postal Service has been trying to improve on
its own. They are making progress, but there is only so much they can
do. Even if the economy begins to recover more quickly and the Postal
Service begins to see volume and revenues improve, we will still need
to make fundamental changes in the way the Postal Service operates in
order to make them as successful in the 21st Century as they were in
the 20th Century.
This is where the Postal Accountability and Enhancement Act comes in.
First, our bill begins the process of developing a modern rate system
for pricing Postal Service products. The new system, to be developed by
a strengthened Postal Rate Commission, re-named the Postal Regulatory
Commission, would allow retained earnings, provide the Postal Service
significantly more flexibility in setting prices and streamline today's
burdensome ratemaking process. To provide stability, predictability and
fairness for the Postal Service's customers, rates would remain within
an inflation-based cap to be developed by the Commission.
In addition, the new rate system will allow the Postal Service to
negotiate service agreements with individual mailers. The Postal Rate
Commission in recent years did approve a service agreement the Postal
Service negotiated with Capital One, but the process for considering
the agreement took almost a year and the Postal Service's authority to
enter into such agreements is not clearly spelled out in law. The
Postal Accountability and Enhancement Act allows the Postal Service to
enter into agreements if the revenue generated from them covers all
costs attributable to the Postal Service and will result in no less
contribution to the institutional costs of the Postal Service than
would have been generated had the agreement not been entered into. No
agreement would be permitted if it resulted in higher rates for any
other mailer or prohibited any similarly situated mailer from
negotiating a similar agreement.
The new rate system also includes some important safeguards meant to
prohibit worksharing discounts that exceed costs avoided by the Postal
Service. Now, worksharing on the part of mailers has been an important
part of the productivity improvements at the Postal Service in recent
years. Mailers should get credit in the form of a discount for work
they do to their mail, such as presorting and barcoding or transporting
mail deeper into the postal system. The discounts they receive,
however, should have some rational relation to the benefit the Postal
Service gets from the worksharing. The Postal Service should continue
to be free to use discounts to incent mailers to be more efficient.
They also should not be forced to impose large rate increases on
workshared mail in order to comply with a strict prohibition on
discounts in excess of costs avoided. Discounts in excess of costs
avoided, however, should be temporary and reasonable. Our worksharing
language strikes a good balance in that it prohibits the Postal Service
from outsourcing work that could be performed cheaper in house while
maintaining pricing flexibility.
The second major provision in the Postal Accountability and
Enhancement Act requires the Postal Regulatory Commission to set strong
service standards for the Postal Service's Market Dominant products, a
category made up mostly of those products, like First Class mail, that
are part of the postal monopoly. The Postal Service currently sets its
own service standards, which allows them to pursue efforts like the
elimination of Saturday delivery, a proposal floated three years ago.
The new standards set by the Commission will aim to improve service and
will be used by the Postal Service to establish performance goals,
rationalize its physical infrastructure and streamline its workforce.
In a rate system featuring rate caps, as any system established
under the Postal Accountability and Enhancement Act must, I believe it
is especially important that the Regulatory Commission, not the Postal
Service, be charged with determining the appropriate level of service
postal customers should receive. This will prevent the Postal Service
form cutting service as a way to keep rates below the cap. The Postal
Service should be forced to look to productivity enhancements, not
poorer quality service, to find savings.
Third, the Postal Accountability and Enhancement Act ensures that the
Postal Service competes fairly. The bill prohibits the Postal Service
from issuing anti-competitive regulations. It also subjects the Postal
Service to state zoning, planning and land use laws, requires them to
pay an assumed Federal income tax on products like packages and Express
Mail that private firms also offer and requires that these products as
a whole pay their share of the Postal Service's institutional costs.
The Federal Trade Commission will further study any additional legal
benefits the Postal Service enjoys that its private sector competitors
do not. The Regulatory Commission will then find a way to use the rate
system to level the playing field.
Fourth, the Postal Accountability and Enhancement Act improves
Postal Service accountability, mostly by strengthening oversight.
Qualifications for membership on the Regulatory Commission would be
stronger than those for the Rate Commission so that Commissioners would
have a background in finance or economics. Commissioners would also
have the power to demand information from the Postal Service, including
by subpoena, and have the power to punish them for violating rate and
service regulations. In addition, the Commission will make an annual
determination as to whether the Postal Service is in compliance with
rate law and meeting service standards and will have the power to
punish them for any transgressions.
Fifth, the Postal Accountability and Enhancement Act revises two
provisions from the Postal Civil Service Retirement System Funding
Reform Act in an effort to shore up the Postal Service's finances in
the years to come. As our colleagues may be aware, that bill requires
the Postal Service, beginning in 2006, to deposit any savings it enjoys
by virtue of lower pension payments into an escrow account. In this
bill, we eliminate that requirement in
[[Page S6002]]
order to allow the Postal Service to spend the money that would have
gone into escrow according to the plan submitted by the Postal Service
in September of last year, which called for using most of the savings
to begin paying down the Postal Service's $50 billion retiree health
obligation. The bill Senator Collins and I are introducing today also
reverses the provision in the Postal Civil Service Retirement System
Funding Reform Act that made the Postal Service the only Federal agency
shouldered with the burden of paying the additional pension benefits
owed to their employees by virtue of past military service.
Finally, and most importantly, the bill preserves universal service
and the postal monopoly and forces the Postal Service to concentrate
solely on what it does best--processing and delivering the mail to all
Americans. Our bill limits the Postal Service, for the first time, to
providing ``postal services,'' meaning they would be prohibited from
engaging in other lines of business, such as e-commerce, that draw time
and resources away from letter and package delivery. It also explicitly
preserves the requirement that the Postal Service ``bind the Nation
together through the mail'' and serve all parts of the country, urban,
suburban and rural, in a non-discriminatory fashion. Any service
standards established by the Postal Regulatory Commission will continue
to ensure delivery to every address, every day. In addition, the bill
maintains the prohibition on closing post offices solely because they
operate at a deficit, ensuring that rural and urban customers continue
to enjoy full access to retail postal services.
The President's Commission, while calling for the preservation of
universal service and the postal monopoly, opened the door for future
changes by recommending that the Regulatory Commission be given the
authority to make them themselves. While I believe that Congress will
find it difficult to roll back universal service or limit the postal
monopoly in the future if it is deemed necessary to do so, I believe
the recommendation from the President's Commission would give too much
power to a relatively small, political body. In order to keep Congress
focused on the Postal Service's future, however, our bill asks the
Regulatory Commission to report every three years on the state of
universal service and the postal monopoly. When necessary, they would
also make recommendations to Congress when they feel like one is
necessary.
We have a once-in-a-generation opportunity this year to enact
meaningful postal reform legislation. The House Government Reform
Committee marked up its version of the Postal Accountability and
Enhancement Act last week by a unanimous 40-0 vote. The President has
indicated his support for a bill, releasing a set of postal reform
principles at the end of last year calling on Congress to make some key
changes to the way the Postal Service operates. We now have everyone
from the National Association of Letter Carriers to former opponents of
reform like UPS supporting our efforts, as well as those in the House.
I know there are still some concerns about certain provisions in our
bill, but I look forward to working with Senator Collins and each of
our colleagues in the coming weeks to continue this momentum and get a
bill through Congress that can be signed into law this year.
It's amazing to me to think that the Postal Service, something
Senator Stevens was able to put together at the beginning of his
career, could have lasted so long and had such an impact on every
American. I'm hopeful that the model Senator Collins and I have set out
in this bill today can last at least that long and have just as
positive an impact on our nation and our economy as the Postal Service
did so many years ago.
Mr. STEVENS. Mr. President, I am pleased to join Chairman Collins and
Senator Carper as an original cosponsor of S. 2468, the Postal
Accountability and Enhancement Act. In 2002, the President formed a
Commission to evaluate the operations of the United States Postal
Service. Earlier this year, the President's Commission issued a
comprehensive report filled with suggestions on how to improve the
Postal Service. Senator Collins became actively engaged on the issue of
postal reform and held a series of hearing this year on postal reform.
This bill is the product of the postal reform hearings held before the
Government Affairs Committee.
I expect I will have suggestions on this legislation as the bill
moves through the legislative process. However, I support Senator
Collins's commitment to postal reform. I look forward to working with
her and Senator Carper in Committee and on the Senate floor to ensure
the success of this legislation.
Mr. AKAKA. Mr. President, I am pleased to join with Senator Collins
and Senator Carper, who today have introduced the Postal Accountability
and Enhancement Act. I commend both of my Governmental Affairs
Committee colleagues for their leadership in crafting a postal reform
bill.
For some time, the General Accounting Office has warned that the
long-term financial outlook for the U.S. Postal Service was at risk
without significant changes. At the request of the Governmental Affairs
Committee, the U.S. Postal Service developed a transformation plan that
offered its vision for the future. Late in 2002, a Presidential Postal
Commission was convened, which issued a number of recommendations in
2003.
Over the past 6 months, I have participated in a series of hearings
chaired by Senator Collins which examined the recommendations of the
Postal Commission. I commend Senator Collins for guaranteeing that the
divergent views were seriously considered throughout our eight
hearings. I also wish to commend my colleague from Delaware, Senator
Carper, for his strong and early commitment to postal reform.
I support modernizing the U.S. Postal Service to ensure that its
mission of providing 6 days a week universal service at an affordable
rate is preserved. Although the legislation introduced today responds
to many of the recommendations and concerns we heard in our hearings,
it wisely rejects others. However, like most bills, there are
provisions that trouble me. I am particularly concerned with the
sections relating to worksharing and changes to the Federal Employees'
Compensation Act (FECA). I will continue to work with the bill's
sponsors to address these provisions, which I believe do not promote
cost savings for the Postal Service or fairness for postal workers.
I look forward to working with my colleagues on this legislation to
guarantee that the U.S. Postal Service will be in position to best
serve the public in the 21st century, be a model employer, and protect
the retirement future of its employees.
______
By Mr. BOND (for himself, Mr. Harkin, Mr. Durbin, Mr. Talent, Mr.
Grassley, Mr. Coleman, Mr. Fitzgerald, and Mr. Pryor):
S. 2470. A bill to enhance navigation capacity improvements and the
ecosystem restoration plan for the Upper Mississippi River and Illinois
Waterway System; to the Committee on Environment and Public Works.
Mr. BOND. Mr. President, today, I join my colleagues, Senators
Harkin, Durbin, Talent, Grassley, Coleman, Fitzgerald and Pryor to
introduce bipartisan legislation to provide transportation efficiency
and environmental sustainability on the Mississippi and Illinois
Rivers.
As the world becomes more competitive, we must also. In the
heartland, the efficiency, reliability, capacity, and safety of our
transportation options are critical--often make-or-break. As we look 50
years into the future, and as we anticipate and try to promote
commercial and economic growth, we have to ask ourselves a fundamental
question: should we have a system that permits and promotes growth, or
should we be satisfied to restrict our growth to the confines of a
transportation straight jacket designed not for 2050, but for 1980?
Further, we must ask ourselves if dramatic investments should be made
to address environmental problems and opportunities that exist on these
great waterways.
In both cases, the answer is, ``Of course we should modernize and
improve.''
We have a system which is in environmental and economic decline. Jobs
and markets and the availability of habitat for fish and wildlife are
at stake.
[[Page S6003]]
We cannot be for increased trade, commercial growth, and job creation
without supporting the basic transportation infrastructure necessary to
move goods from buyers to sellers. New efficiency helps give our
producers an edge that can make or break opportunities in the
international marketplace.
Seventy years ago, some argued that a transportation system on the
Mississippi River was not justified. Congress decided that its role was
not to try to predict the future but to shape the future and decided to
invest in a system despite the naysayers. Over 80 million tons per year
later, it is clear that the decision was wise.
Now, that system that was designed for paddlewheel boats and to last
50 years is nearly 70 years old and we must make decisions that will
shape the next 50-70 years. As we look ahead, we must promote growth
policies that help Americans who produce and employ.
We must work for policies that promote economic growth, job creation,
and environmental sustainability. We know that trade and economic
growth can be fostered or it can be discouraged by policies and other
realities which include the quality of our transportation
infrastructure.
So in 20 and 30 and 40 and 50 years, where will the growth in
transportation occur to accommodate the growth in demand for commercial
shipping? The Department of Transportation suggests that congestion on
our roads and rails will double in the next quarter century. The fact
of the matter is that the great untapped capacity is on our water.
This is good news because water transportation is efficient, it is
safe, it conserves fuel, and it protects the air and the environment.
One medium-sized barge tow can carry the freight of 870 trucks. That
fact alone speaks volumes to the benefits of water. If we can, would we
rather have 870 diesel engines on the roads of downtown St. Louis, or
two diesel engines on the water watching the traffic buildup and smog
glide by?
The veteran Chief Economist at USDA testified that transportation
efficiency and the ability of farmers to win markets at higher prices
are ``fundamentally related.'' He predicts that corn exports over the
next 10 years will rise 45 percent, 70 percent of which will travel
down the Mississippi.
Over the past 35 years, waterborne commerce on the Upper Mississippi
River has more than tripled. The system currently carries 60 percent of
our Nation's corn exports and 45 percent of our Nation's soybean
exports and it does so at two-thirds the cost of rail--when rail is
available.
Over the previous 11 years, the U.S. Army Corps of Engineers have
spent $70 million doing a six year study. During that period, there
have been 35 meetings of the Governors Liaison Committee, 28 meetings
on the Economic Coordinating Committee, among the States along the
Upper Mississippi and Illinois waterways, and there have been 44
meetings of the Navigation and Environmental Coordination Committee.
Additionally, there have been 130 briefings for special interest
groups, 24 newsletters. There have been six sets of public meetings in
46 locations with over 4,000 people in attendance. To say the least,
this has been a very long, very transparent, and very representative
process.
However, while we have been studying, our competitors have been
building. Given the extraordinary delay so far, and given the reality
that large scale construction takes not weeks or months, but decades,
further delay is no longer an option.
This is why I am leased to be joined by a bipartisan group of
Senators who agree that we must improve the efficiency and the
environmental sustainability of our great resources. Today, we
introduce legislation to adopt the initial recommendations of the Corps
of Engineers and their public and private partners to increase the lock
capacity on the Upper Mississippi and Illinois Rivers and the begin an
ambitious program of ecosystem restoration.
This plan gets the Corps back in the business of building the future,
rather than just haggling about predicting the future. More will need
to be done later on ecosystem and lock expansions further upstream, but
this begins the improvement schedule underway.
In this legislation, we authorize $1.46 billion for ecosystem
restoration--two times the federal share of lock capacity expansion
which we authorize on locks 20-25 on the Mississippi River and Peoria
and LaGrange on the Illinois. The new 1,200 foot locks on the
Mississippi River will provide equal capacity in the bottleneck region
below the 1,200 foot lock 19 at Keokuk above locks 26 and 27 near St.
Louis. Half the cost of the new locks will be paid for by private users
who pay into the Inland Waterways Trust fund. Additional funds will be
provided for mitigation and small scale and nonstructural measures to
improve efficiency.
As we look ahead, the locks at 14-18 will have to be addressed as
will further investments to ecosystem restoration efforts.
This effort is supported by a broad-based group of the States, farm
groups, shippers, labor, and those who pay taxes into the Trust Fund
for improvements.
I thank my colleagues for their work together on this bipartisan
effort.
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. 2470
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. FINDINGS.
Congress finds that--
(1) in section 1103(a)(2) of the Water Resources
Development Act of 1986 (100 Stat. 4225), Congress recognized
the Upper Mississippi River System as ``a nationally
significant ecosystem and a nationally significant commercial
navigation system'' and declared that the system ``shall be
administered and regulated in recognition of its several
purposes'';
(2) inaction on construction of new locks will lead to
economic decline, and inaction on implementation of an
enhanced ecosystem restoration program will lead to further
environmental decline;
(3) the Upper Mississippi River and Illinois Waterway carry
approximately 60 percent of the corn exports of the United
States and 45 percent of the soybean exports of the United
States, providing a significant positive balance of trade
benefit for the Nation;
(4) the movement of more than 100,000,000 tons of product
supports 400,000 full- and part-time jobs in the United
States, generating over $4,000,000,000 in income and
$12,000,000,000 to $15,000,000,000 in economic activity;
(5) Midwestern utilities use coal, the second largest
category of cargo shipped on the Upper Mississippi River
System, to produce cost-efficient energy;
(6) keeping the cost of transportation lower through
competition between transportation modes is the United States
farmer's competitive advantage in capturing future global
growth in agricultural exports;
(7) United States farm and trade policies work to open
world markets and promote United States exports, and water
resource policy has provided a low-cost transportation
alternative to other modes;
(8) the Department of Agriculture projects that corn
exports will grow 44 percent over the next decade, with a \1/
3\ increase in growth exported through the Gulf of Mexico;
(9) those transportation savings--
(A) provide higher income to farmers and rural communities;
and
(B) generate Federal and State taxes to support community
activities, quality of life, and national benefits;
(10) the construction of new 1,200-foot locks and lock
extensions will provide more than 48,000,000 man-hours of
employment over 10 to 15 years;
(11) foreign competitors have worked over the last 10 years
to improve foreign transportation infrastructure to compete
more effectively with United States production;
(12) the inland waterway transportation system moves 16
percent of the freight in the United States for 2 percent of
the cost, including more than 100,000,000 tons on the Upper
Mississippi River System;
(13) the Department of Transportation projects that freight
congestion on the roads and rails in the United States will
double in the next 25 years and that water transportation
will need to play an increasing role in moving freight;
(14) the movement of 100,000,000 tons on the river system
in 4,400 15-barge tows out of harms way would require an
equivalent of 4,000,000 trucks or 1,000,000 rail cars moving
directly through our communities;
(15) econometric models are useful analytic tools to
provide valuable information, but are unable to account for
every market trend, development, and public policy impact;
(16) the current capacity of the Upper Mississippi River
System is--
(A) declining by 10 percent annually because of unplanned
closures of a 70-year old infrastructure; and
(B) reducing the potential for sustained growth;
[[Page S6004]]
(17) the current 600-foot lock system was designed for
steamboats, at a time when 4,000,000 tons moved on the
Mississippi River and a total of 2,000,000,000 bushels of
corn were produced nationally, compared to today, when
100,000,000 to 120,000,000 tons are shipped and the national
production of corn exceeds 10,000,000,000 bushels;
(18) the 600-foot locks at Locks and Dam Nos. 20, 21, 22,
24, and 25 on the Upper Mississippi River and LaGrange and
Peoria on the Illinois Waterway are operating at 80 percent
utilization and are unable to provide for or process
effectively the volatile growth of traditional export grain
markets;
(19) based on the current construction schedule of new
locks and dams on the inland system, lock modernization will
need to take place over 30 years, starting immediately, as an
imperative to avoid lost export grain sales and diminished
national competitiveness;
(20) the Corps of Engineers has been studying the needs for
national investments on the Upper Mississippi River System
for the last 15 years and has based initial recommendations
on the best available information and science;
(21) the Upper Mississippi and Illinois Rivers ecosystem
consists of hundreds of thousands of acres of bottomland
forests, islands, backwaters, side channels, and wetlands;
(22) the river ecosystem is home to 270 species of birds,
57 species of mammals, 45 species of amphibians and reptiles,
113 species of fish, and nearly 50 species of mussels;
(23) more than 40 percent of migratory waterfowl and
shorebirds in North America depend on the river for food,
shelter, and habitat during migration;
(24) the annual operation of the Upper Mississippi River
Basin needs to take into consideration opportunities for
ecosystem restoration;
(25) development since the 1930's has altered and reduced
the biological diversity of the large flood plain river
systems of the Upper Mississippi and Illinois Rivers;
(26) Congress recognizes the need for significant Federal
investment in the restoration of the Upper Mississippi and
Illinois River ecosystems;
(27) the Upper Mississippi River System provides important
economic benefits from recreational and tourist uses,
resulting in the basin's receiving more visitors annually
than most National Parks, with the ecosystems and wildlife
being the main attractions; and
(28) the Upper Mississippi River System--
(A) includes 284,688 acres of National Wildlife Refuge land
that is managed as habitat for migratory birds, fish,
threatened and endangered species, and a diverse assortment
of other species and related habitats; and
(B) provides many recreational opportunities.
SEC. 2. ENHANCED NAVIGATION CAPACITY IMPROVEMENTS AND
ECOSYSTEM RESTORATION PLAN FOR THE UPPER
MISSISSIPPI RIVER AND ILLINOIS WATERWAY SYSTEM.
(a) Definitions.-- In this section:
(1) Plan.--The term ``Plan'' means the preferred integrated
plan contained in the document entitled ``Integrated
Feasibility Report and Programmatic Environmental Impact
Statement for the UMR-IWW System Navigation Feasibility
System'' and dated April 29, 2004.
(2) Secretary.--The term ``Secretary'' means the Secretary
of the Army.
(3) Upper mississippi river and illinois waterway system.--
The term ``Upper Mississippi River and Illinois Waterway
System'' means the projects for navigation and ecosystem
restoration authorized by Congress for--
(A) the segment of the Mississippi River from the
confluence with the Ohio River, River Mile 0.0, to Upper St.
Anthony Falls Lock in Minneapolis-St. Paul, Minnesota, River
Mile 854.0; and
(B) the Illinois Waterway from its confluence with the
Mississippi River at Grafton, Illinois, River Mile 0.0, to
T.J. O'Brien Lock in Chicago, Illinois, River Mile 327.0.
(b) Authorization of Construction of Navigation
Improvements.--
(1) Small scale and nonstructural measures.--At a cost of
$24,000,000 in funds from the general fund of the Treasury,
to be matched in an equal amount from the Inland Waterways
Trust Fund (which is paid by private users), the Secretary
shall--
(A) construct mooring facilities at Locks 12, 14, 18, 20,
22, 24, and LaGrange Lock;
(B) provide switchboats at Locks 20 through 25 over 5 years
for project operation; and
(C) conduct development and testing of an appointment
scheduling system.
(2) New locks.--At a cost of $730,000,000 in funds from the
general fund of the Treasury, with an equal matching amount
provided from the Inland Waterways Trust Fund (which is paid
by the private users), the Secretary shall construct new
1,200-foot locks at Locks 20, 21, 22, 24, and 25 on the Upper
Mississippi River and at LaGrange Lock and Peoria Lock on the
Illinois Waterway.
(3) Mitigation.--At a cost of $100,000,000 in funds from
the general fund of the Treasury, with an equal matching
amount provided from the Inland Waterway Trust Fund (which is
paid by private users), the Secretary shall conduct
mitigation for new locks and small scale and nonstructural
measures authorized under paragraphs (1) and (2).
(c) Ecosystem Restoration Authorization.--
(1) Operation.--To ensure the environmental sustainability
of the existing Upper Mississippi River and Illinois Waterway
System, the Secretary shall, consistent with requirements to
avoid any adverse effects on navigation, modify the operation
of the Upper Mississippi River and Illinois Waterway System
to address the cumulative environmental impacts of operation
of the system and improve the ecological integrity of the
Upper Mississippi River and Illinois River.
(2) Ecosystem restoration projects.--
(A) In general.--The Secretary shall, consistent with
requirements to avoid any adverse effects on navigation,
carry out ecosystem restoration projects to attain and
maintain the sustainability of the ecosystem of the Upper
Mississippi River and Illinois River in accordance with the
general framework outlined in the Plan.
(B) Projects included.--Ecosystem restoration projects may
include--
(i) island building;
(ii) construction of fish passages;
(iii) floodplain restoration;
(iv) water level management (including water drawdown);
(v) backwater restoration;
(vi) side channel restoration;
(vii) wing dam and dike restoration and modification;
(viii) island and shoreline protection;
(ix) topographical diversity;
(x) dam point control;
(xi) use of dredged material for environmental purposes;
(xii) tributary confluence restoration;
(xiii) spillway modification to benefit the environment;
(xiv) land easement authority; and
(xv) land acquisition.
(C) Cost sharing.--
(i) In general.--Except as provided in clause (ii), the
Federal share of the cost of carrying out an ecosystem
restoration project under this paragraph shall be 65 percent.
(ii) Exception for certain restoration projects.--In the
case of a project under this paragraph for ecosystem
restoration, the Federal share of the cost of carrying out
the project shall be 100 percent if the project--
(I) is located below the ordinary high water mark or in a
connected backwater;
(II) modifies the operation or structures for navigation;
or
(III) is located on federally owned land.
(iii) Nongovernmental organizations.--Nongovernmental
organizations shall be eligible to contribute the non-Federal
cost-sharing requirements applicable to projects under this
paragraph.
(D) Land acquisition.--The Secretary may acquire land or an
interest in land for an ecosystem restoration project from a
willing owner through conveyance of--
(i) fee title to the land; or
(ii) a flood plain conservation easement.
(3) Specific projects authorization.--
(A) In general.--Subject to subparagraph (B), the ecosystem
restoration projects described in paragraph (2) shall be
carried out at a total construction cost of $1,460,000,000.
(B) Limitation on available funds.--Of the amounts made
available under subparagraph (A), not more than $35,000,000
for each fiscal year shall be available for land acquisition
under paragraph (2)(D).
(4) Implementation reports.--
(A) In general.--Not later than June 30, 2005, and every 4
years thereafter, the Secretary shall submit to the Committee
on Environment and Public Works of the Senate and the
Committee on Transportation and Infrastructure of the House
of Representatives an implementation report that--
(i) includes baselines, benchmarks, goals, and priorities
for ecosystem restoration projects; and
(ii) measures the progress in meeting the goals.
(B) Advisory panel.--
(i) In general.--The Secretary shall appoint and convene an
advisory panel to provide independent guidance in the
development of each implementation report under subparagraph
(A).
(ii) Panelists.--Panelists shall include--
(I) 1 representative of each of the State resource agencies
(or a designee of the Governor of the State) from each of the
States of Illinois, Iowa, Minnesota, Missouri, and Wisconsin;
(II) 1 representative of the Department of Agriculture;
(III) 1 representative of the Department of Transportation;
(IV) 1 representative of the United States Geological
Survey;
(V) 1 representative of the United States Fish and Wildlife
Service;
(VI) 1 representative of the Environmental Protection
Agency;
(VII) 1 representative of affected landowners;
(VIII) 2 representatives of conservation and environmental
advocacy groups; and
(IX) 2 representatives of agriculture and industry advocacy
groups.
(iii) Co-chairpersons.--The Secretary and the Secretary of
the Interior shall serve as co-chairpersons of the advisory
panel.
(d) Authorization of Appropriations.--Except as otherwise
provided in this section--
(1) there are authorized to be appropriated such sums as
are necessary to carry out this section for fiscal years 2006
through 2020; and
(2) after fiscal year 2020--
[[Page S6005]]
(A) funds that have been made available under this section,
but have not been expended, may be expended; and
(B) funds that have been authorized to be appropriated
under this section, but have not been made available, may be
made available.
Mr. HARKIN. Mr. President, I rise to discuss a bipartisan measure on
which I have worked closely with my colleague from Missouri, Senator
Bond. The purpose of this bill is to expand the transportation
infrastructure and improve the ecosystem of the upper Mississippi
River.
I have been deeply involved with Mississippi navigation issues
because of their enormous importance to farmers in Iowa. Efficient
river transportation is critical to keeping Iowa commodity costs
competitive with foreign and domestic alternatives. When shipping on
the river is constrained, costs rise. That, in turn, leads to price
increases for moving bulk farm commodities by alternative means, mainly
rail. These price differentials seem relatively small compared to the
total price, but they make a huge difference in farm income.
Clearly, river traffic on the Mississippi is incredibly important to
producers in my State. As a result of traffic congestion on the
Mississippi, producers in the upper Midwest face longer shipping times,
higher costs, and lost revenue. In the short run, enhanced traffic
management can improve the situation. And it is important to have
helper boats to push long barges through crowded locks. This bill
addresses these two matters. But we need a longer-term solution, too.
It is incredibly important that we modernize a number of the locks on
the upper Mississippi--and we need to get started as soon as possible.
Existing law requires exhaustive analysis of river-use levels looking
decades into the future. The studies required for such predictions are,
by their very nature, highly speculative at best. There is no shortage
of critics of the U.S. Army Corps of Engineers and its methods. But we
can all agree that, to remain competitive, America needs to keep the
arteries and veins of America's river transportation system in smooth
running order. Last year, I visited Brazil and saw first-hand their
remarkable efforts to modernize and improve their river transportation
system. We need to keep up with countries like Brazil, if we are going
to remain competitive. We simply cannot wait any longer to authorize
construction of 1,200-foot locks so barge tows can move through the
upper Mississippi and Illinois without being split.
However, this is not an easy issue. Over the years, I have heard time
and time again from constituents and national leaders who are concerned
about the environment, as I am. People correctly insist that we
maintain a balance between navigation, flood control, and environmental
protection. Habitat for many species, and the Mississippi river
ecosystem as a whole, has deteriorated since the construction of the
original lock system in the 1930's.
The Mississippi River is home to a wide variety of fish and birds, as
well as other wildlife. All of this wildlife, and the abundant plant
life, too, are important to the character and life of the Mississippi
River. Approximately 40 percent of North America's waterfowl and
shorebirds use the Mississippi Flyway. Parts of the Upper Mississippi
River serve could well be the most important area for migrating diving
ducks in the United States. The Mississippi River also serves as
habitat for breeding and wintering birds, including the bald eagle.
We are all aware of the problems that have plagued the Corps' past
work on the Mississippi River. But the Corps has pledged to
dramatically step up its emphasis on environmental protection. We need
to work with the Corps to ensure that all updates and renovations of
locks and dams are done with keen concern for the environment and for
the fish and wildlife that depend on the Mississippi River habitat. At
the same time, we need to give the Corps the authorization and funding
it needs to accomplish real ecosystem restoration, and not just make up
for the lost habitat of specific identified species. The legislation we
are proposing accomplishes this.
We understand that this bill is going to be a challenge in these
difficult budget times. But to not act would be penny wise and pound
foolish. We need to be thinking of the long-term economic health of our
agricultural producers and shippers, hand in hand with the long-term
health of the diverse ecosystems in the river. I believe the
legislation we are proposing strikes a careful balance. I look forward
to working closely with my colleagues to achieve those goals.
Mr. TALENT. Mr. President, I rise today to as a cosponsor of
legislation to modernize our aging waterways infrastructure on the
Upper Mississippi River and the Illinois River.
I am glad to join my colleague from Missouri, Senator Bond as well as
Senators Harkin and Grassley in introducing a bill to upgrade and
modernize the failing infrastructure on the Upper Mississippi and
Illinois Rivers.
This $2.9 billion authorization will also bring great benefits to the
fish habitat along the river through construction of fish passages,
floodplain restoration and side channel restoration. I commend Senators
Bond and Harkin for working to find some balance in this important
issue. I have always said, navigation and habitat restoration do not
have to be mutually exclusive.
The locks and dams that are in place today are vital to our national
economy. These national waterways serve as our competitive advantage to
our overseas competitors, and this a clean and efficient way to move
goods and commodities for export. The Upper Mississippi River and
Illinois Waterway carry approximately 60 percent of the country's corn
exports and 45 percent of our soybean exports, providing a significant
positive balance of trade benefit for the Nation. Over half of the
Soybeans produced in Missiouri head down the Mississippi River to the
Gulf where they are shipped to markets overseas.
To me, this issue is a question of common sense. Water transportation
is safe, clean and efficient. One medium barge tow can carry the same
freight as 870 tractor trailer trucks. This relieves highway
congestion, reduces shipping costs, and reduces fuels consumption and
air emissions. Despite this, we'll still have opponents to this bill
saying that it isn't good for the environment.
This bill is a win-win. It will take steps to reduce some of the
burdens on our transportation systems, as well as providing more
opportunities for our agricultural producers to export their products.
These locks are old and outdated. The current 600-foot lock system
was designed for streamboats, at a time when 4 million tons moved on
the Mississippi River and a total of 2 billion bushels of corn were
produced nationally, compared to today, when 100 million to 120 million
tons are shipped and the national production of corn exceeds 10 million
bushels. We need to bring these locks into the 21st Century.
If we don't fix this aging infrastructure now, it will only become
more costly. If I get a hole in the roof of my house, my wife and I may
discuss how to fix it, but we know we will make the repair. If you
don't make the repairs and upgrades, the problem only gets worse. That
is what we have done to the locks and dams on the Mississippi River. I
don't want this to be a situation where the roof actually falls in--we
must modernize the system.
I commend my colleague from Missouri and his leadership on this
issue. This is a good bill and I am happy to join him as a cosponsor. I
look forward to continuing to work with him on this important issue.
Mr. GRASSLEY. Mr. President, I am pleased to be an original cosponsor
of bipartisan legislation to authorize the modernization of the lock
and dam infrastructure and enhanced environmental restoration on the
Upper Mississippi and Illinois Rivers.
Modernizing the inland waterway transportation system remains a high
priority for the Upper Mississippi River basin and for agricultural,
commercial, and labor interests that rely on the river to transport
their products. In addition to strong grassroots support for this
endeavor, the State legislatures have passed resolutions endorsing lock
and dam modernization, ecosystem restoration, and Congressional action.
Agriculture and related industries in Iowa and the other States on
the Upper Mississippi remain competitive in world markets, despite
higher production costs, because of the efficiencies inherent in river
transport. More than 60 percent of all grain exports move from the
Upper Mississippi, making
[[Page S6006]]
this competitive advantage vital to their ability to operate their
business. Over 400,000 full and part-time jobs in our basin are
connected to the river. Without modernization, Midwest producers will
not be able to compete in anticipated world grain export growth.
Furthermore, a recent study estimates the loss of 30,000 jobs
nationwide, $562 million annually in lost farm income and $185 million
annually in lost State and local tax receipts if the lock and dam
system is not upgraded. Providing U.S. agricultural producers every
opportunity to export their products to world markets is essential for
their financial well-being and future viability.
While it is important to consider economic benefits, we must also
protect the ecosystem of the river. A cooperative solution can meet the
needs of farmers and waterway users while at the same time improve the
environment and stem the decline of the Rivers' ecosystems through
enhanced authorities. Restoring the ecosystem is not mutually exclusive
to lock modernization.
After 12 years and $70 million of study, we firmly believe that the
time has come to take action. I urge my colleagues to support this
legislation providing initial authorization to begin the modernization
process and enhance the authorities to address broader ecosystem
restoration. Without immediate action, the health of both the
agriculture economy and river ecosystem will continue to decline.
Mr. COLEMAN. Mr. President, the Mississippi River is a national
treasure and this legislation authorizes programs that will help
restore water quality and rehabilitate wildlife and wildlife habitat on
the river.
The annual operation of the Upper Mississippi River Basin needs to
take into consideration opportunities for ecosystem restoration. The
Upper Mississippi River ecosystem consists of hundreds of thousands of
acres of bottomland forests, islands, backwaters, side channels and
wetlands. The Upper Mississippi River system includes 284,688 acres of
National Wildlife Refuge land that is managed as habitat for migratory
birds, fish, threatened and endangered species and a diverse assortment
of other species and related habitats.
I am very pleased that this bill gives ecosystem restoration the
attention that it deserves.
The Department of Transportation projects that water transportation
will play an increasing role in moving freight due to congestion on
roads and railways. More efficient use of river transportation will
help the environment reducing traffic congestion and emissions on our
Nation's highways. For example, a 15 barge tow can carry as much as 870
semi-tractor trailer trucks. Fuel efficiency for barge transportation
is 2.5 times that of rail transport and nearly 10 times that of truck
transport.
Improving navigation efficiency on the upper Mississippi and Illinois
Rivers has been a high priority issue for Midwest farmers for years.
Our agricultural competitive position in accessing world markets is
greatly impacted by the efficiency of our transportation system.
Farmers depend on the lock system to move grain efficiently to market.
They also depend on the locks for the movement of crop production
inputs up the Mississippi River.
Our entire region benefits as commercial barge traffic moves not only
agricultural products, but also aggregate, cement, salt, and other
important items efficiently, safely and in an environmentally sound
manner.
The Upper Mississippi River Ecosystem Restoration and navigation bill
also represents a landmark opportunity to address environmental and
economic ramifications of the entire lock and dam system, rather than
the previous piecemeal approaches. The Corps of Engineers has responded
to critics who called for a comprehensive evaluation, coupling an
assessment of the economic need for navigation improvements and the
ecosystem restoration components necessary to protect our region in the
process. As outlined in this legislation, the $1.46 billion ecosystem
restoration package includes the construction of fish passages,
floodplain restoration on thousands of acres and side channel
restoration, along with other measures.
This is indeed a new approach to improving our economy, by providing
construction jobs and boosting our farm economy, and protecting our
environment, by increasing the efficiency of barge traffic while
initiating important water quality measures.
I am proud to be a coauthor of this important legislation.
Mr. FITZGERALD. Mr. President, I rise today with Senator Bond in
support of a bill to put into place recommendations by the Army Corps
of Engineers for navigation capacity improvements and ecosystem
restoration for the Upper Mississippi and Illinois Rivers Waterway
System.
Modernizing the inland waterway transportation system is a high
priority for the Upper Mississippi River basin and for agricultural,
commercial, and labor interests that rely on the river to transport
their products. Without modernization, Midwest producers will not be
able to fully participate in growing world markets.
On April 29, 2004, the Army Corps of Engineers released its proposal
to upgrade the locks and to provide for ecosystem restoration on these
two waterways. I have consistently fought for funding to revitalize
these locks to help Illinois producers more easily transport their
products to market. I have joined Senator Bond as a cosponsor to this
bill because our country's agriculture and business interests have
waited far too long for these improvements.
The Mississippi River plays a vital role in our economy. The
Mississippi and Illinois Rivers are two of the major routes by which
Illinois agricultural commodities are distributed to the world. In
fact, roughly 70 percent of U.S. agricultural products are transported
through the Mississippi River system. More than 60 million tons of
commodities are transported on the Illinois River alone, including more
than half of Illinois' annual corn crop.
By controlling the water's flow, locks and dams help facilitate the
transportation of commodities along rivers. The outdated and
deteriorating 600-foot locks on the Mississippi and Illinois Rivers
create unnecessary delays because the locks are too small to
accommodate modern size barge tows. This causes transportation costs to
rise and results in lost market share for Illinois agriculture
producers.
Along with modernizing this river system's locks, we must not allow
the deterioration of its ecosystem. A cooperative solution can meet the
needs of waterway users and, at the same time, improve the environment
and stem the decline of the Mississippi and Illinois Rivers'
ecosystems. This legislation strikes a good balance by upgrading the
lock system while protecting the ecosystem of these rivers.
I commend Senator Bond for introducing this important legislation and
am pleased to join him in cosponsoring this bill. Illinois farmers and
other producers have waited far too long for these improvements. This
bill brings the Upper Mississippi and Illinois Rivers Waterway System
into the 21st century.
______
By Mr. NELSON of Florida:
S. 2472. A bill to require that notices to consumers of health and
financial services include information on the outsourcing of sensitive
personal information abroad, to require relevant Federal agencies to
prescribe regulations to ensure the privacy and security of sensitive
personal information outsourced abroad, to establish requirements for
foreign call centers, and for other purposes; to the Committee on the
Judiciary.
Mr. NELSON of Florida. Mr. President, I rise today to express my deep
concern about an issue that illustrates the continuing erosion of
Americans' privacy rights. My concern is related to the practice of
outsourcing. When U.S. companies outsource sensitive customer
information for processing overseas, they may be outsourcing our
privacy rights along with it.
We all know that recently it has become popular for American
companies to send internal paperwork to be done in other countries, by
foreign companies.
When a U.S. company allows a foreign company to process customer
data, the foreign company may be given access to the most sensitive
types of customer information. Our health records, bank account
numbers, social security numbers, tax forms, and credit card numbers
are now being
[[Page S6007]]
shipped abroad--without the knowledge of the customer and beyond the
reach of U.S. privacy laws.
This phenomenon means that consumers are almost powerless to stop
foreign scam artists from misusing their sensitive information. What
types of abuses can occur under this scenario?
In one recent shocking example, a U.S. hospital hired a medical
transcriber in Pakistan through a subcontractor to work with sensitive
patient health information. Later, the foreign worker claimed that she
had not been paid for her work.
So, you know what she did? She threatened to post patients' medical
records online unless she was paid. Luckily, she got her paycheck and
doesn't seem to have posted anything online.
But this situation shows us the potential for gross violations of
consumer privacy. The U.S. hospital said that it never even knew that
the foreign transcriber had been hired through a subcontractor and it
therefore had never bound her contractually to follow any privacy or
security standards.
Another potential abuse of offshoring sensitive customer data is
identity theft. The illegal theft of someone's identity is a profoundly
disturbing and costly problem in this information age.
Moreover, illegal misuse of sensitive information also can have
national security implications. For example, data about some of our
Nation's power grids allegedly has been outsourced to companies
overseas. Imagine the harm that terrorists might do if they got hold of
that type of confidential information.
As our global economy expands at such a rapid pace, we simply cannot
tolerate the outsourcing of American's privacy rights overseas. We need
to be proactive on this potentially explosive issue. Make no mistake,
the Pakistani transcriber incident is not the first or the last time
that sensitive customer information becomes endangered in a foreign
country. The time to act is now, instead of reacting only after our
privacy rights are further eroded.
In light of these circumstances, today I am introducing a bill--
along with Senator Feinstein--that begins to address these privacy and
security concerns. The bill is called the INFO Act, which is short for
The Increasing Notice of Foreign Outsourcing Act.
The INFO Act is designed to help ensure that sensitive consumer
information is protected and that U.S. companies can be held
accountable for breakdowns in the security of customer information.
Specifically, the INFO Act that we are introducing today would
require the following things: First, U.S. companies in the health care
industry and the financial industry must tell their customers that
their sensitive health information and financial information is being
processed by companies in foreign nations, where privacy safeguards may
be less stringent.
Second, U.S. companies in the health care industry and the financial
industry must promise their customers that they are complying with U.S.
privacy laws, which are designed to keep sensitive customer information
secure even when it is outsourced.
Third, U.S. companies in the health care industry and financial
industry must make sure that each foreign company that is handling
sensitive customer information has agreed by contract to meet U.S.
privacy standards and to keep sensitive customer information secure.
Fourth, U.S. companies may examine the business operations of the
foreign company to make sure the foreign company is meeting privacy
standards and is keeping sensitive customer information secure.
Fifth, a foreign company must notify the U.S company of any data
security breach. The U.S. company must then notify the U.S. regulatory
agency, which can then hold the U.S. company accountable for the
actions of the foreign company.
Finally, an employee of a foreign call center must tell a U.S.
customer where the employee is located, if the U.S. customer asks for
this information.
I strongly believe that we need to act now, before the privacy issues
raised by offshoring begin to explode.
Let me emphasize that I see this bill as both pro-consumer and pro-
business. Consumers will be informed about how their sensitive
information is handled and they can learn when security breaches occur.
Additionally, foreign companies that handle customer data will be held
accountable to the U.S. company that gives them their work. And U.S.
companies will be upfront in informing their customers about offshoring
sensitive data before customer backlash occurs.
With this sort of system in place, we hopefully can reduce the
chances of customer data being misused, and allow U.S. companies to
play on a level playing field where all interested parties know the
rules of the game.
I have a history of trying to solve consumer issues in ways that are
not needlessly burdensome to U.S. businesses. That is why my office, as
well as Senator Feinstein's office, has met several times with industry
representatives during the development of this bill.
I was interested to find ways for businesses to protect consumer
privacy rights without having to sharply raise prices or limit products
and services. I believe that the INFO Act has achieved those goals.
Consumer privacy has always been one of my top priorities. Now, as
always, I look forward to working with all interested parties to
resolve this consumer privacy issue in a timely and effective manner.
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. 2472
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 ``Increasing Notice of Foreign
Outsourcing Act''.
SEC. 2. HEALTH PRIVACY.
(a) Foreign-Based Business Associate.--In this section, the
term ``foreign-based business associate'' means a business
associate, as defined under the regulations promulgated
pursuant to section 264(c) of the Health Insurance
Portability and Accountability Act of 1996 (42 U.S.C. 1320d-2
note), whose operation is based outside the United States and
that receives protected health information and processes such
information outside the United States.
(b) Notices.--
(1) In general.--The Secretary of Health and Human Services
(referred to in this section as the ``Secretary'') shall
revise the regulations prescribed pursuant to section 264(c)
of the Health Insurance Portability and Accountability Act of
1996 (42 U.S.C. 1320d-2 note) to require a covered entity (as
defined under such regulations and referred to in this
section as a ``covered entity''), that outsources protected
health information (as defined under such regulations and
referred to in this section as ``protected health
information''), outside the United States to include in such
entity's notice of privacy protections the following:
(A) The following information in simple language:
(i) Notification that the covered entity outsources
protected health information to foreign-based business
associates.
(ii) Any risks and consequences to the privacy and security
of protected health information that arise as a result of the
processing of such information outside the United States.
(iii) Additional measures the covered entity is taking to
protect the protected health information outsourced for
processing outside the United States.
(B) A certification that the covered entity has taken
reasonable steps to ensure that the handling of protected
health information will be done in compliance with applicable
laws in all instances where protected health information is
processed outside the United States, including the reasons
for the certification.
(2) Effective date.--A covered entity shall be required to
include in such entity's notice of privacy protections the
information and certification described in paragraph (1) for
notices issued on or after the date on which the Secretary
prescribes regulations pursuant to this section or the date
that is 365 days after the date of enactment of this Act,
whichever date is earlier. Nothing in this subsection shall
be construed to require a covered entity to reissue notices
issued before the date on which the Secretary prescribes
regulations pursuant to this section or the date that is 365
days after the date of enactment of this Act, whichever date
is earlier, to include in such notices the information and
certification described in paragraph (1).
(c) Rulemaking.--
(1) In general.--
(A) Regulatory authority.--The Secretary shall--
(i) prescribe such regulations consistent with paragraph
(2) as may be necessary to carry out this section with
respect to foreign outsourcing; and
(ii) determine the appropriate penalties to impose upon a
covered entity for a violation of a provision of this
subsection or subsection (b).
[[Page S6008]]
(B) Procedures and deadlines.--The regulations described in
subparagraph (A) shall be prescribed in accordance with all
applicable legal requirements and shall be issued in final
form not later than 365 days after the date of enactment of
this Act.
(2) Necessary regulations.--The Secretary shall prescribe
regulations--
(A) requiring that a contract between a covered entity and
such entity's foreign-based business associate contain a
provision that provides such entity with the right to audit
such associate, as needed, to monitor performance under the
contract; and
(B) requiring that foreign-based business associates and
subcontractors of covered entities be contractually bound by
Federal privacy standards and security safeguards.
(d) Breach of Security.--
(1) Breach of security of the system.--In this subsection,
the term ``breach of security of the system''--
(A) means the compromise of the security, confidentiality,
or integrity of computerized data that results in, or there
is a reasonable basis to conclude has resulted in, the
unauthorized acquisition of and access to protected health
information maintained by the covered entity, foreign-based
business associate, or subcontractor; and
(B) does not include good faith acquisition of protected
health information by an employee or agent of the covered
entity, foreign-based business associate, or subcontractor
for the purposes of the entity, associate, or subcontractor,
if the protected health information is not used or subject to
further unauthorized disclosure.
(2) Database security.--
(A) Covered entity.--A covered entity--
(i) that owns or licenses electronic data containing
protected health information shall, following the discovery
of a breach of security of the system containing such data,
notify the Secretary of such breach; or
(ii) that receives a notification under subparagraph (B) of
a breach, shall notify the Secretary of such breach.
(B) Other parties.--
(i) Third party.--The Secretary shall require that a
contract between a covered entity and such entity's foreign-
based business associate contain a provision that if the
foreign-based business associate (or any subcontractor of
such associate) owns or licenses electronic data containing
protected health information that was provided to the
associate through the covered entity, the associate (or
subcontractor) shall, following the discovery of a breach of
security of the system containing such data--
(I) notify the entity from which it received the protected
health information of such breach; and
(II) provide a description to the entity from which it
received the protected health information of any corrective
actions taken to guard against future security breaches.
(ii) Notification process.--Each entity that receives a
notification under clause (i) shall notify the entity from
which it received the protected health information of such
breach until the notification reaches the foreign-based
business associate who shall, in turn, notify the covered
entity of such breach.
(C) Timeliness of notification.--All notifications required
under subparagraphs (A) and (B) shall be made as expediently
as possible and without unreasonable delay following--
(i) the discovery of a breach of security of the system;
and
(ii) any measures necessary to determine the scope of the
breach, prevent further disclosures, and restore the
reasonable integrity of the data system.
(3) Effective date.--This subsection shall take effect on
the expiration of the date that is 365 days after the date of
enactment of this subsection.
SEC. 3. FINANCIAL PRIVACY.
(a) Foreign-Based Business.--Section 509 of the Gramm-
Leach-Bliley Act (15 U.S.C. 6809) is amended by adding at the
end the following:
``(12) Foreign-based business.--The term `foreign-based
business' means a nonaffiliated third party whose operation
is based outside the United States and that receives
nonpublic personal information and processes such information
outside the United States.''.
(b) Financial Notices.--
(1) In general.--Section 503(b) of the Gramm-Leach-Bliley
Act (15 U.S.C. 6803(b)) is amended--
(A) in paragraph (3), by striking ``and'' after the
semicolon;
(B) in paragraph (4), by striking the period at the end and
inserting ``; and''; and
(C) by adding at the end the following:
``(5) if the financial institution outsources nonpublic
personal information outside the United States--
``(A) information informing the consumer in simple
language--
``(i) that the financial institution outsources nonpublic
personal information to foreign-based businesses;
``(ii) of any risks and consequences to the privacy and
security of an individual's nonpublic personal information
that arise as a result of the processing of such information
outside the United States; and
``(iii) of the additional measures the financial
institution is taking to protect the nonpublic personal
information outsourced for processing outside the United
States; and
``(B) a certification that the financial institution has
taken reasonable steps to ensure that the handling of
nonpublic personal information will be done in compliance
with applicable laws in all instances where nonpublic
personal information is processed outside the United States,
including the reasons for the certification.''.
(2) Effective date.--A financial institution shall include
in such institution's disclosure the information and
certification described in the amendment made by paragraph
(1)(C) for disclosures provided on or after the date on which
the regulatory agency that has jurisdiction over such
institution pursuant to section 505 of the Gramm-Leach-Bliley
Act (15 U.S.C. 6805) prescribes regulations pursuant to the
amendments made by this section or the date that is 365 days
after the date of enactment of this Act, whichever date is
earlier. Nothing in this subsection, or the amendments made
by this subsection, shall be construed to require a financial
institution to reissue disclosures provided before the date
on which the regulatory agency that has jurisdiction over
such institution pursuant to section 505 of the Gramm-Leach-
Bliley Act (15 U.S.C. 6805) prescribes regulations pursuant
to the amendments made by this section or the date that is
365 days after the date of enactment of this Act, whichever
date is earlier, to include in such disclosures the
information and certification described in the amendment made
by paragraph (1)(C).
(c) Rulemaking.--Section 504 of the Gramm-Leach-Bliley Act
(15 U.S.C. 6804) is amended by adding at the end the
following:
``(c) Rulemaking on Foreign Outsourcing.--
``(1) In general.--
``(A) Regulatory authority.--The Federal banking agencies,
the National Credit Union Administration, the Secretary of
the Treasury, the Securities and Exchange Commission, and the
Federal Trade Commission (referred to in this subsection as
the `regulatory agencies') shall--
``(i) prescribe such regulations consistent with paragraph
(2) as may be necessary to carry out this subtitle with
respect to foreign outsourcing, with respect to the financial
institutions subject to their jurisdiction under section 505;
and
``(ii) determine the appropriate penalties to impose upon
financial institutions for a violation of a provision of this
subsection.
``(B) Coordination, consistency, and comparability.--The
regulatory agencies shall consult and coordinate with each
other for the purposes of assuring, to the extent possible,
that the regulations prescribed by each such agency are
consistent and comparable with the regulations prescribed by
the other such agencies.
``(C) Procedures and deadlines.--The regulations described
in subparagraph (A) shall be prescribed in accordance with
all applicable legal requirements and shall be issued in
final form not later than 365 days after the date of
enactment of this subsection.
``(2) Necessary regulations.--The regulatory agencies shall
prescribe regulations--
``(A) requiring that a contract between a financial
institution and such institution's foreign-based business
contain a provision that provides such institution with the
right to audit such business, as needed, to monitor
performance under the contract; and
``(B) requiring that foreign-based businesses and
subcontractors of financial institutions be contractually
bound by Federal privacy standards and security
safeguards.''.
(d) Breach of Security.--Section 502 of the Gramm-Leach-
Bliley Act (15 U.S.C. 6802) is amended by adding at the end
the following:
``(f) Breach of Security.--
``(1) Breach of security of the system.--In this
subsection, the term `breach of security of the system'--
``(A) means the compromise of the security,
confidentiality, or integrity of computerized data that
results in, or there is a reasonable basis to conclude has
resulted in, the unauthorized acquisition of and access to
nonpublic personal information maintained by the financial
institution, foreign-based business, or subcontractor; and
``(B) does not include good faith acquisition of nonpublic
personal information by an employee or agent of the financial
institution, foreign-based business, or subcontractor for the
purposes of the institution, business, or subcontractor, if
the nonpublic personal information is not used or subject to
further unauthorized disclosure.
``(2) Database security.--
``(A) Financial institution.--A financial institution--
``(i) that owns or licenses electronic data containing
nonpublic personal information shall, following the discovery
of a breach of security of the system containing such data,
notify the entity under which the institution is subject to
jurisdiction under section 505 of such breach; or
``(ii) that receives a notification under subparagraph (B)
of a breach, shall notify the entity under which the
institution is subject to jurisdiction under section 505 of
such breach.
``(B) Other parties.--
``(i) In general.--The Federal banking agencies, the
National Credit Union Administration, the Secretary of the
Treasury, the Securities and Exchange Commission, and the
Federal Trade Commission shall require, with respect to the
financial institutions subject to their jurisdiction under
section 505, that a contract between a financial institution
and such institution's foreign-based business contain a
provision that if the foreign-based business (or any
subcontractor
[[Page S6009]]
of such business) owns or licenses electronic data containing
nonpublic personal information that was provided to the
business through the financial institution, the business (or
subcontractor) shall, following the discovery of a breach of
security of the system containing such data--
``(I) notify the entity from which it received the
nonpublic personal information of such breach; and
``(II) provide a description to the entity from which it
received the nonpublic personal information of any corrective
actions taken to guard against future security breaches.
``(ii) Notification process.--Each entity that receives a
notification under clause (i) shall notify the entity from
which it received the nonpublic personal information of such
breach until the notification reaches the foreign-based
business who shall, in turn, notify the financial institution
of such breach.
``(C) Timeliness of notification.--All notifications
required under subparagraphs (A) and (B) shall be made as
expediently as possible and without unreasonable delay
following--
``(i) the discovery of a breach of security of the system;
and
``(ii) any measures necessary to determine the scope of the
breach, prevent further disclosures, and restore the
reasonable integrity of the data system.
``(3) Effective date.--This subsection shall take effect on
the expiration of the date that is 365 days after the date of
enactment of this subsection.''.
SEC. 4. FOREIGN CALL CENTERS.
(a) Foreign Call Center Defined.--In this section, the term
``foreign call center'' means a foreign-based service
provider or a foreign-based subcontractor of such provider
that--
(1) is unaffiliated with the entity that utilizes such
provider or subcontractor; and
(2) provides customer-based service and sales or technical
assistance and expertise to individuals located in the United
States via the telephone, the Internet, or other
telecommunications and information technology.
(b) Requirement.--A contract between a foreign call center
and an entity that utilizes such foreign call center to
initiate telephone calls to, or receive telephone calls from,
individuals shall include a requirement that each employee of
the foreign call center disclose the physical location of
such employee upon the request of such individual.
(c) Certification Requirement.--An entity described in
subsection (b) shall submit an annual certification to the
Federal Trade Commission on whether or not the entity and its
subsidiaries, and the foreign call center employees and its
subsidiaries, have complied with subsection (b). Such annual
certifications shall be made available to the public.
(d) Noncompliance.--An entity described in subsection (b)
or its subsidiaries that violates subsection (b) shall be
subject to such civil penalties as the Federal Trade
Commission prescribes under subsection (e).
(e) Regulations.--Not later than 365 days after the date of
enactment of this Act, the Federal Trade Commission shall
prescribe such regulations as are necessary for effective
monitoring and compliance with this section. Such regulations
shall include appropriate civil penalties for noncompliance
with this section.
Mrs. FEINSTEIN. Mr. President, I rise to introduce, along with my
colleague, Senator Bill Nelson, the Increasing Notice of Foreign
Outsourcing Act, or the INFO Act. This legislation will help safeguard
Americans' most important and sensitive personal information when it is
sent abroad for processing to countries that may have lax security and
privacy standards.
The bill will ensure that American companies notify consumers of a
business's outsourcing practices. It will require American companies to
certify the adequacy of their outsourcing protections. And it will
require American companies to hold their foreign business partners
accountable for protecting Americans' data.
In order to protect the information of Americans that is now
vulnerable abroad, this bill calls for the following key safeguards:
First, the bill requires American health and financial companies to
notify consumers when sending their information abroad, and to certify
the safety of the overseas processing. We drafted provisions carefully
to minimize the burden on businesses, so they will expand on privacy
disclosures that companies already make under Federal law.
Second, American companies processing health or financial data must
include clauses in contracts with their foreign partners to allow
audits of their foreign information processors and to enforce American
privacy standards.
Third, the bill creates a system to inform American companies and
Federal regulators of any security breaches involving American health
or financial information at facilities operated outside the United
States.
And fourth, the bill gives Americans the right to have workers at
foreign call centers disclose where they are calling from.
The bill also gives Federal agencies the power to enforce these
provisions. It is important to emphasize that this bill is drafted to
minimize the burdens on businesses, by expanding on existing privacy
data and security laws.
While many are concerned about how outsourcing abroad hurts American
workers, outsourcing also poses risks to the security and privacy of
American consumers' personal data. The recent wave of international
outsourcing means that we are flooding the entire world with our most
sensitive information.
Once sent abroad, the information is at risk because our Federal laws
do not apply to foreign companies operating overseas. Another reason is
because many foreign countries have far weaker security laws than our
own. For instance, India still has no laws to protect personal and
private data. And still another reason is because it is extremely
difficult for Americans to use foreign courts to sue foreign companies
that misuse American data.
These factors leave the most intimate details of the lives of
uncountable Americans vulnerable to lax security and to malicious
identity thieves.
And there is even more at stake. Information outsourcing poses a
direct risk to national security. We are painfully aware that some
people want to steal the identity of individual Americans in order to
evade our homeland defenses and harm us all.
International information outsourcing has skyrocketed in recent
years. Consider the following:
Tax returns for about 200,000 Americans were prepared in India this
year. To put this number in context, India workers processed only about
1,000 U.S. tax returns 2 years ago. Tax returns have Americans' names,
Social Security numbers, income, employers, addresses, and other
details.
The American Association of Medical Transcription estimates that 10
percent of all medical transcription of doctors' notes is being done
abroad.
An executive from Trans Union, one of the major credit agencies in
the United States, told The San Francisco Chronicle that:
A hundred percent of our mail regarding customer disputes
is going to go to India at some point.
If anyone doubts the risk that international outsourcing poses to
Americans, consider these incidents:
Recently, a low-paid transcriber in Pakistan was working as a
subcontractor to the University of California Medical Center in San
Francisco. That foreign worker threatened to post confidential patient
information on the Internet unless the university coaxed her boss into
paying some of her bills.
Three weeks later, a strikingly similar incident occurred with a
worker in Bangalore, India.
In another incident, in Noida, India, an employee working at a call
center used an American's credit card information to buy electronics
equipment from Sony.
Also in India, there is a burgeoning black market in personal
identity information. According to one report, stolen names, addresses,
phone numbers, the bank a person has an account with, and even bank
account numbers are sold on the streets for mere pennies.
These are just a few incidents. No one knows how many other times
workers have done similar things. And that is a big part of the
problem. It is not merely that Americans' identities are vulnerable
when sent abroad. The problem is that American companies obscure how
much outsourcing they do, and when they are doing it.
For example, according to the San Jose Mercury News, a worker at a
call center dealing with State benefits refused to identify his
location. The supervisor, when she picked up the call, refused to say
anything more than that she worked for Citicorp.
In essence, the problem of obscurity is so bad that we can list only
a few incidents reported by the media. How many security breaches have
taken place? Have consumers been informed when their information is
abroad and at risk? How much money has this cost consumers? We don't
know.
[[Page S6010]]
And so far, American regulatory agencies have been unable to say
despite their oversight of these industries. And American companies
have stayed mum. We need to break the silence.
The fact is, our Government is simply not doing enough to protect
consumers. Earlier this month I received a letter from John D. Hawke,
Jr., who is the U.S. Comptroller of the Currency. He heads one of the
agencies that regulates U.S. financial institutions and banks.
Mr. Hawke wrote to me that the Office of the Comptroller of the
Currency, known as the OCC, does not directly regulate foreign
contractors that work for U.S. banks. Specifically, he wrote:
[T]he OCC focuses its supervisory reviews regarding foreign
servicing relationships on whether the serviced banks have
adequate procedures in place. . . .
That means the OCC is focusing on the American companies, not the
foreign ones.
I also learned from the OCC that it already suggests certain
safeguards for American banks to use when they hire foreign information
processors. The OCC asks U.S. banks to use contract provisions to make
sure that foreign companies use secure methods to process data, and to
let the U.S. companies audit the foreign companies.
But the OCC only suggests that companies adopt these safeguards. The
legislation we are introducing today would take safeguards like the
OCC's a step further, and make them mandatory.
Now is the time to act. We know that there are criminal syndicates,
such as in Nigeria, that have fraudulently obtained bank information to
steal untold fortunes. We can hardly imagine the damage such
organizations can do with a vast new source of sensitive financial data
from international information outsourcing.
In short, this bill accomplishes four goals crucial to protecting
Americans' sensitive data sent abroad. It requires companies to give
notice that they send consumers' sensitive data abroad. It ensures that
U.S. companies can audit their foreign partners, and impose U.S.
privacy standards on them. It establishes a system to ensure that
foreign and U.S. companies will report security breaches to the U.S.
Government. And it allows American consumers to demand to know where
foreign call centers are located.
This bill helps to protect outsourced information while minimizing
burdens on American businesses. I urge my colleagues to join us in this
effort.
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