[Congressional Record Volume 150, Number 74 (Tuesday, June 1, 2004)]
[Senate]
[Pages S6275-S6291]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. NELSON of Florida (for himself and Mrs. Feinstein):
  S. 2481. 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 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 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.

[[Page S6276]]

  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 can also 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 Americans' privacy rights overseas. We need 
to be proactve 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 the 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. 2481

       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).
       (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

[[Page S6277]]

       (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 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

[[Page S6278]]

       ``(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.
                                 ______
                                 
      By Mrs. CLINTON (for herself and Mr. Schumer):
  S. 2482. A bill to amend the Marine Protection, Research, and 
Sanctuaries Act of 1972 to prohibit the dumping of dredged material in 
certain bodies of water; to the Committee on Environment and Public 
Works.
  Mrs. CLINTON. Mr. President, I rise today to introduce the Long 
Island Sound Protection Act on behalf of myself and Senator Schumer. 
This legislation, which Congressman Bishop will be introducing in the 
House, would ensure that contaminated dredge materials are not dumped 
in Long Island Sound.
  The need for this legislation is that the U.S. Environmental 
Protection Agency is finalizing the process of designating several 
sites in Long Island Sound as long term disposal sites under the Marine 
Protection, Research, and Sanctuaries Act. Once this designation is 
complete, the sites will be open to receive dredged material 
indefinitely.
  I recognize that there has been and will continue to be a need to 
dredge harbors and marinas around the Sound to support commerce and 
navigation. But I am concerned that EPA has not looked hard enough at 
alternatives to dumping in the sound. While not all dredged materials 
are contaminated, we know that some are contaminated with heavy metals 
and other toxins. In my view, we should not use the Sound as a dumping 
ground for those materials.
  We must look more thoroughly for alternatives to dumping contaminated 
waste in Long Island Sound. We need careful planning that involves a 
strong role for the State of New York in this process. That is why this 
legislation is so important--we cannot let short term economics 
overtake long term environmental concerns.
  The Long Island Sound Protection Act would require the Corps of 
Engineers and the EPA to work with other federal agencies and the 
states of New York and Connecticut to develop a dredged material 
management plan (DMMP) that would govern dumping in the sound.
  The Long Island Sound Protection Act would require the DMMP to meet a 
set of objectives, including: Identifying the major sources and 
quantities of dredge material and contamination that require disposal; 
determining management actions that are to be taken to reduce sediment 
and contaminant loading of dredged areas; thoroughly assessing 
alternative locations, treatment technologies and beneficial uses for 
dredged material; ensuring that dumping is the disposal option of the 
last resort after all other options have been exhausted; securing 
alternative methods of disposal of contaminated dredge materials, 
including decontamination technologies, and alternative uses of 
materials, including upland disposal, containment, beach nourishment, 
marsh restoration, habitat construction, and other beneficial reuses; 
and confirming the specific roles of Federal, State, and local agencies 
with respect to various aspects of dredged material management.
  The Long Island Sound Protection Act also would stipulate that no 
dumping can occur in Long Island Sound, except in accordance with a 
DMMP that has been approved by the Governors of New York and 
Connecticut.
  In addition, the bill would provide for public hearings in both New 
York and Connecticut during the development of the DMMP.
  To me this is a common sense solution to the current dredge disposal 
problem. It would enable both New York and Connecticut to play a 
stronger role in determining what we put in the Sound. And it would 
provide for a much harder look at upland disposal and beneficial reuse 
as alternatives to dumping in the Sound.
  I ask unanimous consent that the text of the measure be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2482

       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 ``Long Island Sound Protection 
     Act''.

     SEC. 2. PROHIBITION ON DUMPING OF DREDGED MATERIAL.

       Section 106 of the Marine Protection, Research, and 
     Sanctuaries Act of 1972 (33 U.S.C. 1416) is amended by 
     striking subsection (f) and inserting the following:
       ``(f) Prohibition on Dumping of Dredged Material.--
       ``(1) Definitions.--In this subsection:
       ``(A) Covered body of water.--The term `covered body of 
     water' means--
       ``(i) Long Island Sound;
       ``(ii) Fisher's Island Sound;
       ``(iii) Block Island Sound;
       ``(iv) Peconic Bay; and
       ``(v) any harbor or tributary of a body of water described 
     in any of clauses (i) through (iv).
       ``(B) Covered project.--The term `covered project' means--
       ``(i) any Federal dredging project (or any project 
     conducted for a Federal agency pursuant to Federal 
     authorization);
       ``(ii) a dredging project carried out by a non-Federal 
     entity that results in the production of more than 25,000 
     cubic yards of dredged material; and
       ``(iii) any of 2 or more dredging projects carried out by 1 
     or more non-Federal entities in a covered body of water, 
     simultaneously or sequentially within a 180-day period, that 
     result, in the aggregate, in the production of more than 
     25,000 cubic yards of dredged material.
       ``(C) Plan.--The term `plan' means the dredged material 
     management plan required under paragraph (5).
       ``(2) Prohibition.--No dredged material from any covered 
     project shall be dumped, or transported for the purpose of 
     dumping, into any covered body of water unless and until the 
     dredged material is determined by the Administrator--
       ``(A) to have, or to cause (including through 
     bioaccumulation), concentrations of chemical constituents 
     that are not greater than those concentrations present in the 
     water column, sediments, and biota of areas proximate to, but 
     unaffected by, the proposed disposal site; and
       ``(B) to meet all requirements under this title (including 
     the trace contaminant provision under section 227.6 of title 
     40, Code of Federal Regulations (or a successor regulation), 
     and requirements under other regulations promulgated under 
     section 108).
       ``(3) Designation of sites.--No dredged material shall be 
     dumped, or transported for the purpose of dumping, into any 
     covered body of water except--
       ``(A) at a site designated by the Administrator in 
     accordance with section 102(c); and
       ``(B) upon a determination by the Administrator, following 
     approval of the plan required under paragraph (5)(F), that no 
     feasible alternative to ocean disposal, including sediment 
     remediation, beneficial reuse, and land-based alternatives, 
     is available prior to the time of designation.
       ``(4) Relationship to other law.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     this title applies to each covered body of water.
       ``(B) Exception.--No waiver under section 103(d) shall be 
     available for the dumping of dredged material in any covered 
     body of water.
       ``(5) Dredged material management plan.--

[[Page S6279]]

       ``(A) In general.--Before designation of any dredged 
     material disposal site in a covered body of water, the 
     Secretary and the Administrator, in consultation with the 
     United States Fish and Wildlife Service, the National Marine 
     Fisheries Service, the United States Coast Guard, and the 
     States of Connecticut and New York, shall--
       ``(i) develop a dredged material management plan for the 
     management of all dredged sediment in the covered bodies of 
     water; and
       ``(ii) submit the plan to Congress and the Governors of the 
     States of Connecticut and New York.
       ``(B) Objectives.--The objectives of the plan shall be--
       ``(i) to identify sources, quantities, and the extent of 
     contamination of dredged material that requires disposal;
       ``(ii) to determine management actions that are to be taken 
     to reduce sediment and contaminant loading of dredged areas;
       ``(iii) to thoroughly assess alternative locations, 
     treatment technologies, and beneficial uses for dredged 
     material;
       ``(iv) to ensure that dumping is the disposal option of 
     last resort for dredged material and is used only after all 
     other options have been exhausted;
       ``(v) to secure--

       ``(I) alternative methods of disposal of dredged materials, 
     including decontamination technologies; and
       ``(II) alternative uses of materials, including upland 
     disposal, containment, beach nourishment, marsh restoration, 
     habitat construction, and other beneficial reuses; and

       ``(vi) to confirm the specific roles of Federal, State, and 
     local agencies with respect to various aspects of dredged 
     material management.
       ``(C) Requirements.--The plan shall include environmental, 
     economic, and other analysis required to meet the objectives 
     listed in subparagraph (B), including--
       ``(i) an analysis of strategies to reduce sediment loading 
     of harbors and navigation areas;
       ``(ii) an analysis of sources of sediment contamination, 
     including recommendations for management measures to limit or 
     reduce those contamination sources;
       ``(iii) an analysis of options for reducing dredging needs 
     through modification of navigation strategies;
       ``(iv) an analysis of decontamination technologies, 
     including subsequent alternative uses of decontaminated 
     materials (such as upland disposal, containment, beach 
     nourishment, marsh restoration, and habitat construction); 
     and
       ``(v) a program for use of alternative methods of disposal 
     and use of dredged material, including alternatives to 
     dumping or dispersal in a covered body of water.
       ``(D) Public input.--The Secretary and the Administrator 
     shall--
       ``(i) during the development of the plan, hold in the 
     States of Connecticut and New York a series of public 
     hearings on the plan; and
       ``(ii) append to the plan a summary of the public comments 
     received.
       ``(E) Support.--Each of the Federal agencies referred to in 
     subparagraph (A) shall provide such staff support and other 
     resources as are necessary to carry out this paragraph.
       ``(F) Approval by connecticut and new york.--
       ``(i) In general.--Not later than 60 days after the date of 
     receipt of the plan, the Governors of the States of 
     Connecticut and New York shall notify the Secretary and the 
     Administrator of whether the States approve or disapprove the 
     plan.
       ``(ii) Dumping of dredged material.--No dredged material 
     from a covered project may be dumped, or transported for the 
     purpose of dumping, in any covered body of water unless the 
     dredged material--

       ``(I) conforms to a plan that has been approved by the 
     Governors of the States of Connecticut and New York; and
       ``(II) is to be dumped in a dredged material disposal site 
     designated by the Administrator under this title.

       ``(iii) Finality.--No dredged material disposal plan shall 
     become final until the plan has been approved by the States 
     of Connecticut and New York under clause (i).
       ``(iv) Previously designated sites.--No dredged material 
     disposal site in any covered body of water that was 
     designated before the date of enactment of this clause shall 
     be used for dumping of dredged material from a covered 
     project until the plan has been approved by the States of 
     Connecticut and New York under clause (i).
       ``(G) Authorization of appropriations.--There is authorized 
     to be appropriated to carry out this paragraph $5,000,000 for 
     each of fiscal years 2005 and 2006.''.
                                 ______
                                 
      By Mr. SPECTER:
  S. 2483. A bill to increase, effective as of December 1, 2004, the 
rates of compensation for veterans with service-connected disabilities 
and the rates of dependency and indemnity compensation for the 
survivors of certain disabled veterans; to the Committee on Veterans' 
Affairs.
  Mr. SPECTER. Mr. President, I have sought recognition to comment on 
legislation I am introducing today to provide a cost-of-living, COLA, 
adjustment for certain veterans' benefits programs. This COLA 
adjustment would affect payments made to nearly 3 million Department of 
Veterans Affairs, VA, beneficiaries, and would be reflected in 
beneficiary checks that are received in January 2005, and thereafter.
  An annual cost-of-living adjustment in veterans benefits is an 
important tool which protects veterans' cash-transfer benefits against 
the corrosive effects of inflation. The principal programs affected by 
the adjustment would be compensation paid to disabled veterans, and 
dependency and indemnity compensation, DIC, payments made to the 
surviving spouses, minor children and other dependants of persons who 
died in service, or who died after service as a result of service-
connected injuries or diseases.
  The President's budget anticipates inflation to be at a 1.3-percent 
level at the close of this year as measured by the consumer price 
index, CPI, published by the Department of Labor's Bureau of Labor 
Statistics. If inflation is held to the 1.3-percent level, that will be 
the level of COLA adjustment under this legislation since it ties the 
increase directly to the CPI increase as measured by the Department of 
Labor. Whatever the CPI increase eventually turns out to be, however, 
veterans' and survivors' benefits payments must be protected by being 
increased by a like amount. The Senate has already concurred with that 
judgment with passage of a budget resolution which assumes an increase 
equal to the CPI, and which sets aside the funds necessary to finance 
the COLA increase envisioned by this legislation.
  I ask my colleagues to support this vital legislation.
  I ask unanimous consent that this bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2483

       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 ``Veterans' Compensation Cost-
     of-Living Adjustment Act of 2004''.

     SEC. 2. INCREASE IN RATES OF DISABILITY COMPENSATION AND 
                   DEPENDENCY AND INDEMNITY COMPENSATION.

       (a) Rate Adjustment.--The Secretary of Veterans Affairs 
     shall, effective on December 1, 2004, increase the dollar 
     amounts in effect for the payment of disability compensation 
     and dependency and indemnity compensation by the Secretary, 
     as specified in subsection (b).
       (b) Amounts To Be Increased.--The dollar amounts to be 
     increased pursuant to subsection (a) are the following:
       (1) Compensation.--Each of the dollar amounts in effect 
     under section 1114 of title 38, United States Code.
       (2) Additional compensation for dependents.--Each of the 
     dollar amounts in effect under sections 1115(1) of such 
     title.
       (3) Clothing allowance.--The dollar amount in effect under 
     section 1162 of such title.
       (4) New dic rates.--The dollar amounts in effect under 
     paragraphs (1) and (2) of section 1311(a) of such title.
       (5) Old dic rates.--Each of the dollar amounts in effect 
     under section 1311(a)(3) of such title.
       (6) Additional dic for surviving spouses with minor 
     children.--The dollar amount in effect under section 1311(b) 
     of such title.
       (7) Additional dic for disability.--The dollar amounts in 
     effect under sections 1311(c) and 1311(d) of such title.
       (8) DIC for dependent children.--The dollar amounts in 
     effect under sections 1313(a) and 1314 of such title.
       (c) Determination of Increase.--(1) The increase under 
     subsection (a) shall be made in the dollar amounts specified 
     in subsection (b) as in effect on November 30, 2004.
       (2) Except as provided in paragraph (3), each such amount 
     shall be increased by the same percentage as the percentage 
     by which benefit amounts payable under title II of the Social 
     Security Act (42 U.S.C. 401 et seq.) are increased effective 
     December 1, 2004, as a result of a determination under 
     section 215(i) of such Act (42 U.S.C. 415(i)).
       (3) Each dollar amount increased pursuant to paragraph (2) 
     shall, if not a whole dollar amount, be rounded down to the 
     next lower whole dollar amount.
       (d) Special Rule.--The Secretary may adjust 
     administratively, consistent with the increases made under 
     subsection (a), the rates of disability compensation payable 
     to persons within the purview of section 10 of Public Law 85-
     857 (72 Stat. 1263) who are not in receipt of compensation 
     payable pursuant to chapter 11 of title 38, United States 
     Code.

     SEC. 3. PUBLICATION OF ADJUSTED RATES.

       At the same time as the matters specified in section 
     215(i)(2)(D) of the Social Security Act (42 U.S.C. 
     415(i)(2)(D)) are required to be published by reason of a 
     determination made

[[Page S6280]]

     under section 215(i) of such Act during fiscal year 2005, the 
     Secretary of Veterans Affairs shall publish in the Federal 
     Register the amounts specified in subsection (b) of section 
     2, as increased pursuant to that section.
                                 ______
                                 
      By Mr. SPECTER (by request):
  S. 2484. A bill to amend title 38, United States Code, to simplify 
and improve pay provisions for physicians and dentists, to authorize 
alternate work schedules and executive pay for nurses; to the Committee 
on Veterans' Affairs.
  Mr. SPECTER. Mr. President, as Chairman of the Committee on Veterans' 
Affairs, I have today introduced, at the request of the Secretary of 
Veterans Affairs, S. 2484, a proposed bill to simplify and improve pay 
provisions for physicians and dentists, and to authorize alternate work 
schedules and executive pay for nurses. The Secretary of Veterans 
Affairs submitted this proposed legislation to the President of the 
Senate by letter dated July 18, 2003.
  My introduction of this measure is in keeping with the policy which I 
have adopted of generally introducing--so that there will be specific 
bills to which my colleagues and others may direct their attention and 
comments--all administration-proposed draft legislation referred to the 
Committee on Veterans' Affairs. In this case, I delayed introduction of 
this measure so that certain provisions of the proposed legislation, 
which proposes extensive changes in the physician pay policies of the 
Department of Veterans Affairs (VA), might be reviewed by the 
Committee's staff, and by potentially-interested parties, prior to its 
introduction. I am pleased to state that many constructive ideas have 
been expressed, and the Committee's staff, working with the VA, the 
National Association of VA Physicians and Dentists, the American 
Federation of Government Employees, the National Federation of Federal 
Employees, and other representatives of VA's labor force, have 
identified prospective modifications to the proposed bill's text which, 
all appear to agree, would represent improvements over the language of 
the legislation forwarded to the Senate in July 2003.
  Even so, the bill I introduce today is the bill which the Secretary 
of Veterans Affairs sent to the Committee in July 2003. I have 
introduced that bill so that the original ``by request'' legislation 
might be available to the Senate, and to the public, as part of the 
public record. As is always my policy with respect to any such ``by 
request'' legislation, I reserve the right to oppose the provisions of, 
as well as any amendment to, this legislation. Indeed, as I have 
indicated, the Committee's staff, with the assistance of VA and other 
interested parties, is already working on modifications to the bill as 
proposed by the administration.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record, together with the transmittal letter and a 
section-by-section analysis which accompanied it.
  There being no objection, the material ordered to be printed in the 
Record, as follows:

                                S. 2484

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Department of Veterans 
     Affairs Health Care Personnel Enhancement Act of 2003''.

     SEC. 2. REFERENCES TO TITLE 38, UNITED STATES CODE.

       Except as otherwise expressly provided, whenever in this 
     Act an amendment is expressed in terms of an amendment to a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of title 38, 
     United States Code.

     SEC. 3. IMPROVEMENT AND SIMPLIFICATION OF PAY PROVISIONS FOR 
                   PHYSICIANS AND DENTISTS.

       (a) Chapter 74 is amended--
       (1) In section 7404(b)--
       (A) by striking ``(1)'' after ``(b)''.
       (B) by striking the list of position grades under the 
     caption, ``PHYSICIAN AND DENTIST SCHEDULE'' and inserting in 
     lieu thereof the following:
       ``Physician grade.
       Dentist grade.''
       (C) by striking paragraph (2) in its entirety.
       (2) In section 7404(c) by striking ``special''.
       (3) By striking Subchapter III in its entirety and 
     inserting in lieu thereof the following new sections:

            Subchapter III--Pay for Physicians and Dentists

     Sec. 7431. Pay authority.

       (a) In order to recruit and retain highly qualified 
     physicians and dentists in the Veterans Health 
     Administration, the Secretary shall establish and 
     periodically adjust the rates of pay for physicians and 
     dentists based upon the factors specified in subsection (b). 
     Total pay shall be benchmarked to representative salaries of 
     non-Department physicians, dentists, and health care 
     clinician-executives.
       (b) Pay for physicians and dentists employed in the 
     Veterans Health Administration shall have three components:
       (1) Base pay.--This shall be a uniform pay band applicable 
     nationwide. The minimum rate shall be the maximum rate for 
     Chief grade in the Veterans Health Administration Physician 
     and Dentist Pay Schedule in effect on the day before the date 
     of enactment of this Act. The maximum rate may not exceed the 
     rate of basic pay authorized by section 5316 of title 5 for 
     Level V of the Executive Schedule. The Secretary shall adjust 
     annually the minimum rate by the same percentage as the 
     adjustment under section 5303 of title 5 in the rates of pay 
     for the General Schedule, and the maximum rate in accordance 
     with section 5318 of title 5. Administration facilities, 
     under regulations prescribed by the Secretary, may set 
     individual base pay anywhere within the pay band.
       (2) Market pay.--This shall be a variable pay band based on 
     geographic area, specialty, assignment, personal 
     qualifications, and individual experience, and shall be 
     established and adjusted locally in accordance with 
     regulations prescribed under subsection (c). Administration 
     facilities will set individual market pay in accordance with 
     regulations prescribed by the Secretary. The Under Secretary 
     for Health shall periodically review and recommend to the 
     Secretary adjustments to the market pay band based on 
     published healthcare workforce employment and compensation 
     data. The Secretary may adjust the market pay band 
     periodically based on the recommendations of the Under 
     Secretary and in response to changing health-care labor 
     trends.
       (3) Performance pay.--
       (A) There shall be a variable pay band linked to the 
     physician's or dentist's achievement of specific corporate 
     goals and individual performance objectives. Physicians and 
     dentists other than those specified in subsection (f)(1) 
     shall not be eligible for this component during the first 
     year of appointment. The amount payable to a physician or 
     dentist for this component may vary based on individual 
     achievement. The performance component paid to any physician 
     or dentist other than those specified in subsection (f)(1) 
     will be in accordance with regulations prescribed by the 
     Secretary and may not exceed $10,000 in a year.
       (B) In accordance with regulations prescribed by the 
     Secretary, ten percent of the benchmarked total pay for 
     physicians and dentists specified in subsection (f)(1) shall 
     be linked to the physician's or dentist's achievement of 
     specific corporate goals and individual performance 
     objectives as a performance component. Administration 
     facilities may set the performance pay in accordance with 
     regulations prescribed by the Secretary.
       (c) Compensation paid under this subchapter shall be 
     considered pay for all purposes, including but not limited to 
     retirement benefits under chapters 83 and 84 of title 5, 
     United States Code, and other benefits. Notwithstanding the 
     preceding sentence, amounts paid for performance pay under 
     subsection (b)(3)(A) shall not be considered pay for 
     retirement benefits under chapters 83 and 84 of title 5, 
     United States Code.
       (d) Any decrease in pay that results from an adjustment to 
     the market or performance component of a physician's or 
     dentist's total compensation does not constitute an adverse 
     action.
       (e) In no case may the total amount of compensation paid to 
     a physician or dentist under this title in any one year 
     exceed the amount of annual compensation (excluding expenses) 
     specified in section 102 of title 3, United States Code.
       (f)(1) Covered Positions.--This subsection applies to 
     physicians and dentists in the following positions: Chiefs of 
     Staff or equivalent facility-level and Network-level clinical 
     management positions (including Network Clinical Service 
     Managers), facility and Network or Regional executive 
     positions (including Network Service Line Coordinators and 
     Medical Center/Health Care System Directors), Central Office 
     executive positions, and such other positions under this 
     title as the Secretary may determine in accordance with 
     regulations prescribed in accordance with section 7434(a).
       (2) Notwithstanding the special relationships of the 
     Veterans Health Administration with affiliated institutions 
     under section 7302, physicians and dentists serving in 
     covered positions and receiving compensation under this 
     subchapter may not receive any compensation on or after the 
     date specified in regulations issued by the Secretary, 
     through employment or contract with, or negotiate or accept 
     any offer of employment from, any institution or other entity 
     that is affiliated with the VA medical center to which they 
     are assigned, or affiliated with a VA medical center which 
     falls under their official responsibilities. This limitation 
     shall include receiving compensation through or from practice 
     groups or any other entities associated with the affiliated 
     institution(s), or from entities under contract with the 
     affiliated institution(s). Compensation includes anything of 
     monetary value, including but not limited to honoraria, 
     salary, and any fringe benefits such as: tuition waiver, 
     insurance protection, contributions to a retirement fund, 
     payment for books, below-

[[Page S6281]]

     market interest loans, or employee discounts. Nothing in this 
     section precludes physicians and dentists in covered 
     positions from holding uncompensated appointments as other 
     than officer, director, or trustee with affiliated 
     institutions in furtherance of section 7302.
       (3) Subject to any conditions the Secretary may by 
     regulation prescribe, the Secretary may, on a case-by-case 
     basis, suspend or waive the limitation in paragraph (2) to an 
     individual physician or dentist, when necessary and 
     appropriate to carry out the purposes of section 7302, to 
     assist communities or practice groups to meet medical needs 
     which otherwise would not be met, or where the Secretary 
     determines that suspension or waiver would be in the best 
     interest of the United States. The Secretary shall make any 
     suspension or waiver made pursuant to this paragraph in 
     writing.

     Sec. 7432. Transition to new pay system.

       (a) All current special pay agreements entered into under 
     the provisions of this subchapter in effect on the day before 
     the date of enactment of this Act shall terminate on the date 
     of enactment of this Act. Any physician or dentist in receipt 
     of special pay on that date shall continue to be compensated 
     as if such agreement were still in effect until the date 
     specified in regulations issued by the Secretary implementing 
     this new subchapter.
       (b) Physicians and dentists appointed or reassigned on or 
     after the date of enactment of this Act, but before 
     implementation of this subchapter shall be compensated in 
     accordance with sections 7404, 7405, 7433, 7434, 7435, and 
     7436, as applicable, in effect on the day before the date of 
     enactment of this Act. Any such physician or dentist shall 
     continue to be compensated at the applicable rates until such 
     date specified in regulations issued by the Secretary 
     implementing the new pay system. No special pay agreement 
     will be required of any physician or dentist receiving such 
     pay.
       (c) During the period from the date of enactment of this 
     Act through the date of implementation of this subchapter, 
     physicians and dentists paid pursuant to this section shall 
     be subject to paragraphs (1), (2), (4), (5), and (6) of 
     subsection (b) of section 7438 in effect on the day before 
     the date of enactment of this Act.
       (d) The amount of pay paid under this subchapter for a 
     physician or dentist appointed before the effective date of 
     regulations implementing this subchapter shall be not less 
     than the amount of base pay and special pay such physician or 
     dentist received under this title on the day before such 
     effective date.
       (e) Special pay subject to the provisions of section 7438, 
     as in effect before the date of enactment of this section, or 
     subject to subsection (c), paid to Veterans Health 
     Administration physicians and dentists appointed before the 
     effective date of regulations implementing this subchapter 
     and who separate after such effective date, shall be fully 
     creditable for purposes of computing benefits under chapters 
     83 and 84 of title 5.

     Sec. 7433. Pay for Under Secretary for Health

       (a) Section 5314 of title 5 establishes the base pay for 
     the Under Secretary for Health at Level III of the Executive 
     Schedule.
       (b) In addition to base pay under section 5314 of title 5, 
     the Under Secretary for Health shall be eligible for Market 
     Pay under section 7431(b)(2).
       (c) Transition. The current special pay agreement of the 
     Under Secretary for Health entered into under the provisions 
     of this subchapter in effect on the day before the date of 
     enactment of this Act shall terminate on the date of 
     enactment of this Act. The incumbent Under Secretary for 
     Health on the date of enactment of this Act shall continue to 
     receive special pay as if such agreement were still in effect 
     until the date specified in regulations issued by the 
     Secretary implementing this new subchapter. Any Under 
     Secretary for Health appointed on or after the date of 
     enactment of this Act, but before the date specified in 
     regulations issued by the Secretary implementing this new 
     subchapter, shall receive special pay in accordance with 
     sections 7432(d)(2), 7433 and 7437(a) in effect on the day 
     before the date of enactment of this Act.

     Sec. 7434. Administrative provisions.

       (a) After receiving the recommendations of the Under 
     Secretary for Health, the Secretary, pursuant to the 
     authority in section 7421(a), shall prescribe regulations 
     implementing the physician and dentist pay system established 
     in this new subchapter. Such regulations shall include the 
     method for computing the pay for all physicians and dentists 
     in the Veterans Health Administration under this title.
       (b) Eighteen months after the Secretary issues regulations 
     implementing this subchapter and annually thereafter for the 
     next ten years, the Secretary shall provide to the Committees 
     on Veterans' Affairs of the Senate and House of 
     Representatives a report on the implementation of the 
     authorities under this subchapter. Each report shall include:
       (1) a description of the rates of pay in effect during the 
     preceding fiscal year with a comparison to the rates in 
     effect during the previous fiscal year by facility and by 
     specialty;
       (2) the number of physicians and dentists who left 
     employment with the Veterans Health Administration during the 
     preceding year;
       (3) the number of unfilled physician and dentist positions 
     in each specialty in the Veterans Health Administration, the 
     average and maximum lengths of time that such positions have 
     been unfilled, and a summary of the reasons that such 
     positions remain unfilled; and
       (4) an assessment of the impact of implementation of this 
     subchapter on efforts to recruit and retain physicians and 
     dentists in the Veterans Health Administration.
       In addition, the first two reports following implementation 
     of this subchapter shall also include a comparison of 
     staffing levels, contract expenditures, and average salary of 
     physicians and dentists by facility and specialty for the 
     preceding and previous fiscal years.
       (b) The title and list of sections for Subchapter III in 
     the table of sections at the beginning of Chapter 74 is 
     amended to read as follows:

            Subchapter III--Pay for Physicians and Dentists

Sec. 7431. Pay authority.
Sec. 7432. Transition to new pay system.
Sec. 7433. Pay for Under Secretary for Health
Sec. 7434. Administrative provisions.

     SEC. 4. ALTERNATE WORK SCHEDULES.

       (a) Chapter 74 is amended by adding a new section 7456a:

     Sec. 7456a. Alternate work schedules.

       (a) Coverage.--This section applies to registered nurses 
     appointed under this chapter.
       (b) 36/40 Work Schedule.--
       (1) Subject to paragraph (2), if the Secretary determines 
     it be necessary in order to obtain or retain the services of 
     registered nurses at any Department health-care facility, the 
     Secretary may provide, in the case of nurses employed at such 
     facility, that such nurses who work three regularly scheduled 
     12-hour tours of duty within a workweek shall be considered 
     for all purposes (except computation of full-time equivalent 
     employees for the purposes of determining compliance with 
     personnel ceilings) to have worked a full 40-hour basic 
     workweek.
       (2)(A) Basic and additional pay for a registered nurse who 
     is considered under paragraph (1) to have worked a full 40-
     hour basic workweek shall be subject to subparagraphs (B) and 
     (C).
       (B) The hourly rate of basic pay for such a nurse for 
     service performed as part of a regularly scheduled 36-hour 
     tour of duty within the workweek shall be derived by dividing 
     the nurse's annual rate of basic pay by 1,872.
       (C)(i) Such a nurse who performs a period of service in 
     excess of such nurse's regularly scheduled 36-hour tour of 
     duty within a workweek is entitled to overtime pay under 
     section 7453(e) of this title, or other applicable law, for 
     officially ordered or approved service performed in excess of 
     eight hours on a day other than a day on which such nurse's 
     regularly scheduled three 12-hour tours fall, or in excess of 
     12 hours for any day included in the regularly scheduled 36-
     hour tour of duty, or in excess of 40 hours during an 
     administrative workweek.
       (ii) Except as provided in subparagraph (i), a registered 
     nurse to whom this subsection is applicable is not entitled 
     to additional pay under section 7453 of this title, or other 
     applicable law, for any period included in a regularly 
     scheduled 12-hour tour of duty.
       (3) A nurse who works a 36/40 work schedule described in 
     this subsection who is absent on approved sick leave or 
     annual leave during a regularly scheduled 12-hour tour of 
     duty shall be charged for such leave at a rate of ten hours 
     of leave for nine hours of absence.
       (c) 7/7 Work Schedule.--
       (1) Subject to paragraph (2), if the Secretary determines 
     it be necessary in order to obtain or retain the services of 
     registered nurses at any Department health-care facility, the 
     Secretary may provide, in the case of nurses employed at such 
     facility, that such nurses who work seven regularly scheduled 
     10-hour tours of duty, with seven days off duty, within a 
     two-week pay period, shall be considered for all purposes 
     (except computation of full-time equivalent employees for the 
     purposes of determining compliance with personnel ceilings) 
     to have worked a full 80 hours for the pay period.
       (2)(A) Basic and additional pay for a registered nurse who 
     is considered under paragraph (1) to have worked a full 80-
     hour pay period shall be subject to subparagraphs (B) and 
     (C).
       (B) The hourly rate of basic pay for such a nurse for 
     service performed as part of a regularly scheduled 70-hour 
     tour of duty within the pay period shall be derived by 
     dividing the nurse's annual rate of basic pay by 1,820.
       (C)(i) Such a nurse who performs a period of service in 
     excess of such nurse's regularly scheduled 70-hour tour of 
     duty within a pay period is entitled to overtime pay under 
     section 7453(e) of this title, or other applicable law, for 
     officially ordered or approved service performed in excess of 
     eight hours on a day other than a day on which such nurse's 
     regularly scheduled seven 10-hour tours fall, or in excess of 
     10 hours for any day included in the regularly scheduled 70-
     hour tour of duty, or in excess of 80 hours during a pay 
     period.
       (ii) Except as provided in subparagraph (i), a registered 
     nurse to whom this subsection is applicable is not entitled 
     to additional pay under section 7453 of this title, or other 
     applicable law, for any period included in a regularly 
     scheduled 10-hour tour of duty.
       (3) A nurse who works a 7/7 work schedule described in this 
     subsection who is absent on approved sick leave or annual 
     leave during a

[[Page S6282]]

     regularly scheduled 12-hour tour of duty shall be charged for 
     such leave at a rate of eight hours of leave for seven hours 
     of absence.
       (d) 9-Month Work Schedule.--The Secretary may authorize a 
     registered nurse appointed under section 7405, with the 
     nurse's written consent, to work full-time for nine months 
     with three months off duty, within a fiscal year, and be paid 
     at 75 percent of the full-time rate for such nurse's grade 
     for each pay period of such fiscal year. Such employee shall 
     be considered a .75 full-time equivalent employee in 
     computing full-time equivalent employees for the purposes of 
     determining compliance with personnel ceilings. Service on 
     this schedule shall be considered part-time service for 
     purposes of computing benefits under chapters 83 and 84 of 
     title 5.
       (f) The Secretary shall prescribe regulations for the 
     implementation of this section.
       (b) The title and list of sections for Subchapter IV in the 
     table of sections at the beginning of Chapter 74 is amended 
     to read as follows:

     Subchapter IV--Pay for Nurses and Other Health-Care Personnel

7451. Nurses and Other Health-Care Personnel: competitive pay.
7452. Nurses and other health-care personnel: administration of pay.
7453. Nurses: additional pay.
7454. Physician assistants and other health care professionals: 
              additional pay.
7455. Increases in rates of basic pay.
7456. Nurses: special rules for weekend duty.
7456a. Alternate work schedules.
7457. On-call pay.
7458. Recruitment and retention bonus pay.

     SEC. 5. NURSE EXECUTIVE SPECIAL PAY.

       (a) Section 7452 is amended by adding at the end thereof:
       ``(g)(1) In order to recruit and retain highly qualified 
     Department nurse executives, the Secretary, in accordance 
     with regulations the Secretary shall prescribe, shall pay 
     special pay to the nurse executive at each Department health-
     care facility or at Central Office.
       (2) Special pay paid under paragraph (1) shall be a minimum 
     of $10,000 and a maximum of $25,000. The amount paid to each 
     nurse executive shall be based on factors such as the grade 
     of the nurse executive position, the scope and complexity of 
     the nurse executive position, the nurse executive's personal 
     qualifications, the characteristics of the health-care 
     facility, e.g., tertiary, single site or multi-site, nature 
     and number of specialty care units, demonstrated recruitment 
     and retention difficulties, and such other factors the 
     Secretary deems appropriate.
       (3) Special pay paid under paragraph (1) shall be in 
     addition to any other pay (including basic pay) and 
     allowances to which the nurse executive is entitled, and 
     shall be considered pay for all purposes, including but not 
     limited to retirement benefits under chapters 83 and 84 of 
     title 5, United States Code, and other benefits, but shall 
     not be considered basic pay for purposes of adverse actions 
     under subchapter V.''

     SEC. 6. EFFECTIVE DATE.

       The amendments to title 38, United States Code, contained 
     herein shall take effect on the first day of the first pay 
     period on or after the later of April 1, 2004, or six months 
     after the date of enactment.

     SEC. 7. ADMINISTRATIVE PROVISION.

       (a) Chapter 74 is amended by adding a new section 7427:

     Sec. 7427. Functions.

       The functions assigned to the Secretary and other officers 
     of the Department of Veterans Affairs under this chapter are 
     vested in their discretion.
                                  ____



                            The Secretary of Veterans Affairs,

                                    Washington, DC, July 18, 2003.
     Hon. Richard B. Cheney,
     President of the Senate,
     Washington, DC.
       Dear Mr. President: There is transmitted herein a draft 
     bill ``To amend title 38, United States Code, to simplify and 
     improve pay provisions for physicians and dentists, to 
     authorize alternate work schedules and executive pay for 
     nurses.'' We request that it be referred to the appropriate 
     committee for prompt consideration and enactment.
       The revised physician and dentist pay system and nursing 
     provisions were included in the President's budget. They 
     would be effective on the first day of the first pay period 
     on or after the later of April 1, 2004, or six months after 
     the date of enactment.

                     Enhanced Physician/Dentist Pay

       This bill will greatly enhance ability of the Department of 
     Veterans Affairs (VA) to recruit and retain the highest 
     quality physicians and dentists to treat the Nation's 
     veterans. It would completely revise the VA physician and 
     dentist pay system to allow VA to adjust physician and 
     dentist compensation levels according to market forces. The 
     system's simplicity and flexibility would ensure that VA 
     physician and dentist compensation levels and practices do 
     not become outdated over time due to statutory limits. This 
     system also would ensure that VA pay levels do not fall 
     drastically behind while awaiting adjustment to the statutory 
     authority. It will be a living system that adjusts to 
     changing forces in the healthcare labor market. Generally, 
     amounts paid under this system will be considered pay for all 
     purposes, including retirement benefits under chapters 83 and 
     84 of title 5, United States Code, and other benefits. 
     However, amounts paid under the performance pay component 
     will not be considered pay for retirement benefits.


                         VA Staffing Challenges

       The VA compensation structure for physicians and dentists 
     has not changed since 1991. The current system is extremely 
     complex, comprising seven or eight different special pay 
     components in addition to basic pay. The system offers 
     insufficient flexibility to respond to the changing 
     competitive market for many of the medical specialties, 
     especially for the highest paid medical subspecialties. VA is 
     no longer able to compete for these critical subspecialties. 
     Also, although Congress increased special pay for dentists in 
     2000, those increases did not bring VA pay up to the levels 
     in private dental practice. The effects of noncompetitive pay 
     and benefits are reflected in dramatic increases in VA's 
     scarce specialty, fee basis, and contractual expenditures.
       VA is facing a critical situation. Its compensation system 
     for physicians and dentists is unable to respond to the 
     demands of the current market. Severe shortages of qualified 
     physician specialists currently exist throughout the country 
     in specialties critical to VA's health care mission, such as 
     Anesthesiology, Radiology, Cardiology, Urology, 
     Gastroenterology, Oncology, and Orthopedic Surgery. These 
     shortages have driven compensation levels dramatically 
     upward. In these shortage specialties, VA total compensation 
     lags behind the private or academic sectors by 35 percent or 
     more. Such compensation gaps make recruitment almost 
     impossible and retention becomes more difficult. This 
     legislation will enable VA to compete for physicians in the 
     higher-paid, critical specialties and will protect other 
     physicians' and dentists' pay. Moreover, VA will be able to 
     offer to all physicians and dentists the prospect, now and in 
     the future, of market-sensitive pay rates, with a portion of 
     their compensation based on achievement of specific 
     performance goals.
       The problems with the current system are clear: special pay 
     rates are fixed in statute, so over time their values are 
     eroded by inflation, and VA pay eventually falls behind the 
     market. The mechanisms available to VA to adjust physician 
     and dentist pay are not able to respond to fluctuations in 
     market levels of incomes for the different specialties. VA 
     physician and dentist base salary rates increase by the 
     amount of the annual national comparability adjustment that 
     Federal employees generally receive; however, there is no 
     increase in special pay amounts. Compensation for many 
     specialties has risen significantly in the private sector, 
     and VA pay cannot be increased to keep pace. VA is already 
     paying the maximum authorized amounts for scarce specialists; 
     there is no discretion under existing statute to pay more to 
     retain employees.
       Additionally, the current system does not adequately 
     recognize disparities in pay among specialties. This results 
     in serious pay compression and makes it difficult for VA to 
     compete for the most highly paid specialists. For example, 
     the difference between the average pay of non-Federal 
     cardiologists vs. primary care practitioners is about 100 
     percent; in VA, the difference averages about 20 percent.
       VA historically had been able to use the Federal benefits 
     package as a major recruitment tool. To offset pay 
     disparities with the private sector, VA publicized its 
     benefits, such as the generous leave policies, opportunities 
     to pursue research and education activities, and formal 
     relationships with academic affiliates. More and more, 
     though, the private sector offers comparable or better 
     benefits. Some benefits widely available in the private 
     sector exceed VA's offerings including paid relocation as a 
     recruiting incentive, cafeteria-style benefit plans, payment 
     for courses to acquire continuing medical education (CME) 
     credits for license and board renewal, disability insurance, 
     and retirement benefits.
       Increased enrollment by veterans for Veterans Health 
     Administration, VHA, services and the need for more 
     comprehensive care to aging veteran patients will result in 
     an increase in workload across the system over the next 5 
     years. Current trends indicate a steady decrease in the 
     number of physicians and dentists VHA will be able to employ 
     over the same period. This decrease will result from 
     increased retirements, losses to the private sector, a 
     shrinking dentist labor supply, and increasing difficulty in 
     recruiting replacements. These factors will combine to create 
     significant gaps between VHA's staffing needs and available 
     resources for most physician specialties.
       Without the flexibility to adjust pay in response to market 
     pressures and improve its competitive position in recruiting 
     and retaining physicians, the Department will be unable to 
     meet the demands of its increasing workload. VHA will be 
     forced to rely more heavily on scarce medical specialist 
     contracts and fee basis care, which often cost more than 
     using VHA physicians. It is critical that VHA be able to 
     offer more competitive compensation for physicians and 
     dentists.


              Proposed New VA Physician/Dentist Pay System

       We propose a three-tiered system of base pay, market pay, 
     and performance-based pay. VA would benchmark the sum of all 
     three bands to the 50th percentile of the Association of 
     American Medical Colleges (AAMC) Associate Professor 
     compensation

[[Page S6283]]

     (for physicians) and 75 percent of American Dental 
     Association (ADA) net private practice income (for dentists). 
     The base pay component would be increased by the annual 
     comparability adjustments to Federal pay authorized by 
     Executive Order.
       First Tier--Base Pay. A uniform base pay band will apply to 
     all positions in VHA, without grade distinctions. The 
     proposed range is Chief grade, step 10 of the VA Physician/
     Dentist Schedule to Level V of the Executive Schedule, from 
     roughly $110,000 to $125,000. This change will dramatically 
     simplify hiring and employment and facilitate reassignments 
     and position changes. Placement in this band would be based 
     on the individual's qualifications. This band would form the 
     floor below which no individual's pay would ever go.
       Second Tier--Market Pay. The second tier, the market pay 
     band, will be determined according to geographic area, 
     specialty, assignment, personal qualifications and individual 
     experience. It would be indexed to the salaries of similarly 
     qualified non-Department physicians, dentists, and health-
     care executives at the entry, mid-career, and senior levels. 
     The flexibility of this tier allows VA to keep pace with the 
     market, both on upward and downward trends. VA would link the 
     market band for clinicians to AAMC faculty compensation. For 
     executives at the Chief of Staff (COS) level and above, the 
     benchmarks would be hospital and HMO executive compensation 
     levels. For dentists, the benchmark will be American Dental 
     Association (ADA) net private practice income.
       Third Tier--Performance Pay. The third band will be linked 
     to performance, and would be paid for discrete achievements 
     in quality, productivity, and support of corporate goals. The 
     measures will be flexible and generally set locally; national 
     objectives could also be mandated. VA facilities may 
     authorize performance pay of up to $10,000 for physicians and 
     dentists below the Chief of Staff (COS) level. For managers 
     at the COS level and above, ten percent of their benchmarked 
     pay would be at risk, and would be payable to the extent that 
     performance goals are met. This will address a concern that 
     has been raised by the General Accounting Office and others 
     of a disconnect between employees' performance and their pay.
       The draft bill also would prohibit senior title 38 
     officials at the Chief of Staff level and above from 
     receiving any compensation, whether from employment or 
     contract, and from accepting any offers of future employment, 
     from medical schools affiliated with their respective VAMCs. 
     This prohibition will reduce the risk of potential conflicts 
     of interest, and will ensure that the Department's interests 
     in agreements with affiliated medical schools are adequately 
     protected. It is highly desirable to have an independent 
     senior clinical official at each facility. VA's 
     implementation of the bill will increase executive 
     compensation to a level that would offset any loss of outside 
     income resulting from this provision. In limited 
     circumstances, the Secretary could suspend or waive this 
     prohibition.


                  Details of VA's Implementation Plan

       Salary benchmarks will be set at the national level and 
     communicated to networks. Local facilities would set pay 
     levels within a range (10 percent of the 
     benchmark) according to local circumstances. Any decision to 
     set pay outside the 10-percent band will require higher-level 
     approval.
       Benchmark salaries will be set for each specialty and 
     location, at entry, mid-career, and senior levels. Increments 
     and graduated benchmarks will be set to reflect varying 
     levels of experience and to provide for reasonable income 
     growth over a period of time.
       VA will use ADA net private practice income to set VA 
     dentist salary benchmarks. About 93 percent of all practicing 
     dentists are employed in private practice, so VA's primary 
     competition in the marketplace is private practice income.
       Specific amounts of each tier and the total payable for 
     each clinician will be set at the local level. This continues 
     the VA practice of local pay setting based on national policy 
     (used for physician and dentist special pay, nurse locality 
     pay system, and special salary rates):
       This proposal will greatly enhance VA's ability to compete 
     for the full range of skilled medical and dental services at 
     the most reasonable cost. VA will be able to offer 
     competitive compensation to full-time, part-time, or 
     occasional staff, or pay on contract, according to the most 
     clinically appropriate and efficient option.
       This proposed physician and dentist pay aligns with the 
     President's budget and would be effective on the first day of 
     the first pay period on or after the later of April 1, 2004, 
     or six months after the date of enactment.


                                Examples

       An example of how this system will work for Internal 
     Medicine:

     VA internist with 10 years of experience, 2003: $142,682; 
         AAMC Associate Professor median salary, 2001-2002: 
         $142,000; Benchmark for VA Salary (10% of 
         AAMC): $127,800-156,200; Targeted Increase: $0-$13,518.

       An example of how this system will work for Therapeutic 
     Radiologists:

     VA radiologist with 10 years of experience, 2003: $190,682; 
         AAMC Associate Professor median salary, 2001-2002: 
         $248,000; Benchmark for VA Salary (10% of 
         AAMC): $223,200-272,800; Targeted Increase: $32,518-
         82,118.

       An example of how this system will work for General 
     Dentists:

     VA general dentist with 10 years of experience, 2003: 
         $131,682; ADA net private practice income (minus 
         benefits), 2002: $134,928; Benchmark for VA Salary 
         (10% of ADA): $121,435-148,421; Targeted 
         Increase $0-$16,739.


                        Estimated Costs/Savings

       VA estimates the first year costs to be $69.42 million, 
     with ten-year costs of $1.59 billion. There are expected 
     savings from productivity and the avoidance of costly 
     specialty contracts resulting from more competitive pay. The 
     net first year costs are $48.47 million, with net ten-years 
     costs of $636.25 million. A detailed explanation is in the 
     attached charts.

                        Enhancements for Nurses

       Over the next several years the projected increase in the 
     number of aging veterans and increased enrollment in the VA 
     healthcare system by veterans of all ages will increase 
     workload across the VA healthcare system. Between 2000 and 
     2010, the number of veterans age 75 and above will increase 
     from 4 million to 4.5 million and within that number, those 
     veterans age 85 and older will triple from 422,000 to 1.3 
     million. Veteran enrollees in the VA healthcare system will 
     increase from approximately 6 million in FY 2002, to 
     approximately 7.75 million in FY 2007. This increasing and 
     aging population of veterans will exhibit higher comorbidity 
     and require more comprehensive care both as inpatients and as 
     outpatients.
       At the same time, national nursing leaders and healthcare 
     organizations project a shortage of registered nurses that 
     will be unlike any experienced in the past. Changes in 
     healthcare delivery requiring larger numbers of professional 
     nurses to perform increasingly complex functions in hospitals 
     and the community has heightened the demand for professional 
     nurses. Given the aging of the current registered nurse 
     workforce (average age nationally, 45.2 yrs., in VA, 46 
     yrs.), and the decreasing number of students who choose 
     nursing as a career, the future availability of professional, 
     registered nurses (RN) will be insufficient to meet our 
     national healthcare needs. Negative perceptions of nursing as 
     a profession (i.e., perceived negative work environment and 
     pay inequities between nurses and a wide range of alternative 
     career options that require less education and have less 
     responsibility) have exacerbated this situation. VA already 
     is experiencing some staffing difficulties. VA's nurse 
     vacancy and turnover rates have greatly increased since 1998. 
     VA must better position itself to attract the nurses to meet 
     current and future healthcare needs.
       Nurse shortages, complex healthcare environments and 
     growing administrative demands require highly skilled nurse 
     executives at facility and national levels with the knowledge 
     and experience to develop responsive care delivery models in 
     an ever-changing healthcare environment. VA nursing 
     leadership must be highly qualified and capable of 
     implementing cutting edge, innovative changes. Current VA pay 
     for nurse executives is not comparable to private sector pay 
     and perquisites. As a result, VA often is not in a position 
     to hire and retain nurse executives with exceptional skills. 
     The current pay structure offers little or no incentive for 
     current VA nurse executives and potential nurse leaders to 
     take on progressively more responsible and complex 
     assignments. Moreover, the current VA pay structure is 
     generally not attractive to highly skilled and experienced 
     non-VA nurse executives.
       Approximately 55 percent of all VA Nurse Executives are 
     eligible for retirement by 2005; 69 percent will be eligible 
     by 2008. In addition, 35 percent of all current VA registered 
     nurses are eligible to retire by 2005. When coupled with the 
     national shortage, this potential loss of nurses could 
     jeopardize VA's ability to accomplish its healthcare mission.
       Thus, we propose legislation enabling VA medical centers 
     (VAMCs) to offer flexible tours, and establishing a nurse 
     executive special pay program.


                             Flexible Tours

       The proposed legislation would authorize VA to offer 
     registered nurses the following flexible tours:
       (1) three 12-hour tours (36 hours) in a workweek paid as 40 
     hours;
       (2) 7 ten-hour days/7 days off in a pay period, with pay 
     for 80 hours;
       (3) 9 months of work with 3 months off, with pay 
     apportioned over a 12-month period.
       Inflexibility in work schedules is a major cause of 
     dissatisfaction in nurse employment. A 2000 survey conducted 
     by the American Organization of Nurse Executives (AONE), 
     found that after salary, the top benefit sought by nurses was 
     ``flexible scheduling and control over shifts.'' Providing 
     different options for scheduling would be a way of bringing 
     more nurses into the workplace and retaining their services.
       VAMCs across the country must compete in local employment 
     markets that offer a variety of flexible working schedules 
     and pay practices to professional nurses. Such options are 
     popular among nurses because it allows them to accommodate 
     individual lifestyles and personal obligations. The proposed 
     changes would allow VAMCs to implement flexible pay and work-
     schedule options common in many job markets. The ability to 
     offer options comparable to those offered by their 
     competitors would enhance VAMCs'

[[Page S6284]]

     ability to remain competitive employers. These flexible nurse 
     tour proposals align with the President's budget and would be 
     effective on the first day of the first pay period on or 
     after the later of April 1, 2004, or six months after the 
     date of enactment.


                      Nurse Executive Special Pay

       The proposed legislation also would authorize VA to approve 
     special pay to the nurse executive at each VA medical center 
     or VA Central Office. The special pay would range from a 
     minimum of $10,000 to a maximum of $25,000, based on factors 
     such as the grade of the nurse executive, the scope and 
     complexity of the nurse executive position, the nurse 
     executive's personal qualifications, the characteristics of 
     the of the healthcare facility, e.g., tertiary, single site 
     or multi-site, nature and number of specialty care units, 
     demonstrated recruitment and retention difficulties, and such 
     other factors as the Secretary deems appropriate.
       This proposed nurse executive pay aligns with the 
     President's budget and would be effective on the first day of 
     the first pay period on or after the later of April 1, 2004, 
     or six months after the date of enactment.
       There are significant inadequacies in the VA nurse locality 
     pay system (LPS) as it relates to nurse executive 
     compensation. There are difficulties in obtaining comparative 
     survey data on non-VA nurse executive positions to use in 
     making an informed determination concerning locality pay. 
     Non-VA employers often do not cooperate in the survey 
     process. Nurse executive positions are often one-of-a-kind 
     positions making it difficult to match VA and non-VA jobs. 
     Non-VA employers typically do not include nurse executives in 
     compensation surveys. With the organizational changes and 
     scope of responsibilities changes for nurse executives 
     occurring in both VA and non-VA healthcare facilities, lines 
     of authority and levels of responsibilities for executive 
     nurses are changing. Thus, job and pay matching for nurse 
     executives at VAMCs and non-VA healthcare facilities is 
     extremely difficult. Furthermore, nurse executives work in a 
     national labor market, or at least a regional one. LPS 
     compares jobs on a local basis. Another major problem is that 
     VA nurse executives are capped at Level V of the Executive 
     Schedule (EL-V), $125,400. There is no such cap in the non-VA 
     healthcare industry. The EL-V rate is no longer competitive 
     with non-VA nurse executive positions. Moreover, non-VA 
     employers negotiate nurse executive compensation as a total 
     compensation package, often including bonuses and other 
     incentives in addition to base pay. VA is unable to do that.
       The proposal derives from a recommendation of the VHA 
     Future Nursing Workforce Planning Group. This group, composed 
     of Medical Center Administrators, Nurse Executives, Network 
     Managers and clinicians, has identified the $10,000-$25,000 
     range as the amount that most commonly would mirror salary 
     and/or community based prerequisites of non-VA nurse 
     executives, while not making VA the pay leader within the 
     community. It is also consistent with the range of special 
     pay currently available to VA physician executives.
       Responsibilities of VA nurse executives are rapidly 
     changing and becoming more varied and complex. VA's pay 
     system for them must address this growing variety and 
     complexity.


                                 Costs

                             Flexible Tours

       (1) Three 12-hour tours (36 hours) paid as 40 hours.
       Assumptions: Based on a 36 hour work week/72 hours per pay 
     period for selected RNs. 40 hours/wk (Full-time) - 36 hours/
     wk (Full-time requested) = 4.
       Average VA RN hourly wage = $29.02 (using FY02 avg RN 
     salary = $56,679, adjusted by 3.2% annual pay increase = 
     $60,364, divided by 2,080).
       Cost is 4 hours per week/208 hours per year per nurse.

     Cost per RN per week: 4 $29.02 = $116.08; Cost per RN per 
         year: 208 $29.02 = $6036.

       Based on an estimated 25 nurses per facility, the cost 
     would be as follows:

     25 (RNs) $6036 = $150,900; 162 (VAMCs) $150,900 = $24.4 
         million.

       FY 2004 costs would be $12,222,900 (half-year 
     implementation).
       Costs in future years increased by 3.2%.

                        [In millions of dollars]

FY05.............................................................$25.22
FY06..............................................................26.03
FY07..............................................................26.86
FY08..............................................................27.72
FY09..............................................................28.61
FY10..............................................................29.53
FY11..............................................................30.47
FY12..............................................................31.45
FY13..............................................................32.45
                                                             __________
                                                             
    Total (over 10 years).......................................$270.56
       (2) 9 months of work with 3 months off, with pay 
     apportioned over a 12-month period.
       This is an authorization to pay RNs who are hired under 
     this provision less than full time pay for full time worked. 
     RNs would work a full nine months prior to pay continuance 
     for 3 months. Registered nurses hired under this provision 
     would reflect the following:
       1. Hired as part-time employees .75 FTE.
       2. Each would work full-time (40 hr/wk) for nine months.
       3. While working full time for 9 months they would agree to 
     be paid .75 salary.
       4. While not working for a period of 3 months, they would 
     continue to be paid .75 salary.
       VAMCs would determine when such appointments would begin, 
     based on regional needs (e.g. higher winter workload in the 
     sunbelt) and community-based competitive factors.
       There are no costs associated with this proposal. It is 
     estimated that VAMCs will derive fiscal benefits from 
     deferring 25 percent of pay for full-time work over a 9-month 
     period.
       (3) 7 ten-hour days/7 days off, with pay for 80 hours.
       Assumptions: Based on paying an RN who works 70 hours as if 
     80 hours are worked. Average hourly wage = $29.02 (using FY02 
     avg RN salary = $56,679, adjusted by 3.2% annual pay increase 
     = $60,364, divided by 2,080).
       Cost is 10 hours per pay period/260 hours per year.

     Cost per RN per pay period: 10 $29.02 = $290.20; Cost per RN 
         per year 260 $29.02 = $7,545.

       Based on an estimated 15 nurses per facility, the cost 
     would be as follows:

     15 (RNs) $7,545 = $113,175; 162 (VAMCs) $113,175= 
         $18,334,350.

       FY 2004 costs would be $9,167,175 (half-year 
     implementation).
       Costs in future years increased by 3.2%.

                        [In millions of dollars]

FY05.............................................................$18.92
FY06..............................................................19.53
FY07..............................................................20.15
FY08..............................................................20.80
FY09..............................................................21.46
FY10..............................................................22.15
FY11..............................................................22.86
FY12..............................................................23.59
FY13..............................................................24.34
                                                             __________
                                                             
    Total (over 10 years)........................................203.00

                          Nurse Executive Pay

       Assumptions: One nurse executive at each of the 162 VHA 
     medical centers would be authorized to receive the executive 
     special pay, [Note: the estimate below is a maximum estimate 
     since in any given year there will be a varying number of 
     nurse executive vacancies. On board strength is estimated to 
     average 150 nurse executives. This number also includes 5 
     nurse executives in the VACO Office of Nursing Services]. The 
     average per executive would be $17,500, $2.62 million per 
     year for 150 executives.

        Year                                            Cost (millions)
2004..............................................................$1.31
(Based on April 4, 2004 effective date):
  2005.............................................................2.62
  2006.............................................................2.62
  2007.............................................................2.62
  2008.............................................................2.62
  2009.............................................................2.62
  2010.............................................................2.62
  2011.............................................................2.62
  2012.............................................................2.62
  2013.............................................................2.62
                                                             __________
                                                             
      Total.......................................................24.89

       The Office of Management and Budget advises that the 
     submission of this draft bill is in accord with the program 
     of the President.
           Sincerely yours,
                                              Anthony J. Principi.

------------------------------------------------------------------------
                                                 Cost estimate
                                     -----------------------------------
                                      Direct costs for    Savings from
                                        current staff     productivity
------------------------------------------------------------------------
Cost for physicians.................      $124,488,837       $28,389,272
Cost for dentists...................         4,996,680           703,166
Cost for management.................         9,354,318                 0
                                     -----------------------------------
      Total.........................       138,839,835        29,092,438
------------------------------------------------------------------------


                                               10-YEAR PROJECTIONS
                [First year cost projections assume implementation in 3rd quarter of FY 2004 \1\]
----------------------------------------------------------------------------------------------------------------
                                                         Productivity        Contract/fee
                                         Cost               savings           savings \2\          Net cost
----------------------------------------------------------------------------------------------------------------
FY 2004.........................         $69,419,917         $14,546,219          $6,405,709         $48,467,990
2005............................         144,254,588          30,227,043          19,217,127          94,810,419

[[Page S6285]]

 
2006............................         149,880,517          31,405,898          32,028,544          86,446,075
2007............................         155,725,857          32,630,728          44,839,962          78,255,168
2008............................         161,799,166          33,903,326          57,651,380          70,244,460
2009............................         168,109,333          35,225,556          69,656,718          63,227,060
2010............................         174,665,597          36,599,352          80,855,976          57,210,269
2011............................         181,477,556          38,026,727          92,055,235          51,395,594
2012............................         188,555,180          39,509,769         103,254,493          45,790,918
2013............................         195,908,832          41,050,650         114,453,752          40,404,430
                                 -------------------------------------------------------------------------------
      Total.....................       1,589,796,546         333,125,267         620,418,896         636,252,382
----------------------------------------------------------------------------------------------------------------
\1\ Assuming annual rate of inflation of 3.9 percent.
\2\ Savings based on difference between cost of providing services in-house vs. contact and fee basis. See
  attached sheet for calculation of estimated total contract savings ($112 million over 10 years). Savings in
  contract expenditures based on realizing 10 percent of total savings per year. Savings in fee basis
  expenditures ($8.05 million) based on 5 percent reduction per year over 5 years.
 
Note: Savings in 2013 do not equal total due to crediting only half-year savings in first year.


                                                           CONTRACT SAVINGS COMPUTATION SHEET
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Estimated                         Estimated
                                                     Current active      FY 2001                           average         Estimated       savings from
                Clinical specialty                     vacancies      contract costs     New VA pay     contract cost     contract FTE       contract
                                                                                                         per FTE \1\          \2\        replacement \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Allergy/Immunology................................            2.4           $393,353         $134,629         $265,724            1.48          $194,061
Anesthesiology....................................           89.5         18,040,153          216,469          387,500           46.56         7,962,388
Cardiology........................................           58.1         17,556,339          183,928          423,031           41.50         9.923,087
Dermatology.......................................           18.125       19,411,073          173,538          352,366           55.09         9,851,230
Emergency Medicine................................           20            8,322,130          174,949          216,824           38.38         1,607,245
Endocrinology.....................................            6.1            186,985          133,695          181,776            1.03            49,458
Gastroenterology..................................           45.4          1,902,181          156,510          329,111            5.78           997,592
General Internal Medicine.........................          191.225      113,586,127          136,250          160,058          709.66        16,895,004
General Surgery...................................           31.25        12,232,562          194,361          277,702           44.05         3,671,108
Geriatrics........................................           11.375        5,300,674          132,003          167,694           31.61         1,128,177
Gynecology (OB/Gyn--Other)........................            1.9          2,646,880          176,359          206,943           12.79           391,181
Hematology/Oncology...............................           29.625        3,604,702          140,164          385,606            9.35         2,294,428
Infectious Diseases...............................           18.505          597,046          135,196          199,761            2.99           192,972
Nephrology........................................            7            4,561,735          139,617          275,311           16.57         2,248,366
Neurology.........................................           22.25         2,182,569          133,314          212,216           10.28           811,484
Neurosurgery......................................            7.175        3,786,867          249,601          502,913            7.53         1,907,405
Ophthalmology.....................................           17.1          4,315,444          171,094          301,451           14.32         1,866,135
Orthopedic Surgery................................           22.875        6,600,581          242,825          444,105           14.86         2,991.556
Otolaryngology....................................           11.55           962.887          190.567          304.389            3.16           360.058
Pathology.........................................           24.875       10,832,884          145,778          289,235           37.45         5,372,989
Physical Medicine & Rehab.........................           20.575          969,748          142,976          234,605            4.13           378,752
Plastic Surgery...................................            5.125          840,228          223,465          472,475            1.78           442,828
Preventive Medicine...............................            1      ...............          145,807              N/A          N/A                  N/A
Psychiatry........................................          110.175        4,350,983          146,887          161,440           26.95           392,213
Pulmonology.......................................           16.975        1,162,023          138,667          236,298            4.92           480,114
Radiology.........................................          100.2         64,119,853          220,662          450,000          142.49        32,678,042
Rheumatology......................................            9.4            165,564          133,563          212,183            0.78            61,347
Thoracic/Cardiovasc Surgery.......................           10.375       15,826,215          247,602          375,385           42.16         5,387,326
Urology...........................................           34.75         3,597,512          200,690          337,144           10.67         1,456,039
                                                   -----------------------------------------------------------------------------------------------------
      Total.......................................          944.905      328,055,298  ...............  ...............  ...............      111,992,584
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Estimated unit FTE cost based on MGMA Physician Compensation Report, 2002 (based on 2001 data); actual contract FTE costs may be higher.
\2\ Contract FTE constructed by dividing total contract expenditures by estimated unit FTE cost.
\3\ Savings based on difference between contract costs per contract FTE and VA employee costs for same FTE, or actual contract expenditures, whichever
  is lower.

                         Analysis of Draft Bill

       The first section provides a title for the bill, the 
     ``Department of Veterans Affairs Health Care Personnel 
     Enhancement Act of 2003''.
       Section 2 specifies that, unless otherwise expressly 
     provided, references throughout are to title 38, United 
     States Code.
       Section 3 establishes a new pay system for VA physicians 
     and dentists.
       Section 3(a)(1) amends section 7404(b)(1) to revise the 
     Physician and Dentist Schedule such that there now are two 
     grades: Physician grade and Dentist grade. It strikes 
     paragraph (2) as a conforming amendment as the Director and 
     Executive grades no longer exist.
       Section 3(a)(2) strikes ``special'' before ``pay'' because 
     Section 3(a)(3) repeals the special pay provisions, but the 
     individuals concerned will still be paid under subchapter 
     Ill.
       Section 3(a)(3) strikes existing Subchapter III in its 
     entirety and inserts in lieu thereof new sections 7431-7434:
       Section 7431 establishes a new pay system for VHA 
     physicians and dentists composed of three tiers, base pay, 
     market pay, and performance pay. It additionally provides 
     that compensation under the new system shall be considered 
     pay for all purposes, that downward adjustments do not 
     constitute adverse actions, and that total pay may not exceed 
     that of the President. In order to reduce the risk of 
     potential conflicts of interest, this section also would 
     prohibit certain senior title 38 officials from receiving any 
     compensation, whether from employment or contract, from 
     medical schools affiliated with their respective VAMCs.
       Section 7432 provides for transition to the new pay system: 
     written special pay agreements are terminated, but current 
     pay levels continue until the new provisions are implemented 
     on a date to be specified in VA regulations. Upon conversion 
     to the new system, incumbent employees will be paid at least 
     as much as they were paid under the old system. All pay under 
     the new system, except performance pay, as well as special 
     pay under the previous system, is fully creditable in 
     computing retirement benefits.
       Section 7433 contains provisions for pay for the Under 
     Secretary for Health. In addition to base pay at Executive 
     Level III, the Under Secretary would be eligible for market 
     pay under the new system. The current Under Secretary's 
     written special pay agreements are terminated, but would 
     continue to be paid at current pay levels until the new 
     provisions are implemented on a date to be specified in VA 
     regulations. If a new Under Secretary were to be appointed 
     during the interim, he/she would be paid under current law 
     until a date to be specified in VA regulations.
       Section 7434 contains several administrative provisions: 
     (a) the Secretary is authorized to prescribe regulations; (b) 
     current employees will not have their pay reduced when they 
     move to the new system; (c) beginning eighteen months after 
     issuance of regulations implementing the new pay system and 
     annually thereafter for the next ten years, the Secretary 
     would be required to provide a report to the Committees on 
     Veterans' Affairs of the Senate and House of Representatives 
     on the implementation of the new system.
       Section 3(b) makes a conforming amendment to the title and 
     list of sections for Subchapter III in the table of sections 
     at the beginning of Chapter 74.
       Section 4 provides for alternate work schedules.
       Section 4(a) amends Chapter 74 to add a new section 7456a, 
     Alternate Work Schedules:
       Section 7456(a) specifies that this section applies to 
     chapter 74 registered nurses.
       Section 7456(b)(1) authorizes the Secretary, when necessary 
     to obtain or retain registered nurses at any Department 
     health-care facility, to provide for such nurses to work 
     three regularly scheduled 12-hour tours of duty within a 
     workweek, and for such tour to be considered for all purposes 
     (except computation of full-time equivalent employees for the 
     purposes of determining compliance with personnel ceilings) a 
     full 40-hour basic workweek.
       Section 7456(b)(2) provides the formula for determining the 
     hourly rate, and sets forth rules for overtime pay.
       Section 7456(c)(1) authorizes the Secretary, when necessary 
     to obtain or retain registered nurses at any Department 
     health-care facility, to provide for such nurses to

[[Page S6286]]

     work seven regularly scheduled 10-hour tours of duty, with 
     seven days off duty, within a two-week pay period, and for 
     such tour to be considered for all purposes (except 
     computation of full-time equivalent employees for the 
     purposes of determining compliance with personnel ceilings) a 
     full 80-hour pay period.
       Section 7456(c)(2) provides the formula for determining the 
     hourly rate, and sets forth rules for overtime pay.
       Section 7456(d)(1) authorizes the Secretary to provide for 
     nurses to work full-time for 9 months with 3 months off, and 
     be paid at 75 percent of the full-time rate over a full 12-
     month period over a fiscal year, and for employees working 
     such tours to be considered .75 full-time equivalent 
     employees. Service on this schedule shall be considered part-
     time service for purposes of computing retirement benefits.
       Section 7456(e) provides the formula for determining leave 
     charges for nurses working 36/40 or 7/7 work schedules.
       Section 7456(f) directs the Secretary to prescribe 
     implementing regulations.
       Section 4(b) makes a conforming amendment to the title and 
     list of sections for Subchapter IV in the table of sections 
     at the beginning of Chapter 74 to add new section 7456a.
       Section 5 establishes special pay for VA nurse executives.
       Section 5(a) adds a new subsection (f) to section 7452:
       Subsection (f)(1) authorizes, when necessary to recruit or 
     retain nurse executives, special pay for the nurse executive 
     at each Department health-care facility or at Central Office.
       Subsection (f)(2) sets the range of special pay to be a 
     minimum of $10,000 and a maximum of $25,000, and specifies 
     the factors in determining the amount paid to each nurse 
     executive.
       Subsection (f)(3) specifies that special pay is in addition 
     to any other pay (including basic pay) and allowances to 
     which the nurse executive is entitled, and that it is be 
     considered pay for all purposes.
       Section 6 sets the effective date for rates of pay 
     established pursuant to section 7431, as added by section 
     3(a), and sections 4 and 5, as the first day of the first pay 
     period on or after the later of April 1, 2004, or six months 
     after the date of enactment. All other provisions are 
     effective on the date of enactment.
       Section 7 adds an administrative provision concerning 
     functions under chapter 74. It provides that functions of the 
     Secretary and other Department officers under chapter 74 are 
     vested in their discretion. The purpose of this provision is 
     to make clear that the exercise of those functions 5 U.S.C. 
     701(a)(2) exempts the exercise of those functions from 
     judicial review under the Administrative Procedures Act.
                                 ______
                                 
      By Mr. SPECTER (by request):
  S. 2485. A bill to amend title 38, United States Code, to improve and 
enhance the authorities of the Secretary of Veterans Affairs relating 
to the management and disposal of real property and facilities, and for 
other purposes; to the Committee on Veterans' Affairs.
  Mr. SPECTER. Mr. President, as chairman of the Committee on Veterans' 
Affairs, I have introduced today, at the request of the Secretary of 
Veterans' Affairs, S. 2485, a proposed bill to modify provisions of law 
relating to the administration of real property assets by the 
Department of Veterans' Affairs, VA. The Secretary of Veterans' Affairs 
submitted the elements of this proposed legislation to the President of 
the Senate by letters dated August 15, 2003, and October 3, 2003.
  My introduction of this measure is in keeping with the policy which I 
have adopted of generally introducing--so that there will be specific 
bills to which my colleagues and others may direct their attention and 
comments--all administration-proposed draft legislation referred to the 
Committee on Veterans' Affairs. In this case, however, I have departed 
from my usual course of simply introducing administration-advanced 
measures as forwarded to me. Measures that the administration forwarded 
in August and October, 2003, relate to similar subject matter, namely 
the administration of VA-controlled real property assets. It is my 
belief that these provisions, inasmuch as they are related, might be 
considered in a more orderly fashion as parts of a single piece of 
legislation. To facilitate that, I have included sections 401-403 of 
the administration's August 15, 2003, request, and sections 5-6 of the 
administration's October 3, 2003, request, in the single bill which I 
have introduced today. As is always my policy with respect to any such 
``by request'' legislation, I reserve the right to oppose the 
provisions of, as well as any amendment to, this legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2485

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

     SECTION 1. SHORT TITLE; REFERENCES TO TITLE 38, UNITED STATES 
                   CODE.

       (a) Short Title.--This Act may be cited as the ``Department 
     of Veterans Affairs Real Property and Facilities Management 
     Improvement Act of 2004''.
       (b) References to Title 38 United States Code.--Except as 
     otherwise expressly provided, whenever in this Act an 
     amendment or repeal is expressed in terms of an amendment to, 
     or repeal of, a section or other provision, the reference 
     shall be considered to be made to a section or other 
     provision of title 38, United States Code.

     SEC. 2. AUTHORITY TO USE PROJECT FUNDS TO CONSTRUCT OR 
                   RELOCATE SURFACE PARKING INCIDENTAL TO A 
                   CONSTRUCTION OR NON-RECURRING MAINTENANCE 
                   PROJECT.

       Section 8109 is amended by adding at the end the following 
     new subsection:
       ``(j) Funds in a construction account or capital account 
     that are available for a construction project or non-
     recurring maintenance project may be used for the 
     construction or relocation of a surface parking lot 
     incidental to such project.''.

     SEC. 3. IMPROVEMENTS OF ENHANCED-USE LEASE AUTHORITIES.

       (a) Business Plan Criteria.--Section 8162 is amended--
       (1) in subsection (a)(2)(B), by striking ``the Under 
     Secretary for Health for applying the consideration under 
     such a lease to the provision of medical care and services'' 
     and inserting ``one of the Under Secretaries for applying the 
     consideration under such a lease to the programs and 
     activities of the Department''; and
       (2) in subsection (b)(4)(A), by striking ``on the leased 
     property''.
       (b) Consideration of Proposals for Leases.--(1) Section 
     8163 is amended--
       (A) in subsection (a), by striking the first sentence and 
     inserting the following new sentence: ``If the Secretary 
     proposes to enter into an enhanced-use lease with respect to 
     certain property, the Secretary shall conduct a public 
     hearing before entering into the lease.'';
       (B) in subsection (b), by striking ``of the proposed 
     designation and of the hearing'' in the matter preceding 
     paragraph (1) and inserting ``on the proposed lease and the 
     hearing to the congressional veterans' affairs committees and 
     to the public''; and
       (C) in subsection (c)--
       (i) in paragraph (1)--
       (I) by striking ``to designate the property involved'' and 
     inserting ``to enter into an enhanced-use lease of the 
     property involved''; and
       (II) by striking ``to so designate the property'' and 
     inserting ``to enter into the lease'';
       (ii) in paragraph (2), by striking ``90-day'' and inserting 
     ``45-day''; and
       (iii) by striking paragraph (4).
       (2)(A) The heading of such section is amended to read as 
     follows:

     ``Sec. 8163. Proposals for property to be leased''.

       (B) The table of sections at the beginning of chapter 81 is 
     amended by striking the item relating to section 8163 and 
     inserting the following new item:

``8163. Proposals for property to be leased.''.

       (c) Disposal Authority.--Section 8164 is amended--
       (1) in subsection (a)--
       (A) by striking ``by requesting the Administrator of 
     General Services to dispose of the property pursuant to 
     subsection (b)''; and
       (B) by striking the last sentence;
       (2) in subsection (b)--
       (A) by striking ``and the Administrator of General Services 
     jointly determine'' and inserting ``determines''; and
       (B) by striking ``and the Administrator consider'' and 
     inserting ``considers''; and
       (3) in subsection (c), by striking ``90 days'' and 
     inserting ``45 days''.
       (d) Use of Proceeds.--Section 8165 is amended--
       (1) in subsection (a)--
       (A) in paragraph (1), by striking ``Funds received'' and 
     inserting ``Except as provided in paragraph (2), funds 
     received'';
       (B) by redesignating paragraph (2) as paragraph (3);
       (C) by inserting after paragraph (1) the following new 
     paragraph (2):
       ``(2) Funds received by the Department under an enhanced-
     use lease implementing a business plan proposed by the Under 
     Secretary for Benefits or the Under Secretary for Memorial 
     Affairs and remaining after any deduction from such funds 
     under subsection (b) shall be credited to applicable 
     appropriations of the Veterans Benefits Administration or 
     National Cemetery Administration, as the case may be.''; and
       (D) in paragraph (3), as so redesignated, by striking 
     ``nursing home revolving fund'' and inserting ``Capital Asset 
     Fund established under section 8122A of this title'';
       (2) in subsection (b)--
       (A) by inserting ``(1)'' after ``(b)''
       (B) in paragraph (1), as so designated, by striking ``for 
     that fiscal year''; and
       (C) by adding at the end the following new paragraph:
       ``(2) The Secretary may also deduct from the proceeds of 
     any enhanced-use lease an amount to reimburse applicable 
     appropriations of the Department for any expenses incurred by 
     the Secretary in the development

[[Page S6287]]

     of additional enhanced-use leases. Amounts so deducted shall 
     be utilized to reimburse such appropriations.''; and
       (3) by striking subsection (c).

     SEC. 4. DISPOSAL OF REAL PROPERTY OF THE DEPARTMENT OF 
                   VETERANS AFFAIRS.

       (a) In General.--(1) Subchapter II of chapter 81 is amended 
     by inserting after section 8122 the following new section:

     ``Sec. 8122A. Disposal of real property

       ``(a) In General.--(1) To the extent provided in advance in 
     appropriations Acts, the Secretary may, in accordance with 
     this section and sections 8122 and 8164 of this title, 
     dispose of real property of the Department, including land 
     and structures and equipment associated with such property, 
     that is under the jurisdiction or control of the Secretary 
     by--
       ``(A) transfer to or exchange with another department or 
     agency of the Federal Government;
       ``(B) conveyance to or exchange with a State or a political 
     subdivision of a State, an Indian tribe, or other public 
     entity; or
       ``(C) conveyance to or exchange with any private person or 
     entity.
       ``(2) The Secretary may exercise the authority in paragraph 
     (1) notwithstanding the following provisions of law:
       ``(A) Sections 521, 522, and 541 through 545 of title 40.
       ``(B) Section 501 of the McKinney-Vento Homeless Assistance 
     Act (42 U.S.C. 11411).
       ``(3) In any transfer, exchange, or conveyance of real 
     property under this subsection, the Secretary shall obtain 
     consideration in an amount equal to the fair market value of 
     the property, as determined by the Secretary.
       ``(b) Treatment of Proceeds.--Proceeds from the transfer, 
     exchange, or conveyance of real property under subsection (a) 
     shall be deposited in the Capital Asset Fund under subsection 
     (c).
       ``(c) Capital Asset Fund.--There is established on the 
     books of the Treasury of the United States a revolving fund 
     known as the Capital Asset Fund (in this section referred to 
     as the `Fund').
       ``(d) Elements of Fund.--The Fund shall consist of the 
     following:
       ``(1) Amounts authorized to be appropriated to the Fund.
       ``(2) Proceeds from the transfer, exchange, or conveyance 
     of real property under subsection (a) that are deposited in 
     the Fund under subsection (b).
       ``(3) Funds to be deposited in the Fund under section 
     8165(a)(3) of this title.
       ``(4) Any other amounts specified for transfer to or 
     deposit in the Fund by law.
       ``(e) Use of Amounts in Fund.--Subject to the provisions of 
     appropriations Acts, amounts in the Fund shall be available 
     for purposes as follows and in the following order of 
     priority:
       ``(1) For costs of the Department in disposing of real 
     property, including costs associated with demolition, 
     environmental clean-up, maintenance and repair, improvements 
     to facilitate disposal, and associated administrative 
     expenses.
       ``(2) For costs of the Department associated with proposed 
     disposals of real property of the Department.
       ``(3) For costs of non-recurring capital projects of the 
     Department.
       ``(f) Reports.--The Secretary shall include with the budget 
     justification documents submitted to Congress each year with 
     the budget of the President for the fiscal year beginning in 
     such year (as submitted pursuant to section 1105 of title 31) 
     a report setting forth the following:
       ``(1) A statement of each disposal of real property to be 
     undertaken in such fiscal year that is valued in excess of 
     the major medical facility project threshold specified in 
     section 8104(a)(3)(A) of this title.
       ``(2) A description of each disposal of real property that 
     was completed in the fiscal year ending in the year before 
     such report is submitted.''.
       (2) The table of sections at the beginning of such chapter 
     is amended by inserting after the item relating to section 
     8122 the following new item:

``8122A. Disposal of real property.''.

       (b) Conforming Amendment.--Section 8164(a) is amended in 
     the second sentence by inserting ``or 1822A'' after ``section 
     8122''.
       (c) Authorization of Appropriations.--There is authorized 
     to be appropriated for the Department of Veterans Affairs for 
     fiscal year 2005, $10,000,000 for deposit in the Capital 
     Asset Fund under section 1822A(c) of title 38, United States 
     Code (as added by subsection (a)).

     SEC. 5. MODIFICATION OF OTHER REAL PROPERTY DISPOSAL 
                   AUTHORITIES.

       (a) General Limitations on Disposal.--Paragraph (2) of 
     subsection (a) of section 8122 is amended to read as follows:
       ``(2) Except as provided in paragraph (3) of this 
     subsection, the Secretary may not during any fiscal year 
     dispose of real property owned by the United States and under 
     the jurisdiction and control of the Secretary that has an 
     estimated value in excess of the major medical facility 
     project threshold specified in subsection 8104(a)(3)(A) of 
     this title unless--
       ``(A) the disposal is described in the budget justification 
     documents submitted to Congress each year with the budget of 
     the President for the fiscal year beginning in such year (as 
     submitted pursuant to section 1105 of title 31);
       ``(B) the Department receives consideration for the real 
     property equal to the fair market value of the property, as 
     determined by the Secretary; and
       ``(C) the net proceeds of the disposal are deposited in the 
     Capital Asset Fund under section 8122A(c) of this title.''.
       (b) Disposal Procedures.--Subsection (d) of such section is 
     amended--
       (1) by inserting ``(1)'' after ``(d)''; and
       (2) by adding at the end the following new paragraphs:
       ``(2)(A) In the case of property (including land and 
     structures and equipment associated with such property) that 
     has an estimated value less than the major medical facility 
     project threshold specified in section 8104(a)(3)(A) of this 
     title, the Secretary may dispose of the property if--
       ``(i) the Secretary notifies the Administrator of General 
     Services of an intent to dispose of the property; and
       ``(ii) a period of 30 days elapses after notice under 
     clause (i) during which period no other department or agency 
     of the Federal Government expresses an interest in assuming 
     jurisdiction of the property under the condition of paying 
     the Secretary the fair market value of the property, as 
     determined by the Secretary, of the property.
       ``(B) In disposing of property under subparagraph (A), the 
     Secretary shall publish a notice of sale in the real estate 
     section of a local newspaper of general circulation serving 
     the market in which the property is located.
       ``(3) In the case of property (including land and 
     structures and equipment associated with such property) that 
     has an estimated value in excess of the major medical 
     facility project threshold specified in section 8104(a)(3)(A) 
     of this title, the Secretary may dispose of the property if--
       ``(A) the Secretary complies with subsection (a)(2) with 
     respect to the property;
       ``(B) the Secretary--
       ``(i) notifies the Administrator of General Services of an 
     intent to dispose of the property;
       ``(ii) publishes in the Federal Register notice of an 
     intent to dispose of the property; and
       ``(iii) notifies the committees of an intent to dispose of 
     the property;
       ``(C) a period of 30 days elapses after notice under 
     subparagraph (B)(i) during which period no other department 
     or agency of the Federal Government expresses an interest in 
     assuming jurisdiction of the property under the condition of 
     paying the Secretary the fair market value of the property, 
     as determined by the Secretary, of the property; and
       ``(D) a period of 60 days elapses after notice under 
     subparagraph (B)(iii).''.

     SEC. 6. TERMINATION OF NURSING HOME REVOLVING FUND.

       (a) Termination.--(1) Section 8116 is repealed.
       (2) The table of sections at the beginning of chapter 81 is 
     amended by striking the item relating to section 8116.
       (b) Conforming Amendment.--Section 8165(a)(3), as 
     redesignated by section 3(d)(1)(D) of this Act, is further 
     amended by striking ``nursing home revolving fund'' and 
     inserting ``Capital Asset Fund under section 1822A of this 
     title''.
       (c) Transfer of Unobligated Balances to Capital Asset 
     Fund.--Any unobligated balances in the nursing home revolving 
     under section 8116 of title 38, United States Code, as of the 
     date of the enactment of this Act shall be deposited in the 
     Capital Asset Fund under section 8122A of title 38, United 
     States Code (as added by section 4(a) of this Act).

     SEC. 7. INAPPLICABILITY OF LIMITATION ON USE OF ADVANCE 
                   PLANNING FUND TO AUTHORIZED MAJOR MEDICAL 
                   FACILITY PROJECTS.

       Section 8104 is amended by adding at the end the following 
     new subsection:
       ``(g) The limitation specified in subsection (f) shall not 
     apply to projects for which funds have already been 
     authorized by law in accordance with subsection (a)(2).''.

     SEC. 8. LEASE OF CERTAIN NATIONAL CEMETERY ADMINISTRATION 
                   PROPERTY.

       (a) In General.--Chapter 24 is amended by adding at the end 
     the following new section:

     ``Sec. 2412. Lease of land and buildings

       ``(a) Lease Authorized.--The Secretary may lease any 
     undeveloped land and unused or underutilized buildings, or 
     parts or parcels thereof, belonging to the United States and 
     part of the National Cemetery Administration.
       ``(b) Term.--The term of a lease under subsection (a) may 
     not exceed 10 years.
       ``(c) Lease to Public or Nonprofit Organizations.--(1) A 
     lease under subsection (a) to any public or nonprofit 
     organization may be made without regard to the provisions of 
     section 3709 of the Revised Statutes (41 U.S.C. 5).
       ``(2) Notwithstanding section 1302 of title 40 or any other 
     provision of law, a lease under subsection (a) to any public 
     or nonprofit organization may provide for the maintenance, 
     protection, or restoration of the leased property by the 
     lessee, as a part or all of the consideration for the lease.
       ``(d) Notice.--Before entering into a lease under 
     subsection (a), the Secretary shall give appropriate public 
     notice of the intention of the Secretary to enter into the 
     lease in a newspaper of general circulation in the community 
     in which the lands or buildings concerned are located.
       ``(e) National Cemetery Administration Facilities Operation 
     Fund.--(1) There is established on the book of the Treasury 
     an account to be known as the `National Cemetery 
     Administration Facilities Operation

[[Page S6288]]

     Fund' (in this section referred to as the `Fund').
       ``(2) The Fund shall consist of the following:
       ``(A) Amounts authorized to be appropriated to the Fund.
       ``(B) Proceeds from the lease of land or buildings under 
     this section.
       ``(C) Proceeds of agricultural licenses of lands of the 
     National Cemetery Administration.
       ``(D) Any other amounts authorized for deposit in the Fund 
     by law.
       ``(3) Amounts in the Fund shall be available to cover costs 
     incurred by the National Cemetery Administration in the 
     operation and maintenance of property of the Administration.
       ``(4) Amounts in the Fund shall remain available until 
     expended.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such chapter is amended by adding at the end the 
     following new item:

``2412. Lease of land and buildings.''.
                                 ______
                                 
      By Mr. SPECTER (for himself and Ms. Murkowski) (by request):
  S. 2486. A bill to amend title 38, United States Code, to improve and 
enhance education, housing, employment, medical, and other benefits for 
veterans and to improve and extend certain authorities relating to the 
administration of benefits for veterans, and for other purposes; to the 
Committee on Veterans' Affairs.
  Mr. SPECTER. Mr. President, I have sought recognition to comment on 
legislation which I have introduced today which would, among other 
things, improve the education and housing benefits of our Nation's 
veterans. Education and housing benefits administered by the Department 
of Veterans Affairs, VA, were the essence of one of the most 
significant pieces of legislation in the 20th Century, the 1944 GI Bill 
of Rights. Sixty years later, the Veterans' Benefits Improvements Act 
of 2004, which I introduce today, would build on that historic legacy.
  Section 101 of the bill would allow for significant increases in 
Montgomery GI Bill, MGIB, educational assistance benefits by expanding 
on ``buy up'' legislation which I authored in 1999 and which was 
enacted as part of Public Law 106-419. Under the provisions of the 
existing ``buy up'' program, active duty service members can increase 
their monthly MGIB ``pay-out'' by making voluntary in-service 
contributions of up to $600 in addition to the $1,200 aggregate 
contribution which is made to secure basic eligibility for MGIB 
benefits. In return for this added $600 ``investment,'' a veteran can 
secure an increase in his or her monthly MGIB benefit of $150 per 
month. Assuming the veteran completes a 36-month course of full-time 
study, the added benefit amount to $5,400, an effective yield of $9 for 
every added dollar contributed. The legislation which I have introduced 
today would expand the ``buy-up'' program by allowing service members 
to voluntarily contribute more--up to $2000--to the program, in return 
for which they could ``buy'' up to an additional $18,000--or $500 per 
month over 36 months--in potential MGIB benefits. A service member who 
contributes the full $2,000 could thus increase his or her aggregate 
MGIB entitlement to $53,460, the amount that the College Board, an 
association of over 4,000 colleges and other educational organizations, 
estimates is necessary today to finance the average cost of tuition, 
fees, books, room and board, transportation, and expenses for a 
resident student at a four-year public institution of higher learning.
  Section 102 of this bill would authorize VA to carry out a 4-year 
pilot program under which veterans could extend, for up to 2 years, 
their eligibility period to use MGIB education benefits. Current law 
states, in summary, that a veteran is entitled to 36 months of MGIB 
benefit, but only during a 10-year ``delimiting period'' beginning on 
the date of discharge from service. Section 102 of my bill would allow 
a veteran with a ``left-over'' entitlement to apply for a one-time 
extension of the delimiting period so that he or she might gain 
vocational or job readiness skills necessary to obtain or maintain 
employment. I believe that as the workforce evolves, so too must 
workers in order to stay competitive. Providing veterans with some 
flexibility in the use of a benefit they have earned--at a point in 
life beyond the ``delimiting period''--is a sensible approach to 
helping veterans obtain the skills they may need to stay competitive in 
a 21st Century workforce.
  Section 103 of this legislation would prohibit veterans' education 
benefits from being considered when determining a veteran's entitlement 
to Federal financial aid administered by the Department of Education. 
Under current law, such benefits are already excluded from eligibility 
calculations in determining eligibility for some forms of assistance 
granted by Title IV of the Higher Education Act of 1965, e.g., Pell 
grants and subsidized Stafford loans, but not for other forms of 
assistance, e.g., unsubsidized Stafford loans and campus-based aid. 
This legislation would rectify that anomaly by excluding veterans' 
education benefits from all such eligibility determinations.
  Section 104 of the bill would fix yet another anomaly of law 
applicable to Reservists who are called to active duty. Current law 
generally specifies that such Reservists are eligible for MGIB benefits 
if they have served a minimum of 2 consecutive years of active duty. 
Current law also requires that service members contribute $100 a month 
during their first 12 months of service to gain eligibility for MGIB 
benefits. Because the Department of Defense (DoD) activates Reservists 
for indefinite periods of time, it is impossible for a Reservist to 
know at the beginning of his or her activation period--when a decision 
has to be made on contributing the requisite $100 per month--whether he 
or she will, in fact, end up serving 2 consecutive years of active duty 
and, thus, whether he or she will become eligible for MGIB benefits. 
Due to that uncertainty, activated Reservists are, quite reasonably, 
hesitant to make the requisite contributions. The DoD and VA have 
worked around this problem; they permit Reservists who end up serving 2 
consecutive years to pay the $1,200 contribution at some later point--
but the law does not explicitly authorize that allowance. This 
legislation would update the law to authorize these ``late'' 
contributions.

  Section 201 of this legislation would increase the maximum amount of 
the VA home loan guaranty from $60,000 to $83,425. A guaranty of 
$60,000 allows a veteran to purchase, without a down payment, a home 
with a value of four times that amount, or $240,000. In many areas of 
the country, the median cost of housing is over $300,000, effectively 
limiting the utility of this benefit. This legislation would raise the 
VA guaranty limit to make the effective amount of a VA loan equal to 
the so-called conforming loan rate in the non-VA secondary mortgage 
markets.
  Sections 202 and 203 of this bill would expand on legislation I 
authored in 2002 that added a pilot adjustable rate mortgage, ARM, 
feature to VA's loan guaranty program. Currently, the pilot program, 
which expires on September 30, 2005, allows VA to guarantee only so-
called ``hybrid'' ARMs. Even then, restrictive adjustment caps have 
effectively limited the program to only one type of hybrid ARM 
financing. This bill would give VA permanent authority to guaranty a 
full range of ARM financing, to include traditional 1-year ARMs and 
hybrid ARMs with interest rates fixed for periods of 3, 5, 7, or 10 
years, consistent with the ARM provisions of the National Housing Act. 
I believe the housing benefit for veterans should, at the very least, 
equal that of benefits available for non-veterans through the FHA 
program.
  Section 204 of this legislation resurrects legislation that was 
approved by the Senate during the 106th Congress, but which failed to 
pass the House. Current law mandates that VA collect a funding fee when 
veterans obtain a loan with a VA guaranty, but it also allows for a 
waiver of the funding fee if the veteran seeking housing assistance has 
suffered a service-connected disability. For the funding fee to be 
waived under current law, however, the veteran must already be 
receiving compensation, an event which can only occur after the service 
member has been discharged from service. Because VA has a presence at 
over 136 military discharge sites (where it conducts pre-discharge 
medical examinations), it is common for someone who is still in service 
to be adjudged disabled by VA. But because such a service member cannot 
yet receive veterans' compensation, VA cannot waive the funding fee 
even though an active-duty service can make use of his or her 
entitlement to a VA-guaranteed home loan while still in

[[Page S6289]]

service. This legislation would rectify that situation by, 
prospectively, allowing VA to waive funding fees for active duty 
service members who are eligible to receive compensation as a result of 
a pre-discharge examinations, but who are not yet discharged from 
service.
  Section 301 of this legislation would rectify what I perceive to be 
an unintended oversight of the Veterans Employment Opportunity Act of 
1998. That statute granted Federal job preferences to two classes of 
veterans--those who are ``preference eligible'' due to service during 
wartime or because of service-connected disability, and those who 
served on active duty for at least three years. The statute also 
authorized administrative and judicial redress but, by oversight, it 
limited such redress to the ``preference eligible'' class of veterans 
only. This legislation would extend current remedies to all veterans 
who are eligible for Federal job preferences.
  Section 311 of this legislation would prohibit the collection of co-
payments from veterans receiving VA-provided hospice care. The 
requirement for co-payments for hospice care is, I think, unduly 
burdensome in cases where the end of life is near. The Bush 
administration concurs; it requested this exemption in its fiscal year 
2005 budget proposal. I am glad to advance this provision on behalf of 
the President.
  Section 321 of this bill would extend three non-controversial 
statutory authorities that are now scheduled to expire. The first would 
extend, until 2009, the requirement that the VA's Advisory Committee on 
Former Prisoners of War submit a biennial report of its recommendations 
for improvements to benefits afforded to former prisoners of war. The 
second would make permanent VA authority to provide counseling and 
treatment services to veterans who have experienced sexual trauma while 
in service. The third would extend, until December 31, 2009, a 
reporting requirement imposed on VA's Special Medical Advisory Group. 
Finally, Section 331 of my legislation would update the definition of 
minority group members for purposes of the work of VA's Advisory 
Committee on Minority Veterans.
  Mr. President, the principal thrust of this legislation is to improve 
and modernize aspects of VA education and housing programs which were 
first conceived 60 years ago. These improvements, and others contained 
in this bill, merit the support of the Senate. I request that support, 
and 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. 2486

       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 ``Veterans' 
     Benefits Improvements Act of 2004''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. References to title 38, United States Code.

                      TITLE I--EDUCATION BENEFITS

Sec. 101. Increase in maximum amount of contribution for increased 
              amount of basic educational assistance under Montgomery 
              GI Bill.
Sec. 102. Pilot program on additional two-year period for use of 
              entitlement by participants in Montgomery GI Bill for 
              vocational or job readiness training.
Sec. 103. Exclusion of veterans education benefits in determination of 
              eligibility or amount of Federal educational grants and 
              loans.
Sec. 104. Collection of contributions for educational assistance under 
              Montgomery GI Bill from Reserves called to active duty.

                       TITLE II--HOUSING BENEFITS

Sec. 201. Increase in maximum amount of housing loan guarantee.
Sec. 202. Permanent authority for guarantee of adjustable rate 
              mortgages.
Sec. 203. Permanent authority for guarantee of hybrid adjustable rate 
              mortgages and modification of guarantee authority.
Sec. 204. Termination of collection of loan fees from veterans rated 
              eligible for compensation at pre-discharge rating 
              examinations.

             TITLE III--OTHER BENEFITS AND BENEFITS MATTERS

                    Subtitle A--Employment Benefits

Sec. 301. Availability of administrative and judicial redress for 
              certain veterans denied opportunity to compete for 
              Federal employment.

                      Subtitle B--Medical Benefits

Sec. 311. Prohibition on collection of copayments for hospice care.

       Subtitle C--Extension of Benefits and Related Authorities

Sec. 321. Extension of various authorities relating to benefits for 
              veterans.

                       Subtitle D--Other Matters

Sec. 331. Modification of definition of minority group member for 
              purposes of Advisory Committee on Minority Veterans.

     SEC. 2. REFERENCES TO TITLE 38, UNITED STATES CODE.

       Except as otherwise expressly provided, whenever in this 
     Act an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made to a section or 
     other provision of title 38, United States Code.

                      TITLE I--EDUCATION BENEFITS

     SEC. 101. INCREASE IN MAXIMUM AMOUNT OF CONTRIBUTION FOR 
                   INCREASED AMOUNT OF BASIC EDUCATIONAL 
                   ASSISTANCE UNDER MONTGOMERY GI BILL.

       (a) Active Duty Benefit.--Section 3011(e)(3) is amended by 
     striking ``$600'' and inserting ``$2,000''.
       (b) Selected Reserve Benefit.--Section 3012(f)(3) is 
     amended by striking ``$600'' and inserting ``$2,000''.

     SEC. 102. PILOT PROGRAM ON ADDITIONAL TWO-YEAR PERIOD FOR USE 
                   OF ENTITLEMENT BY PARTICIPANTS IN MONTGOMERY GI 
                   BILL FOR VOCATIONAL OR JOB READINESS TRAINING.

       (a) In General.--(1) Subchapter I of chapter 30 is amended 
     by adding at the end the following new section:

     ``Sec. 3020A. Additional two-year period for use of 
       entitlement for vocational or job readiness instruction or 
       training: pilot program

       ``(a) Pilot Program Required.--(1) The Secretary shall 
     carry out a pilot program to assess the feasibility and 
     advisability of permitting individuals whose entitlement to 
     basic educational assistance under this chapter expires under 
     section 3031 of this title before their complete use of such 
     entitlement to be entitled to an additional two-year period 
     for their use of such entitlement.
       ``(2) The pilot program shall commence six months after the 
     date of the enactment of this section, and shall terminate 
     four years after the date of the commencement of the pilot 
     program.
       ``(b) Additional Two-Year Period of Entitlement.--
     Notwithstanding any provision of section 3031 of this title, 
     an individual described in subsection (c) shall, at the 
     expiration of the 10-year period beginning on the educational 
     assistance entitlement commencement date of such individual, 
     be entitled to an additional two-year period for the use of 
     entitlement to basic educational assistance under this 
     chapter.
       ``(c) Eligible Individuals.--(1) An individual described in 
     this subsection is any individual who--
       ``(A) as of the end of the 10-year period beginning on the 
     educational assistance entitlement commencement date of such 
     individual--
       ``(i) would remain entitled to basic educational assistance 
     under this chapter but for the expiration of the 10-year 
     delimiting period applicable to such individual under section 
     3031 of this title; and
       ``(ii) has not utilized all of the entitlement of such 
     individual to basic educational assistance under this 
     chapter; and
       ``(B) at the time of the application for entitlement under 
     this subsection (d), is accepted, enrolled, or otherwise 
     participating (as determined by the Secretary) in instruction 
     or training described in subsection (e).
       ``(2) This subsection does not apply to an individual 
     otherwise described by paragraph (1) whose remaining 
     entitlement to basic educational assistance under this 
     chapter as described in subparagraph (A)(ii) of that 
     paragraph is based on the transfer of basic educational 
     assistance under section 3020 of this title.
       ``(d) Application.--(1) An individual seeking an additional 
     two-year period for the use of entitlement under this section 
     shall submit to the Secretary an application therefor 
     containing such information as the Secretary may require for 
     purposes of this section.
       ``(2) The Secretary may not receive applications under this 
     subsection after the termination date of the pilot program 
     under subsection (a)(2).
       ``(e) Commencement of Additional Period for Use.--The 
     additional two-year period for the use of entitlement by an 
     individual under this section shall commence on the date the 
     application of the individual under subsection (d) is 
     received by the Secretary if the Secretary determines 
     pursuant to a review of the application that the individual 
     is an individual described by subsection (c) for purposes of 
     this section.
       ``(f) Instruction or Training Covered by Additional Period 
     for Use.--(1) The instruction or training for which 
     entitlement to basic educational assistance under this 
     chapter may be used during the additional two-year period for 
     the use of entitlement under this section is as follows:
       ``(A) Education leading to employment in a high technology 
     industry for purposes of section 3014A of this title.
       ``(B) A full-time program of apprenticeship or other on-job 
     training approved as provided

[[Page S6290]]

     in clause (1) or (2), as appropriate, of section 3687 of this 
     title.
       ``(C) A cooperative program (as defined in section 
     3482(a)(2) of this title).
       ``(D) A licensing or certification test approved under 
     section 3689 of this title.
       ``(E) Training or education leading toward a professional 
     or vocational objective which has been approved in accordance 
     with the provisions of subchapter I of chapter 36 of this 
     title and is identified by the Secretary in regulations to be 
     prescribed by the Secretary for purposes of this section.
       ``(2) Entitlement to basic educational assistance under 
     this chapter may not be used during the additional two-year 
     period for the use of entitlement under this section for the 
     instruction or training as follows:
       ``(A) General education leading toward a standard college 
     degree (as defined in section 3452(g) of this title), unless 
     the program or training concerned will result in an 
     associates degree that is approved by the Secretary in the 
     manner specified in paragraph (1)(E) to be necessary to 
     obtain a professional or vocational objective.
       ``(B) Preparatory courses for a test that is required or 
     used for admission to an institution of higher education or 
     graduate school.
       ``(g) Coordination With Certain Other Benefits.--(1) An 
     individual entitled to basic educational assistance under 
     subsection (c) is entitled to educational and vocational 
     counseling under section 3697A of this title in connection 
     with the use of entitlement under this section.
       ``(2) An individual using entitlement to basic educational 
     assistance under this chapter during the additional two-year 
     period for the use of entitlement under this section is not 
     entitled during the use of such entitlement to the following:
       ``(A) Supplemental educational assistance under subchapter 
     III of this chapter.
       ``(B) A work-study allowance under section 3485 of this 
     title.
       ``(h) Educational Assistance Entitlement Commencement Date 
     Defined.--In this section, the term `educational assistance 
     entitlement commencement date', in the case of an individual 
     described in subsection (b)(1), means the date on which 
     begins the period during which the individual may use the 
     individual's entitlement to educational assistance under 
     chapter as determined under section 3031 of this title.
       ``(i) Effect of Termination of Pilot Program.--The 
     termination of the pilot program under subsection (a)(2) 
     shall not effect the continuing use of entitlement under this 
     section of any individual whose additional two-year period 
     for the use of entitlement under this section continues after 
     the date of the termination of the pilot program under that 
     subsection.''.
       (2) The table of sections at the beginning of such chapter 
     is amended by inserting after the item relating to section 
     3020 the following new item:

``3020A. Additional two-year period for use of entitlement for 
              vocational or job readiness instruction or training: 
              pilot program.''.

       (b) Cross-Reference Amendment.--Section 3031 is amended--
       (1) in subsection (a), by striking ``subsections (b) 
     through (g), and subject to subsection (h),'' and inserting 
     ``subsections (b) through (h), and subject to subsection 
     (i),'';
       (2) by redesignating subsection (h) as subsection (i); and
       (3) by inserting after subsection (g) the following new 
     subsection (h):
       ``(h) An individual whose period for the use of entitlement 
     to basic educational assistance under this chapter would 
     otherwise expire under this section may be eligible for an 
     additional two-year period for the use of entitlement under 
     section 3020A of this title.''.

     SEC. 103. EXCLUSION OF VETERANS EDUCATION BENEFITS IN 
                   DETERMINATION OF ELIGIBILITY OR AMOUNT OF 
                   FEDERAL EDUCATIONAL GRANTS AND LOANS.

       (a) In General.--(1) Subchapter II of chapter 36 is amended 
     by inserting after section 3694 the following new section:

     ``Sec. 3694A. Exclusion of veterans education benefits in 
       determination of eligibility or amount of Federal education 
       grants and loans

       ``(a) Exclusion.--Notwithstanding any other provision of 
     law and subject to subsection (b), education benefits shall 
     not be considered as income, assets, or other monetary 
     resource in determining eligibility for, or the amount of, 
     grant or loan assistance provided under title IV of the 
     Higher Education Act of 1965 (20 U.S.C. 1070 et seq.).
       ``(b) Exception.--In the case of campus-based student 
     financial assistance, the amount of such assistance for which 
     an individual would otherwise be eligible without taking into 
     consideration education benefits as described in subsection 
     (a) shall be reduced to the extent that the sum of such 
     amount, the amount of the education benefits of the 
     individual, and the amount of the Federal Pell Grant, if any, 
     of the individual exceeds the cost of attendance of the 
     individual.
       ``(c) Definitions.--In this section:
       ``(1) The term `campus-based student financial assistance' 
     means grant, work, or loan assistance provided under subpart 
     3 of part A, and parts C and E of title IV of the Higher 
     Education Act of 1965 (20 U.S.C. 1070b et seq; 42 U.S.C. 2751 
     et seq.; 20 U.S.C. 1087aa et seq.).
       ``(2) The term `cost of attendance' has the meaning given 
     such term in section 472 of the Higher Education Act of 1965 
     (20 U.S.C. 1087ll).
       ``(3) The term `education benefits' means education 
     benefits under chapters 30, 32, and 35 of this title and 
     under chapter 1606 of title 10.
       ``(4) The term `Federal Pell Grant' means a grant provided 
     under subpart 1 of part A of title IV of the Higher Education 
     Act of 1965 (20 U.S.C. 1070a).''.
       (2) The table of sections at the beginning of chapter 36 is 
     amended by inserting after the item referring to section 3694 
     the following new item:

``3694A. Exclusion of veterans education benefits in determination of 
              eligibility or amount of Federal education grants and 
              loans.''.

       (b) Effective Date.--The amendments made by this section 
     shall be effective with respect to award years, as that term 
     is defined in section 481(a)(1) of the Higher Education Act 
     of 1965 (20 U.S.C. 1088(a)(1)), beginning on or after July 1, 
     2004.

     SEC. 104. COLLECTION OF CONTRIBUTIONS FOR EDUCATIONAL 
                   ASSISTANCE UNDER MONTGOMERY GI BILL FROM 
                   RESERVES CALLED TO ACTIVE DUTY.

       (a) Active Duty Program.--Section 3011(b) is amended--
       (1) by striking ``The basic pay'' and inserting ``(1) 
     Except as provided in paragraph (2), the basic pay'';
       (2) by designating the second sentence as paragraph (3), 
     indenting the left margin of such paragraph, as so 
     designated, two ems, and, in that paragraph by striking 
     ``this chapter'' and inserting ``this subsection''; and
       (3) by inserting after paragraph (1), as so designated, the 
     following new paragraph:
       ``(2) In the case of an individual covered by paragraph (1) 
     who is a Reserve, the Secretary shall collect from the 
     individual an amount equal to $1,200 before the commencement 
     by the individual of the use of entitlement to basic 
     educational assistance under this chapter. The Secretary may 
     collect such amount through reductions in basic pay in 
     accordance with paragraph (1) or through such other method as 
     the Secretary determines appropriate.''.
       (b) Selected Reserve Program.--Section 3012(c) is amended--
       (1) by striking ``The basic pay'' and inserting ``(1) 
     Except as provided in paragraph (2), the basic pay'';
       (2) by designating the second sentence as paragraph (3), 
     indenting the left margin of such paragraph, as so 
     designated, two ems, and, in that paragraph by striking 
     ``this chapter'' and inserting ``this subsection''; and
       (3) by inserting after paragraph (1), as so designated, the 
     following new paragraph:
       ``(2) In the case of an individual covered by paragraph (1) 
     who is a Reserve, the Secretary shall collect from the 
     individual an amount equal to $1,200 before the commencement 
     by the individual of the use of entitlement to basic 
     educational assistance under this chapter. The Secretary may 
     collect such amount through reductions in basic pay in 
     accordance with paragraph (1) or through such other method as 
     the Secretary determines appropriate.''.

                       TITLE II--HOUSING BENEFITS

     SEC. 201. INCREASE IN MAXIMUM AMOUNT OF HOUSING LOAN 
                   GUARANTEE.

       (a) In General.--Subparagraph (A)(i)(IV) of section 
     3703(a)(1) is amended by striking ``$60,000'' and inserting 
     ``$83,425''.
       (b) Conforming Amendment.--Subparagraph (B) of such section 
     is amended by striking ``$60,000'' and inserting ``$83,425''.

     SEC. 202. PERMANENT AUTHORITY FOR GUARANTEE OF ADJUSTABLE 
                   RATE MORTGAGES.

       Section 3707(a) is amended by striking ``The Secretary 
     shall'' and all that follows through ``guaranteeing loans'' 
     and inserting ``The Secretary shall guarantee loans''.

     SEC. 203. PERMANENT AUTHORITY FOR GUARANTEE OF HYBRID 
                   ADJUSTABLE RATE MORTGAGES AND MODIFICATION OF 
                   GUARANTEE AUTHORITY.

       (a) Permanent Authority.--Subsection (a) of section 3707A 
     is amended by striking ``The Secretary shall'' and all that 
     follows through ``guaranteeing loans'' and inserting ``The 
     Secretary shall guarantee loans''.
       (b) Modification of Interest Rate Adjustment 
     Requirements.--Subsection (c) of such section is amended--
       (1) by striking paragraph (3) and inserting the following 
     new paragraph (3):
       ``(3) in the case of the initial interest rate adjustment 
     under such provisions, be limited to a maximum increase or 
     decrease of 1 percentage point if the interest rate remained 
     fixed for 3 or fewer years; and''; and
       (2) in paragraph (4), by striking ``5 percentage points'' 
     and all that follows and inserting ``such number of 
     percentage points as the Secretary shall prescribe for 
     purposes of this section.''.
       (c) No Effect on Guarantee of Loans Under Hybrid Adjustable 
     Rate Mortgage Guarantee Demonstration Project.--The 
     amendments made by this section shall not be construed to 
     affect the force or validity of any guarantee of a loan made 
     by the Secretary of Veterans Affairs under the demonstration 
     project for the guarantee of hybrid adjustable rate mortgages 
     under section 3707A of title 38, United States Code, as in 
     effect on the day before the date of the enactment of this 
     Act.

[[Page S6291]]

     SEC. 204. TERMINATION OF COLLECTION OF LOAN FEES FROM 
                   VETERANS RATED ELIGIBLE FOR COMPENSATION AT 
                   PRE-DISCHARGE RATING EXAMINATIONS.

       Section 3729(c) is amended--
       (1) by inserting ``(1)'' before ``A fee''; and
       (2) by adding at the end the following new paragraph:
       ``(2) A veteran who is rated eligible to receive 
     compensation as a result of a pre-discharge disability 
     examination and rating shall be treated as receiving 
     compensation for purposes of this subsection as of the date 
     on which the veteran is rated eligible to receive 
     compensation as a result of the pre-discharge disability 
     examination and rating without regard to whether an effective 
     date of the award of compensation is established as of that 
     date.''.

             TITLE III--OTHER BENEFITS AND BENEFITS MATTERS

                    Subtitle A--Employment Benefits

     SEC. 301. AVAILABILITY OF ADMINISTRATIVE AND JUDICIAL REDRESS 
                   FOR CERTAIN VETERANS DENIED OPPORTUNITY TO 
                   COMPETE FOR FEDERAL EMPLOYMENT.

       (a) Administrative Redress.--Section 3330a(a)(1) of title 
     5, United States Code, is amended--
       (1) by inserting ``(A)'' after ``(1)''; and
       (2) by adding at the end the following new subparagraph:
       ``(B) A veteran described in section 3304(f)(1) who alleges 
     that an agency has violated such section with respect to such 
     veteran may file a complaint with the Secretary of Labor.''.
       (b) Judicial Redress.--Section 3330b(a)(1) of such title is 
     amended by inserting ``, or a veteran described by section 
     3330a(a)(1)(B) with respect to a violation described by such 
     section,'' after ``a preference eligible''.

                      Subtitle B--Medical Benefits

     SEC. 311. PROHIBITION ON COLLECTION OF COPAYMENTS FOR HOSPICE 
                   CARE.

       Section 1710B(c)(2) is amended--
       (1) in subparagraph (A), by striking ``or'' at the end;
       (2) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (3) by inserting after subparagraph (A) the following new 
     subparagraph (B):
       ``(B) to a veteran being furnished hospice care under this 
     section; or''.

       Subtitle C--Extension of Benefits and Related Authorities

     SEC. 321. EXTENSION OF VARIOUS AUTHORITIES RELATING TO 
                   BENEFITS FOR VETERANS.

       (a) Six-Year Extension of Biennial Report of Advisory 
     Committee on Former Prisoners of War.--Section 541(c)(1) is 
     amended by striking ``2003'' and inserting ``2009''.
       (b) Permanent Authority for Counseling and Treatment for 
     Sexual Trauma.--Section 1720D(a) is amended--
       (1) in paragraph (1), by striking ``During the period 
     through December 31, 2004, the Secretary'' and inserting 
     ``The Secretary''; and
       (2) in paragraph (2), by striking ``, during the period 
     through December 31, 2004,''.
       (c) Five-Year Extension of Reports by Special Medical 
     Advisory Group.--Section 7312(d) is amended by striking 
     ``December 31, 2004'' and inserting ``December 31, 2009''.

                       Subtitle D--Other Matters

     SEC. 331. MODIFICATION OF DEFINITION OF MINORITY GROUP MEMBER 
                   FOR PURPOSES OF ADVISORY COMMITTEE ON MINORITY 
                   VETERANS.

       Subsection (d) of section 544 is amended to read as 
     follows:
       ``(d) In this section, the term `minority group member' 
     means an individual who is--
       ``(1) American Indian or Alaska Native;
       ``(2) Asian;
       ``(3) Black or African American;
       ``(4) Native Hawaiian or other Pacific Islander; or
       ``(5) of Hispanic, Latino, or Spanish origin.''.

                          ____________________